Contract
Xxxxx
Xxxxxxx Racing Stables, Inc. (the “Acquirers”) is prepared to acquire ABTTC,
Inc. (“ABTTC” or the “Company) for $7,750,000 under the terms contained in this
term sheet. With the exception of the section of this agreement relating to
expenses, this term sheet is a non-binding document prepared for discussion
purposes only, and the proposed acquisition is specifically subject to customary
stock purchase agreements, legal due diligence, and other conditions precedent
contained herein, all satisfactory to the Acquirers in their sole
discretion
Company:
|
ABTTC,
INC (“ABTTC” or the “Company”).
|
Acquirers:
|
Xxxxx
Xxxxxxx Racing Stables (“MHRS”).
|
Purchase
Amount:
|
$7,750,000
(the “Investment Amount”).
|
Investment
Form:
|
Common
Stock, Series A (the “Common Stock”).
|
Closing:
|
Assuming
satisfactory completion of due diligence, audit and timely acceptance
of
this Summary Term Sheet, MHRS expects to execute definitive agreements
no
later than February 21, 2007. The closing shall be upon completion
on an
audit performed on ABTTC. The closing of this deal shall be conditioned
on
the following:
|
(a)
|
Completion
of employment agreements with the management team on terms acceptable
to
MHRS.
|
(b)
|
The
management team signing noncompete employment contracts with terms
acceptable to MHRS binding the management team to the
company.
|
(c)
|
MHRS
will complete due diligence on all aspects of the Company, including
references and background checks on senior management. During due
diligence, the Company agrees to provide MHRS and its accountants,
attorneys and other representatives complete access to the Company’s
accountants, attorneys, facilities, employees, books, records, customers,
backlog and vendors and such other individuals and information as
needed;
|
(d)
|
The
Company will provide to MHRS audited financial statements for the
years
ended December 31, 2005, 2006 and
2007;
|
(e)
|
The
absence of a material adverse change with respect to the
Company;
|
(f)
|
Any
required governmental or shareholder approvals or
waivers;
|
(g)
|
Satisfactory
completion of legal documentation;
and
|
(h)
|
Approval
of MHRS Board of Directors.
|
(i)
|
MHRS
will be under no obligation to continue with its due diligence or
to
extend the closing contemplated herein, if at any time, the results
of its
due diligence are not satisfactory to MHRS for any reason in its
sole
discretion.
|
Stock
Options:
|
Management
shall be given stock options as part of their new employment contracts.
|
Proposed
Capitalization:
|
The
proposed capitalization is as follows:
|
Pre-Investment
|
||||
Amount
|
%
|
|||
At
Announcement
|
1,750,000
|
22.58%
|
||
1st Quarter
after Closing
|
500,000
|
6.45%
|
||
2nd Quarter
after Closing
|
500,000
|
6.45%
|
||
3rd Quarter
after Closing
|
500,000
|
6.45%
|
||
4th Quarter
after Closing
|
500,000
|
6.45%
|
||
5th Quarter
after Closing
|
500,000
|
6.45%
|
||
6th Quarter
after Closing
|
500,000
|
6.45%
|
||
7th Quarter
after Closing
|
500,000
|
6.45%
|
||
8th Quarter
after Closing
|
500,000
|
6.45%
|
||
9th Quarter
after Closing
|
1,000,000
|
12.90%
|
||
10th
Quarter after Closing
|
1,000,000
|
12.90%
|
||
7,750,000
|
100%
|
|
.
|
The
initial issuance of 1,750,000 shall be at the closing price on the five day
average before the term sheet is announced to the public. Such
issuance shall be restricted until the corresponding S-1 is approved by the
SEC.
alcohol
Good
Faith/Break Up Fee:
|
The
parties acknowledge that ABTTC has offers to be acquired from other
companies, therefore the initial payment of $1,750,000 shall be considered
a good faith payment and credit towards the purchase price. If MZYH
shall
not complete this transaction, the payment shall be considered a
break up
fee.
|
Security:
|
The
purchase and underlying share issuance shall be secured by the shares
being purchase of ABTTC.
|
Events
of Default:
|
An
event of default will occur if the Company (i) becomes legally insolvent
or otherwise is involved in a bankruptcy proceeding, (ii) defaults
on any
outstanding debt which is material to the Company, or (iii) fails in
any
material respect to perform or observe any of the covenants or to
comply
wit any material provisions contained in any agreement with the Series
A
Preferred or in the Articles of Incorporation of the Company. Upon
an
event of default, the remaining amount owed to the shareholder of
ABTTC
shall be due and paid immediately in cash.
|
Employment
and Non-
|
Unless
such agreements already exist in a form satisfactory
|
Competition
Agreements:
|
to
MHRS, the Company will enter into (i) an employment agreement with
the
shareholders of the Company and (ii) non-competition and non-solicitation
agreements with key officers and employees.
|
Definitive
Agreements:
|
The
acquisition will be made pursuant to definitive agreements, which
will
contain, among other things, appropriate representations and warranties
of
the Company. Specific and appropriate remedies to material violations
of
agreements will be included.
|
Expiration:
|
This
Summary Term Sheet will expire on February 28, 2008.
|
Expenses:
|
Upon
closing of the MHRS financing, the Company will pay MHRS’s reasonable
costs and expenses incurred with respect to this
investment. Expenses shall be subject to approval of Xxxxxx
Xxxx and/or Xxxxxxx Xxxxxxxx.
|
Confidentiality:
|
The
Company will keep confidential the existence and terms of this Summary
Term Sheet.
|
Break
Up Clause:
|
ABTTC
agrees to pay any and all fees of MHRS should ABTTC terminate this
Agreement.
|
Obligations:
|
The
parties hereby agree there is no financial obligation on the part
of MHRS
until definitive agreements are entered into between the parties.
|
Except
for the exclusivity and confidentiality provisions described above, this Summary
Term Sheet will not give rise to a binding agreement, and no such binding
agreement will exist with respect to such provisions until definitive agreements
have been executed and delivered.
Agreed
and Accepted:
ABTTC,
INC.
XXXXX XXXXXXX RACING STABLES, INC.
/s/
Xxxxxx
Xxxx
/s/ J. Xxxx Xxxxx
By:
Xxxxxx
Xxxx
By: J. Xxxx Xxxxx
Its:
President
Its: CEO