EXHIBIT 2.1
THIS SETTLEMENT AGREEMENT AND RELEASE (this "Agreement") is entered
into as of this 15th day of December 2003 (the "Effective Date"), by and among
AMERICAN ASSOCIATION OF CHRISTIAN COUNSELORS, INC, a Nevada corporation
("AACC"), KINGDOM VENTURES, INC, a Nevada corporation ("KDMV"), VISIONQUEST
MINISTRIES, INC., a Nevada corporation ("VisionQuest"), XX. XXXXXXX X. XXXXXXX
("Xxxxxxx"), XXXX X. XXXXXXX ("Xx. Xxxxxxx"), and DR. XXXX XXXXXXX ("Xx.
Xxxxxxx").
STATEMENT OF BACKGROUND
A. AACC, KDMV, Clinton, and American Association of Christian
Counselors, Inc., a Texas corporation ("Old AACC"), are parties to an Agreement
and Plan of Merger, dated as of July 31, 2003 (the "Merger Agreement").
B. In conjunction with the execution of the Merger Agreement, certain
of the parties thereto entered into certain other agreements that were attached
as Exhibits C-H of the Merger Agreement (all such agreements, the "Exhibit
Agreements"). The Exhibit Agreements include (1) a Consulting Agreement by and
between Clinton and KDMV (the "Consulting Agreement'); (2) an Employment
Agreement by and among Clinton, KDMV, and AACC (the "Employment Agreement'); (3)
a Put/Call Agreement by and between KDMV and Clinton; (4) a Promissory Note of
AACC payable to the order of Clinton in the principal amount of $750,000 (the
"Promissory Note"); (5) a Guaranty by and among Clinton and KDMV (the
"Guaranty"); and (6) a Security and Pledge Agreement by and between Clinton and
KDMV (the "Security Agreement').
C. Pursuant to the terms of the Merger Agreement, (1) Old AACC was
merged with and into AACC (the "Merger"); and (2) all of the outstanding shares
of common stock of Old AACC, which shares were owned by Clinton, were converted
into the right to receive the sum of $3,750,000 from AACC and KDMV, payable in
the form of the Promissory Note, and the issuance of 6,000,000 shares of common
stock of KDMV (the "KDMV Shares").
D. Pursuant to the terms of the Consulting Agreement, KDMV agreed to
pay Clinton the sum of $1.25 million. KDMV agreed to pay Clinton the sum of
$100,000 immediately upon the execution of the Consulting Agreement, and to make
monthly payments of $50,000 to Clinton commencing September 15, 2003.
E. Pursuant to the terms of the Guaranty, KDMV agreed to guarantee
certain obligations of AACC to Clinton, including the obligations of AACC under
the Promissory Note.
F. Pursuant to the terms of the Security Agreement, the obligations of
KDMV under certain of the Exhibit Agreements, including the Consulting Agreement
and the Guaranty, were secured by the pledge of KDMV to Clinton of 8,000,000
shares of common stock of AACC (the "Pledged Shares"). Subject to the terms of
the Security Agreement, the Pledged Shares are owned by KDMV and represent
eighty percent (80%) of the issued and outstanding shares of common stock of
AACC. VisionQuest previously owned 2,000,000 shares of common stock of AACC (the
"VisionQuest Shares," and collectively with the Pledged Shares, the "AACC
Shares"), all of which shares have been transferred to KDMV. The AACC Shares
represent all of the issued and outstanding shares of all classes of stock of
AACC.
G. Pursuant to the terms of the Security Agreement, KDMV delivered to
legal counsel for Clinton the original of stock certificate No. 1, representing
the Pledged Shares, duly endorsed for transfer to Clinton.
H. Pursuant to the Merger Agreement, Clinton and KDMV made certain
representations and warranties to the other, and each party agreed to indemnify
the other with respect to breaches of such party's representations and
warranties.
1. By letter dated November 5, 2003, Clinton alleged that AACC and KDMV
had breached various terms of the Merger Agreement, the Consulting Agreement,
the Promissory Note, and the Security Agreement. As a result of such alleged
breaches, Clinton purported to exercise his rights under the Security Agreement
and assert ownership of the Pledged Shares.
J. As a result of Clinton's actions, as described above in Paragraph I,
on November 10, 2003, KDMV filed a Complaint against Clinton in the United
States District Court for the Western District of Virginia, Roanoke Division
(the "Court"), alleging breach of contract by Clinton of the Merger Agreement,
and seeking a declaratory judgment. The filing of such Complaint precipitated
the commencement of an action in the Court, proceeding as Civil Action No.
7:03CV00735 (the "Action").
K. On November 14, 2003, Clinton filed with the Court in the Action (1)
a Counterclaim against KDMV, alleging breach of contract by KDMV of the Merger
Agreement and certain of the Exhibit Agreements, fraud, and conspiracy; and (2)
a Third Party Complaint against AACC, Xx. Xxxxxxx and Xx. Xxxxxxx, alleging
breach of contract by AACC, and alleging fraud and conspiracy by Xx. Xxxxxxx and
Xx. Xxxxxxx. All of the allegations set forth by Clinton in the aforesaid
Counterclaim and Third Party Complaint filed in the Action shall be referred to
in this Agreement as the "Clinton Claims."
L. On November 24, 2003, KDMV, AACC, Xx. Xxxxxxx, and Xx. Xxxxxxx filed
an Amended Complaint and Counterclaim with the Court in the Action, alleging
breach of contract by Clinton of the Merger Agreement, actual fraud,
constructive fraud, and breach of fiduciary duty, and seeking damages from
Clinton in excess of $1,000,000. All of the allegations set forth by KDMV, AACC,
Xx. Xxxxxxx, and Xx. Xxxxxxx in the aforesaid Amended Complaint and Counterclaim
filed in the Action shall be referred to in this Agreement as the "KDMV Claims."
M. To avoid the further expense and inconvenience of litigation, each
party hereto desires and intends, without admitting or conceding liability, to
expeditiously resolve and settle all existing disputes, claims, and causes of
actions between or among any and all of the parties hereto upon the terms set
forth in this Agreement.
N. Each party's intent and desire in executing this Agreement is to
release each other party hereto from all its covenants, liabilities and
obligations under the Merger Agreement and the Exhibit Agreements, and, except
as expressly provided for in this Agreement, to place each other party hereto so
far as is reasonably practicable in the position that such party would have been
in if the Merger Agreement and the Exhibit Agreements had not been executed.
TERMS
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged by each party hereto, the
parties, intending to be legally bound, agree as follows:
1. Cancellation of Exhibit Agreements and Obligations Under the Merger
Agreement. Each of the parties hereto expressly acknowledges and agrees that,
from and after the Effective Date, no party hereto shall have any obligation
(regardless of when such obligation arises or arose) to any other party hereto
under the Merger Agreement, the Exhibit Agreements, and all other agreements
executed, and transactions undertaken, in furtherance of the Merger. Each of the
Exhibit Agreements and the obligations of the Parties under the Merger Agreement
are, to the extent still in effect or unfulfilled, hereby cancelled, and shall
be no longer binding on any party hereto. Notwithstanding the foregoing, each of
the parties hereto agrees that:
a. The cancellation referenced in the preceding paragraph shall not
affect or nullify (i) the formation of AACC as the successor corporation to Old
AACC; (ii) any act undertaken, or business transaction conducted by, or on
behalf of, AACC on or after July 31, 2003; (iii) the continued corporate
existence of AACC; and (iv) the continued operation of the business of AACC.
x. Xxxxxxx shall retain all sums and financial benefits paid to him as
of the Effective Date by, or on behalf of, KDMV pursuant to the terms of the
Merger Agreement, and any of the Exhibit Agreements, including without
limitation, the Consulting Agreement and the Employment Agreement.
c. Except for the KDMV Materials (defined in Paragraph 6(a) below),
AACC shall retain all financial sums and benefits, information, materials, and
assets provided or rendered to AACC by, or on behalf of, KDMV, pursuant to the
terms of the Merger Agreement, and/or any of the Exhibit Agreements, and/or in
reliance upon the Merger.
d. KDMV shall transfer all of its right, title, and interest in and to
any and all life insurance policies insuring the life of Clinton (the
"Policies") to Clinton, including without limitation, the life insurance polices
set forth on Exhibit A to the Employment Agreement. As of the Effective date,
Clinton shall be solely responsible for the payment of all premiums, expenses,
costs and charges associated with the Policies.
2. Transfer of the AACC Shares. In consideration of (a) the payment by
AACC to KDMV of the sum of Two Hundred Thousand Dollars ($200,000) (the
"Consideration"), payable in accordance with the terms of Paragraph 3 below; (b)
the transfer by Clinton to KDMV of the KDMV Shares; and (c) the respective
covenants, warranties, and agreements of AACC and Clinton set forth in this
Agreement; KDMV agrees to, and does hereby, sell, assign, set over unto and
deliver, transfer, and convey all of the AACC Shares to Clinton free and clear
of all liens, pledges, security interests, charges, encumbrances, claims and
rights of others of any nature whatsoever. Immediately upon the execution of
this Agreement, Clinton agrees to deliver the certificate representing the AACC
Shares, duly endorsed for transfer to KDMV (the "Certificate") to Wood Xxxxxx,
PLC as escrow agent (the "Escrow Agent"), to be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement, attached hereto as Exhibit A
(the "Escrow Agreement"), the terms of which are incorporated herein by this
reference.
3. Payment of the Consideration. In consideration of (a) the sale and
transfer by KDMV to Clinton of the AACC Shares; and (b) the respective
covenants, warranties, and agreements of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx.
Xxxxxxx set forth in this Agreement, AACC agrees to pay KDMV the Consideration
in the following manner: (i) AACC shall pay KDMV the sum of Twenty-Five Thousand
Dollars ($25,000) (the "First Payment") by delivering the First Payment in cash,
or other immediately available funds, to Xxxxx Xxxxxx, PLC, 00 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, by no later than 5:00 p.m. EST on
December 29, 2003; and (ii) AACC shall pay the balance of One Hundred
Seventy-Five Thousand Dollars ($175,000) to KDMV in accordance with the terms of
the promissory note attached hereto as Exhibit B (the "Note"), the terms of
which are incorporated herein by this reference. AACC and Clinton each expressly
acknowledges and agrees that, notwithstanding any provision of the Note to the
contrary, including any provision permitting cure of any breach or default
thereof, that if AACC does not pay KDMV the First Payment in cash, or other
immediately available funds, by 5:00 p.m. EST on December 29, 2003, the entire
principal balance of the Note, namely One Hundred Seventy Five Thousand Dollars
($175,000), shall become immediately due and payable in full.
4. Transfer of the KDMV Shares. In consideration of (a) the sale and
transfer by KDMV to Clinton of the AACC Shares; and (b) the respective
covenants, warranties, and agreements of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx.
Xxxxxxx set forth in this Agreement, Clinton agrees to, and does hereby, sell,
assign, set over unto and deliver, transfer, and convey the six million
(6,000,000) KDMV Shares to KDMV free and clear of all liens, pledges, security
interests, charges, encumbrances, claims and rights of others of any nature
whatsoever. Immediately upon the execution of this Agreement, Clinton agrees to
deliver to KDMV the original of stock certificates KV 1422, KV 1423, KV 1424, KV
1425, KV 1426, KV 1427, KV 1428, KV 1429, KV 1430, KV 1431, KV 1432, and KV
1433, duly endorsed for transfer to KDMV, which certificates represent the KDMV
Shares.
5. Control and Ownership of AACC.
a. Control of AACC. Each of the parties hereto agrees that on and after
the Effective Date, Clinton shall be the sole owner of all of the outstanding
and issued shares of all classes of stock of AACC, and that Clinton shall be
free to exercise control of AACC, and to conduct all aspects of the business
operations of AACC in any manner he deems appropriate or necessary, free of
interference of any kind from KDMV, Xx. Xxxxxxx, and/or Xx. Xxxxxxx, subject
only to the terms of this Agreement, the Note, the Escrow Agreement, and the
Pledge Agreement, of even date herewith, by and between Clinton and KDMV. Upon
the execution of this Agreement, any position, status, role or title held by Xx.
Xxxxxxx, Xx. Xxxxxxx, KDMV, and any of KDMV's employees, agents, directors,
officers, or shareholders, in, or with respect to, AACC, including without
limitation, any position, status, role or title as an employee, officer or
director of AACC, shall automatically terminate, together with all
responsibilities, obligations, and rights associated therewith. Upon the
execution of this Agreement, Xx. Xxxxxxx and Xx. Xxxxxxx shall deliver to AACC
their written resignations of their respective positions, if any, as an
employee, officer and/or director of AACC.
b. Conduct of Business. From and after the Effective Date and until the
Expiration Date (defined in Paragraph 7(c) below):
x. Xxxxxxx will devote his full time and effort to the conduct of
business of AACC and the AACC's affiliates listed on Exhibit C (the "AACC
Affiliates").
ii. AACC will, and will require each of AACC Affiliates to, (i) conduct
their respective business only in the ordinary course business, and (ii) use
their best efforts to preserve intact their respective present business
organizations and operations, keep available the services of their respective
officers and employees (except those employees and/or officers who are
terminated pursuant to the terms of Paragraph 5(a) above), and preserve their
respective relationships with licensors, suppliers, dealers, customers, clients,
and others having business relationships with AACC and/or any AACC Affiliate.
c. Restrictions on Business Operations. From and after the Effective
Date and until the Expiration Date:
x. Xxxxxxx will not permit AACC to, and AACC will not, without the
prior written consent of KDMV, directly or indirectly:
(A) grant or agree to grant any bonus to Clinton; pay or agree to pay
Clinton annual cash compensation in excess of $200,000; provide for any new
pension, retirement or other employee benefit plan or any increase in any
existing employee benefits to Clinton; or pay or reimburse any expenses incurred
by Clinton except those expenses that are reasonable in amount and in direct
furtherance of AACC's business. (B) authorize the creation or issuance of, or
issue or sell any shares of its capital stock or any securities or obligations
convertible into or exchangeable for, prior to the Expiration Date, or giving
any person any right to acquire from it, prior to the Expiration Date, any
shares or its capital stock, unless (1) after any such creation, issuance, sale,
or acquisition, Clinton owns at least fifty one percent (51%) of AACC's
outstanding capital stock, or (2) the definitive agreement governing such
creation, issuance, sale, or acquisition requires the cash proceeds to be
received by AACC or Clinton pursuant thereto to be no less than the outstanding
principal amount and accrued interest under the Note (the "Note Balance"), and
provides for such cash proceeds to be first paid to KDMV to satisfy the Note
Balance.
(C) merge or undertake an exchange of shares with any other entity
unless, after any such merger or exchange, Clinton owns at least fifty one
percent (51 %) of AACC or the surviving entity's then outstanding capital stock.
(D) consolidate with another entity.
(E) redeem, repurchase, or otherwise acquire any shares of its capital
stock.
(F) voluntarily dissolve or propose to its shareholders that AACC
voluntarily dissolves.
(G) sell, dispose of, transfer or encumber any of its assets, other
than in the ordinary course of business, unless (1) the proceeds of any such
transaction are to be retained and used exclusively in AACC's business
(including an additional contribution to the capital of an AACC Affiliate), or
(2) the definitive agreement governing such transaction requires the cash
proceeds to be received by AACC or Clinton to be no less than the Note Balance
and to be first paid to KDMV and applied to the Note Balance.
(H) declare, set aside, or pay any dividend in cash or property with
respect to its capital stock.
(1) enter into an agreement to do any of the things described in
clauses (A) - (H) above.
ii. Neither Clinton nor AACC will permit any AACC Affiliate to, without
the prior written consent of KDMV, directly or indirectly:
(A) grant or agree to grant any bonus to Clinton; pay any salary to
Clinton; provide for any pension, retirement or other employee benefit plan or
any increase in any existing employee benefits to Clinton; or pay or reimburse
any expenses incurred by Clinton except those expenses that are reasonable in
amount and in direct furtherance of an AACC Affiliate's business.
(B) split, combine or otherwise change its capital stock;
(C) authorize the creation or issuance of, or issue or sell any shares
of its capital stock or any securities or obligations convertible into, or
exchangeable for, or giving any person any right to acquire from it, any shares
or its capital stock.
(D) merge, consolidate, or undertake an exchange of shares with any
other entity.
(E) sell, dispose of, transfer or encumber any of its assets, except in
the ordinary course of business, unless (1) the proceeds of any such
transactions are to be retained and used exclusively in an AACC Affiliate for
exclusive use in an AACC Affiliate's business (which would include a dividend or
disbursement to AACC for exclusive use in an AACC's Affiliate's business), or
(2) the definitive agreement governing such transaction requires the cash
proceeds to be received by the AACC Affiliate, AACC, or Clinton to be no less
than the Note Balance, and to be first paid to KDMV and applied to the Note
Balance.
(F) enter into an agreement to do any of the things described in the
clauses (A) - (E) above.
6. Return of Assets and Materials. Immediately following the execution
of this Agreement:
x. Xxxxxxx and AACC each agrees to use best efforts to promptly return
to KDMV all confidential and/or proprietary materials and information of, or
owned by, KDMV that were provided by, or on behalf of, KDMV to Clinton and/or
AACC prior to, and/or after, the Merger (the "KDMV Materials"), together with
all copies of the KDMV Materials existing in any format or medium, including
without limitation, print and electronic copies. Clinton and AACC each further
agrees to delete all copies of the KDMV Materials that are stored on either such
party's computers, servers, network, or any portable electronic medium,
including without limitation, diskettes and compact discs. The KDMV Materials
include, without limitation, the mailing list of Blue Hill Media, Inc. (the
"Mailing List").
b. KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx each agrees to use
best efforts to promptly return to AACC all confidential and proprietary
materials and/or information of, or owned by, AACC and/or Clinton that were
provided by, or on behalf of, AACC and/or Clinton to any of KDMV, VisionQuest,
Xx. Xxxxxxx and Xx. Xxxxxxx prior to, and/or after, the Merger (the "AACC
Materials"), together with all copies of AACC materials existing in any format
or medium, including without limitation, print and electronic copies. KDMV,
VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx each further agrees to delete all
copies of the AACC Materials that are stored on any such party's computers,
servers, network, or any portable electronic medium, including without
limitation, diskettes and compact discs. The AACC Materials include, without
limitation, (i) the corporate records, minute book, and stock ledger of AACC;
(ii) financial information of AACC; and (iii) all lists of, and information
relating to, the business partners, employees, vendors, clients, and/or members
of AACC and/or any AACC Affiliate.
7. Non-Competition and Non-Solicitation.
a. Covenants of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx. Each
of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx agrees that neither it/he,
nor any of its/his employees, agents, affiliates, successors, assigns, or heirs
shall (i) solicit, cause, or induce, or attempt to solicit, cause or induce, any
person or entity that is, as of the Effective Date, an employee, contractor,
agent, customer, vendor, and/or known member of AACC (KDMV, VisionQuest, Xx.
Xxxxxxx and Xx. Xxxxxxx each agrees to use reasonable efforts to ascertain
whether a person or entity is a member of AACC) to terminate his/her/its
employment, engagement, association, membership, and/or business relationship
with AACC; (ii) conduct any business, or other activities, associated with, or
relating in any manner, to "Shine Magazine;" and (iii) publish and/or distribute
any work or publication that directly competes with "Shine Magazine." KDMV,
VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx each further agrees not to take any
action to impair, or adversely affect, any business relationship by and between
AACC and any of WorldVision, Xxx.xxx, Money Coach, and National Mediation.
b. Covenants of AACC and Clinton. Each of AACC and Clinton agrees that
neither it/he, nor any of its/his employees, agents, affiliates, successors,
assigns, or heirs shall cause or induce, or attempt to cause or induce, any
person or entity that is, as of the Effective Date, an employee, contractor,
agent, customer, vendor, and/or known member (AACC and Clinton each agrees to
use reasonable efforts to ascertain whether a person or entity is a member of
KDMV) to terminate his/her/its employment, engagement, association, membership,
and/or business relationship with KDMV.
c. Duration and Scope of Covenants. The obligations imposed upon KDMV,
VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx pursuant to Paragraphs 7(a) above, and
the obligations imposed upon AACC and Clinton pursuant to Paragraph 7(b) above,
shall continue in force until the first to occur of (such date, the "Expiration
Date"): (i) the date on which AACC makes full payment to KDMV of the
Consideration in accordance with the terms of this Agreement and the Note; (ii)
August l, 2005; and/or (iii) the date on which KDMV acquires ownership of the
AACC Shares pursuant to the terms of the Note, following an uncured default
under the Note by AACC.
8. Non-Use and Non-Disclosure Covenants.
a. Covenants of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx. Each
of KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx agrees that neither it/he,
nor any of its/his employees, agents, affiliates, successors, assigns, or heirs
shall disclose to any person or entity, or use in any manner, any confidential
and/or proprietary information owned by AACC and/or Clinton, including without
limitation, the AACC Materials, intellectual property, software, devices,
inventions, processes, compilations of information, records, source codes,
object codes, and specifications, customer lists, member lists, vendor lists,
and financial, accounting, statistical, and personnel information concerning
Clinton, AACC, or customers, clients, employees, vendors, and/or members of AACC
(collectively, "AACC Confidential Information"). Notwithstanding anything set
forth in this Agreement to the contrary, neither KDMV, VisionQuest, Xx. Xxxxxxx,
nor Xx. Xxxxxxx shall have any obligation to AACC or Clinton with respect to any
AACC Confidential Information which: (i) is or becomes publicly known other than
as a consequence of a breach of this Agreement by KDMV, Xx. Xxxxxxx and/or Xx.
Xxxxxxx; (ii) is or becomes publicly known other than as a consequence of a
breach of a confidentiality obligation owed to AACC and/or Clinton by a bona
fide third party; (iii) is or has been developed by KDMV, VisionQuest, Xx.
Xxxxxxx, and/or Xx. Xxxxxxx prior to the Effective Date, independently of and
without reference to anything provided to any such party by AACC and/or Clinton;
(iv) is obtained by KDMV, VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx from a
bona fide third party that is not under an obligation of confidentiality with
respect thereto to AACC and/or Clinton; (v) KDMV, VisionQuest, Xx. Xxxxxxx,
and/or Xx. Xxxxxxx is required to disclose pursuant to any applicable, law,
rule, or regulation; and/or order of a court, tribunal or government agency;
and/or (vi) is necessary to disclose in connection with any legal proceeding
regarding this Agreement, or the transactions contemplated hereby.
b. Covenants of AACC and Clinton. Each of AACC and Clinton agrees that
neither it/he, nor any of its/his employees, agents, affiliates, successors,
assigns, or heirs shall disclose to any person or entity, or use in any manner,
any confidential and/or proprietary information owned by KDMV, VisionQuest, Xx.
Xxxxxxx, and/or Xx. Xxxxxxx, including without limitation, the KDMV Materials,
intellectual property, software, devices, inventions, processes, compilations of
information, records, source codes, object codes, and specifications, customer
lists, member lists, vendor lists, and financial, accounting, statistical, and
personnel information concerning KDMV, or customers, clients, employees,
vendors, and/or members of KDMV (collectively, "KDMV Confidential Information").
Notwithstanding anything set forth in this Agreement to the contrary, neither
AACC nor Clinton shall have any obligation to KDMV, VisionQuest, Xx. Xxxxxxx, or
Xx. Xxxxxxx with respect to any KDMV Confidential Information which: (i) is or
becomes publicly known other than as a consequence of a breach of this Agreement
by AACC and/or Clinton; (ii) is or becomes publicly known other than as a
consequence of a breach of a confidentiality obligation owed to KDMV,
VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx by a bona fide third party; (iii)
is or has been developed by AACC and/or Clinton prior to the Effective Date,
independently of and without reference to anything provided to any such party by
KDMV, VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx; (iv) is obtained by AACC
and/or Clinton from a bona fide third party that is not under an obligation of
confidentiality with respect thereto to KDMV, VisionQuest, Xx. Xxxxxxx, and/or
Xx. Xxxxxxx; (v) AACC and/or Clinton is required to disclose pursuant to any
applicable, law, rule, or regulation; and/or order of a court, tribunal or
government agency; and/or (vi) is necessary to disclose in connection with any
legal proceeding regarding this Agreement, or the transactions contemplated
hereby.
c. Duration of Non-Use and Non-Disclosure Covenants. The obligations
imposed on each party pursuant to the terms of Paragraphs 8(a) and (b) above
shall continue in force for a period of three (3) years commencing on the
Effective Date.
9. Representations and Warranties.
a. Representations and Warranties of KDMV. KDMV represents and warrants
to AACC and Clinton as follows:
i. KDMV is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with full corporate power and
authority to conduct its business as now conducted and to own and operate the
assets and properties now owned and operated by it.
ii. KDMV has full power and authority to enter into this Agreement, and
has taken all action necessary to authorize the transactions effected hereby. No
consents, approvals, orders or authorizations of any third party, including but
not limited to governmental bodies, are required for the execution, delivery or
performance of this Agreement by KDMV.
iii. True and correct copies of AACC's article and bylaws are attached
to this Agreement as Exhibits D and E, respectively.
iv. The authorized capital stock of AACC consists of 110,000,000
shares, of which 100,000,000 are shares of common stock, $0.001 par value, of
which, as of the Effective Date, 10,000,000 shares are validly issued and
outstanding, fully paid and nonassessable. AACC has not (1) issued, sold,
transferred, assigned, pledged, or otherwise disposed of, or encumbered, any
shares of any class of capital stock of AACC; (2) issued any options, warrants,
or rights to acquire shares of any class of capital stock of AACC; (3) issued
any securities convertible into shares of any class of capital stock of AACC;
(4) entered into any agreement or arrangement granting any person or entity the
right or power to convert debt or other obligations into, or otherwise acquire,
any shares of capital stock of AACC; and/or (5) entered into any commitments,
agreements, or arrangements relating to any of the foregoing.
v. KDMV owns the AACC Shares free and clear of all liens, pledges,
encumbrances and rights of any nature whatsoever of any other person or entity,
including the right to convert debt or other obligations into any of the AACC
Shares.
vi. KDMV has full power and authority to so transfer the AACC Shares to
Clinton, free and clear of all liens, pledges, encumbrances and rights of any
nature whatsoever of any other person or entity.
vii. Except as set forth on Exhibit F, to its best knowledge, KDMV has
taken no direct or indirect action whatsoever since July 31, 2003 to cause, or
that has resulted in, the transfer, sale, assignment, pledge, encumbrance, or
disposition of any assets or rights of AACC, including without limitation, any
intellectual property or intellectual property rights of AACC.
viii. Except as set forth on Exhibit F, to its best knowledge, KDMV has
taken no direct or indirect action whatsoever since July 31, 2003 to cause, or
that has resulted in, the imposition of any valid and binding financial or other
obligations on AACC, including without limitation, any contractual obligations.
b. Representations and Warranties of Xx. Xxxxxxx and Xx. Xxxxxxx. Xx.
Xxxxxxx and Xx. Xxxxxxx each represents and warrants to AACC and Clinton that:
i. Except as set forth on Exhibit F, attached hereto, to his best
knowledge, he has taken no direct or indirect action whatsoever since July 31,
2003 to cause, or that has resulted in, the transfer, sale, assignment, pledge,
encumbrance, or disposition of any assets or rights of AACC, including without
limitation, any intellectual property or intellectual property rights of AACC.
ii. Except as set forth on Exhibit F, attached hereto, to his best
knowledge, he taken no direct or indirect action whatsoever since July 31, 2003
to cause, or that has resulted in, the imposition of any binding financial or
other obligations on AACC, including without limitation, any contractual
obligations.
c. Representations and Warranties of Clinton. Clinton represents and
warrants to KDMV as follows:
x. Xxxxxxx owns the KDMV Shares free and clear of all liens, pledges,
encumbrances and rights of any nature whatsoever of any other person or entity.
ii. Clinton has full power and authority to transfer the KDMV Shares to
KDMV, free and clear of all liens, pledges, encumbrances and rights of any
nature whatsoever of any other person or entity.
10. Indemnity.
a. Indemnification by KDMV. KDMV agrees to indemnify and hold harmless
AACC and Clinton from and against all threatened and actual fines, obligations,
liability, losses, costs, expenses, damages, and expenses (including reasonable
attorney's fees and court costs) (collectively, "Losses") that AACC and/or
Clinton suffers or incurs in connection with, or that arises out of (i) any
misrepresentation or breach by KDMV of its warranties set forth in Paragraphs
9(a)(i)-(viii) above; (ii) any contract or agreement entered into, or obligation
incurred, by AACC, without Clinton's prior knowledge or consent, as a result of
any act or omission of KDMV, except for the obligations and contracts set forth
on Exhibit F attached hereto (the "AACC Contracts"); (iii) AACC and/or Clinton's
use of the Mailing List, and/or the return of the Mailing List to KDMV; (iv) any
and all filings made by, or on behalf, of KDMV with the Securities and Exchange
Commission (the "SEC"), or with any other person or entity pursuant to the Rules
of the Securities and Exchange Commission, the Nasdaq Stock Market, Inc., the
National Association of Securities Dealers, the rules and regulations of other
applicable regulatory agencies (collectively, "Agencies"), or as otherwise
required by law, relating in any way to AAAC, the Merger, and/or this Agreement,
including without limitation, the Audit, and any other financial audit,
assessment, or report of the financial affairs of AACC and/or KDMV prepared by,
or on behalf of, KDMV (any such filing, a "Filing"); and (v) any financial
audit(s) or other financial reports, prepared by, or behalf of, KDMV relating in
any way to AACC, including without limitation the audit prepared by Wrinkle,
Xxxxxxx & Company, PC (the "Audit"). The indemnities set forth in Paragraphs
10(a)(iv) and (v) above shall not apply to any Losses caused, or incurred by,
AACC and/or Clinton as a direct result of any information provided by Clinton
and/or AACC to KDMV relating to the finances of AACC prior to July 31, 2003,
provided that such information was not altered or modified in any manner by, or
on behalf of, KDMV.
b. Indemnification by Xx. Xxxxxxx and Xx. Xxxxxxx. Xx. Xxxxxxx and Xx.
Xxxxxxx each agrees to indemnify and hold harmless AACC and Clinton from and
against all Losses that AACC or Clinton suffers or incurs in connection with, or
that arises out of, (i) any misrepresentation or breach by Xx. Xxxxxxx and/or
Xx. Xxxxxxx of their respective warranties set forth in Paragraphs 9(c)(i)-(ii)
above; (ii) any contract entered into, or obligation incurred, by AACC, without
Clinton's prior knowledge and/or consent, as a result of any act or omission of
Xx. Xxxxxxx and/or Xx. Xxxxxxx, except for the AACC Contracts; (iii) AACC and/or
Clinton's use of the Mailing List, and/or the return of the Mailing List to
KDMV; (iv) any and all Filings made by, or on behalf, of KDMV; and (v) any
financial audit(s) or other financial reports, prepared by, or behalf of, KDMV
relating in any way to AACC, including without limitation, the Audit. The
indemnities set forth in Paragraphs 10(b)(iv) and (v) above shall not apply to
any Losses caused, or incurred by, AACC and/or Clinton as a direct result of any
information provided by Clinton and/or AACC to KDMV relating to the finances of
AACC prior to July 31, 2003, provided that such information was not altered or
modified in any manner by, or on behalf of, KDMV.
c. Indemnification by Clinton. Clinton agrees to indemnify and hold
harmless KDMV, Xx. Xxxxxxx, and Xx. Xxxxxxx from and against any and all Losses
that KDMV suffers or incurs in connection with, or that arises out of any
misrepresentation or breach by Clinton of his warranties set forth in Paragraphs
9(d)(i)-(ii) above.
11. Release of Claims.
a. Release by KDMV. KDMV, on its own behalf, and on behalf of its
successors and assigns, hereby forever releases, acquits and discharges, and
agrees not to xxx or institute any legal action against, AACC and/or Clinton,
and its/his respective agents, contractors, employees, officers, directors,
shareholders, trustees, members, assigns, estates, heirs, personal
representatives and successors-in-interests, from, against, and with respect to,
all claims, actions, liability, obligations, damages and causes of action, of
every kind, nature, and description whatsoever, whether based in tort, contract,
or otherwise, and/or alleging breach of fiduciary duty, fraud, conflict of
interest, or otherwise, which arose, accrued, or relate to any matter, action,
omission or circumstance occurring or existing prior to and including the
Effective Date, whether known or unknown, asserted or unasserted (collectively,
"Claims"), including without limitation, (i) the KDMV Claims; (ii) any and all
Claims, regardless of when such Claims arise, arising under, or otherwise
relating to, the negotiation, execution, performance, and/or breach of the
Merger Agreement, and/or any of the Exhibit Agreements; (iii) except for this
Agreement, any and all Claims arising out of, or related to, KDMV's rights as a
party under any agreement with AACC and/or Clinton, and/or under any
organizational document of AACC and/or KDMV; (iv) any and all Claims related to,
or arising out of, any and all agreements and transactions related in any way to
the Merger, except for AACC and Clinton's respective covenants, obligations and
warranties under this Agreement and the Note (which Claims are expressly
excluded from this Paragraph 11(a)); (v) any and all Claims related to, or
arising out of, any and all acts and omissions of AACC and Clinton prior to the
Effective Date; (vi) any and all Claims for, related to, or arising out of,
Losses suffered or incurred by KDMV as a result of executing and performing this
Agreement, unless such Losses are caused directly by AACC and/or Clinton's
failure to perform any of its obligations under this Agreement and/or the Note
in accordance with the terms thereof; (vii) any and all Claims arising out of,
or related to, KDMV's status or interests as a shareholder of AACC; (viii) any
and all Claims for Losses arising out of, or otherwise related to, any and all
Filings made by, or on behalf of, KDMV; and (ix) any and all Claims for Losses
arising out or, or otherwise related to, any financial audit(s) or other
financial reports, prepared by, or behalf of, KDMV relating in any way to AACC,
including without limitation, the Audit.
b. Release by VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx. Each of
VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx, on its/his own behalf, and on behalf
of its/his respective successors, assigns, heirs, and/or personal
representatives, hereby forever releases, acquits and discharges, and agrees not
to xxx or institute any legal action against, AACC and/or Clinton, and its/his
respective agents, contractors, employees, officers, directors, shareholders,
trustees, members, assigns, estates, heirs, personal representatives and
successors-in-interests, from, against, and with respect, to all Claims
occurring or existing prior to and including the Effective Date, including
without limitation, (i) the KDMV Claims; (ii) any and all Claims, regardless of
when such Claims arise, arising under, or otherwise relating, to the
negotiation, execution, performance, and/or breach of the Merger Agreement,
and/or any of the Exhibit Agreements; (iii) except for this Agreement, any and
all Claims arising out of, or related to, VisionQuest, Xx. Xxxxxxx and/or Xx.
Xxxxxxx'x rights as a party under any agreement with AACC and/or Clinton, and/or
under any organizational document of AACC; (iv) any and all Claims related to,
or arising out of, any and all agreements and transactions related in any way to
the Merger, except for AACC and Clinton's respective covenants, obligations and
warranties under this Agreement and the Note (which Claims are expressly
excluded from this Paragraph 11(b)); (v) any and all Claims related to, or
arising out of, any and all acts and omissions of AACC and Clinton prior to the
Effective Date; (vi) any and all Claims for, related to, or arising out of,
Losses suffered or incurred by VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx as a
result of executing and performing this Agreement, unless such Losses are caused
directly by AACC and/or Clinton's failure to perform any of its obligations
under this Agreement and/or the Note in accordance with the terms thereof; (vii)
any and all Claims arising out of, or related to, VisonQuest's status or
interests as a shareholder of AACC; (viii) any and all Claims arising out of, or
related to, any position, status, role or title that Xx. Xxxxxxx and/or Xx.
Xxxxxxx holds, or held, in or with respect to AACC, including without limitation
any position, status, role or title as an employee, officer or director of AACC,
and the termination thereof.; (ix) any and all Claims for Losses arising out of,
or otherwise related to any and all Filings made by, or on behalf of, KDMV; and
(x) any and all Claims for Losses arising out or, or otherwise related to, any
financial audit(s) or other financial reports, prepared by, or behalf of, KDMV
relating in any way to AACC, including without limitation, the Audit.
c. Release by Clinton and AACC. Each of AACC and Clinton, on its/his
own behalf, and on behalf of its/his respective successors, assigns, heirs,
and/or personal representatives, hereby forever releases, acquits and
discharges, and agrees not to xxx or institute any legal action against, KDMV,
VisionQuest, Xx. Xxxxxxx and/or Xx. Xxxxxxx, and its/his respective agents,
contractors, employees, officers, directors, shareholders, trustees, members,
assigns, estates, heirs, personal representatives and successors-ininterests,
from, against, and with respect to, all Claims occurring or existing prior to
and including the Effective Date, including without limitation, (i) the Clinton
Claims; (ii) any and all Claims, regardless of when such Claims arise, arising
under, or otherwise relating to the negotiation, execution, performance, and/or
breach of the Merger Agreement, and/or any of the Exhibit Agreements, (iii)
except for this Agreement, any and all Claims arising out of or related to
Clinton and/or AACC's rights as a party under any agreement with KDMV, or under
any organizational document of AACC or KDMV; (iv) any and all Claims related to,
or arising out of, any and all agreements and transactions related in any way to
the Merger, except for KDMV, VisionQuest, Xx. Xxxxxxx, and Xx. Xxxxxxx'x
respective covenants, obligations and warranties under this Agreement and the
Note (which Claims are expressly excluded from this Paragraph 11(c)); (v) any
and all Claims related to, or arising out of, any and all acts and omissions of
KDMV, VisionQuest, Xx. Xxxxxxx, and/or Xx. Xxxxxxx prior to the Effective Date;
(vi) any and all Claims for, related to, or arising out of, Losses suffered or
incurred by AACC and/or Clinton as a result of executing and performing this
Agreement, unless such Losses are caused directly by KDMV, VisionQuest, Xx.
Xxxxxxx, and/or Xx. Xxxxxxx'x failure to perform any of its obligations under
this Agreement in accordance with the terms hereof; (vii) any and all Claims
arising out of, or related to, Clinton's interest as a shareholder and/or
creditor of AACC and/or KDMV; and (viii) any and all Claims arising out of, or
related to, any position, status, role or title that Clinton holds, or held, in
or with respect to AACC and/or KDMV, including without limitation any position,
status, role or title as an employee, officer and/or director of AACC and/or
KDMV, and the termination thereof.
12. Dismissal of Action. The parties agree to endorse and tender to the
Court for entry the Dismissal Order attached hereto as Exhibit G (the "Dismissal
Order").
13. Acknowledgements. Each of the parties hereto acknowledges and
agrees that (i) the terms of this Agreement have been negotiated by the parties,
with each party being represented by, or having the opportunity to be
represented by, separate, independent legal counsel throughout such
negotiations; and (ii) it has determined the terms of this Agreement to be fair
to, and in the best interests of, such party (and with respect to KDMV,
VisionQuest, and AACC, in the best interests of its respective shareholders).
14. Further Assurances. Upon the request of any other party hereto from
time to time, each party hereto agrees to execute and deliver all documents or
instruments, make all truthful oaths, testify in any proceedings and do all
other acts that may be reasonably necessary or desirable, in the opinion of the
requesting party, to carry out and implement the transactions and agreements
contemplated by this Agreement.
15. Non-Disparagement. Each party hereto agrees that it/he shall not
make or publish any disparaging, knowingly false, or defamatory statements or
comments to any person or entity concerning any other party hereto, including
without limitation, any such comments or statements relating to the Merger, the
performance or breach of any party of its obligations under the Merger Agreement
and/or any of the Exhibit Agreements, and/or the circumstances giving rise to
the execution of this Agreement. Further, KDMV agrees that, any public release
and/or filing made by, or on behalf of, KDMV of any report or statement
concerning AACC, the Merger, this Agreement, and/or the circumstances giving
rise to this Agreement, including without limitation, any Filing, shall not
criticize, disparage, condemn, apportion blame to concerning the circumstances
giving rise to this Agreement, or contain adverse comments or statements
concerning, Clinton, AACC, an AACC Affiliate, and/or any employee, member,
client, and/or customer of AACC or an AACC Affiliate.
16. Attorney's Fees and Costs. Each party acknowledges and agrees that
it shall be solely responsible for its attorneys' fees and costs incurred in the
Action, and in the negotiation of this Agreement.
17. Provisions of General Application.
a. This Agreement shall be construed, interpreted, and applied
according to the law of the Commonwealth of Virginia, without reference to the
choice of laws principles of any jurisdiction.
b. This Agreement shall be binding upon and shall inure to the benefit
of the heirs, personal representatives, successors, and assigns of the parties.
c. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all agreements and
understandings between the parties with respect to the subject matter hereof
made prior to the date hereof.
d. There are no representations, warranties, understandings or
agreements relating to the subject matter hereof which are not fully expressed
in this Agreement.
e. If any provision of this Agreement or the application of any
provision shall be unenforceable, the rights and obligations of the parties
shall be construed and enforced with that provision limited so as to make it
enforceable to the greatest extent allowed by law or, if it is totally
unenforceable, as if this Agreement did not contain that particular provision.
f. No amendment, modification, waiver or discharge of this Agreement
will be valid unless in writing and signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced.
g. This Agreement may be executed in any number of counterparts, each
of which shall for all purposes constitute one agreement that is binding on the
parties hereto. This Agreement may also be executed by the use of counterpart
signature pages and all executed facsimile or photostatic copies of any
counterpart signature page shall be deemed to be an original.
END OF AGREEMENT. SIGNATURE PAGE FOLLOWS.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
and Release as of the date first above written.
KINGDOM VENTURES, INC.
By: Xxxx X. Xxxxxxx, President
VISIONQUEST MINISTRIES, INC.
By: Xxxx Xxxxxxx, President
AMERICAN ASSOCIATION OF
CHRISTIAN COUNSELORS, INC.
By: Xxxxxxx X. Xxxxxxx, President
XXXX X. XXXXXXX
XXXX XXXXXXX
XXXXXXX X. XXXXXXX
Exhibit A Escrow Agreement
Exhibit B Note
Exhibit C AACC Affiliates
l. Shine Media, LLC
2. American Association of Christian Counselors Foundation, Inc. Exhibit D
Articles of Incorporation of AACC
Exhibit E Bylaws of AACC
Exhibit F AACC Contracts
1. Invoice # 50, dated September 10, 2003, in the amount of $2,915, of
Christian Times, Inc.
2. Invoice # 51, dated October 13, 2003, in the amount of $2,915, of
Christian Times, Inc.
3. Invoice #52, dated September 25, 2003, in the amount of $4,925, of
Christian Times, Inc.
4. Invoice #56, dated October 29, 2003, in the amount of $3,300, of
Christian Times, Inc.
5. Invoice #245, dated November 16, 2003, in the amount of $1,800, of
Ministry Xxxxxx.xxx.
6. Invoice #2944, dated October 21, 2003, in the amount of $1,690, of Xx.
Xxx Productions.
7. Invoice #2821, dated September 16, 2003, in the amount of $1,763.56, of
Xx. Xxx Productions.
AACC agrees to pay the above-referenced invoices by no later than June
30, 2004.
Exhibit G Dismissal Order
