FULL AND FINAL RELEASE AND SETTLEMENT AGREEMENT

This Full and Final Release and Settlement Agreement (“ Settlement Agreement ”) is made and entered into by and between Andrews Kurth LLP (“ AK ”), XFormity, Inc. and XFormity Technologies, Inc. (collectively hereinafter “ the Parties ”).

WHEREAS, AK and XFormity, Inc. previously entered into an attorney-client relationship pursuant to which AK provided legal services to XFormity, Inc.;

WHEREAS, XFormity, Inc., is a wholly owned subsidiary of XFormity Technologies, Inc.;

WHEREAS, a dispute has arisen regarding the payment of certain of AK’s invoices for legal services rendered by AK in connection with the B-50 patent litigation;

WHEREAS, the Parties now desire by this Settlement Agreement to settle the above claims, including, but not limited to, any and all claims that have been raised or could have been raised by the Parties relating to the above-referenced dispute, the legal services performed by AK, or any other matter, with no party admitting any liability to the other, but agreeing to settle solely as a means of compromise to avoid proceeding further with this dispute;

Now, therefore, in consideration of the mutual obligations set forth herein, and intending to be legally bound, the Parties agree as follows:

1.           Subject to the terms and conditions set forth herein, XFormity, Inc. shall pay the following amounts and such other consideration provided hereunder to AK.

(a).           Forty-eight (48) monthly payments of $10,000.00 for a total of $480,000.00.  The first two (2) of these payments ($20,000.00) are to be paid upon execution of this Settlement Agreement.  The third payment ($10,000.00) is to be paid on the 10th day of December 2008.  Thereafter, each payment shall be due on the 10th of the month.

(b).           At such time as the Company obtains funding of at least $300,000 in net proceeds (the “Financing”), an amount equal to the lesser of $300,000 or the amount necessary to complete the payment in full of the $480,000, provided for in paragraph 1(a) above, will be paid in a lump sum.  The remainder, if any, of the $480,000.00 will continue to be paid on the 15th day of the month until paid.

(c).           Upon execution of this Settlement Agreement, XFormity, Inc. shall issue 1,000,000 of its shares of common stock to AK, shall provide AK with stock certificates evidencing the 1,000,000 shares, and shall make all appropriate entries on its books and records and file all appropriate papers before all federal and state agencies to evidence the transfer of the shares of stock certificates.  Such shares shall be “restricted securities” under the Securities Act of 1933.   XFormity, Inc. shall not do anything or take any action to significantly dilute the value of these 1,000,000 shares except for any dilution resulting from lender or investor funding as referred to in paragraph 1(b).  XFormity, Inc. understands that it is the intent of AK to sell the 1,000,000 shares at a time and for a price to be determined by AK and as permitted under federal law.  AK agrees that sales of the shares will not exceed the volume limitation of Rule 144(e) under the Securities Act.  AK shall report to XFormity Inc. all sales of the shares and the price per share so as to permit the calculation required by paragraph 1(e).

(d).           In addition to the payments and stock referred to in paragraphs 1(a)-(c) there shall be up to four additional bonus payments of $65,000.00, when XFormity, Inc.’s gross annual revenue reaches the following levels: $2,000,000.00, $3,000,000.00, $4,000,000.00 and $5,000,000.00 up to fiscal year end June 30, 2011.  If these revenue amounts are reached, each bonus payment will be paid on or before 45 days after the company’s fiscal years ending June 30, 2009, 2010 and 2011.  The amount will be subject to verification upon audit by the company’s independent accounting firm.

(e)           The cap on the aggregate of all payments referred to in paragraphs 1(a), 1(b), 1(d)  and the value of the stock referred to in paragraph 1(c) (when it is sold) shall be $1,575,000.0