Exhibit 10.64
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Settlement Agreement")
is entered into on this 18th day of June, 2003, by Xxxxxxx Xxxxx Xxxxxxxxxx ("X.
Xxxxxxxxxx"), Xxxxxxx X. Xxxxxxxxxx ("X. Xxxxxxxxxx" and, together with X.
Xxxxxxxxxx, the "Cunninghams"), Xxxxxxxxxx Enterprises, Inc., an Arizona
corporation d/b/a Xxxxxxxxxx Technology Group ("CTG" and, collectively with the
Cunninghams, the "CTG Parties"), and Integrated Information Systems, Inc., a
Delaware corporation ("IIS").
RECITALS
A. Pursuant to a Master Transaction Agreement dated November 13, 2002,
as amended by the First Amendment to Master Transaction Agreement dated as of
November 15, 2002, and the documents and agreements executed and/or delivered in
connection therewith (collectively, the "MTA"), IIS agreed to hire certain
employees and to purchase certain assets from CTG, and the parties agreed to
certain other matters as set forth in the MTA.
B. In connection with the MTA, X. Xxxxxxxxxx became employed by IIS and IIS
and X. Xxxxxxxxxx entered into an Executive Employment Agreement dated as of
November 15, 2002 (the "Employment Agreement").
C. Since the closing of the transactions contemplated by the MTA, disputes
have arisen between the parties over various matters.
D. In an effort to resolve all of their disputes and any and all future
disputes that may arise under the MTA and/or the Employment Agreement (other
than as specifically set forth in this Settlement Agreement), and in order to
avoid the cost and uncertainty of litigation and the consumption of the parties'
time and attention to ongoing disputes, IIS and the CTG Parties have agreed to
resolve all of their disputes in a binding fashion by releasing their claims
against each other and entering into the other agreements set forth in this
Agreement.
AGREEMENT
1. FINAL PAYMENT; RELEASE OF SHARES.
In full satisfaction of any and all amounts that are or may be owed to
the CTG Parties under the MTA (or otherwise), IIS shall pay to CTG, for the
benefit of all CTG Parties, the aggregate sum of $24,683.43 (the "Settlement
Amount"). The Settlement Amount shall be paid as follows: $10,000.00 to be paid
upon execution of this Agreement; $5,000.00 to be paid on July 22, 2003;
$5,000.00 to be paid on August 22, 2003; and the remaining payment of $4,683.43
to be paid on September 22, 2003. In consideration of the Settlement Amount and
the releases herein, the CTG Parties hereby forever and irrevocably waive,
relinquish and forego any and all amounts that may be or may in the future be
payable to them by IIS under the MTA, including without limitation any amounts
representing or paid on account of Eligible Accounts Receivable (as defined in
the MTA) and any amounts representing Additional Consideration. IIS shall have
no obligation to report or provide an accounting to the CTG Parties or anyone
with respect to such amounts, and shall be entitled to collect, keep and/or
retain any and all such amounts for itself.
Upon execution of this Settlement Agreement by all of the CTG Parties, IIS
shall release from escrow the Closing Shares (as defined in the MTA) now held in
such escrow to CTG. The CTG Parties acknowledge and agree that any restrictions
with respect to such shares arising under the Securities Act of 1933, as
amended, or comparable state securities law, and any stock certificate legends
required by such laws or other applicable law, shall remain in accordance with
such laws.
2. LANDLORD SETTLEMENT.
Promptly upon execution of this Settlement Agreement by each of the CTG
Parties, IIS shall execute and deliver the Payment and Tolling Agreement to
Settle Litigation with Mutual Releases, by and between Phoenix 24th Place, Inc.,
the CTG Parties, and IIS, in the form attached hereto as Exhibit A (The
"Landlord Settlement Agreement"). The payments made under Section 1 above and
the Landlord Settlement Agreement shall constitute full payment and settlement
of IIS's indemnity obligations to the CTG Parties arising out of the lease that
is the subject of the Landlord Settlement Agreement, including without
limitation any obligation with respect to attorneys' fees incurred by the CTG
Parties. IIS hereby acknowledges its continuing payment obligations pursuant to
the terms of the Landlord Settlement Agreement. Any breach of IIS's continuing
obligations under the Landlord Settlement Agreement shall give rise only to the
rights and remedies available to the CTG Parties under the Landlord Settlement
Agreement, and not to any additional rights or remedies under this Settlement
Agreement, the MTA, or otherwise.
3. CTG OBLIGATIONS.
Notwithstanding the releases contained herein, IIS hereby acknowledges and
confirms its obligations pursuant to the MTA with respect to the Assumed
Equipment Leases (as defined in the MTA), and its obligations under the AT&T
telecommunications liability (collectively, the "CTG Obligations"). In the
event IIS breaches its obligations existing under the MTA with respect to the
CTG Obligations, the CTG Parties shall retain any indemnity rights as against
IIS that they may have under the MTA, pursuant to the terms and conditions
thereof.
4. EMPLOYMENT MATTERS.
Effective upon his execution of this Settlement Agreement, X. Xxxxxxxxxx
hereby voluntarily resigns all officer positions and positions of employment
with IIS, effective June 20, 2003. Up until June 20, 2003, X. Xxxxxxxxxx shall
diligently and in good faith carry out his employment duties under the
Employment Agreement, as directed by appropriate officers of IIS. Upon the
effective date of his resignation, X. Xxxxxxxxxx shall return to IIS, in good
working order, any and all property of IIS used by him or otherwise in his
possession or control, and shall return, and not keep original or copies of (in
any format) any documents, records or other information of or obtained from IIS,
and IIS shall pay to X. Xxxxxxxxxx his base salary and any accrued vacation as
required by law up to June 20, 2003. X. Xxxxxxxxxx hereby agrees to waive and
forever forego and release any claims or entitlements to severance pay, any
benefits (subject to applicable COBRA laws and regulations), including stock
options, and other amounts of any kind.
X. Xxxxxxxxxx hereby confirms and acknowledges his non-competition,
non-solicitation and confidentiality and other obligations under sections 6, 7
and 10 of the Employment Agreement as well as any such obligations arising under
common law. IIS agrees that after June 20, 2003 X. Xxxxxxxxxx may, subject in
all respects to his existing obligations under the non-solicitation and
confidentiality provisions of Sections 7 and 10 of the Employment Agreement, as
a self-employed consultant working alone or through not more than two additional
employees of his consultancy business, and not as part of any other company,
business or group or through any other affiliation, provide consulting services,
other than for or with respect to IIS' existing or prospective clients. IIS
waives the provisions of section 6 of the Employment Agreement solely to
accommodate the activities described in the preceding sentence. For purposes of
this Section 4 and the Employment Agreement, IIS' prospective clients shall
include any person, entity or business organization with whom (i) IIS has begun
substantive discussions to perform work or submitted a bid or proposal (whether
or not known to X. Xxxxxxxxxx), or (ii) X. Xxxxxxxxxx had contact or intended to
or was assigned or requested to have contact, or otherwise was personally aware
through attendance at sales meetings or otherwise. Nothing herein shall be
deemed to amend, modify or waive in any respect the non-competition,
non-solicitation or confidentiality provisions of the Employment Agreement
(except to the limited extent permitted above) or similar restrictions arising
under common law, all of which shall survive execution and delivery of this
Settlement Agreement and shall continue in effect in accordance with their
respective terms.
5. MUTUAL RELEASE AND DISCHARGE
As a material inducement to each of the parties to enter into this
Settlement Agreement, and except as otherwise expressly and specifically set
forth in this Agreement, IIS on the one hand, and the CTG Parties on the other
hand, respectively, do each hereby, for itself and its successors and assigns,
forever release each other and each of their respective successors, assigns,
officers, directors, partners, members, shareholders, employees, agents, parent,
subsidiary or sister corporations, affiliates, representatives, attorneys,
accountants, related entities, predecessors, heirs, and all persons acting by,
through, under or in concert with, or otherwise claiming any right or benefit
through, them, or of them (collectively, the "Releases"), from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees and costs actually
incurred) of any nature whatsoever, known or unknown, suspected or unsuspected,
including, but not limited to, rights arising out of alleged violations of any
contract, express or implied (including but not limited to any contract of
fiduciary, attorney-client, special or other confidential relationship); any
covenant of good faith and fair dealing (express or implied); and any tort,
including breach of fiduciary or other duty, defamation, libel, slander,
invasion of privacy, negligence, intentional or negligent infliction of
emotional distress, malicious prosecution, abuse of process, and intentional
interference with current or prospective contract, relationship or economic
advantage, which any party hereto now has, owns or holds, or claims to have, own
or hold, or which any party hereto at any time prior to this Agreement had,
owned or held, or claimed to have had, owned or held, or which any party hereto
at any time hereafter may have, own or hold, or claim to have, own or hold
against each other or any of the Releases, arising prior to the date hereof,
including, without limitation, related to the MTA, the Employment Agreement, the
transactions contemplated therein, the CTG Parties' status as a stockholder of
IIS, or the relationship or dealings between them (collectively, the "Claims"),
except as set forth below.
With respect to X. Xxxxxxxxxx, this release includes any Claims relating in any
manner whatsoever to his employment by and/or resignation of his employment with
IIS, including any Claim arising under the Civil Rights Act of 1866, 1964, 1991,
Title VII as amended by the Civil Rights Act of 1991, the Americans with
Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Labor
Management Relations Act (LMRA), the Employee Retirement Income Security Act
(ERISA), the Consolidated Omnibus Budget Reconciliation Act, the Fair Labor
Standards Act (FLSA), the Equal Pay Act, the Rehabilitation Act of 1973, the
Arizona Civil Rights Act, the Family and Medical Leave Act of 1993, Worker's
Compensation Claims, or any other federal, state, or local statute, or any
contract, agreement, plan or policy.
IIS expressly does not release any Claims it may have against X. Xxxxxxxxxx for
violations of sections 6, 7 and 10 of the Employment Agreement, and the parties
do not release any Claims for breaches or violations of this Settlement
Agreement which may accrue after the date of this Settlement Agreement.
6. TIME PERIOD OF CONSIDERING OR CANCELING.
With respect to any ADEA Claims, X. Xxxxxxxxxx acknowledges that he has been
offered a period of time of at least twenty-one (21) days to consider whether to
sign this Settlement Agreement, which he has waived, and IIS agrees that X.
Xxxxxxxxxx may cancel this Settlement Agreement with respect to any ADEA Claims
at any time during the seven (7) days following the date on which this
Settlement Agreement has been signed by all parties. In order to cancel or
revoke this Agreement with respect to any ADEA Claims, X. Xxxxxxxxxx must
deliver to IIS: x/x Xxxxxxxxxxx Xxxxxx XXX, Xxxx: Xxxx Xxxxxxxxxxx, at 0000 X.
Xxxxxxx Xxx., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, written notice stating that X.
Xxxxxxxxxx is canceling or revoking this Settlement Agreement with respect to
such ADEA Claims. If this Settlement Agreement is timely cancelled or revoked
with respect to such ADEA Claims, none of the obligations of IIS under this
Settlement Obligations shall be effective or enforceable and IIS shall not be
obligated to the CTG Parties, or liable to them, for failure to meet its
obligations and make any payments under the Landlord Settlement Agreement, this
Settlement Agreement, or the CTG Obligations or to provide X. Xxxxxxxxxx with
the other benefits described in this Settlement Agreement, including the
non-competition agreements with respect to his consulting activities after
execution of this Agreement, and all contracts and provisions modified,
terminated, or relinquished by the Company or the CTG Parties shall otherwise
be reinstated. In addition, IIS shall be entitled to the return from the CTG
Parties of any payments to such CTG Parties under this Settlement Agreement and
to the return from the CTG Parties of any amounts paid under the Landlord
Settlement Agreement and the CTG Obligations, and all obligations of the CTG
Parties other than X. Xxxxxxxxxx under this Settlement Agreement shall remain in
effect and fully enforceable, and all obligations of X. Xxxxxxxxxx other than
the release of his ADEA Claims will remain in effect and fully enforceable.
7. NO OTHER CLAIMS; FULL RELEASE.
Each party agrees that it will not file any complaints, charges, lawsuits or
appeals against any other party or its respective Releases with any
governmental agency, regulatory body, court, arbitration panel, mediator or
other tribunal or body at any time hereafter based on any matter released by
this Settlement Agreement. Each party agrees that this Settlement Agreement
constitutes the full, final and complete settlement of all acts, omissions or
other matters between the parties (except as otherwise expressly set forth in
this Settlement Agreement), related to or arising out of their actions or
omissions in connection with or in any other manner related to the MTA or the
Employment Agreement and the prior transactions or relationships between them.
For the purpose of implementing a full and complete release and discharge of the
parties and their respective Releases, each party hereto expressly acknowledges
that, except as otherwise specifically provided herein, this Settlement
Agreement is intended to include in its effect, without limitation, all Claims
which any party hereto does not know or suspect to exist in such party's favor
against it or the Releases, or any of them, as of the date hereof, and that this
Settlement Agreement contemplates the extinguishment of any such Claims.
8. NO ADMISSION OF LIABILITY
The parties agree that neither has admitted any liability to the
other, and that this Settlement Agreement will not be construed as an admission
of liability by either party.
9. NON-DISPARAGEMENT.
The parties agree that as part of the consideration for this Settlement
Agreement, they will not make disparaging or derogatory remarks, whether oral or
written, about each other or their respective subsidiaries, affiliates,
officers, directors, employees or agents.
10. REPRESENTATION OF COMPREHENSION OF DOCUMENT
In entering into this Settlement Agreement, the parties represent that they
have relied upon the legal advice of their attorneys, who are the attorneys of
their own choice, and that the terms of this Settlement Agreement have been
completely read and explained to them by their attorneys, and those terms are
fully understood and voluntarily accepted.
11. GOVERNING LAW
This Settlement Agreement shall be construed and interpreted in accordance
with the laws of the State of Arizona.
12. ENTIRE AGREEMENT AND SUCCESSORS IN INTEREST
This Settlement Agreement contains the entire agreement between IIS and the
CTG Parties and shall be binding upon and inure for the benefit of the
administrators, successors, and assigns of each.
13. ATTORNEYS' FEES
Each party shall bear its own attorneys' fees and costs in connection with
this Settlement Agreement, and all related matters. In the event an action is
brought to enforce or defend this Settlement Agreement, the prevailing party
shall recover its costs and reasonable attorneys' fees incurred in any such
action.
INTEGRATED INFORMATION SYSTEMS, INC., XXXXXXXXXX ENTERPRISES, INC., AN
A DELAWARE CORPORATION ARIZONA CORPORATION D/B/A
XXXXXXXXXX TECHNOLOGY GROUP
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxx Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxx, Xx. Name: Xxxxxxx Xxxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxx Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
