SETTLEMENT
      AGREEMENT AND


RELEASE
      OF CLAIMS





This
      Settlement Agreement and Release of Claims (this “Agreement”) is made and
      entered into this 24th day of January, 2007, by and between SEI LLC, assignee
      of
      SEI Information Technology, Inc. (.“SEI”),and XFormity, Inc., a Texas
      Corporation (“XFormity”). SEI and XFormity are sometimes collectively referred
      to in this Agreement as “the Parties.”





RECITALS





|A. | The
              Parties executed and delivered that certain Master Services Agreement
              dated as of December 12, 2003, and various Task Specifications pursuant
              thereto (hereafter collectively, the “Master Services
              Agreement”).
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|B. | The
              Parties desire to terminate the Master Services Agreement and release
              each
              other from any potential claims arising thereunder, except as expressly
              set forth in this Agreement.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




NOW,
      THEREFORE, in consideration of the promises and covenants made herein, and
      for
      other good and valuable consideration, the Parties hereby agree as
      follows:





|1. | CONSIDERATION.
|-- | --------------




XFormity
      agrees to pay to SEI the aggregate sum of $20,000 (the “Consideration”). The
      Consideration shall be paid in five (5) equal monthly installments of $4,000
      each, with the first payment due on or before January 31, 2007, and each
      subsequent installment due on or before the last day of each succeeding month,
      with the final installment due on or before May 31, 2007. In the event of a
      default by XFormity in the payment of any monthly installment, which default
      is
      not cured within five (5) business days after written notice from SEI, the
      entire unpaid balance of the Consideration shall immediately become due and
      payable in full.





|2. | MUTUAL
              RELEASES OF ALL CLAIMS OF ANY PARTY.
|-- | ---------------------------------------------------------




A.  In
      exchange for the other Parties’ promises and covenants herein, including the
      Consideration provided for in Paragraph 1 above, the
      sufficiency of which is hereby acknowledged, SEI, for itself, and all of its
      present and former officers, directors, employees, agents, insurers, attorneys,
      parents, affiliates subsidiaries and successors and assigns, hereby releases,
      acquits and forever discharges Xformity and its parent corporation, XFormity
      Technologies, Inc., a Colorado corporation, and all of their present and former
      officers, directors, employees, agents, insurers, benefit plans (and related
      persons/entities), attorneys, parents, affiliates, subsidiaries, and successors
      and assigns, (collectively referred to as the “XFormity Released Parties”), from
      any and all charges, complaints, grievances, actions, suits, liabilities,
      obligations, promises, agreements, demands, controversies, rights, claims and
      causes of action of whatever kind or nature, whether known or unknown, including
      claims brought under any federal, state or local statute, ordinance or under
      common law, and
      all
      manner of claims, demands, causes of action, judgments, actions, suits, levies,
      executions, and liabilities of whatever nature, known or unknown, fixed or
      contingent, liquidated or unliquidated, indirect or direct, foreseen or
      unforeseen, which SEI may have had, may have, or may come to have against the
      XFormity Released Parties, at any time by reason of, in any way connected with,
      arising out of, bearing upon, or in any way relating to any matter, act, fact,
      transaction or occurrence or thing occurring prior to the date of execution
      of
      this Agreement, including without limitation, all claims pertaining to, arising
      out of, or bearing upon the Master Services Agreement; provided, however, that
      nothing stated in this paragraph shall constitute a release of any of Xformity’s
      obligations under this Agreement, any legal or contractual obligations of Paul
      Dwyer to SEI, or any of Xformity’s obligations under the surviving provisions of
      the Master Services Agreement identified in Paragraph 3 of this Agreement
      (collectively, the “XFormity Surviving Obligations”).





B.  In
      exchange for the other Parties’ promises and covenants herein, including the
      consideration provided for in Paragraph 2A above, the
      receipt and sufficiency of which are hereby acknowledged, the XFormity Released
      Parties, for themselves, and all of their present and former officers,
      directors, employees, agents, insurers, attorneys, parents, affiliates
      subsidiaries and successors and assigns, hereby irrevocably and unconditionally
      release, acquit and forever discharge SEI, and all of its present and former
      officers, directors, employees, agents, insurers, benefit plans (and related
      persons/entities), attorneys, parents, affiliates, subsidiaries, and successors
      and assigns, (collectively referred to as the “SEI Released Parties”), from any
      and all charges, complaints, grievances, actions, suits, liabilities,
      obligations, promises, agreements, demands, controversies, rights, claims and
      causes of action of whatever kind or nature, whether known or unknown, including
      claims brought under any federal, state or local statute, ordinance or under
      common law, and
      all
      manner of claims, demands, causes of action, judgments, actions, suits, levies,
      executions, and liabilities of whatever nature, known or unknown, fixed or
      contingent, liquidated or unliquidated, indirect or direct, foreseen or
      unforeseen, which the XFormity Released Parties may have had, may have, or
      may
      come to have against the SEI Released Parties, at any time by reason of, in
      any
      way connected with, arising out of, bearing upon, or in any way relating to
      any
      matter, act, fact, transaction or occurrence or thing occurring prior to the
      date of execution of this Agreement, including without limitation, all claims
      pertaining to, arising out of, or bearing upon the Master Services Agreement;
      provided, however, that nothing stated in this paragraph shall constitute a
      release of any of SEI’s obligations under this Agreement or any of SEI’s
      obligations under the surviving provisions of the Master Services Agreement
      identified in Paragraph 3 of this Agreement (collectively, the “SEI
      Surviving Obligations”).




C.  Other
      than the XFormity Surviving Obligations and the SEI Surviving Obligations,
      the
      parties understand and expressly agree that the General Mutual Release contained
      in Paragraphs 2A and 2B above extends to all claims of every nature and
      kind, known or unknown, suspected or unsuspected, presently existing or which
      may arise in the future, caused by or resulting from or attributable to any
      act
      or omission of each party and each person released under this Agreement which
      occurred or failed to occur prior to the execution of this Agreement. The
      parties acknowledge that except for matters expressly represented herein, the
      facts with respect to which this Agreement was entered into may turn out to
      be
      other than or different from the facts now known to each party or believed
      by
      each party to be true, and the parties hereto expressly assume the risks of
      the
      facts turning out to be different and agree that this Agreement shall be in
      all
      respects effective and binding despite any such difference. The parties agree
      that the general mutual releases contained in Paragraphs 2A and 2B above do
      not apply to any claims or causes of action that arise after the date of
      execution of this Agreement nor to claims or causes of action that arise from
      the Xformity Surviving Obligations or the SEI Surviving Obligations.


D.  Each
      party does hereby represent and warrant to the other party that no portion
      of
      any claim, demand, cause of action or other matter released herein, nor any
      portion of any recovery or settlement to which such party might be entitled
      from
      the other party, has been assigned or transferred to any other person, firm,
      entity or corporation, either directly or by way of subrogation or operation
      of
      law, and (ii) covenants (a) to indemnify, defend and hold harmless the other
      party from all loss, costs, claim or expense (including, but not limited to,
      all
      expenses of investigation and defense of any such claim or action, including
      reasonable attorney's fees and accountants' fees, costs and expenses) arising
      out of any claim made or action instituted against the other party by any person
      or entity who claims to be the beneficiary of any such assignment or transfer,
      and to pay and satisfy any judgment resulting from any settlement of any such
      claim or action and (b) not to sue the other party for any claim or claims
      or
      arising under any local, state or federal statutory, regulatory or common law
      right, claim or cause of action whatsoever which may have existed prior to,
      or
      may exist at the time of, the execution of this Agreement.


E.  The
      parties to this Agreement warrant and represent that no promise or inducement
      has been offered except as expressly set forth herein and that this Agreement
      is
      executed without reliance upon any statement or representation by the persons
      or
      parties involved or their representatives concerning the nature or extent of
      any
      damages or any legal liability of the other party therefor.





F.  The
      parties recognize and agree that by entering into this Agreement no party
      admits, and each of them does specifically deny, any violation of any local,
      state or federal law, common or statutory or any liability to the other. The
      parties further recognize that no delivery of any document or instrument made
      in
      connection with this Agreement is to be construed as an admission of liability
      by such party and that this instrument has been entered into in order to
      consummate a compromise and final settlement of any and all claims of the
      parties which might arise from any fact, transaction or occurrence prior to
      the
      date hereof.





3.  TERMINATION
      OF MASTER SERVICES AGREEMENT





In
      consideration of the mutual covenants and agreements herein contained, the
      parties covenant and agree that the Master Services Agreement shall be deemed
      terminated effective January 1, 2007 (the “Termination Date”), excluding the
      surviving provisions specified in this paragraph which shall remain in full
      force and effect. From and after the Termination Date, each party shall be
      shall
      continue to be bound by and subject to Sections 5, 6, 9.2, and 18 of the Master
      Services Agreement, which Sections the Parties expressly acknowledge and agree
      shall survive termination of the Master Services Agreement and are expressly
      excluded from the general mutual releases set forth above. Notwithstanding
      anything to the contrary stated herein, SEI expressly consents, covenants and
      agrees, as a limited exception and without waiver of any of SEI’s other rights
      under Section 5 of the Master Services Agreement or otherwise, that
      Xformity may, without violating the Master Services Agreement or this Agreement,
      extend an offer of employment and/or employ the services of Josh
      Asher.





4.  TELEPHONE
      NUMBERS





The
      parties acknowledge that during the course of SEI’s performance under the Master
      Services Agreement, SEI obtained two (2) telephone numbers: (a) 1-866-GET.QSRX
      and (b) 1-866-WE.POLL.U (the “Telephone Numbers”). Concurrently with the
      execution of this Agreement, SEI consents to the transfer and assignment to
      XFormity of all right, title and interest in and to the Telephone Numbers and,
      at XFormity’s expense, SEI agrees to take all reasonable action to assign to
      XFormity all ownership in and to the Telephone Numbers. Further, as of the
      date
      of this Agreement, SEI shall discontinue all use of the Telephone
      Numbers.





5.  NO
      FEES OR COSTS TO EITHER PARTY .





The
      Parties agree that they will each be responsible for their own attorneys’ fees,
      costs and disbursements incurred in connection with the negotiation and
      preparation of this Agreement. In the event of any dispute or controversy
      concerning this Agreement, the prevailing party shall be entitled to recover
      its
      costs, expenses, and reasonable attorneys’ fees.





6.  RECITALS .





The
      recitals and facts set forth above are incorporated into this Agreement as
      part
      of the terms hereof.





7. CONSTRUCTION
      OF AGREEMENT .





A.  The
      Parties hereto acknowledge and agree that they each have been represented by
      competent legal counsel of their own choosing in connection with all
      negotiations, drafting and execution of this Agreement. Accordingly, the
      language used in this Agreement will be deemed language chosen by all Parties
      hereto to express their mutual assent, and no rule of strict construction
      against any party will apply to any term or condition of this
      Agreement.





B.  Each
      party further expressly warrants, declares and represents that before executing
      this instrument, such party has fully informed himself/itself of its terms,
      contents, conditions and effects; that such party understands that it may
      consult an attorney of its choice concerning this instrument and their decision
      to enter into this Agreement. Each party represents and acknowledges that it
      has
      read the foregoing instrument carefully and fully and that it understands its
      terms, and each is executing such agreements voluntarily and without any
      coercion, undue influence, threat or intimidation of any kind or type
      whatsoever.





C.  In
      the
      event of any conflict or inconsistency between the provisions of this Agreement
      and the provisions of the Master Services Agreement, the provisions of this
      Agreement shall control.





8.  COUNTERPARTS .





The
      Parties agree that this Agreement may be signed in counterparts by the Parties
      with the same force and effect as if the Parties had all signed the same
      original Agreement. This Agreement may further be delivered and executed via
      facsimile transmission, and receipt of a signed counterpart by facsimile shall
      be considered the same as an original.





9. GOVERNING
      LAW





This
      Agreement shall be governed by the laws of the State of Illinois, excluding
      conflicts of law principles.





10.  BINDING
      EFFECT .





The
      Parties agree that this Agreement is binding upon their respective parents,
      subsidiaries, affiliates, shareholders, officers, directors, employees,
      successors, predecessors-in-interest and assigns.




11. CONFIDENTIALITY
      AND NON-DISCLOSURE AGREEMENT .





Neither
      party shall make disparaging remarks about the other. The Parties agree that
      this Agreement and its terms shall remain confidential and shall not be
      disclosed to any third party, except under the following
      circumstances:





Terms
      of
      this Settlement Agreement can be disclosed by either party if, in the opinion
      of
      legal counsel for either party, such disclosure is required to be included
      in
      either party’s reports and other filings with the Securities and Exchange
      Commission under Section 13(a) of the Securities Exchange Act of 1934, as
      amended or in a registration statement under the Securities Act of 1933, as
      amended. The Parties agree that pertinent details of the settlement agreement
      can be disclosed as necessary to applicable government agencies (including,
      but
      not limited to, the Internal Revenue Service, the Securities and Exchange
      Commission, and other state and federal agencies).





In
      addition, either party may disclose the terms of this Settlement Agreement
      (1)
      to enable either party to obtain advice from its accountants or lawyers, and
      in
      that event such disclosure may only be made to that party’s accountant or
      lawyer; and (2) to comply with lawfully issued process from a court of competent
      jurisdiction. In all other cases, the Parties may only disclose to third parties
      the fact that the dispute has been settled by confidential agreement of the
      Parties.





12.
      ENTIRE AGREEMENT.





This
      Agreement constitutes the entire agreement of the Parties with respect to the
      subject matter hereof, and supersedes all previous negotiations, understandings,
      commitments and undertakings.





DATED:  January
      26, 2007  SEI
      LLC








BY:
      /s/
      William J. Fitton






TITLE:
      V.P. of Finance











DATED:
      January 24, 2007  XFORMITY, INC.





BY:
      /s/Chris Ball









TITLE:
      CEO