SETTLEMENT AGREEMENT AND RELEASE I. Recitals. A. Introduction. This Settlement Agreement and Release (hereinafter “Settlement Agreement”) is made and entered into this ___ day of February, 2014, by and between Plaintiffs Kasey Leedy and David Mikelson (“Named Plaintiffs”), individually and on behalf of a Class of similarly situated Washington residents (the “Settlement Class”,) and J. Hass Group, LLC (“JHG”); American Debt Settlement Group, LLC (“ADSG”); Jeremy Hass and Alma Hass, individually and on behalf of their marital community; Jason Hass and Michelle Hass, individually and on behalf of their marital community; and Jeffrey Hass and Barbra Hass, individually and on behalf of their marital community (collectively, the “JHG Defendants”). B. Purpose. Named Plaintiffs filed a Second Amended Class Action Complaint against the JHG Defendants and others in the Pierce County Superior Court, State of Washington, Case No. 12-205948-4, on or about June 5, 2013 (the “Lawsuit”). The Lawsuit is related to, among other things, JHG Defendants’ debt settlement enterprise and the fees paid by Washington consumers related to that debt settlement enterprise. Named Plaintiffs alleged that the JHG Defendants violated the Washington Debt Adjusting statute, chapter 18.28 RCW, and the Washington Consumer Protection Act, chapter 19.86 RCW. Further, Plaintiffs alleged Defendants made negligent misrepresentations which caused harm to Plaintiffs and Washington consumers. The JHG Defendants and Named Plaintiffs now wish to effect a complete, full and final resolution and settlement of all claims, disputes, and controversies as to all parties. C. No Admission of Liability. Nothing in this Settlement Agreement shall be construed as an admission or concession by the JHG Defendants as to the truth or validity of any allegations in the Complaint, or of any fault, wrongdoing, or liability. Page 1 of 10 D. Reasonableness of Settlement. Plaintiffs and Class Counsel for the Settlement Class judge the Settlement Agreement as providing fair, reasonable, and adequate relief to the Class Members, and in the best interests of the Settlement Class. Named Plaintiffs and Class Counsel and Defendants and Defense Counsel reached this Settlement as a result of informed, arm’s length negotiation by attorneys highly experienced in complex class litigation. The JHG Defendants agree to support approval of the Class Settlement under the terms of this Settlement Agreement. II. Settlement Terms. A. The Settlement Class. Pursuant to Washington Court Rule 23, the parties hereto agree to certification, for settlement purposes only, of a Class consisting of all Washington residents who entered into a contract for debt adjusting services with JHG or otherwise participated in a debt adjusting program with JHG between February 3, 2008 and February 3, 2012, and who do not execute a timely and valid exclusion request in accordance with Section III.C below. B. Settlement Fund. The entire Settlement Fund shall be five hundred thousand dollars ($500,000.00) and JHG Defendants shall pay or cause their insurers to pay the Settlement Fund as follows: 1. The JHG Defendants have paid the total sum of twenty-five thousand dollars ($25,000.00) to be paid into the IOLTA account of The Scott Law Group, P.S. (“Settlement Trust”) the receipt of which is hereby acknowledged; and 2. No later than fourteen (14) calendar days, following the entry of an order granting final approval of this Class Settlement Agreement, the remaining balance of the settlement fund of four hundred seventy-five thousand dollars ($475,000.00) shall be paid into the IOLTA account of The Scott Law Group, P.S. (“Settlement Trust”) by the insurers of the JHG Defendants in settlement of all claims between the Settlement Class and the JHG Defendants. Page 2 of 10 Such funds shall be used to make all necessary payments under the Settlement Agreement, including but not limited to, all awards to Class Members, incentive awards to Class Representatives (in an amount to be approved by the Court), Class Members’ attorney fees and costs, costs associated with the sending of Class Notice and payments to the Class, and all other costs incurred by the Claims Administrator arising from the administration of the Settlement, as approved by the Court. C. No Further Liability. Following payment of the above amounts, the remaining Settlement Fund (“Net Settlement Fund”) shall be distributed to Class Members. Each Settlement Class Member shall be entitled to an individual award representing the members’ pro rata share of the Net Settlement Funds. The Class Members’ pro rata share is determined by the amount of fees received by JHG and ADSG pursuant to the JHG debt settlement program. Each Settlement Class member’s pro rata share shall be calculated according to the formula A / B x C - where A represents the total fees received by ADSG and JHG from the Class Member, B represents the aggregate total of all fees paid to JHG and ADSG by Settlement Class members, and C represents the Net Settlement Proceeds. D. Injunctive Relief. As further consideration for settlement, JHG Defendants agree that they will forever refrain from conducting any debt adjusting business, as defined by applicable Washington law, in violation of any applicable Washington or Federal law in the State of Washington. This injunctive relief will be memorialized in a Consent Judgment, substantially in the form attached hereto as Exhibit “A”. E. Defendants’ Financial and Insurance Information. As further consideration for settlement: 1. Jeremy, Jeffrey, and Jason Hass have provided on November 27, 2013, reviewed financial statements issued by a licensed accountant to Class Counsel evidencing all of their financial assets and liabilities; Page 3 of 10 2. Jeremy Jeffrey, and Jason Hass have provided on November 27, 2013, information evidencing the IRS is collectively seeking payment from them; and 3. Attorney Tim Barnes has provided on November 27, 2013, a declaration attaching and authenticating all coverage letters. 4. Class Counsel does herewith acknowledge receipt of the materials described in the above three subsections and agrees that said materials are provided on a confidential basis and will not be distributed to any third parties except the Court under seal. F. Class Member Information. As further consideration for Settlement, and in order to effectuate claims administration and communicate with class members, JHG Defendants agree to fully and in good faith cooperate with Class Counsel in obtaining Class Member information from JHG Defendants and any outside sources, to the extent necessary - if at all - including, but not limited to, Meracord, LLC. E. Class Notice. The Parties agree to request approval of the form of notice attached hereto as Exhibit “B”. The fact that the Court may require changes in the form of notice does not invalidate this Class Settlement Agreement if the changes do not materially affect the substance of the Class Settlement Agreement. Notice to the proposed Settlement Class shall be provided as ordered by the Court. The Parties anticipate that members of the proposed Settlement Class will receive such notice directly through first class mail and also by electronic mail using the most recent contact information available. No later than thirty (30) days after the entry of an order granting preliminary approval of this Class Settlement Agreement, the Claims Administrator shall issue notice to all Settlement Class members in the form and manner approved by the Court. The date on which this notice is sent shall be deemed “the Initial Notice Mailing Date.” Page 4 of 10 III. Settlement Administration. A. The Claims Administrator shall be appointed by the Court upon such terms and conditions as approved by the Court. Subject to the foregoing the JHG Defendants have no objection to The Scott Law Group, P.S., serving as the Claims Administrator. B. To facilitate distribution of Court-approved notice and settlement awards to Settlement Class members, the JHG Defendants, to the extent that they have any additional information than that which has previously been provided to class counsel, shall provide the following information in electronic form to Class Counsel no later than seven (7) calendar days following the Court’s entry of an order granting preliminary approval of this Class Settlement Agreement: (1) the name and last-known contact information (mailing address, email address, and phone number) of each Settlement Class member; and (2) the total fees that the JHG Defendants received for each proposed Settlement Class member. C. The Claims Administrator shall be responsible for sending Class Notice of this proposed Class Settlement, corresponding with the Class regarding opt outs, any questions about the settlement, transmitting payments as provided herein, and attending to other administrative obligations required to fulfill the requirements of this Settlement. D. All individuals who properly file a timely written Request for Exclusion shall be excluded from the Class and such individuals shall have no rights under, and will not be bound by, this Settlement Agreement. A request shall be deemed timely if it is postmarked no later than sixty days after the date Class Notice is sent. At least ten (10) days in advance of the Final Approval Hearing, Class Counsel shall file and serve an affidavit identifying all persons who have made a timely Request for Exclusion. E. The final approval hearing will be held on such date as the Court, in its discretion, may order. F. Following receipt of the full five hundred thousand dollar ($500,000.00) payment of the Settlement Fund, and as soon as practicable after the Court’s entry of a Final Order approving Class Settlement and so long as no appeal is taken, the Claims Administrator shall Page 5 of 10 mail to each Class Member a settlement check, drawn from the Settlement Fund, in amounts described in Section II, paragraph C. Individuals who timely exclude themselves from the Class shall not be entitled to any award. Each check issued pursuant to this Class Settlement Agreement shall be void if not negotiated within one hundred and twenty (120) days after its date of issue and shall contain a legend to such effect. G. Uncashed Checks. All checks that are uncashed by Class Members, including all returned checks and all checks not cashed within one hundred and twenty (120) days after the date of issue, shall be redistributed to those Class Members who did cash their checks, less reasonable administrative expensive and fees, so long as such uncashed checks equal or exceed forty thousand dollars ($40,000.00) in the aggregate. In the event the uncashed checks are equal to or greater than forty thousand dollars ($40,000.00) then the remaining funds shall be distributed to the settlement class members who did cash their checks according to the following formula: D /E x F-where D represents the total fees received by ADSG and JHG from the Class Member, E represents the aggregate total of all fees paid to JHG and ADSG by settlement class members who have been located and who have negotiated original settlement checks, and F represents the cumulative balance of undistributed settlement funds If the uncashed checks total less than forty thousand dollars ($40,000.00) in the aggregate, then those funds shall be redistributed to the Legal Foundation of Washington pursuant to Paragraph H and CR 23(f). H. In the event that any portion of the Settlement Fund has not been distributed as provided for in this Agreement after a period of one hundred and eighty (180) days has elapsed from: (1) the date on which settlement checks are mailed by the Claims Administrator, or (2) the date upon which Class Counsel Fees and Costs (as defined below) are distributed, whichever is later, then the remaining funds shall be paid to the Legal Foundation of Washington, pursuant to Washington Court Rule 23(f). Page 6 of 10 I. Class Counsel, upon application to and approval from the Court, shall be reimbursed for attorney fees, litigations costs, and claims administration fees and costs from the Settlement Fund. IV. Release by Plaintiffs. A. Upon the Court’s issuance of a Final Order and Judgment approving this Class Settlement under the terms stated herein, and except for the obligations expressly created by this Agreement, Plaintiffs and Class Members fully, finally, and forever release, relinquish, and discharge Jeremy and Alma Hass, Jason and Michelle Hass, Jeffrey and Barbra Hass, JHG, ADSG and their insurers from any and all claims, causes of action, liabilities, losses, costs, fees, interest, attorneys’ fees, expenses or damages of any kind that have been or could have been asserted in this class action against Jeremy and Alma Hass, Jason and Michelle Hass, Jeffrey and Barbra Hass, JHG, or ADSG, including all claims under the Washington Debt Adjusting Act (Chapter 18.28 RCW) and the Washington Consumer Protection Act (Chapter 19.86 RCW) and claims for negligent misrepresentation. B. In the event that this Settlement Agreement is not given final approval in all material respects by the Court, or the Court’s Final Order is reversed on appeal, the Settlement Agreement shall become null and void and all settlement funds must be immediately returned to the persons or entities putting the funds into the trust account within 14 calendar days. V. General Provisions. A. This Agreement shall be governed by the laws of the State of Washington. B. Subject to Court approval, all proceedings and deadlines in this class action shall be stayed as to the JHG Defendants pending and following preliminary approval of the Settlement, except as necessary to implement the Settlement or this Settlement Agreement. C. This is a fully integrated Agreement. It contains the full and final expression of the Parties relative to its subject matter and supersedes any and all prior representations, understandings, and agreements with respect to the subject matter of this Agreement. There are no other representations, agreements, arrangements, or understandings, oral or in writing. Page 7 of 10 D. By signing this agreement, each Party acknowledges and warrants that he or she has not assigned or transferred any claim he or she is releasing, or any rights to such claim, in whole or in part. E. The Washington Superior Court, Pierce County, shall retain continuing jurisdiction over this action for the purpose of implementing the Settlement and all related matters, including this Settlement Agreement, Final Approval of the Settlement, Final Judgment, and post-Judgment issues. F. The parties consent to entry of Judgment in this matter that comports with the terms of this Settlement Agreement, and waive their rights to appeal from such Judgment. G. The Parties agree to undertake their reasonable best efforts, including, without limitation, all efforts contemplated by the Settlement Agreement, to carry out the terms of this Agreement. H. Should any JHG Defendants violate any terms of this Settlement Agreement, and Class Representatives, on behalf of the Class, elect to pursue an enforcement Action, the breaching JHG Defendant(s) shall be liable for all attorney's fees and costs incurred by virtue of creating the necessity for Class Representatives, on behalf of the Class, to bring said action. I. This Agreement may be executed in counterparts, and by facsimile and/or e-mail, with the same effect as if the Parties had signed the same document. All counterparts shall be construed together and shall constitute one agreement. Absent an original signature, it is hereby understood and agreed that a facsimile and/or e-mailed signature shall be binding upon the Parties and otherwise admissible under the Best Evidence Rule. THE PARTIES HEREBY CONSENT TO THE ABOVE SETTLEMENT AGREEMENT BY THE FOLLOWING SIGNATURES: For Plaintiffs and the Settlement Class: DATED: 3 fOXJlA Page 8 of 10 DATED DATED For Defendants: DATED: J. HASS GROUP, LLC DATED: AMERICAN DEBT SETTLEMENT GROUP, LLC DATED: JASON HASS, INDIVIDUALLY AND ON BEHALF OF HIS MARITAL COMMUNITY DATED: MICHELLE HASS, INDIVIDUALLY AND ON BEHALF OF HER MARITAL COMMUNITY DATED: JEREMY HASS, INDIVIDUALLY AND ON BEHALF OF HIS MARITAL COMMUNITY DATED: ALMA HASS, INDIVIDUALLY AND ON BEHALF OF HER MARITAL COMMUNITY DATED: JEFFREY HASS, INDIVIDUALLY AND ON BEHALF OF HIS MARITAL COMMUNITY Page 9 of 10