Exhibit 10.18
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is entered into as of
this __ day of June, 2012, by and between La Jolla Cove Investors, Inc., a
California corporation ("LJCI") and The X-Change Corporation, a Nevada
corporation ("XCHC"). LJCI and XCHC will sometimes be referred to individually
as a "Party" and collectively as the "Parties" throughout this Agreement with
respect to the following recitals:
Recitals
A. WHEREAS, the Parties entered into the following agreements or issued the
following financing documents:
a. Securities Purchase Agreement (the "Securities Purchase Agreement")
dated as of August 29, 2007 between LJCI and XCHC;
b. 6 1/4% Convertible Debenture in the principal amount of $250,000 (the
"Debenture") issued on August 29, 2007 by XCHC to LJCI;
c. Warrant to Purchase Common Stock (the "Warrant") issued on August 29,
2007 by XCHC to LJCI;
d. 6 1/4% Convertible Debenture in the principal amount of $150,000
issued on October 9, 2007 by XCHC to LJCI (the "Second Debenture");
e. Warrant to Purchase Common Stock (the "Second Warrant") issued on
October 9, 2007 by XCHC to LJCI; and
f. Addendum To Stock Purchase Agreement And Convertible Debenture dated
as of January, 2011 between LJCI and XCHC (the "Addendum");
B. WHEREAS, XCHC failed to issue shares to LJCI following the delivery by
LJCI of a "Conversion Notice" dated July 6, 2011, as defined in the Debenture
and the Second Debenture;
C. WHEREAS, LJCI did not exercise any warrants to purchase common shares in
connection with three prior conversion notices ("Disputed Conversions") and XCHC
asserts that LJCI was required, under the terms of the Warrant and/or the Second
Warrant to exercise warrants in connection with those conversions;
D. WHEREAS, LJCI asserts that it was not required to exercise any warrants
in connection with the Disputed Conversions and a dispute has arisen between the
parties concerning all these matters;
E WHEREAS, on or about December 8, 2011, LJCI filed a lawsuit against XCHC,
known as La Jolla Cove Investors, Inc. vs. The X-Change Corporation, Superior
Court Case No. 37-2011-00102204-CU-CO-CTL (the "Lawsuit");
F. WHEREAS, XCHC has filed its Answer and Cross-Complaint against LJCI in
the Lawsuit;
G WHEREAS, LJCI and XCHC now want to resolve the dispute that has arisen
among them, and desire to enter into this Agreement as a means of fully settling
any claims or causes of action each may have against each other relating to the
Lawsuit.
NOW, THEREFORE, the parties hereby agree as follows:
1. Recitals, Definitions and Condition: The Recitals set forth above are an
integral part of this Agreement, and shall be used in any interpretation of this
Agreement. All terms used herein and not otherwise defined herein shall have the
meanings set forth in the Securities Purchase Agreement, the Debenture, the
Second Debenture, the Warrant, the Second Warrant or the Addendum, as the case
may be.
2. Obligation to Sign New Addendum. On or before June 15, 2012, the parties
shall each execute an addendum to their agreements ("New Addendum"), in the form
attached hereto as Exhibit "A" and incorporated herein by this reference.
3. Obligation of LJCI. On or before July 1, 2012, LJCI shall dismiss the
Lawsuit without prejudice. On or before July 1, 2012, XCHC shall dismiss its
Cross-Complaint against LJCI in the Lawsuit without prejudice.
4. General Release. Except for (i) claims arising for breach or
non-performance of the terms and conditions of this Agreement, LJCI and XCHC,
and on behalf of their respective agents, attorneys, heirs, executors,
beneficiaries, administrators, successors and assigns, hereby fully and forever
release, remise, discharge, and acquit the other party (and such party's agents,
attorneys, beneficiaries, administrators, heirs, executors, successors and
assigns) from and against any and all claims and causes of action of every kind
and nature, whether at this time known or unknown, anticipated or unanticipated,
direct or indirect, which may presently exist or may hereafter arise or become
known, and which such party may or might have by reason of or otherwise arising
in connection with his interest in or relating to the Lawsuit.
It is further agreed and understood that all rights under Section 1542 of
the California Civil Code pertaining to unknown claims are hereby expressly
waived with respect to such unknown claims that are related to the Lawsuit.
Section 1542 provides as follows:
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A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
LJCI and XCHC each hereby acknowledge, agree and certify that each has read
Section 1542 set out above, has considered and understands the implications and
risks involved with waiving its application, and, by each party's initials
below, freely and intentionally waive its protection and application.
5. Representations and Warranties. Each of the parties to this agreement
represent and warrant to, and agree with, each other party hereto, as follows:
(a) Each party or responsible officer thereof has read this agreement and
understands the contents thereof.
(b) In entering into this agreement and the settlement provided for herein,
each party assumes the risk of any misrepresentation, concealment, or mistake.
If any party should subsequently discover that any fact relied upon by him in
entering into this agreement was untrue, or that a fact was concealed from him,
or that his understanding of the facts or the law was incorrect, such party
shall not be entitled to any relief in connection therewith, including, but not
limited to, any alleged right or claim to set aside or rescind this agreement.
This agreement is intended to be and is final and binding among the parties
hereto, regardless of any claims of misrepresentation, promise without the
intent to perform, concealment of fact, mistake of fact or law, or any other
circumstance.
(c) Each party has not heretofore assigned, transferred, or granted, or
purported to assign, transfer, or grant, any of the claims, demands, and
cause(s) of action disposed of by this agreement.
(d) Each term of this agreement is contractual and not merely a recital.
(e) Each party is aware that he or she may hereafter discover claims or
facts in addition to or different from those he or she knows or believes to be
true with respect to the matters related herein. Nevertheless, it is the
intention of the parties fully, finally, and forever to settle and release all
such matters and all claims relative hereto, which do now exist, may exist, or
heretofore have existed between them, except as to such rights or claims as may
be created by this agreement. In furtherance of such intention, the releases
given herein shall be and remain in effect as full and complete mutual releases
of all such matters, notwithstanding the discovery or existence of any
additional or different claims or facts relative thereto.
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(f) It is within the contemplation of each party to this agreement, and
understood by each party to this agreement, that this agreement is not an
admission of liability by way of the parties hereto and is a compromise of
disputed claims. Nothing in this agreement shall be construed as an admission of
liability or responsibility on the part of any party hereto. This agreement
affects the settlement of claims which are denied and contested. Each of the
parties hereto denies any liability in connection with any claim. This agreement
and the settlement terms embodied herein are confidential and are intended to
remain confidential following execution.
6. Attorneys' Fees. In the event of any action or proceeding arising out of
or relating to this Agreement, its breach or enforcement, including any action
for declaratory relief or specific performance, the prevailing party in such
action or proceeding shall be entitled to recover all court costs, expenses and
reasonable attorneys' fees to be fixed by the court. Such recovery shall include
court costs, expenses and attorneys' fees on appeal, if any. The court shall
determine the prevailing party, whether or not the dispute or controversy
proceeds to final judgment.
7. Successors and Assigns. All terms of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by the parties hereto and
their respective legal representatives, successors and assigns.
8. Modification. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver, amendment,
discharge or change is or may be sought.
9. California Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California.
10. No Pursuit of Actions. The Parties hereto covenant and agree that they
will not individually or in concert with any other person or entity file,
commence, prosecute, or pursue (or cause to be filed, commenced, prosecuted, or
pursued) against any person or entity released herein any action or other
proceeding based upon any claim, demand, cause of action, obligation, damage, or
liability which is/are the subject of the releases contained herein.
11. No Admission of Liability. The Parties understand and acknowledge that
this Agreement constitutes a compromise and settlement of disputed claims and is
made to buy peace and for no other reason. No action taken by the Parties hereto
either previously or in connection with this Agreement shall be deemed or
construed to be an admission of the truth or falsity of any claims heretofore
made, or an acknowledgement or admission by any Party of any fault or liability
whatsoever to the other Parties or third parties.
12. Authority. The Parties represent and warrant that the undersigned
individuals have the authority to act on behalf of the signing Party and have
the authority to bind that Party, and all that may claim through it, to the
terms and conditions of this Agreement. Each Party warrants and represents that
there are no liens or claims of lien or assignment or equity or otherwise of or
against any of the claims or causes of action released herein.
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13. Representation. The Parties represent and warrant that they each have
had an opportunity to consult with an attorney, and have carefully read and
understand the scope and effect of the provisions of this Agreement. No Party
has relied upon any representations or statements made by any other Party, which
are not specifically set forth in this Agreement. Each of the Parties warrant
and represent that in executing this Agreement, such Party has relied on legal
advice from the attorney of its choice, that the terms of this Agreement and its
consequences have been completely read and explained to such Party by that
attorney, and that such Party fully understands the terms of this Agreement.
14. No Prior Assignment; Indemnity. Each Party represents and warrants that
it is the sole and lawful owner of all right, title and interest in and to every
claim and other matter which it purports to release herein, and that such Party
has not hereto assigned or transferred, or purported to assign or transfer, to
any person or entity any right, title or interest in any claims, future or
current, have been or could have been released in this dispute or other matter
herein released. In the event that any Party shall have assigned and
transferred, or purported to assign or transfer, any claim or other matter
herein released, such Party shall indemnify, defend and hold harmless the other
Parties from and against any loss, cost, or claim or expense (including, but not
limited to, all costs related to defense of any action including reasonable
attorneys' fees) based upon, arising out of or occurring as a result of any such
claim or assignment to transfer. Each Party further warrants and represents that
each and every successor to the respective Parties, and any party that is
granted an assignment of claims by the respective Parties, will be bound by the
terms of this Agreement.
15. Confidentiality. The Parties hereby agree that they and their
affiliates, attorneys and/or other representatives will not, directly or
indirectly, disclose to anyone not a Party hereto the facts, terms and
conditions of this Agreement, except: (i) as necessary to enforce the terms of
this Agreement; (ii) as reasonably necessary in connection with any audits, or
financial or legal due diligence; (iii) insofar as it is necessary to reveal the
terms hereof to their attorneys, accountants, and/or tax preparers; (iv) in
response to a properly issued subpoena; (v) in response to inquiries or
investigations by local, state or federal authorities or agencies; (vi) in
filings with the SEC or (vii) as may be otherwise required by law. In the event
of a subpoena or other compulsory process that would require disclosure to the
non-party, the Party receiving such process shall give to the other Party prompt
notice thereof so as to permit the opportunity for such Party to contest the
disclosure.
16. Severability. In the event that any provision hereof becomes declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said illegal
provision, so long as the general purpose and intent of this Agreement can be
achieved.
17. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Parties, and represents the complete, final and
exclusive embodiment of their agreement concerning the matters set forth in the
Recitals. Further, this Agreement shall supersede and replace any and all prior
and contemporaneous agreements, representations and understandings regarding the
subject of this Agreement. No representation, inducements, or agreement among
the Parties not contained or embodied herein shall be of any force or effect.
Notwithstanding the provisions of California Evidence Code Section 1152, this
Agreement is admissible for purposes of enforcement.
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18. Acknowledgement. Each Party acknowledges that it has read this
Agreement in its entirety, that it understands the terms of this Agreement, that
the Agreement shall be binding upon its legal representatives, successors, and
assigns, and that it sought advice from counsel as it deemed necessary in order
to understand the meaning of this Agreement.
19. Governing Law. This Agreement shall be governed by the laws of the
State of California, including all matters of construction, validity,
performance, and enforcement and without giving effect to the principles of
conflict of laws.
20. Counterparts. This Agreement may be executed in counterparts and each
counterpart shall have the same force and effect as an original and constitute
an effective, binding agreement on the part of each of the undersigned. This
Agreement may be transmitted by facsimile or otherwise.
21. No Construction Against the Drafter. This Agreement shall be deemed
jointly drafted and written by all Parties to it and shall not be construed or
interpreted against any particular Party, regardless of which Party or counsel
originated or drafted any portion of it.
22. Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) on the date of actual receipt, when being sent by U.S. certified mail,
return receipt requested, or (iv) on the date of actual receipt when deposited
with an internationally recognized overnight delivery service, in each case
properly addressed to the Party to receive the same. The address and facsimile
numbers for such communications shall be:
If to XCHC, to:
The X-Change Corporation
12655 North Central Expressway Suite 1000
Dallas, TX 75243
Telephone: (972) 386-7360
With a copy to:
McDowell Odom LLP
Attn: Claudia J. McDowell, Esq.
28494 Westinghouse Place Suite 213
Valencia, CA 91355
Telephone: (661) 449-9630
Facsimile: (818) 475-1819
claudia@mcdowellodom.com
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If to LJCI, to:
La Jolla Cove Investors, Inc.
1150 Silverado Street, Suite 203
La Jolla, California 92037
Telephone: (858) 551-8789
Facsimile: (858) 551-8779
Each Party may change its foregoing address by notice given pursuant to this
Section.
23. Survival of Warranties. The representations and warranties contained in
this Agreement are deemed to and do survive the execution hereof.
24. No Implied Waiver. No action or failure to act shall constitute a
waiver of any right or duty afforded under this Agreement, nor shall any action
or failure to act constitute an approval of, or acquiescence in, any breach,
except as may be specifically agreed in writing. Waiver of any one provision
herein shall not be deemed to be a waiver of any other provision herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
The X-Change Corporation, a Nevada La Jolla Cove Investors, Inc., a
corporation California corporation
By: By:
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Name: Name:
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Title: Title:
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EXHIBIT "A" TO SETTLEMENT AGREEMENT AND RELEASE
ADDENDUM TO SECURITIES PURCHASE AGREEMENT
AND CONVERTIBLE DEBENTURES
This Addendum to Securities Purchase Agreement and Convertible Debentures
("Addendum") is entered into as of the __ day of June, 2012 by and between The
X-Change Corporation, a Nevada corporation ("Company"), and La Jolla Cove
Investors, Inc., a California corporation ("LJCI").
WHEREAS, LJCI and Company are parties to that certain 6 1/4% Convertible
Debenture in the principal amount of $250,000 that was issued on August 29, 2007
by Company to LJCI (the "Debenture") pursuant to that certain Securities
Purchase Agreement dated as of August 29, 2007 between the Company and LJCI (the
"Purchase Agreement"), the 6 1/4 % Convertible Debenture in the principal amount
of $150,000 that was issued on October 9, 2007 by the Company to LJCI (the
"Second Debenture"), a Warrant to Purchase Common Stock (the "Warrant") issued
on August 29, 2007 by XCHC to LJCI and a Warrant to Purchase Common Stock (the
"Second Warrant") issued on October 9, 2007 by XCHC to LJCI;.
WHEREAS, the Parties agree that as of June 1, 2012, the balance of the Debenture
is $140,225, plus $35,215.70 in accrued interest, and the balance of the Second
Debenture is $145,000, plus $34,915.80 in accrued interest.
WHEREAS, the parties now desire to amend the Debenture, Second Debenture, the
Warrant and Second Warrant in certain respects.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, XCHC and LJCI agree as follows:
1. The Recitals set forth above are an integral part of this Agreement,
and shall be used in any interpretation of this Agreement. All
capitalized terms used and not defined herein have the respective
meanings assigned to them in the Debenture.
2. The Maturity Dates of the Debenture and Second Debenture are hereby
extended to December 31, 2013.
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3. The Expiration Dates (as defined in the Warrant and Second Warrant) of
the Warrant and Second Warrant are hereby extended to December 31,
2013.
4. During the term of the Debenture and Second Debenture, the parties
agree that all conversions will be accompanied by a corresponding
warrant exercise pursuant to the terms of the Warrant and/or Second
Warrant,, except as permitted in the Debenture and/or Second
Debenture, as amended.
5. Section 3.1(c) in the Debenture and Second Debenture shall be deleted
in its entirety and replaced with the following:
Section 3.1(c): If the Holder elects to convert a portion of the
Debenture and, on the day that the election is made, the Volume
Weighted Average Price is below $0.30, the Company shall have the
right to prepay that portion of the Debenture that Holder elected to
convert, plus any accrued and unpaid interest, at 120% of such amount.
In the event that the Company elects to prepay that portion of the
Debenture, Holder shall have the right to withdraw its Conversion
Notice. If, at anytime during the month, the Volume Weighted Average
Price is below $0.30, Holder shall not be obligated to convert any
portion of the Debenture during that month. If at any time during the
term of this Debenture (i) the Company has not authorized or reserved
enough shares of its Common Stock to account for the conversion of
this Debenture and the exercise of the Warrant Shares (as defined in
the Warrant) and the issuance of shares of the Common Stock of the
Company to Holder in connection therewith; and/or (ii) the Holder is
prohibited for any reason, including without limitation in connection
with any claim, suit, federal or state law, regulation, order,
interpretation, statute, or similar authority, from otherwise
converting this Debenture and, in connection with such conversion of
the Debenture, exercising such portion of the Warrant as is required
under the terms of the Warrant, then the Holder shall have no
obligation to exercise any portion of the Warrant, and Holder may
elect in Holder's sole and absolute discretion to convert any portion
of the outstanding Principal Amount and accrued and unpaid interest
under this Debenture into such amount of Common Shares of the Company
equal to the dollar amount of the Debenture being converted divided by
the Conversion Price.
6. All terms used herein and not otherwise defined herein shall have the
definitions set forth in the Securities Purchase Agreement or the
Debentures or the Warrants, as the case may be.
7. This Addendum, the Debentures, the Warrants and the Securities
Purchase Agreement between LJCI and Company each constitute a legal,
valid and binding obligation of both parties and any successor or
resulting corporation by way of merger, consolidation, sale or
exchange of all or substantially all of the assets of either party or
otherwise, each enforceable in accordance with its respective terms.
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8. Except as specifically amended herein, all other terms and conditions
of the above-referenced documents shall remain in full force and
effect.
IN WITNESS WHEREOF, Company and LJCI have caused this Addendum to be signed by
its duly authorized officers on the date first set forth above.
The X-Change Corporation La Jolla Cove Investors, Inc.
By: By:
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Name: Name:
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Title: Title:
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