SETTLEMENT AGREEMENT AND RELEASE
SETTLEMENT
AGREEMENT AND RELEASE
This
SETTLEMENT AGREEMENT AND RELEASE (this “Agreement”) is entered into as of the
8th
day of
November 2007, by and among CLEAR SKIES GROUP, INC., a New York corporation
(the
"Company") SUSTAINABLE PROFITABILITY GROUP, INC a New York corporation (“SPG”)
and XXXXX X. XXXXXXXX, an individual (“Xxxxxxxx”).
WHEREAS,
SPG and the Company entered into a consulting agreement, dated as of June 17,
2005 (the “Consulting Agreement”), for certain services to be performed by SPG
for certain compensation; and
WHEREAS,
pursuant to the Consulting Agreement, SPG is entitled to designate one member
of
the Board of Directors of the Company, and has designated Xxxxxxxx who was
then
elected to the Board of Directors and currently serves as a director of the
Company; and
WHEREAS,
SPG provided notice of termination of the Consulting Agreement on or around
February 16, 2007 and a disagreement exists regarding compensation which may
be
due SPG under the Consulting Agreement; and
WHEREAS,
SPG and the Company have made certain claims against each other concerning
the
responsibilities, performance and compensation under the Consulting Agreement,
and Xxxxxxxx wishes to resign his board position; and
WHEREAS,
the parties hereto desire to settle, compromise and terminate forever all
disputes among and between them, and to resolve any and all claims, causes
of
action, disputes and disagreements they may have against each other and to
provide for the return of all Company property, including without limitation,
documents, confidential information and trade secrets in possession of SPG
and
Xxxxxxxx.
NOW
THEREFORE, in consideration of the premises and the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending
to be
legally bound do hereby agree as follows:
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Immediate
Payment.
Simultaneously with SPG’s execution and delivery of this Agreement and the
documents contemplated herein, the Company shall pay to SPG $250,000
in
immediately available funds, by check or wire transfer in full settlement
of any and all claims under the Consulting Agreement against the
Company.
Payment by wire transfer shall be made to Frydman LLC’s trust account with
the following wire instructions: Bank Name: ABA #: ; Acct Name: Acct.
#: .
The parties acknowledge that $85,000 of the payments are in satisfaction
of cash fees claimed by SPG to be due to SPG under the Consulting
Agreement.
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Secured
Promissory Note.
Upon execution and delivery of this Agreement, Xxxx Xxxxx (“Green”) shall
deliver to SPG a promissory note in the form attached hereto as
Exhibit
A
(the “Green Note”) and the share pledge and escrow agreement in the form
attached hereto as Exhibit
B
(the “Pledge Agreement”) as payment in consideration of the purchase by
Green of the Subject Shares (as hereinafter defined). Contemporaneously
with the delivery of the Green Note, SPG and Xxxxxxxx shall be deemed
to
have transferred, conveyed and assigned their entire right, title
and
interest in and to all of the shares of common stock, preferred stock
or
other securities, including any and all rights to receive any securities
through the exercise of any warrant, option or other right, of which
SPG
and Xxxxxxxx own or are entitled to, without any further action or
agreement. SPG and Xxxxxxxx represent and warrant that 140,000 shares
of
common stock of the Company represent all of the shares of common
stock of
the Company owned or controlled, directly or indirectly, by SPG and/or
Xxxxxxxx, or to which either of SPG and/or Xxxxxxxx claim any right
or
interest in (collectively, the “Subject Shares”). Transfer of ownership of
the Subject Shares shall be recorded on the stock transfer records
of the
Company to Green or his designee as of the date of this Agreement
and the
secretary of the Company is authorized to record such transfer in
the
transfer records of the Company. The Subject Shares shall be delivered
to
the “Agent” pursuant to the terms of the Pledge Agreement and disposed of
in accordance with the terms thereof for the benefit of pledgee,
provided,
however, that neither SPG nor Xxxxxxxx shall have any further claim
or
right, title or interest in or to the Subject Shares or any other
shares
or interests in or to any other securities of the
Company.
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The
Green
Note shall be payable to SPG in the original principal amount of $150,000 and
shall accrue interest at the fixed rate of eight (8%) percent per annum, simple
interest. All unpaid principal and any accrued interest on the Green Note shall
be due and payable on the date or dates set forth in the Green Note (the
“Maturity Date”); provided,
however, that
$50,000 of the original principal amount and accrued interest thereon (the
“First Payment Amount”) shall be due and payable on January 2, 2008 (the “First
Payment Date”). In the event that the First Payment Amount is not paid on or
before the First Payment Date, then the full amount of unpaid principal and
accrued interest outstanding under the Green Note shall become immediately
due
and payable five (5) days following written notice received by Green of
non-payment of the First Payment Amount. Green may elect, in his sole
discretion, to prepay all or any portion of the outstanding principal and/or
interest on the Green Note at any time without premium or penalty. Upon payment
in full of the Green Note the Pledge Agreement shall terminate and the Subject
Shares remaining subject to the pledge, if any, shall be irrevocably delivered
to Green and neither Green nor Company shall have any further obligation to
SPG
or Xxxxxxxx.
The
Pledge Agreement shall include terms providing for the possible sale, from
time
to time, by an independent agent named therein (who shall be selected by Green
but shall be reasonably acceptable to SPG, provided that Xxxxxxx Management
Company or Delaware Trust Company or its or their affiliates shall be deemed
acceptable) through any means without further authorization of any person
(including without any further authorization by SPG or Xxxxxxxx) of the Subject
Shares, but shall not require such sale. The escrow agent shall have the
authority to liquidate all or any portion of the Subject Shares pledged in
any
manner approved by Green, provided that the proceeds from any sales shall first
be paid to SPG within five (5) days of receipt of funds by the agent to reduce
the outstanding principal amount (and following payment of all principal, any
accrued interest) under the Green Note. In the event of a default in the
payment, when due, of the Green Note, either of interest payment on the Maturity
Date or following the First Payment Date, the unsold Subject Shares pledged
under the Pledge Agreement, if any, shall be delivered to SPG for sale by SPG
in
satisfaction of the amounts due and any excess returned to Green. Upon payment
in full of the Green Note, including all accrued interest thereon, all unsold
Subject Shares shall be immediately delivered to Green or his
designee.
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The
descriptions of the Pledge Agreement and Green Note are by way of summary only
and the terms of the Pledge Agreement and Green Note shall control. The Pledge
Agreement and Green Note, and the rights and obligations thereunder, are
intended to be wholly independent from and independently enforceable from any
provisions, performance or claim of nonperformance of this
Agreement.
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Cancellation
of Warrant.
The Company shall have no obligation to issue or deliver any warrants
pursuant to the Consulting Agreement (the “Warrants”). Any right of SPG or
Xxxxxxxx to receive any Warrants is hereby cancelled and of no force
or
effect. SPG and Xxxxxxxx hereby waive any and all claims to entitlement
to
the issuance of any warrants or options to receive any securities
of the
Company.
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Representations,
warranties and agreements of Xxxxxxxx and SPG.
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4.1
Each of
Xxxxxxxx and SPG represent and warrant, jointly and severally, that other than
(i) 100,000 shares of common stock of the Company held by SPG, (ii) 40,000
shares of common stock of the Company held by Xxxxxxxx and (iii) any claim
or
interest in the Warrants asserted by SPG, Xxxxxxxx and SPG which have been
released hereby they do not, directly or indirectly, own any securities of
the
Company or any interest therein. Xxxxxxxx and SPG agree that for a period of
one
(1) year following the date of this Agreement they shall not own or acquire,
directly or indirectly, any securities of the Company, directly or
indirectly.
4.2 Each
of
Xxxxxxxx and SPG represent and warrant, jointly and severally, that, neither
the
Subject Shares, any claims or rights to receive Warrants nor any interest in
or
to the Subject Shares or the Warrants, nor any rights under the Consulting
Agreement have been transferred, assigned, endorsed, pledged, hypothecated
or
otherwise encumbered in any manner whatsoever, and no person or entity has
any
right, claim or interest (legal, equitable or otherwise) in or to the Subject
Shares, the Warrants, any shares issuable upon exercise of the Warrants or
under
the Consulting Agreement.
4.3 SPG
represents and warrants that the execution and delivery of this Agreement has
been duly authorized and is the valid and binding obligation of SPG, enforceable
in accordance with its terms.
4.4 The
representations and warranties of each of Xxxxxxxx and SPG set forth in this
Agreement shall survive the closing of this Agreement.
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Representations
of the Company.
The Company represents and warrants that the execution and delivery
of
this Agreement has been duly authorized and is the valid and binding
obligation of the Company, enforceable in accordance with its terms,
except as such enforcement may be limited by the laws of bankruptcy
or
insolvency and with respect to enforceability of rights of creditors
generally. The representations and warranties of the Company set
forth in
this Agreement shall survive the closing of this
Agreement.
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Delivery
of Shares.
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6.1 Immediately
upon execution of this Agreement, SPG and Xxxxxxxx shall deliver to Green the
original stock certificates of the Company representing the Subject Shares,
with
executed stock powers attached, irrevocably transferring the Subject Shares
to
Green for delivery to the transfer agent for deposit pursuant to the Pledge
Agreement.
6.2 Immediately
upon execution of this Agreement and the surrender of the certificates
representing the Subject Shares in accordance with Section 6.1, the Company
shall issue a certificate representing the Subject Shares in the name of Green
or the escrow agent named in the Pledge Agreement (who shall vote such shares
only upon the direction of Green) and deliver such certificate to be held in
accordance with the Pledge Agreement. The Company and its successors, including
any public company which may succeed to the business of the Company, shall
issue
or pay to the Escrow Agent or SPG as applicable any securities or payments
replacing or representing a dividend, conversion or other byproduct of a
transaction effecting the Subject Shares.
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Resignation
of Xxxxxxxx.
Upon the execution of this Agreement and payment of the amount as
provided
in Section 1 hereof, Subbarao’s resignation from the Board of Directors
and any and all offices and positions of the Company and any of its
subsidiaries or affiliated companies shall become immediately
effective.
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Company
Information and Property.
Each of Xxxxxxxx and SPG agrees to immediately return to the Company
all
documents, including electronic documents, supplied by the Company
and all
Company property in whatever form held in his or its possession including,
but not limited to, Company reports, customer lists, supplier lists,
consultant lists, formulas, files, manuals, memoranda, computer equipment,
access codes, discs, software, and any other Company business information
or records (including without limitation, tapes and transcripts,
agenda,
minutes reports and other written material or notes related thereto),
in
any form in which they are maintained, including records or information
regarding Company customers, suppliers and vendors, pricing, products
a
development plans, budgets, business affairs and operations and agrees
that he and it will not retain any copies, duplicates, reproductions,
or
excerpts thereof in any form. Each of Xxxxxxxx and SPG further agrees
that
he and it will not, in any manner, disclose or make use of any Company
property or information. Each party represents that they will not
disparage or make any negative, derogatory or defamatory statements
about
the other, their existing or planned business practices or activities,
or
about any former, current or future officer, director, consultant,
agent,
employee or representative of the other to any person. Each of Xxxxxxxx,
SPG, the Company and Green acknowledge that any breach of this
nondisparagement agreement would cause irreparable injury to the
other for
which there is no adequate remedy at law and in addition to any remedies
that may be available in the event of a breach or threatened breach
of
this Section 8 the offended party shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction which
would
prevent violations of the provisions of this Section 8. In seeking
such an
order, any requirement to post a bond or other undertaking shall
be
waived. The terms of this nondisparagement will not apply to statements
made under oath which are required in connection with any legally
compelled statement, provided not less than 5 business days advance
notice
of such is provided the other party.
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Mutual
Release.
All parties to this Agreement and any of their respective agents,
representatives, xxxxxxxxx, xxxxx, xxxxxxx, successors and assigns
(on
their own behalf and which shall also be binding on behalf of such
other
persons) (in such capacity, the “Releasor”) hereby irrevocably, fully, and
finally, without further word, deed, action, execution, or further
documentation release the other, together with its officers, directors,
employees, agents and stockholders and each of their respective agents,
representatives, xxxxxxxxx, xxxxx, xxxxxxx, successors, assigns and
affiliates (in such capacity, collectively, “Releasees”) from any and all
claims, actions, causes of action, suits, debts, accounts, reckonings,
covenants, contracts, controversies, agreements, promises, damages,
expenses, demands and other obligations or liabilities of any nature
whatsoever, in law or equity, whether known or unknown, which any
Releasor
ever had or now has against any of the Releasees, for, upon, or by
reason
of, any matter, course or thing whatsoever from the beginning of
the world
to the date of this Agreement relating to or arising out of the Consulting
Agreement or by reason of any dealings the parties may have had with
one
another up until the date hereof. Nothing contained within this Agreement
shall be deemed to release or discharge any representation, warranty
or
other obligation undertaken in this Agreement by any of the parties
hereto.
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Indemnification.
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10.1 In
addition to any indemnification rights Xxxxxxxx may be entitled to under the
Certificate of Incorporation or Bylaws of the Company and pursuant to applicable
statutes, the Company shall indemnify Xxxxxxxx to the full extent permitted
by
law so that the Company, among other things, indemnifies and saves and holds
harmless Xxxxxxxx from and against any and all claims, demands, liabilities,
losses, costs and expenses, including judgments, fines, penalties, damages
or
amounts paid on account thereof (whether in settlement or otherwise) including
reasonable attorneys’ fees as incurred as a result of any action, proceeding,
investigation, subpoena or inquiry relating to Subbarao’s services as a director
of the Company or service with any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity at
the
request of the Company; unless the final judgment of an action in which Xxxxxxxx
is a party finds that Xxxxxxxx engaged in intentional or illegal misconduct
while conducting his duties as a member of the Company’s Board of Directors. In
the event that any valid claim to indemnification is asserted hereunder,
Xxxxxxxx shall be entitled to advancement of his actual costs and expenses
(including reasonable attorneys’ fees as incurred) upon execution of an
undertaking to reimburse the Company in the event that it is found that Xxxxxxxx
was not entitled to indemnification as provided herein. Xxxxxxxx agrees that
he
will not settle any matter for which he shall seek and has been granted
indemnification without the written consent of the Company.
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10.2 Each
of
SPG and Xxxxxxxx represents and warrants, jointly and severally, that except
for
the issues arising out of or relating to the Consulting Agreement, they know
of
no pending or threatened claim, suit or action against the Company or any of
its
officers, directors, or employees, or of any pending or threatened proceeding
or
investigation by any governmental or regulatory agency of such persons, nor
of
any basis upon which any such claim, suit or action or regulatory proceeding
could be asserted.
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Cooperation.
It is further agreed by all parties that in addition to any express
obligation set forth herein, they shall execute whatever additional
documents or agreements may be necessary or desirable to effectuate
the
intent and purposes of this
Agreement.
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No
Admission of Liability.
It is expressly agreed and understood that this Agreement shall not
constitute or be deemed an admission of liability by any party hereto
but
is designed solely to amicably resolve claims and disputes between
and
among the parties.
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Governing
Law, Jurisdiction and Venue.
This Agreement shall be governed by and construed in accordance with
the
internal laws of the State of New York, without giving effect to
principles of conflicts of laws. Actions or proceedings relating
to this
Agreement may only be brought in a state or federal court sitting
in New
York County, New York, and each of the parties irrevocably consents
to the
jurisdiction of such courts in any such action or proceeding. Each
of the
parties to this Agreement further agrees to accept service of process
in
any action or proceeding relating to this Agreement by the delivery
of
such process in the manner designated in Section 16 of this
Agreement.
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Successors
and Assigns.
Except as otherwise expressly provided herein, the provisions hereof
shall
inure to the benefit of and be binding upon the parties hereto and
their
respective heirs, successors and permitted
assigns.
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Entire
Agreement; Amendment.
This Agreement constitutes the full and entire understanding and
agreement
among the parties with regard to the subject matter hereof. Neither
this
Agreement nor any term hereof may be amended, waived, discharged
or
terminated except by a written instrument signed by all of the parties.
Except for any indemnification provisions contained in the Certificate
of
Incorporation or Bylaws of the Company, this Agreement supersedes
any and
all prior agreements and negotiations between the parties hereto
and
supersedes any and all obligations the parties hereto may have to
one
another under any prior agreements, including, without limitation,
the
Consulting Agreement.
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Notices.
Any notices, demands and other communications to be given or delivered
hereunder shall be in writing and shall be deemed to have been given
when
delivered personally or when mailed by certified or registered mail,
return receipt requested and postage prepaid, or by a nationally
recognized overnight courier service and addressed to the addresses
of the
respective parties set forth below or to such changed address for
any
party as such party may have fixed by notice sent in accordance with
this
Section 16:
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If
to the
Company or Green, to:
Clear
Skies Group, Inc
0000
Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx
Xxxx, XX 00000
with
a
copy to:
Xxxxxx
and Xxxxx, LLP
000
Xxxx
00xx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
If
to SPG
or Xxxxxxxx, to:
Sustainable
Profitability Group, Inc
00
Xxxxxxxxx Xxxxxxx
Xxx
Xxxxx, XX 00000
with
a
copy to:
Frydman
LLC
00
Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Att:
Xxxxx X. Xxxxxxx, Esq.
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Disclosure.
The parties shall not disclose, directly or indirectly, the terms
and
existence of this Agreement or the negotiations or underlying facts
that
led up to this Agreement, except to their attorneys and accountants
and to
the extent such disclosure is required to be made by compulsion of
legal
process or to enforce the terms of this Agreement and the agreements
contemplated herein under any applicable law, rule or regulation.
Notwithstanding the foregoing, either party may disclose such matters
as
are necessary or appropriate to be disclosed in any report or other
document required to be filed with the Securities and Exchange Commission
and any drafts of such documents.
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Costs
and Expenses.
The parties agree that each is to bear its own costs and expenses,
including attorneys’ fees, in connection with this Agreement. In the event
that either party brings an action for enforcement of any of the
terms or
provisions of this Agreement that is unsuccessful, the prevailing
party
shall be paid all of the costs and expenses (including reasonable
attorneys fees) incurred in defense of such
action.
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Construction.
The parties have mutually participated in the drafting of this Agreement,
and neither this Agreement nor any Section hereof shall be construed
against any party due to the fact that it was drafted by said
party.
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Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which shall be an original, but all of which together shall constitute
one
instrument. Facsimile signatures shall be deemed
originals.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first written above.
| CLEAR SKIES GROUP, INC. | ||
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| By: | /s/ Xxxx Xxxxx | |
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Name: Xxxx
Xxxxx
Title:
Chief Executive Officer
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| SUSTAINABLE PROFITABILITY GROUP, INC. | ||
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| By: | /s/ Xxxxx Xxxx | |
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Name: Xxxxx
Xxxx
Title:
President
and Chief Executive Officer
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| /s/ Xxxxx X. Xxxxxxxx | ||
| Xxxxx X. Xxxxxxxx | ||
AGREED
AND ACCEPTED WITH RESPECT TO PARAGRAPHS 2, 8 AND 9 ONLY:
| /s/ Xxxx Xxxxx | |
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Xxxx
Xxxxx
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