Exhibit 10.1

 

 

 

 

AIC, LLC AND CONSORTEUM HOLDINGS, INC.

 

TERM SHEET FOR $30,000,000 7 YEAR TERM LOAN FINANCING FROM AIC, LLC (AIC) TO
CONSORTEUM HOLDINGS, INC. (CHI); (ii) $2,000,000 BRIDGE LOAN FROM AIC OR AN
AFFILIATE TO CHI, (iii) SALE/PURCHASE OF A MAXIMUM OF 35% OF RESTRICTED COMMON
STOCK OF CHI BY AIC, TOGETHER WITH (iv) MISCELLANEOUS RELATED AGREEMENTS
DESCRIBED BELOW.

 

 

 

 

 

 

 

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TERM SHEET FOR:(i) $30,000,000 7 YEAR TERM LOAN FINANCING FROM AIC, LLC (AIC) TO
CONSORTEUM HOLDINGS, INC. (CHI); (ii) $2,000,000 BRIDGE LOAN FROM AIC OR AN
AFFILIATE TO CHI, (iii) SALE/PURCHASE OF A MAXIMUM OF 35% OF RESTRICTED COMMON
STOCK OF CHI BY AIC, TOGETHER WITH (iv) MISCELLANEOUS RELATED AGREEMENTS
DESCRIBED BELOW.

 

THE FOLLOWING TERMS HAVE NOT BEEN PUBLICLY DISCLOSED AND THEREFORE MAY
CONSTITUTE MATERIAL NON-PUBLIC INFORMATION.

 

This Term Sheet (“Term Sheet”) summarizes the principal terms of a loan (the
“Loan”), a bridge loan (the “Bridge Loan”) and an investment (the “Investment”)
by AIC, a Georgia limited liability company as, respectively, the Lender, the
Bridge Lender and the Investor in CHI, a Nevada corporation. The Loan, the
Bridge Loan and the Investment are referred to together as the “Transaction.” In
consideration of the time and expense devoted and to be devoted by AIC and CHI
to the Transaction, the terms set forth below in this Term Sheet shall be
binding obligations of AIC and CHI. The parties shall use good faith to
negotiate and conclude definitive agreements with respect to the Transaction as
quickly as possible and, in any case, in accordance with the schedule for the
execution of definitive agreements for each portion of the Transaction as
specified below. This Term Sheet shall be governed in all respects by the laws
of the State of Nevada.

 

Insider Trading Prohibition. AIC and CHI acknowledge to each other that they are
aware, and will advise their respective affiliates, directors, officers,
employees, agents and other recipients who are informed as to the matters which
are the subject of this Term Sheet, that the United States securities laws
prohibit any person who has material, non-public information concerning the
matters which are the subject of this Term Sheet from purchasing or selling
securities of CHI or from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person may
purchase or sell such securities. Each party agrees that it will obtain and
preserve written acknowledgement of the prohibition on using insider information
for trading purposes from each recipient of information about this Term Sheet or
the proposed transaction.

 

Offering Terms

 

A. THE LOAN

 

    Lender  

AIC, LLC

 

Borrower

 

Amount of Loan

 

Consorteum Holdings, Inc.

 

USD$30,000,000

    Term of Loan   Seven (7) years with two one year right of renewal at
discretion of CHI. The Loan is subject to earlier termination by AIC and by CHI
in event of default. See “Event of Default” and “Termination of Loan” below.
Interest Rate  

Six percent (6%) per annum payable monthly on the 15th day of each month in
arrears on the amount of principal loan funds outstanding.

 

Disbursement Schedule for Loan:   In minimum equal successive monthly draw downs
in accordance with a mutually agreed draw schedule (Exhibit A) beginning not
later than sixty (60) days from the execution of this Term Sheet. By way of
example, if this Term Sheet is executed on February 3, 2013, then the first draw
down shall occur on or before April 4, 2013 and each 30 days thereafter. Failure
of AIC to make any disbursement shall be a material breach of this Term Sheet
with the consequences described below under “Termination of Loan.” Upon making
the first disbursement, AIC shall be entitled to the issuance of restricted
shares of the common stock of CHI as described in Part C below under the heading
“The AIC Shares Issuance.”

 

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Repayment of Loan   Interest only for seven (7) years with a balloon payment of
all accrued and unpaid interest and all principal on seventh anniversary of the
first portion of the Loan disbursement under the Disbursement Schedule. Right of
Prepayment   CHI has right of prepayment of all or any portion of the Loan at
any time during term of Loan without premium or penalty. Loan proceeds repaid
shall not be available for re-borrowing by CHI. Collateral Security for Loan  
CHI shall give AIC a first priority security interest in and to all its assets
including all IP with standard rights afforded secured party under Uniform
Commercial Code of State of Nevada. CHI shall retain ownership of all its assets
subject to the security interest. Use of Proceeds   Growth and expansion
capital, capital expenditure and general working capital needs related to the
Company and its subsidiaries.       Loan Fees  

There shall be two sets of fees for the Loan payable as follows: (i) $150,000
expense fee (the “Expense Fee”) to AIC payable within five (5) days of the
execution of this Term Sheet. AIC shall return the Expense Fee to CHI
immediately upon the failure to fund the Bridge Loan (described below) within
thirty (30) days of the execution of this Term Sheet, or (ii) the failure to
fund the first draw down under the Disbursement schedule under this Term Sheet;
provided, however, that with respect to the first draw down on the Disbursement
Schedule, AIC shall have one additional thirty (30) day period to complete the
first portion of the draw down, failing which the Expense Fee shall be repaid
forthwith to CHI.

 

(ii) Origination Fees as follows: CHI shall pay an origination equal to four
percent (4.0%) of the total Funding amount payable as follows:- two percent (2%)
to Brigham Enterprises LLC or its related companies as Funding Facilitator and
two percent (2%) to Kawamura Capital LLC as consultant and coordinator
(“Origination”). The Origination Fee shall be paid only from each of the loan
disbursements as and when paid by AIC to CHI in accordance with the Disbursement
Schedule.

 

Event of Default by AIC  

AIC shall fail to fund the first or any subsequent instalment of the Loan in
accordance with the Disbursement Schedule. If AIC shall fail to fund the first
instalment of the Loan under the Disbursement Schedule then AIC shall have one
thirty (30) day extension (the “Extension”) to complete the funding process.

If AIC shall fail to fund any subsequent instalment of the Loan under the
Disbursement Schedule, then AIC shall not be entitled to any additional
extension.

  

  Consequences of AIC Default   If AIC fails to fund the first instalment of the
Loan as extended by the Extension, then AIC shall return forthwith to CHI the
Expense Fee. If AIC fails to fund any subsequent instalment of the Loan, then
the Loan shall terminate forthwith, and CHI’s obligation to repay any portion of
the principal amount of the Loan and accrued and unpaid interest received
theretofore shall terminate and be null and void.       CHI Default   CHI
defaults in any representation, warranty and covenant in the definitive Loan
Documents (defined below); or commits a voluntary or involuntary act of
bankruptcy or similar filing.      

 

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Consequences of CHI Default   AIC‘s obligation to continue funding the Loan
shall cease and AIC shall exercise all remedies of a secured party under the
Uniform Commercial Code.       Definitive Loan Documents   The Parties will
negotiate and execute definitive agreements, for the Loan including but not
limited to the following: the Loan Agreement, the Secured Note and Collateral
Security Agreement, (the “Definitive Loan Agreements”).       Best
Efforts/Confidentiality:   The Parties agree to use best efforts to work in good
faith expeditiously towards a closing within 60 days of the date of acceptance
of this Term Sheet. AIC and CHI and their respective representatives will not
disclose the terms of this Term Sheet, or the existence of the discussions
related thereto, to any person other than officers, members of the Board of
Directors and the Company’s accountants and attorneys without the written
consent of the other Party; provided, however, that CHI will make such filings
and issue such press releases as may be required to fulfill its Federal
securities laws disclosure requirements (the “Disclosure Rules”) including the
filing of a Form 8-K regarding this Term Sheet. CHI shall furnish a draft report
to AIC for its review and comment prior to each such filing.       Counsel and
Expenses:   AIC and CHI shall each bear the costs of its own counsel and
accountants and other professionals, and all other expenses in connection with
negotiation and execution of the definitive agreements and this Term Sheet;
provided, however, that CHI will be reimbursed the Expense Fee from the proceeds
of the Bridge Loan. Board of Directors:   Immediately after Closing, the Board
shall consist of 4 directors comprised of (i) 1 representative designated by
AIC, (ii) and 3 directors designated by CHI; provided, however, that AIC’s right
to board representation shall increase in proportion to each portion of the Loan
disbursement in accordance with the Disbursement Schedule such that its final
Board representation shall comprise one third of all Board members. AIC shall
also be entitled to appoint one board observer. B. THE BRIDGE LOAN    
Terms/Conditions of Bridge Loan   Within thirty (30) days of the date of this
Term Sheet AIC or an affiliate shall lend $2,000,000 to CHI (THE “Bridge Loan”)
that CHI shall repay from the first proceeds of the Loan hereunder. If the
funding of the Loan does not proceed, then the Bridge Loan shall convert to a
convertible note. The convertible note shall be for one year and shall accrue
interest at 6% per annum and shall be convertible into common stock of the
company at a 85% discount of market price based on a 5 day trailing average of
the closing stock price; at the option of the Company. The Bridge Loan shall
bear simple interest at six percent (6%) per annum, and the Bridge Lender shall
be given a collateral security interest in the assets of CHI. If the funding of
the Bridge Loan does not proceed, then this Term Sheet shall terminate and AIC
shall forthwith repay the Expenses Fee to CHI. The documentation for the Bridge
Loan shall include a Bridge Loan Note and the related Collateral Security
Agreement.

 

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C. THE AIC SHARE ISSUANCE   At the time of the first disbursement under the
Loan, CHI shall issue to AIC that number of restricted shares of its common
stock as shall represent thirty-five percent (35%) of all of the issued and
outstanding common stock of CHI on a fully-diluted basis. The AIC Shares shall
be deposited in escrow with CHI’s transfer agent pursuant to the terms and
conditions of an escrow agreement. The portion of the AIC Shares actually
distributed to AIC by CHI, i.e., one sixth (16 and 2/3%) of the thirty five
percent (35%) total of AIC Shares shall be made each time a disbursement of the
Loan is made in accordance with the timing and amounts shown in the Disbursement
Schedule. If any disbursement is not made as scheduled, then the distributions
of the remaining ACI Shares shall cease and all such ACI Shares remaining in
escrow shall be returned to CHI and cancelled. Additional Terms/Conditions of
AIC Shares   The AIC Shares shall be subject to the following additional
conditions: a lock-up such that not more than an agreed upon percentage of such
Shares can be sold by AIC within any three month period. AIC shall comply with
all of the Disclosure Rules applicable to the holder of a thirty-five percent
ownership position in a public company. AIC shall be permitted to transfer
portions of the AIC Shares in conformity to Federal securities laws
requirements; provided, however, that any such transfer of the AIC Shares shall
not be made to any person or entity that is subject to any legal or regulatory
disqualification in the gaming or credit industries or other business areas in
which CHI operates or proposes to operate under the Business Plan. AIC and CHI
shall agree to a mutual voting agreement for the election of directors proposed
by each of them. Definitive AIC Shares Agreements   The Parties will negotiate
and execute definitive agreements, for the AIC Shares including but not limited
to the following: the AIC Shares Agreement, the Shareholders Agreement, the
Escrow Agreement (if applicable), the Voting Trust Agreement, the Board
Representation Agreement (the “Definitive AIC Shares Agreements”). Business
Development Services Agreement   In addition to the documents listed above the
Parties shall enter into a Business Development Services Agreement containing
terms and conditions agreed upon by the Parties. Characteristics of Definitive
Transaction Agreements   Subject in all respects to the condition entitled
“Severability” below, the Definitive Agreements for the Transaction shall
contain such representations and warranties, covenants, indemnifications,
signatories, conditions to closing, rights of shareholders, as are customary in
agreements of these kinds. The Parties understand and acknowledge that it is not
possible in the Term Sheet to list and define all such terms and conditions.
Nevertheless, the parties hereto shall negotiate in good faith to address and
modify the Transaction Definitive Agreements so as to effect the original intent
of the parties as closely as possible in an acceptable manner in order that the
Transactions contemplated by this Term Sheet are consummated as originally
contemplated to the greatest extent possible.

 

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Severability   If any term or other provision of this Term Sheet is invalid,
illegal or incapable of being enforced by any law or public policy, all other
terms and provisions of this Term Sheet shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated by this Term Sheet is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Term Sheet so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the Transactions contemplated by this Term Sheet are consummated as
originally contemplated to the greatest extent possible. Governing Law   This
Term Sheet shall be governed by, and construed in accordance with, the laws of
the State of Nevada applicable to contracts executed in and to be performed in
that State. Dispute Resolution; Jurisdiction  

Each of the parties hereto hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State of Nevada and of
the United States, in each case located in the County of Clark, for any
litigation arising out of or relating to this Term Sheet (and agrees not to
commence any litigation relating thereto except in such courts), and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Term Sheet shall be
effective service of process for any litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any litigation arising out of this
Letter of Intent in the courts of the State of Nevada or the United States, in
each case located in the County of Clark, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.

 

Waiver of Jury Trial   Each of the Parties hereto hereby waives to the fullest
extent permitted by applicable law any right it may have to a trial by jury with
respect to any litigation directly or indirectly arising out of, under or in
connection with this Term Sheet or the Transactions contemplated by this Term
Sheet. Assignment   This Term Sheet may not be assigned by operation of law or
otherwise by a Party without the express prior written consent of the other
Party (which consent may be granted or withheld in the sole discretion of either
Party). No Third Party Beneficiaries   This Term Sheet shall be binding upon and
inure solely to the benefit of the Parties hereto and their successors and
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Term Sheet. Amendment
  This Term Sheet may not be amended or modified except (a) by an instrument in
writing signed by, or on behalf of, each of the Parties.

 

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Entire Agreement   This Term Sheet constitutes the entire agreement of AIC and
CHI with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, among the Parties with
respect to the subject matter hereof. Waiver   Either Party to this Term Sheet
may (a) extend the time for the performance of any obligations or other acts of
the other Party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements of the other Party or conditions to such party’s obligations
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the Party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Term Sheet. The failure of any Party to assert
any of its rights hereunder shall not constitute a waiver of any such rights.
Execution in Counterparts   This Term Sheet may be executed and delivered
(including by facsimile transmission or by electronic signature) in one or more
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. Expiration   This Term
Sheet shall expire in one calendar week from issuing if not accepted by both
Parties by that date. Intentions of the Parties; Legal Effect of the Term Sheet
  The Parties recognize that this Term Sheet does not contain all matters upon
which agreement must be reached for the Loan, the Bridge Loan and the AIC Shares
issuance. Nevertheless, the Parties agree that to the extent set forth in this
Term Sheet, the terms and conditions contained herein create enforceable legal
obligations on the part of both Parties hereto with respect to the definitive
terms and conditions for the Loan, the Bridge Loan and the AIC Shares issuance
described in this Term Sheet. The Parties intend that the Term Sheet shall be a
legally binding and enforceable commitment with respect to the Transactions,
notwithstanding the fact that the Parties must enter into the Definitive
Agreements for the Transaction.

  

IN WITNESS WHEREOF, the undersigned have executed this Term Sheet as of this –
day of February 2013 and agree to be legally bound by all of the terms and
conditions contained in this Term Sheet for the Loan, the Bridge Loan and the
AIC Shares issuance, notwithstanding that there remain to be negotiated and
executed the Definitive Agreements for these Transactions.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first above written.

 

COMPANY NAME: Consorteum Holdings Inc.

 

By: /s/ Craig Fielding

Name: Craig Fielding

Title: CEO

COMPANY NAME: AIC, LLC

 

By: /s/ Edward JP Bingham

Name: Edward JP Brigham

Title: Member and CEO

 

 

 

 

 

 

 

 

 

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