Exhibit 2.1
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("the Settlement Agreement"),
by and among ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇ Family Charitable
Foundation, Inc. ("▇▇▇▇▇▇▇▇ Foundation"), ARTA Equity Advisors, LLC ("ARTA"), U.
S. Sporting Interests, LLC ("Sporting Interests"), iExalt, Inc. (Nevada Corp.)
("iExalt Nevada"), iExalt, Inc. (Texas Corp.) ("iExalt Texas"), iExalt
Operating, Inc. ("iExalt Operating"), ▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇
("▇▇▇▇"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), sets forth the terms upon which these
parties have agreed to fully and finally resolve their disputes, as follows:
1. There exist certain disputes, claims, causes of action and
controversies between ▇▇▇▇▇▇▇▇, iExalt Nevada, iExalt Texas, iExalt Operating,
Sapaugh, ▇▇▇▇ and ▇▇▇▇▇▇▇ that relate to loans from ▇. ▇. ▇▇▇▇▇▇ Chase, its
predecessors and/or affiliates to iExalt Nevada or iExalt Texas, and guaranties
delivered or not delivered to ▇. ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, its predecessors and/or
affiliates, in connection with the loans, including without limitation ▇. ▇.
▇▇▇▇▇▇ Chase Note No. 710001 in the amount of $150,000.00 and Note No. 009001 in
the amount of $550,000.00, as well as interest and other bank charges. Some of
those disputes are set forth in the lawsuit entitled ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ vs.
iExalt, Inc. (Texas), iExalt, Inc. (Nevada), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Hunter M. A.
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇. ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, Cause No. 2001-61592, in the
280th Judicial District Court of ▇▇▇▇▇▇ County, Texas.
2. There exist certain disputes, claims, causes of action and
controversies between ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA, Sporting Interests,
iExalt Nevada, iExalt Texas, iExalt Operating, Sapaugh, Carr, and ▇▇▇▇▇▇▇ that
arise from events separate and apart from the Bank claims, including without
limitation those resulting from loans by ▇▇▇▇▇▇▇▇ and Sporting Interests to
iExalt Texas in the aggregate amount of $545,000.00, as well as interest on some
of the notes and attorney's fees, and claims against ▇▇▇▇. Some of those
disputes are set forth in the lawsuit entitled Civil Action No. H-02-0770; ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Family Charitable Foundation, Inc. vs. Hunter M.A. ▇▇▇▇
and iExalt, Inc.; In the United States District Court for the Southern District
of Texas, Houston Division, and in counterclaims not yet filed.
3. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA, Sporting Interests, iExalt
Nevada, iExalt Texas, iExalt Operating, Sapaugh, ▇▇▇▇ and ▇▇▇▇▇▇▇ have agreed to
compromise, settle and provide for the final termination of all disputes,
claims, causes of action and controversies between them, including without
limitation those described in
paragraphs 1 and 2 above, and to set forth in writing the terms of the
settlement.
4. Accordingly, in consideration of the execution of this Settlement
Agreement, and other good and valuable consideration, the amount and sufficiency
of which is known and acknowledged by the parties, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Foundation, ARTA, Sporting Interests, iExalt Nevada, iExalt Texas, iExalt
Operating, Sapaugh, ▇▇▇▇ and ▇▇▇▇▇▇▇ agree as follows:
5. Release by ▇. ▇. ▇▇▇▇▇▇ Chase as Condition Precedent to this
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Settlement. Contemporaneous with the execution of this Settlement Agreement and
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Release, ▇▇▇▇▇▇▇▇ and iExalt Texas and iExalt Nevada are completing a settlement
with ▇. ▇. ▇▇▇▇▇▇ Chase, including without limitation claims based upon the
default of iExalt Texas or iExalt Nevada under Note Nos. 009001 and 710001 and a
limited guaranty from ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ has asserted certain claims
described in a lawsuit against those parties (referenced in paragraph 1 above).
All parties to this Settlement Agreement and Release agree that a full and final
settlement of all disputes with ▇. ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ in a form acceptable to all
parties hereto is a condition precedent to this Settlement Agreement and Release
and, if a settlement with the Bank is not finalized and the required payments
made, then there is no agreement between the parties hereto.
6. Transfer of ePublishing. As consideration for this Settlement
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Agreement and Release, iExalt Nevada, and its affiliates as necessary, transfer
to Sporting Interests all of the assets of ePublishing, currently a division of
iExalt Texas or iExalt Nevada ("ePublishing), including without limitation those
described on the balance sheets dated February 28, 2002 and May 31, 2002
(attached as Exhibit A hereto and incorporated by reference), the name of that
business, and all intellectual property and intangible assets currently utilized
in ePublishing's business, and those liabilities agreed to be assumed by
Sporting Interests (as described on the schedule attached as Exhibit B and
incorporated herein by reference). The transfer does not include the following:
(a) any and all intra-company payables and receivables of ePublishing, meaning
those owed to iExalt Nevada or any of its subsidiaries or affiliates, or any
entity in which an insider of iExalt Nevada is involved, and (b) the $10,000 in
cash withdrawn from ePublishing in April of this year. Sapaugh, in his capacity
as chairman of iExalt Nevada, represents and warrants that (a) iExalt Nevada
owns the assets and liabilities of ePublishing being transferred to Sporting
Interests, (b) the Board of Directors of iExalt Nevada has approved the transfer
of those assets and liabilities to Sporting Interests, (c) ePublishing is not
currently subject to any intra-company payables or receivables, as described
above (and not released at closing), and (d) with the exception of the
$10,000.00 cash withdrawal described above, neither iExalt Nevada nor any of its
affiliates, officers, board members or employees have removed, or obtained the
removal of through another person acting at their direction, any of the assets
of ePublishing since the date of the February 28, 2002 balance sheet that
appears in Exhibit A. iExalt Nevada further agrees to hold Sporting Interests
harmless - including payment of all costs and attorney's fees associated
therewith - in connection with any claims arising from the business of
ePublishing prior to the date of this Agreement, and Sporting Interests agrees
to hold iExalt Nevada and its affiliates harmless - as described above - for
claims arising on or after the date of this Agreement. After the transfer of
ownership Sporting Interests intends to rename the company "Exalt ePublishing,
Inc." and, as part of the settlement, the parties have agreed to waive and
release any objection to or claim arising from use of that name by ▇▇▇▇▇▇▇▇.
All of the parties to this Settlement Agreement and Release agree that they will
not take any action that would cause damage to the business or reputation of
ePublishing, its successor Exalt ePublishing, Inc., or iExalt Nevada.
ePublishing and its successor agree to send, in the form provided by iExalt
Nevada, emails on behalf of iExalt Nevada through its facilities to those
persons listed on the database of pastors owned by ePublishing, which also
includes some non-pastor customers, with the consent of ePublishing or its
successor and on no more than six (6) occasions during the two (2) years
following the execution of this Agreement, at which time ePublishing's
obligation to send such emails on behalf of iExalt Nevada shall cease.
ePublishing and its successor agree that such consent shall not be unreasonably
withheld. iExalt Nevada will be provided advance notice of the costs
associated with sending the emails, and agrees to reimburse ePublishing or its
successor in the event those costs exceed $200.00. An officer of ePublishing or
its successor will certify delivery of (i) the number of emails sent and (ii)
the number of emails actually delivered in a letter to iExalt Nevada following
completion of each set of mailings. Further, ▇▇▇▇▇▇▇▇ is granted the limited
right to use the name of iExalt, Inc. and its logo until the earlier of (i) the
date when all existing inventory of ePublishing containing such name and logo is
utilized or (ii) a period of six (6) months. iExalt Nevada and iExalt Texas
agree to waive any claim arising from the use of the name of iExalt, Inc. and
its logo for the period described.
7. Payments to ▇. ▇. ▇▇▇▇▇▇ ▇▇▇▇▇. As further consideration of this
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Settlement Agreement and Release, iExalt Nevada agrees to pay ▇.▇. ▇▇▇▇▇▇ Chase
$300,000.00 in cash and ▇▇▇▇▇▇▇▇ agrees to pay ▇.▇. ▇▇▇▇▇▇ Chase $150,000.00 in
cash. ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ has agreed to accept the total amount, $450,000.00, in
full and final settlement of the claims arising from the default of iExalt
Nevada and iExalt Texas on the outstanding notes payable to the Bank. The
$150,000.00 paid by ▇▇▇▇▇▇▇▇ to ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ represents a loan by ▇▇▇▇▇▇▇▇
to iExalt Nevada and is to be repaid through regular repayments of principal and
interest at eight percent (8%) per annum, payable in monthly installments of
interest only by iExalt Nevada and by the assignment to ▇▇▇▇▇▇▇▇, pursuant to
this agreement, of fifty
percent (50%) of the remaining payments for the receivables of PremierCare, LLC
or other payments to which iExalt Nevada is entitled under the agreements
pursuant to which PremierCare was sold last year (and on the payment schedule
set forth in those agreements). iExalt Nevada shall be allowed ten (10) days
from notice by ▇▇▇▇▇▇▇▇ to cure any default hereunder. Such payments are to be
received through a lockbox owned by ▇▇▇▇▇▇▇▇ and designated by him for that
purpose. Sapaugh, in his capacity as chairman of iExalt Nevada, represents and
warrants that iExalt Nevada has executed any and all documents necessary to
insure that the referenced payments are collateral for the obligation to
▇▇▇▇▇▇▇▇ and that the payments have been directed to be made in the manner
described. The debt payable to ▇▇▇▇▇▇▇▇ by iExalt Nevada will become due and
payable eighteen (18) months from the date of this agreement, requiring iExalt
Nevada to pay any outstanding balance due at that time. iExalt Nevada agrees to
provide ▇▇▇▇▇▇▇▇ with (a) a copy of all agreements and other documentation
relating to the payments received by iExalt Nevada for the sale of PremierCare,
including those reflecting payments received to date, and (b) documentation from
the payor on a quarterly basis reflecting all sums paid to iExalt Nevada or any
other entity under the agreements under which PremierCare was sold. ▇▇▇▇▇▇▇▇
agrees to initiate no contact with the payor of such sums unless and until a
default by iExalt Nevada on its obligation to make such payments and/or provide
such documentation, subject to the right of iExalt Nevada to cure such default
within ten (10) days of its occurrence.
8. Transfer of iExalt Shares. In further consideration of this
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Settlement Agreement and Release, iExalt Nevada agrees to transfer to ▇▇▇▇▇▇▇▇
Foundation one hundred fifty thousand (150,000) freely tradable shares - meaning
shares tradable on the public markets - of iExalt Nevada and one hundred fifty
thousand (150,000) restricted shares of iExalt Nevada. ▇▇▇▇▇▇▇▇ Foundation
understands and agrees that the 150,000 freely tradable shares will initially be
delivered in restricted form under Rule 144, but that iExalt Nevada believes
that such shares are readily convertible to freely tradable shares based upon
the advice of counsel and the knowledge of its corporate secretary, as reflected
in the letter provided to ▇▇▇▇▇▇▇▇ during the negotiation of this Agreement.
(The letter is attached as Exhibit C hereto and incorporated herein by
reference). In the event the contemplated process for converting the shares
into freely tradable form is not successful, iExalt Nevada agrees to deliver
replacement shares that are freely tradable to ▇▇▇▇▇▇▇▇ Foundation within thirty
(30) from notice of the rejection of the previous shares by the transfer agent.
In the event (i) iExalt Nevada delivers all documents legally required to
accomplish the transfer of the replacement shares to ▇▇▇▇▇▇▇▇ Foundation and
(ii) ▇▇▇▇▇▇▇▇ Foundation fails to execute and return those documents within
seven (7) days from the date received by ▇▇▇▇▇▇▇▇ Foundation, then the
thirty-day period shall be extended by the period of noncompliance that
exceeds the seven (7) days allowed. Regarding the remaining 150,000 restricted
shares, iExalt Nevada agrees to use its best efforts to lift the Rule 144
restriction on those shares at its cost and expense on or before December 31,
2002, and agrees that in no event shall such shares be subject to any
restriction on a date more than one year from their transfer to ▇▇▇▇▇▇▇▇
Foundation. In connection with the shares transferred under this agreement,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Foundation agree that shares representing no more than ten
percent (10%) of the trading volume for the preceding day shall be sold by
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Foundation on a single trading day and that, if they sell
less than that amount, there will be no aggregation of unsold amounts to
increase the number of shares available for sale on a subsequent single day.
▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Foundation agree that the referenced trading
limitation will be binding on any assignee of the shares transferred under this
agreement.
9. Transfer of Note Payable from ▇▇▇▇ Coffee. In further consideration
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of this Settlement Agreement and Release, iExalt Nevada transfers to ▇▇▇▇▇▇▇▇
the note receivable from ▇▇▇▇ Coffee, without representation or warranty.
Sapaugh, in his capacity as chairman of iExalt Nevada, represents and warrants
that iExalt Nevada owns the note and that its Board of Directors approves the
transfer of the note to ▇▇▇▇▇▇▇▇.
10. Release of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA and Sporting
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Interests by iExalt Nevada, iExalt Texas, iExalt Operating, Sapaugh, ▇▇▇▇ and
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▇▇▇▇▇▇▇. By executing this Settlement Agreement, iExalt Nevada, iExalt Texas,
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iExalt Operating, Sapaugh, ▇▇▇▇ and ▇▇▇▇▇▇▇ release and forever discharge, for
themselves, their parent companies, subsidiaries, affiliates, divisions,
predecessors, successors, assigns, partners, employees, representatives,
attorneys, spouses, heirs, executors, administrators and agents, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ Foundation, ARTA and Sporting Interests, and any of ▇▇▇▇▇▇▇▇'
companies, partners, employees, representatives, agents, and attorneys in the
litigation referenced in paragraphs 1 and 2 above, from any and all disputes,
claims, demands, causes of action, controversies, costs, expenses, liabilities
and losses of any and every nature whatsoever, known or unknown, including
without limitation those which have been asserted, directly or indirectly, or
those which could have been asserted but were not.
11. Release of iExalt Nevada, iExalt Texas, iExalt Operating, Sapaugh,
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▇▇▇▇ and ▇▇▇▇▇▇▇ by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA and Sporting Interests.
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By executing this Settlement Agreement, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA and
Sporting Interests releases and forever discharges, for ▇▇▇▇▇▇▇▇ and any of
▇▇▇▇▇▇▇▇' companies, partners, employees, representatives, attorneys and agents,
iExalt Nevada, iExalt Texas, iExalt Operating, Sapaugh, ▇▇▇▇ and ▇▇▇▇▇▇▇, their
parent companies, subsidiaries, affiliates, divisions, predecessors, successors,
assigns, partners, employees, representatives, spouses, heirs, executors,
administrators, agents, and attorneys in the litigation
referenced in paragraphs 1 and 2 above, from any and all disputes, claims,
demands, causes of action, controversies, costs, expenses, liabilities and
losses of any and every nature whatsoever, known or unknown, including without
limitation those which have been asserted, directly or indirectly, or those
which could have been asserted but were not. This release by ▇▇▇▇▇▇▇▇ does not
discharge the obligations of iExalt Nevada to repay the debt to ▇▇▇▇▇▇▇▇ or
remove the restriction on its shares, as described in paragraphs 7 and 8 above.
12. Dismissal of Lawsuits. Following the execution of this Agreement
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by all parties and confirmation of a full and final settlement with ▇. ▇. ▇▇▇▇▇▇
Chase, ▇▇▇▇▇▇▇▇ agrees to dismiss the pending lawsuits, as referenced in
paragraphs 1 and 2 above, with prejudice.
13. No Admission. The settlement of the Subject Matter is not an
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admission of liability by any party. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA,
Sporting Interests, iExalt Nevada, iExalt Texas, iExalt Operating, Sapaugh,
Carr, and ▇▇▇▇▇▇▇ expressly deny any liability for the claims asserted by the
others.
14. No Public Statement. No party to this Settlement Agreement and
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Release shall issue a press release or otherwise make a public statement about
the Agreement or its contents, including those matters referenced in the court's
files in the lawsuits referenced in paragraphs 1 and 2, other than required
regulatory filings.
15. Representations and Warranties. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation,
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ARTA, Sporting Interests, iExalt Nevada, iExalt Texas, iExalt Operating,
Sapaugh, Carr, and ▇▇▇▇▇▇▇ represent and warrant that each of them and their
counsel have read this Settlement Agreement and completely and thoroughly
understand that in entering into this Settlement Agreement, all of the parties
are doing so freely and voluntarily upon the advice of their own counsel - and
not upon the advice of counsel for any other party -- and in the exercise of
their own free act, deed and will, free of any duress or coercion; that except
as specifically contained herein, no representations, promises or statements
have been made by any party hereto or its agents, attorneys or other
representatives, nor has any party hereto or its agents, attorneys or other
representatives influenced the other in making and executing this Settlement
Agreement; and that each of the parties hereto understands that this Settlement
Agreement finally and conclusively settles any and all claims each party may
have against the other and it is each party's desire that such matters be
finally and conclusively settled.
16. Entire Agreement. This Agreement constitutes the entire agreement
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with respect to the settlement of all of the disputes, claims, demands, causes
of action, controversies, costs, expenses, liabilities and losses among
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA, Sporting Interests, iExalt Nevada, iExalt
Texas, iExalt Operating, Sapaugh, Carr, and ▇▇▇▇▇▇▇. There are no other
agreements, direct or collateral, written or oral, between the parties hereto.
All prior
negotiations, agreements, understandings and statements, if any, made by and
among the parties hereto that have occurred on any subject and at any time prior
to or as part of the execution of this Settlement Agreement are superseded by
and merged into this completely integrated Settlement Agreement.
17. Modifications. No modification or alteration of the terms of this
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Settlement Agreement shall be effective unless in writing and signed by
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Foundation, ARTA, Sporting Interests, iExalt Nevada, iExalt
Texas, iExalt Operating, Sapaugh, Carr, and ▇▇▇▇▇▇▇, or any other person that
has the authority to orally waive or modify any provision of this Settlement
Agreement.
18. If Any Provision Declared Unenforceable. If any portion of this
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Settlement Agreement shall for any reason be adjudged by any court or
arbitration panel to be invalid or unenforceable to any extent or in any
application, whether by statute, rule, regulation, decision of tribunal or
otherwise, then the remainder of this Settlement Agreement, and such portion
thereof except to such extent or in such application, shall not be affected
thereby, and each and every term and condition of this Settlement Agreement
shall be valid and enforceable to the fullest extent and in the broadest
application permitted by law.
19. Parties. This Settlement Agreement shall be binding upon each
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party and such party's respective partners, employees, spouses, heirs,
executors, administrators, attorneys, agents, representatives and assigns.
However, nothing in this Settlement Agreement, either express or implied, shall
confer any right or remedy upon any person or entity other than the parties
hereto, or such parties' respective successors or assigns.
20. Facsimile Signatures. All parties agree that a facsimile signature
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shall have the same force and effect as an original signature.
IN WITNESS WHEREOF, the undersigned have executed this Settlement Agreement
on the date next to their signature.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Date: 6/24/02
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ FAMILY CHARITABLE FOUNDATION, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chairman
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ARTA Equity Advisors, LLC
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chairman
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U. S. SPORTING INTERESTS, LLC
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chairman
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IEXALT, INC. (NEVADA CORP.)
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman/CEO
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IEXALT, INC. (TEXAS CORP.)
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman/CEO
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IEXALT OPERATING, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: 6/24/02
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman/CEO
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: 6/24/02
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▇▇▇ ▇▇▇▇▇▇▇
/s/ Hunter M. A. ▇▇▇▇ Date: 6/24/02
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HUNTER M. A. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Date: 6/24/02
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇