SETTLEMENT AGREEMENT
EXHIBIT
99.1
CONFIDENTIAL
THIS
SETTLEMENT AGREEMENT (the "Agreement")
is made
and
entered into as of this 16th
day of
February, 2007 by and among CLEAR CHOICE FINANCIAL, INC., a Nevada corporation
(the "Company"),
and
CCF
RESTRUCTURING, LLC,
an
Arizona limited liability company (“CCF”),
XXXXX
XXXXXXX,
XXXX XXXXXX, XXXX XXXXX, XX XXXXXXX, XXXXX XXXXXXXX
and
XXX
XXXXXXX
(collectively CCF, Mullins, Mooney, Russo, Kendler, Xxxxxxxx and Xxxxxxx are
referred to herein as the “CCF
Parties”),
and
XXXXXXX
AND KATSURA LUKE,
husband
and wife and each a resident of the state of Arizona (referred to individually
herein as “X.
Xxxx”
and “
X.
Xxxx”
and
collectively as the “Lukes”).
RECITALS:
A. SGL
Family
Partners Ltd., an entity controlled by X. Xxxx, was the owner of 5,952,245
shares of common stock of the Company (the “Shares”).
B. The
Company
entered into a Stock Purchase Agreement dated August 14, 2006 (the "Purchase
Agreement")
pursuant to which it agreed to purchase the Shares from X. Xxxx. The Purchase
Agreement's sole security was a pledge of the Shares pursuant to a Stock Pledge
Agreement dated August 14, 2006 (the "Pledge
Agreement").
C. The
Company made the initial payment of $500,000 (the "Initial
Payment")
due
under the Purchase Agreement but has defaulted on subsequent payments due under
the Purchase Agreement. The parties now wish to cancel and rescind the Purchase
Agreement and the Pledge Agreement.
D. The
Lukes
agree, subject to the terms and conditions of this Agreement, to repay the
Initial Payment and make the representations, warranties and covenants contained
herein in exchange for the Company returning the Shares to X. Xxxx and making
the covenants contained herein.
E. The
parties hereto desire to document the terms of this transaction and have agreed
to enter into this Agreement for such purpose.
AGREEMENT:
ARTICLE
I
FINANCIAL
TERMS; CLOSING
1.1 Repayment
to the Company.
The
Lukes shall pay to the Company at the Closing by certified or cashier's check
the sum of $500,000. This payment shall constitute full repayment of the Initial
Payment.
1.2 Return
of Shares.
It
shall be a condition precedent to the closing that X. Xxxx shall have executed
the Stock Purchase Agreement with CCF dated February 16, 2007 (the “CCF
Purchase
Agreement”)
to
purchase all but 400,000 of the Shares at the closing. Certificate No. 5341-5
representing the Shares shall be cancelled by the Company and at the Closing
the
Company shall deliver a new certificate for 400,000 shares registered in the
name of SGL Family Partners Ltd. to X. Xxxx and a new certificate for 5,552,245
shares registered in the name of CCF Restructuring, LLC to CCF. Pending Closing,
these two new certificates will be held by the Company’s legal
counsel.
1.3
Cancellation
and Rescission of Purchase and Pledge Agreements.
The
parties agree that upon closing the Purchase and Pledge Agreements shall
automatically be cancelled, rescinded and of no further effect.
1.4
Closing.
The
closing of the transaction described in this Article I contemplated herein
shall
occur at Bade and Xxxxxx, PLC, 00 Xxxx Xxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx 00000 at the earliest practicable date but in no event later than
February 28, 2007.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
The
Lukes
hereby represent and warrant to the Company as of the date of this Agreement
and
as of the Closing that:
2.1.
Agreement
Binding. Neither
the execution, delivery, nor performance of this Agreement by the Lukes will,
with or without the giving of notice or the passage of time, or both, conflict
with or result in a default, right to accelerate or loss of rights under, or
result in the creation of, any lien, charge or encumbrance or any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law, rule
or
regulation, or any order, judgment or decree to which the Lukes are a party
or
by which the Lukes may be bound or affected.
2.2.
Full
Settlement. The
Lukes
agrees that upon Closing no further compensation or other payment is due or
owing to the Lukes from the Company whether in the form of cash or non-cash
compensation with respect to any relationship between the Company and the
Lukes.
ARTICLE
III
COVENANTS
3.1.
Lukes
Release. The
Lukes
and their heirs, executors, affiliated companies, successors, predecessors,
assigns, present and former partners, principals, employees, agents, attorneys,
and all other persons acting on behalf of the aforementioned parties (the
"Luke
Parties")
hereby
release and forever discharge the Company, its successors, assigns, affiliates,
subsidiaries, divisions, present and former officers, directors, employees,
shareholders, agents, attorneys, and all other persons acting on behalf of
the
aforementioned parties (the "Company
Parties”)
and
the CCF Parties from any and all claims, debts, demands, suits, actions and
causes of action of whatsoever kind and nature, whether in law or in equity,
known or unknown that the Lukes or the Luke Parties may now have, at any time
prior hereto ever had, or hereafter may have or could assert against the
Company, the Company Parties or the CCF Parties for, upon or by reason
of
any matter, cause or thing whatsoever arising out of, set forth in, or connected
with this transaction, the CCF Purchase Agreement, the Purchase Agreement or
the
Pledge Agreement.
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3.2.
Company
Release. The
Company, the Company Parties and the CCF Parties hereby release and forever
discharge the Lukes and the Luke Parties from any and all claims, debts,
demands, suits, actions and causes of action of whatsoever kind and nature,
whether in law or in equity, known or unknown that the Company, the Company
Parties or the CCF Parties may now have, at any time prior hereto ever had,
or
hereafter may have or could assert against the Lukes or the Luke Parties for,
upon or by reason of any matter, cause or thing whatsoever arising out of,
set
forth in, or connected with this transaction, the CCF Purchase Agreement, the
Purchase Agreement or the Pledge Agreement.
3.3.
Scope
of Release; Indemnification by the Lukes. The
Lukes
hereby acknowledge and agree that nothing contained in this Agreement shall
release or discharge them from any and all claims, debts, demands, suits,
actions and causes of action of whatsoever kind and nature, whether in law
or in
equity, known or unknown, for, upon or by reason of any matter, cause or thing
whatsoever arising out of, set forth in, or connected with any act or omission
to act by X. Xxxx while a shareholder of the Company, and that the Lukes hereby
agree to indemnify and hold harmless the Company, the Company Parties and the
CCF Parties (the “Indemnified
Parties”)
for,
from and against damages, claims, causes of action, debts, expenses and any
award, liability or judgment (including costs and reasonable attorney’s fees)
assessed against any of the Indemnified Parties for any party other than any
of
the parties to this Agreement by any court of competent jurisdiction as a result
of (i) any act or omission to act by X. Xxxx while a shareholder of the Company,
(ii) any breach by the Lukes of any of their obligations hereunder, and (iii)
the inaccuracy of any of the Lukes’ representations or warranties herein.
3.4.
Indemnification
by the Company and CCF.
The
Company, the Company Parties and the CCF Parties hereby agree to indemnify
and
hold harmless the Lukes and the Luke Parties (the "Luke
Indemnified Parties")
for,
from and against damages, claims, causes of action, debts, expenses and any
award, liability or judgment (including costs and reasonable attorney's fees)
assessed against any of the Luke Indemnified Parties for any party other than
any of the parties to this Agreement by any court of competent jurisdiction
as a
result of (i) any breach by the Company, the Company Parties or the CCF Parties
of any of their obligations hereunder and (ii) the inaccuracy of any of the
Company, Company Parties or CCF Parties' representations or warranties
herein.
3.5.
D
& O Indemnification.
The
Company agrees that the Articles of Incorporation and By-laws of the Company
shall not be amended, repealed or otherwise modified for a period from the
date
hereof until six years after the Closing in any manner that would adversely
affect the rights thereunder of X. Xxxx to indemnification, advancement of
expenses or exculpation from liability. It is understood and agreed that the
Company shall, to the fullest extent permitted under Nevada law, indemnify,
defend and hold harmless X. Xxxx against any losses in connection with any
threatened, pending or completed claim, action, suit, proceeding or
investigation to the extent that it was based on the fact that X. Xxxx is or
was
a director, officer, employee, fiduciary or agent of the Company or its
subsidiaries and arising out of actions or omissions or alleged actions or
omissions occurring on or prior to the date of this Agreement. Any determination
required to be made with respect to whether X. Xxxx'x conduct complies with
the
standards set forth
under Nevada law, the Articles of Incorporation or By-laws, as the case may
be,
shall be made by independent counsel mutually acceptable to the Company and
X.
Xxxx.
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3.6.
Luke
Covenant Not to Xxx. The
Xxxxx
and the Luke Parties hereby agree and covenant not to xxx the Company or the
Company Parties for any and all claims, counterclaims, crossclaims, set-offs,
debts, actions for contribution or indemnity, demands or any action whatsoever,
in law or in equity, which the Lukes or the Luke Parties may now have, at any
time prior hereto ever had or hereafter may have or could assert against the
Company or the Company Parties for, upon or by reason of any matter, cause
or
thing whatsoever arising out of, set forth in or connected with the Purchase
Agreement or Pledge Agreement.
3.7.
Company
Covenant Not to Xxx.
The
Company and the Company Parties hereby agree and covenant not to xxx the Lukes
or the Luke Parties for any and all claims, counterclaims, crossclaims,
set-offs, debts, actions for contribution or indemnity, demands or any action
whatsoever, in law or in equity, which the Company or the Company Parties may
now have, at any time prior hereto ever had or hereafter may have or could
assert against the Lukes or the Luke Parties for, upon or by reason of any
matter, cause or thing whatsoever arising out of, set forth in or connected
with
the Purchase Agreement or Pledge Agreement.
3.8.
Release
Not Applicable to Future Services. Notwithstanding
any language to the contrary contained herein, any and all claims, debts,
demands, suits, actions and courses of action arising from services rendered
by
the Lukes to the Company on or after the Closing shall not be released and
discharged by Sections 3.1 and 3.2 of this Agreement.
ARTICLE
IV
MISCELLANEOUS
4.1.
Confidentiality.
The
Lukes
and the CCF Parties will not discuss or disclose this Agreement or any of its
terms with or to any unaffiliated person or entity not signing this Agreement,
except as required by law, the Lukes will not voluntarily cooperate or aid
any
claimant adverse to the Company or the CCF Parties, and the Company and the
CCF
Parties will not voluntarily cooperate or aid any claimant adverse to the
Lukes.
4.2.
Separate
Counsel. Each
of
the parties warrant and confirm that Xxxxxx Xxxxxxxx, PLC has only represented
the Company in connection with this Agreement and the transactions referenced
herein or contemplated hereby. Xxxxxx Xxxxxxxx has not represented the CCF
Parties or the Lukes and the Lukes were represented by Schian Walker PLC and
Bade and Xxxxxx PLC. The parties stipulate and agree that, in entering into
this
Agreement, they have relied upon the advice and representation of counsel and
other advisors selected by them or have waived the right to do so. The Lukes
and
the CCF Parties particularly stipulate and agree that they and their counsel
and
advisors have not received and are not relying on any representations or
warranty from any person or entity retained or employed by the Company in
connection with their entry into this Agreement.
4.3.
Waiver
of Breach or Default. No
waiver
of any breach or default hereunder shall be considered valid unless in writing
and signed by the party giving such waiver, and no such waiver
shall be deemed a waiver of any subsequent breach or default of the same or
similar nature.
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4.4.
Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
4.5.
Paragraph
Headings. The
paragraph headings contained herein are for the purposes of convenience only
and
are not intended to define or limit the contents of said
paragraphs.
4.6. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which taken
together shall be deemed one original.
4.7. Applicable
Law. This
Agreement and all amendments thereof shall be governed by and construed in
accordance with the laws of the State of Arizona applicable to contracts made
and to be performed therein and the parties herein are subject to the personal
jurisdiction of the courts in and for the State of Arizona, with venue to lie
in
Maricopa County.
4.8. Severability.
Wherever
there is any conflict between any provisions of this Agreement and any statute,
law, regulation or judicial precedent, the latter shall prevail, but in such
event the provisions of this Agreement thus affected shall be curtailed and
limited only to the extent necessary to bring it within the requirement of
the
law. In the event that any part, section, paragraph or clause of this Agreement
shall be held by a court of proper jurisdiction to be invalid or unenforceable,
the entire Agreement shall not fail on account thereof, but the balance of
the
Agreement shall continue in full force and effect unless such construction
would
clearly be contrary to the intention of the parties or would result in
unconscionable injustice.
4.9. Litigation.
In
the
event of any litigation between the parties arising out of this Agreement,
the
prevailing party shall be entitled to recover its court costs and reasonable
attorneys' fees.
4.10.
Entire
Agreement and Modification. This
Agreement represents the entire agreement by, between and among any of the
parties and may be modified only by a duly authorized writing, executed by
the
Company, the CCF Parties and the Lukes or their respective heirs, successors
or
assigns.
4.11.
Additional
Acts and Documents.
Each
party hereto agrees to do all such things and take all such actions, and to
make, execute and deliver such other documents and instruments, as shall be
reasonably requested to carry out the provisions, intent and purpose of this
Agreement.
[Signature
Page Follows]
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| CLEAR CHOICE FINANCIAL, INC., a Nevada corporation | ||
| |
|
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| By: | /s/ Xxxx Xxxxxx | |
|
Xxxx Xxxxxx, CEO |
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| /s/ Xxxxxxx Xxxx | ||
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Xxxxxxx Xxxx |
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| /s/ Katsura Xxxx | ||
|
Xxxxxxx Luke |
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|
CCF
Restructuring, LLC
|
||
| |
|
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| By: | /s/ Xxxxx Xxxxxxx | |
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Its:
|
Manager |
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| /s/ Xxxxx Xxxxxxx | ||
|
Xxxxx Xxxxxxx |
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| /s/ Xxxx Xxxxxx | ||
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Xxxx Xxxxxx |
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| /s/ Xxxx Xxxxx | ||
|
Xxxx Xxxxx |
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| /s/ Xx Xxxxxxx | ||
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Xx Xxxxxxx |
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| /s/ Xxxxx Xxxxxxxx | ||
|
Xxxxx Xxxxxxxx |
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| /s/ Xxx Xxxxxxx | ||
|
Xxx Xxxxxxx |
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