SETTLEMENT and RELEASE AGREEMENT
THIS AGREEMENT MADE THIS 18th day of February, 2005 BY AND AMONG ACS HOLDINGS,
INC., a Nevada corporation and American Card Services Inc., a Delaware
corporation (collectively "ACS"),
AND
▇▇▇▇ ▇▇▇▇▇, individually and for and on behalf of Grafton Inc and the ▇▇▇▇ &
▇▇▇▇ ▇▇▇▇▇ Revocable Trust; ▇▇▇▇▇▇ ▇▇▇▇▇▇, individually and for and on behalf of
Ventura Holdings Ltd.; ▇▇▇▇ ▇▇▇▇▇▇▇, individually and for and on behalf of
Nelena Holdings Ltd.; ▇▇▇ ▇▇▇▇▇▇, individually and for and on behalf of ▇▇▇ &
▇▇▇▇▇ ▇▇▇▇▇▇ Family Trust; ▇▇▇▇▇ ▇▇▇▇▇▇, individually and for and on behalf of
MJJ Ventures LLC ; ▇▇▇▇▇▇ ▇▇▇▇▇; individually and for and on behalf of ACS
Funding LLC; ▇▇▇▇▇▇▇ ▇▇▇▇; individually and for and on behalf of ACS Funding
LLC; ▇▇▇▇ ▇▇▇▇▇▇▇, individually and for and on behalf of ACS Funding LLC; ▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇, individually; ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, individually; ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
individually; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually; (collectively "Investors").
ACS and Investors collectively referred to as Parties.
WHEREAS, Investors invested sums set forth herein below in ACS, and
WHEREAS, Investors obtained from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇, personal guarantees for
said investments (for purposes of this Agreement, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Rodering Inc. of California, Rodering Inc of Georgia, Rodering DB Plan,
Rodering Inc Profit Sharing Plan & Trust, Rodering Trust; ▇▇▇▇▇ Revocable Living
Trust, and any and all entities owned or controlled by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇ are
collectively referred to in this Agreement as "▇▇▇▇▇"); and
WHEREAS, ACS is a publicly traded company on the NASDAQ Bulletin Board that
elected to be governed under the Investment Act of 1940 ("BDC"), and
WHEREAS, the business model of ACS in the debit card business was not
successful, and
WHEREAS, ACS engaged KMA Capital Partners Ltd. to turn around and restructure
ACS, and
WHEREAS, KMA pursuant to a contract with ACS preserved the public trading status
of ACS on the NASDAQ Bulletin Board, including but not limited to, completing
certain financial reporting, and
WHEREAS, it has been determined by KMA and ACS that a restructuring of ACS is
necessary to preserve ACS and bring it into compliance with the Investment Act
of 1940, and
WHEREAS, Investors and ACS have had certain discussions regarding the
restructuring of ACS, which the Parties now wish to reduce to writing in this
Agreement.
NOW, THEREFORE IN CONSIDERATION OF THE MUTUAL PROMISES, REPRESENTATIONS, AND
COVENANTS CONTAINED HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE
PARTIES AGREE AS FOLLOWS:
Article 1. Settlement and Release. At Closing, Investors shall receive the
Preferred Shares and Warrants set forth herein below in full settlement,
release, discharge and exchange of all of their rights, title, and interest in
and to ACS, including but not limited to, principal, interest, penalties, debts,
security interests, liens, encumbrances, compensation, fees, payroll,
obligations, options, warrants, equity, conversion or other similar financial
obligations or instruments of ACS.
Article 2. Preferred Shares. Investors shall receive Preferred Shares and
Warrants in proportion to their interests set forth in Schedule "A" attached
hereto and made a part hereof. Said Preferred Shares and shall have the
following attributes.
a) At Closing Investors shall have parity with KMA, so that
Investors shall receive (in accordance with the Schedule "A")
Preferred Shares totaling Three Hundred Million (300,000,000) and
Three Hundred and Twenty Five Million (325,000,000) Warrants. The
Preferred and Warrants shall have no face value. The Warrants
shall be convertible into the Preferred at a price of $0.0001.
The Warrants shall be entitled to convert the earlier of the
effective date of the Reverse Split of ACS or six (6) months.
Company shall be liable to Investors for the Warrant conversion
strike price for those Warrants that are exercised.
b) The Preferred Shares are convertible into Common one to one.
c) After Closing, Investors position may increase for fresh equity
capital or services obtained by ACS.
d) The Preferred Shares shall be entitled to one vote per share.
e) The Preferred Shares as a group shall be entitled to revenue
sharing dividend of twenty five (25%) of the net revenue of ACS.
Net revenue is defined as the net revenue as reported under SEC
financial filings. Said dividend may be payable in cash or common
stock at the option of the Investors
f) The Preferred Shares are callable by ACS at 120% of value after
twenty four (24) months, subject to Article 2(b) hereinabove.
Value shall be determined by mutual agreement of the Parties. In
the event the Parties cannot agree, than the Parties shall submit
the disputes to binding arbitration under this Agreement.
Article 3. Board. ACS shall not have less than a five (5) person board.
Investors shall be entitled to elect two (2) board members and KMA shall be
entitled to elect two (2) board members and the fifth member shall be an
independent member mutually agreed to by the parties.
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Article 4. Management. The current management of ACS by KMA shall remain
unchallenged by Investors for not less than twenty four (24) months from the
date of the Closing, subject to Article 6.
Article 5. ▇▇▇▇▇. In further consideration of the exchange in this Agreement,
Investors at Closing, shall assign, convey, transfer, bargain, and sell unto ACS
all right, title and interest of Investors, if any, to any and all guarantees of
▇▇▇▇▇. The release of ACS from liability on the obligations of Investors shall
not release ▇▇▇▇▇. from their obligations on said guarantees.
Article 6. Business Plan and Two Year Benchmarks. As part of the ACS business
model ACS shall raise funds under the 40 Act and acquire portfolio companies in
accordance with the BDC model as may be determined from time to time by ACS
management. Provided however, ACS shall endeavor to reach the following
benchmarks
a) 1Q 2005 - continue restructuring
b) 2Q & 3Q 2005 - complete Business Plan; start development of
portfolio companies; possible first acquisition
c) Year end 2005 - complete restructuring and deploy business plan;
and distribute a cash dividend to the Preferred Shareholders,
subject to state corporate statutes.
d) 2006 - to be determined. Distribute a cash dividend to the
Preferred Shareholders, subject to state corporate statutes.
e) In addition, ACS shall endeavor to create liquidity and an annual
return.
Article 7. Closing. The Closing shall take place on February 21, 2005
("Closing") at the offices of ACS. At Closing the Parties shall deliver all
information and documents necessary or reasonably required by the Parties to
fulfill their respective obligations hereunder. The Closing may take place by
facsimile transmission or overnight delivery of documents.
Article 8. Continuing Warranties of Investors. Investors hereby warrant and
represent to ACS:
a) that the debts and obligations listed on Schedule A are valid and
enforceable obligations of ACS.
b) that the guarantees of Investors from ▇▇▇▇▇ are valid and
enforceable.
c) That the debts, obligations, and guarantees from ACS ▇▇▇▇▇, have
not been sold, assigned, conveyed or transferred by Investors.
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These warranties and representations are ongoing warranties by Investors and
shall survive the Closing of this Agreement.
Article 9. Ongoing Due Diligence. The Parties hereby acknowledge and agree that
subsequent to the execution of this Agreement and prior to Closing, ACS shall
conduct such further due diligence as it deems in its sole discretion to be
reasonably necessary for Closing.
Article 10. Default and Cure. In the event a Party to this Agreement, fails or
refuses to perform its respective obligations under this Agreement in a timely
manner, then one Party may give Notice hereunder to the defaulting Party of
default hereunder ("Default Notice"). Said Default Notice shall set forth with
sufficient specificity and particularity the details of said default. The Party
to whom said Default Notice is given shall have thirty (30) days from the date
of the delivery of the Default Notice to either (a) cure the deficiencies set
forth in the Default Notice or (b) give written Reply to the Notice setting
forth with particularity the reasons for the nonexistence of default or
inability to cure the default(s).
Article 11. Effective Date and Binding Effect. The effective date of this
Agreement shall be from and after Closing and shall remain in full force and
effect. It shall be not be a requirement for a binding Agreement that all of the
Investors execute the Agreement.
Article 12. Legal Counsel. Parties hereby acknowledge and agree they had full
opportunity to seek legal counsel of their own choosing prior to execution of
this Agreement.
Article 13. Securities Laws and Regulation and Taxation. The Parties hereby
agree and acknowledge that the transfer and exchange of securities pursuant to
this Agreement shall constitute an exempt isolated transaction and the
securities received in such transfer and exchange do not have to be registered
under federal or State securities laws and regulations. Further, it is the
express intent of the Parties that this Agreement, and the transactions
contemplated by it, be treated as tax free to the extent possible under the IRS
Code of 1986 (and regulations thereto).
Article 14. Costs. The Parties shall bear their own legal and other costs in
connection with the making and closing of this Agreement.
Article 15. STANDARD TERMS and CONDITIONS and EXHIBITS. THE PARTIES AGREE
EXHIBIT "A" ATTACHED HERETO ON STANDARD TERMS AND CONDITIONS ARE DEEMED PART OF
THIS AGREEMENT FOR ALL PURPOSES AS THOUGH FULLY SET FORTH HEREIN. FURTHER, THE
PARTIES AGREE AND ACKNOWLEDGE THAT ANY OTHER EXHIBITS, ATTACHMENTS, OR SCHEDULES
THAT ARE MADE A PART OF THIS AGREEMENT OR PROVIDED IN CONNECTION WITH THIS
AGREEMENT ARE DEEMED TO BE A PART OF THIS AGREEMENT FOR ALL PURPOSES.
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IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE EXECUTED IN
THEIR NAMES AND/OR BY AND THROUGH THEIR PROPERLY AND DULY AUTHORIZED
REPRESENTATIVES ON THE DATE FIRST ABOVE WRITTEN.
INVESTORS:
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Individually and for and on behalf of
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ACS:
ACS Holdings, Inc.
By
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▇▇▇▇▇ ▇. ▇▇▇▇▇, COO
American Card Services Inc.
By
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▇▇▇▇▇ ▇. ▇▇▇▇▇, COO
SCHEDULE A
nsert
EXHIBIT A
STANDARD TERMS AND CONDITIONS
Time. Time is of the essence in this Agreement and the transactions contemplated
by it.
Good faith and fair dealing. The parties agree this Agreement imposes an implied
duty of good faith and fair dealing on all the respective obligations of the
Parties.
Headings. The headings of Articles and paragraphs contained in this Agreement
are for convenience of reference only and shall not be considered in construing
this Agreement.
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Obligations After Closing. The Parties shall, after Closing, assist and
cooperate in good faith with each other in providing any and all information or
documents necessary or reasonably required to fulfill their respective
obligations under this Agreement.
Modification and Waiver. This Agreement constitutes the entire Agreement between
the Parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations, and understandings of the
Parties. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by all of the Parties. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute, a waiver
of any other provision, whether or not similar, nor shall any waiver constitute
a continuing waiver. No waiver shall be binding unless executed in writing by
the party making the waiver.
Counterparts & Facsimile. This Agreement and Exhibit may be executed
simultaneously in one or more counter-parts or by facsimile, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
Rights of Parties. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the Parties to it and their respective heirs, legal
representatives, successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons not a party to this Agreement, nor shall any provision give any such
third persons any right of subrogation or action over against any party to this
Agreement.
Assignment. The Parties shall not assign or transfer their respective
obligations under this Agreement. This Agreement shall be binding on, and shall
inure to the benefit of, the Parties to it and their respective heirs, legal
representatives, successors, and any of their respective companies,
subsidiaries, entities, agents, associates, partners, directors, officers,
employees, and representatives.
Arbitration and Governing law. Any and all disputes, controversies or claims
(including any and all disputes, controversies, and claims between the Parties
after Closing) arising out of or relating to this Agreement, or the making,
performance, or interpretation thereof, including the issues of fraud,
misrepresentation, rescission, reformation, revocation, or novation, shall be
fully and finally settled by binding arbitration in accordance with the
Commercial Rules of the American Arbitration Association, then existing. The
arbitration shall take place in Orlando, Florida and judgment on the arbitration
award may be entered in any Court having jurisdiction over the subject matter of
the controversy. The arbitrator(s) in deciding the case shall apply the
commercial law of the State of Florida without regard to the doctrine of
conflicts of law. The obligation of the Parties to submit to binding arbitration
is their sole and exclusive remedy at law or equity and this obligation shall
survive the Closing.
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Costs. If legal action or any arbitration or other proceeding is brought for the
enforcement of this Agreement, or because of any alleged dispute, breach,
default, or misrepresentation, in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorney's fees and other costs incurred, including expert
witness fees, in that action or proceeding, in addition to any other relief to
which it or they may be entitled.
Severability. To the extent any provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid or unenforceable, such
provision shall be deleted from this Agreement, and the validity and
enforceability of the remainder of such provision and of this Agreement shall be
unaffected.
Force Majeure. No Party to this Agreement shall be responsible to the other
Party for nonperformance or delay in performance of the terms or conditions of
this Agreement due to acts of God, acts of governments, war, riots, strikes,
accidents in transportation, or other causes beyond the reasonable control of
such Party.
Authority. Both Parties acknowledge that by execution of this Agreement they
have the right, power, legal capacity, and authority to enter into, and perform
their respective obligations under this Agreement, and no approvals or consents
of any persons other than the Parties are necessary in connection with this
Agreement.
No Conflict with Prior Agreements. Both Parties acknowledge, warrant and agree
that the execution of this Agreement, the consummation of the transactions
contemplated herein, and compliance with the terms of this Agreement, do not and
will not, conflict with, or constitute a default under any indenture, mortgage,
deed of trust or other agreement (oral or written) or instrument to which the
Parties are now a party, or the articles, (and any amendments thereto) or bylaws
of Parties, or any law, order, rule or regulations, injunction, or decree or any
government agency or court, domestic or foreign, having jurisdiction over the
Parties or their respective businesses or properties.
Notices. Any notice or other communication in connection with this Agreement
must be in writing and if by mail, by certified mail, return receipt requested,
and shall be effective when delivered to the addressee at the address listed
below or such other address as the addressee shall have specified in a notice
actually received by the addressor.
If to: ACS Holding, Inc.
ATTN: ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
fax (▇▇▇) ▇▇▇-▇▇▇▇
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If to: INVESTOR
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ATTN:
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fax:
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