Contract
Xxxxx
Xxxxxxx Racing Stables, Inc. (the “Acquirers”) is prepared to acquire ABTTC,
Inc. (“ABTTC” or the “Company) 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
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Company:
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ABTTC,
INC (“ABTTC” or the “Company”).
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Acquirers:
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Xxxxx
Xxxxxxx Racing Stables (“MHRS”).
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Purchase
Amount:
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2.85x
Gross Revenue (the “Investment Amount”). Gross revenue shall be
defined as the revenue received by the company from the 12 months ending
with June 30, 2008 as determined by the audit of ABTTC, Inc.
financials.
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Investment
Form:
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Common
Stock, Series A (the “Common Stock”) and Preferred Series B (the “Common
Stock”).
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Closing:
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Assuming
satisfactory completion of due diligence, audit and timely acceptance of
this Summary Term Sheet, MHRS expects to execute definitive agreements no
later than August 1, 2008. The closing shall be upon completion
on an audit performed on ABTTC. The closing of this deal shall be
conditioned on the following:
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(a)
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Completion
of employment agreements with the management team on terms acceptable to
MHRS.
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(b)
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The
management team signing noncompete employment contracts with terms
acceptable to MHRS binding the management team to the company for the next
five years.
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(c)
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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;
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(d)
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The
Company will provide to MHRS audited financial statements for the years
ended December 31, 2005, 2006 and
2007;
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(e)
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The
absence of a material adverse change with respect to the
Company;
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(f)
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Any
required governmental or shareholder approvals or
waivers;
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(g)
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Satisfactory
completion of legal documentation;
and
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(h)
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Approval
of MHRS Board of Directors.
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(i)
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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.
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(j)
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The
parties shall enter into an anti-dilation this is acceptable to all
parties.
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Stock
Options:
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Management
shall be given stock options as part of their new employment
contracts.
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Proposed
Capitalization:
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The
initial issuance of $1,750,000 shall be at the closing price on the day
before the term sheet is announced to the public. Such issuance
shall be restricted until the corresponding S-1 is approved by the
SEC.
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The
remaining amount shall be issued in Preferred Stock shares at one share per
dollar. Each Preferred Share shall have voting rights equal to 20:1
(20 votes per shares) and a conversion ratio of 10:1 (10 shares of common per
each share of preferred).
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Security:
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The
purchase and underlying share issuance shall be secured by the shares
being purchase of ABTTC. In addition, ABTTC is entitled to
retain the initial $1,750,000 paid in
stock.
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Events of
Default:
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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.
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Employment and
Non-
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Unless
such agreements already exist in a form
satisfactory
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Competition
Agreements:
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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.
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Liabilities
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It
is understood that the liabilities incurred by Xxxxxxx Xxxxxxxx and Xxxxx
Xxxx relating to the houses currently being used by the company, the
vehicles used by the Company and the corporate card in Xxxxxxx’ name shall
be assumed by the company.
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Definitive
Agreements:
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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.
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Expiration:
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This
Summary Term Sheet will expire on June 15,
2008.
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Expenses:
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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.
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Confidentiality:
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The
Company will keep confidential the existence and terms of this Summary
Term Sheet.
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Break Up
Clause:
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ABTTC
agrees to pay any and all fees of MHRS should ABTTC terminate this
Agreement. Additionially, ABTTC will be enittled to the initial
stock payment of $1,750,000.
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Obligations:
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The
parties hereby agree there is no financial obligation on the part of MHRS
until definitive agreements are entered into between the
parties.
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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.
By: By:
Its: Its:
