sample of information memorandum

ABC Company

Confidential Information Memorandum Brett Nelson Business Agent Licence # 122781 MAUS Level 1, 39 East Esplanade Manly NSW 2095, Australia Ph 61 2 9976 2177 Fax: 61 2 9976 2137

Information Memorandum Prepared For: ABC Company

Copyright. All Rights Reserved. MAUS Business Systems 1

Table Of Contents PURPOSE OF THIS DOCUMENT ..................................................................................................... 3

EXECUTIVE SUMMARY ................................................................................................................... 4

BUSINESS OVERVIEW ....................................................................................................................................................... 4 QUICK FACTS ABOUT THE BUSINESS ..................................................................................................................................... 4 TURNOVER & PROFITABILITY ............................................................................................................................................... 4 REVENUE ........................................................................................................................................................................ 4 PROFIT ......................................................................................................................................................................... 5

BUSINESS HISTORY ........................................................................................................................ 7

KEY STRENGTHS ................................................................................................................................................................ 8

INTELLECTUAL PROPERTY AND ASSETS .......................................................................................... 9

ORGANISATION, MANAGEMENT AND CONTROL ......................................................................... 10

COMPANY PHILOSOPHY .................................................................................................................................................... 10 MANAGEMENT AND EMPLOYEES ........................................................................................................................................ 10 SHAREHOLDERS .............................................................................................................................................................. 11

FINANCIAL HISTORY ..................................................................................................................... 12

FINANCIAL PERFORMANCE ................................................................................................................................................ 12

BUSINESS ANALYSIS ..................................................................................................................... 14

SUMMARY OF BUSINESS ................................................................................................................................................... 14 PRODUCTS ................................................................................................................................................................... 14 SALES BY PRODUCT CATEGORY ........................................................................................................................................... 14 SOURCE: ABC COMPANY MANAGEMENT ACCOUNT. REVENUE BY MAJOR PRODUCT SUMMARY

................................................................................................................................................................................................. 15

MARKET ANALYSIS..................................................................................................................... 16

SEASONAL FLUCTUATIONS ................................................................................................................................................ 17 SEGMENTATION ANALYSIS ................................................................................................................................................ 18

COMPETITIVE ANALYSIS .............................................................................................................. 19

COMPETITIVE STRATEGY COMPARISON ................................................................................................................................ 20 COMPETITIVE POSITIONING ............................................................................................................................................... 21

MAJOR PRODUCTS AND PLANNED DEVELOPMENTS .................................................................... 22

PLANNED DEVELOPMENTS ................................................................................................................................................. 22 PRODUCT DEVELOPMENT ................................................................................................................................................. 23

CUSTOMERS AND DATABASES ..................................................................................................... 24

CUSTOMER ACQUISITION AND PROCESSING ........................................................................................................................... 24

DISTRIBUTION CHANNELS .......................................................................................................... 25

RESELLER AND DISTRIBUTORS ............................................................................................................................................ 25 DISTRIBUTION CHANNELS ................................................................................................................................................ 25

Source: ABC Company management accounts ........................................................................ 25



THE OPPORTUNITY ...................................................................................................................... 26

FINANCIAL PROJECTIONS ............................................................................................................. 27

KEY PERSON OVERVIEW .............................................................................................................. 30

REASON FOR SALE ....................................................................................................................... 31

WHERE WE ARE NOW! ..................................................................................................................................................... 31 WORKOUT PERIOD.......................................................................................................................................................... 32

SALE MATTERS ............................................................................................................................. 33

SALES PROCESS .............................................................................................................................................................. 33 INDICATIVE OFFER ........................................................................................................................................................... 34 KEY TERMS OF SALE ........................................................................................................................................................ 35 DUE DILIGENCE .............................................................................................................................................................. 35 FORMAL SALE AGREEMENT ............................................................................................................................................... 36 SUBMISSION OF OFFER .................................................................................................................................................... 36 CONDITIONS OF ISSUE OF MEMORANDUM ........................................................................................................................... 37



Purpose of this Document

ABC Company Pty Ltd ("ABC Company") is a company owned and operated by David Fox. The major shareholders have decided that they wish to sell the ABC Company business and has appointed MAUS Business Systems ("MAUS") to be the communication avenue for this process. This Confidential Information Memorandum ("Memorandum") has been prepared for selected parties with a preliminary understanding of the business of ABC Company and to assist the recipient of the Memorandum ("Recipient") in making their own independent appraisal of ABC Company before preparing an indicative non-binding offer. The Memorandum does not purport to be complete or contain all of the information which a prospective purchaser may require. No representation or warranty is made (or will be made in any sale agreement) as to the accuracy, reliability or completeness of any information contained in this Memorandum by David Fox or MAUS. The Recipient named at the bottom of this page agrees by receiving this Memorandum that it shall not copy, reproduce or distribute to others this Memorandum, whether in whole or in part, without the prior written consent of David Fox or MAUS. Further, the Recipient of this Memorandum will keep permanently confidential all information contained herein not already public and will use this Memorandum only for assessing ABC Company. On request, the Recipient will promptly return all material received from David Fox, ABC Company and MAUS, including this Memorandum, without retaining copies. All projections in this Memorandum have been prepared by ABC Company for internal use and are for illustrative purposes only. They do not constitute, and should not be regarded as, a representation that the projected results will actually be achieved or that the underlying assumptions are valid. The projections are subject to uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of ABC Company. MAUS has not independently verified the projections. All currency amounts are expressed in Australian dollars unless otherwise stated. All inquiries in connection with this Memorandum or the sale process in general should be directed to MAUS as detailed below. All contact between David Fox, ABC Company and prospective purchasers will be arranged by MAUS. Under no circumstances should prospective purchasers contact management or staff of ABC Company directly.

Brett Nelson Business Agent Licence # 122781

At: Recipient: MAUS Level 1, 39 East Esplanade Manly NSW 2095, Australia Ph 61 2 9976 2177

Fax: 61 2 9976 2137 Email: [email protected]

Copy No:



Executive Summary Business Overview ABC Company is one of the leading publishing, consulting and training firms that specialise in "step-by-step" profit improvement programs. The company has a range of self help software, videos and resources that are designed for businesses as well as a range that is targeted at the coaching and consulting community. The Company was founded by David Fox. John is a successful entrepreneur that is a specialist in the area of Business planning. John built his last company from a one man business to a multi million dollar operation. Quick facts about the business • Revenue is based on a recurring revenue model. • The company has acquired over 13,000 customers and a 50,000 mailing list. • No debt, profitable business. Technology funded through organic growth. • One of the most knowledgeable companies in this field of expertise. • Receive hundreds of enquires per annum. • Operate in a booming billion dollar market with a compelling “cost advantage” technology that

would enable the launch of a service based division. Turnover & Profitability For the previous 2007/2008 financial year ABC Company earnt $1,100,000 in booked revenue, a growth of 76.3% over the immediate preceding year. The profit margin for this period was 14%, resulting in a final net profit position of $150,000. The graph below shows the sales and profit for this period.

Revenue



ABC Company is forecasting for the 2008/2009 financial year revenue growth of 465% over the previous financial year. This equates to a forecast of $4,000,000 in booked revenue. (The previous year was $1,100,000).

Actual Actual Actual Actual/Proj 2005/2006 2006/2007 2007/2008 2008/2009

($'000) ($'000) ($'000) ($'000)

Revenue $250,000 $624,000 $1,100,000 $4,000,000

Sales Growth 150% 76% 465%

Profit Profit for the previous (2007/2008) year was $150,000 which represents a 14% net profit margin on our revenue base of $1,100,000.


($'000) ($'000) ($'000) ($'000)

EBIT $50,000 $126,000 $150,000 $200,000

Profit Margin before tax 20% 20% 14% 5%

Growth Rate 152% 19% 33% PLUS ADD BACKS

Profit plus Addbacks $200,000 $276,000 $300,000 $350,000

ROI to Associated persons 80% 44% 27% 9%



Business History ABC Company was established in 2001. The company has achieved significant success since its establishment. This includes many business awards and new product launches that have been received with positive acclaim by customers. Below are the key timelines that show the highlights of the company.

Date Event 1998 Company Founded

2001 Launch New Product

2002 Launch Next Product

2003 Win an Award

2004 Expand to International

2005 Trade Mark Names

More recently, the company has embarked on an aggressive expansion of its product portfolio focusing on the online advertising “Pay Per Click” bid management market. The company produces a range of products at different price-points and respective functionality.



Key strengths ABC Company possesses the following key strengths:

Strength Details

Experienced staff The business has an excellent management team. This means that the new owner doesn't have to work in the business and should be able to take advantage of the strong and dedicated team. Note that the current owners can not guarantee that staff will continue with the business after sale but feel that this is likely.

Financial history and growth The company has a good revenue and profit growth over the last two years and predicts strong future growth.

Systems and processes The company has invested heavily in the development of systems and processes that streamline the efficiency of the organisation.

Business Development The company has generated most of its revenue from customer referral programs. The company in the future will continue to receive the benefit from these referral programs.

Customer database The company has a high level of customer satisfaction and a strong loyal existing customer database of 10,000 clients. This means that these customers are highly likely to buy new products launched by the company.

Employee Accountability

Employee Morale

Well known brand

Product Innovation



Intellectual Property and Assets Websites The company maintains 3 major websites. The main website is www.maus.com. The company owns all IP and ownership rights to the source material of the website and has licences for the graphics and content. Trade Marks and Patents The Company has registered the marks MAUS and Business Olympics. Full details will be disclosed during due diligence. Copyright Manuals and material The company owns the copyright to all manuals and help documentation. In addition the company has developed a 100 page training manual. Physical Assets A full list of assets to be included in the sale will be supplied during due diligence. The sale includes all computer equipment, software and furniture and fittings Inventory The company has a store room at the back of the premises. All stock is managed from this storeroom. At the end of the last financial year the company held $60,000 worth of stock on hand. A complete inventory will be supplied during due diligence. Other



Organisation, management and control Company Philosophy The company adopts an open style of management that is fundamental to the company’s success. Through the empowerment of a young, talented management team of motivated individuals, the company has fostered an environment that is conducive to the development of innovative new ideas. This is reflected by the rapid expansion of an innovative product range. With a system of performance measurement geared strongly towards the achievement of sales targets and major KPIs, the autonomy given to all staff has created a passionate culture that has been an integral component of the company's success.

Over the last two years the company has invested considerably in the recruitment and training of additional employees to expand the business. This employee investment has been funded through organic growth.

Management and employees ABC Company as at June 2008 employs 8 full time and 1 part time staff members. The List of Employees Table sets out the number of full-time and part-time employees by function. Table - List of Employees Full-time and part-time employees by function

Department

Number of full-time

employees

Number of part-time

employees

Number of Contractors

Number of Work

Experience Staff

Marketing IT Service Finance/Accounting Administration Support Sales Other

4 2 1 1

1

1

Total

8

1

1

0



Shareholders ABC Company as at June 2008 had 2 major shareholders. The Major Shareholder Table breaks down all major shareholders and the percentage and class of shares. Table – Major Shareholders

List of Major Shareholders % holding John Smith 80% Maria Smith 20%



Financial History Financial Performance The Financial Summary Table below represents the financial years 2005/2006, 2006/2007, 2007/2008 and the projected result for the year 2008/2009.These projections are based on organic growth with no major injection of capital or strategic alliance. Table - Financial Summary

Historical


($'000) ($'000) ($'000) ($'000)

Revenue $250,000 $624,000 $1,100,000 $4,000,000

Sales Growth 150% 76% 465%

Gross profit $496,000 $537,000 $630,000 $630,000

Gross margin % 198% 86% 57% 16%

Commercial overheads





Adv and promotion

$72,000 $100,000 $100,000 $100,000

Other $222,000 $150,000 $150,000 $150,000

Total overheads $294,000 $250,000 $250,000 $250,000

EBIT $50,000 $126,000 $150,000 $200,000

Profit Margin before tax

20% 20% 14% 5%

Growth Rate 152% 19% 33%

PLUS ADD BACKS

Associated Wages (AW) included in expenses $150,000 $150,000 $150,000 $150,000

Other addbacks $50,000 $50,000 $50,000 $50,000 Profit plus Addbacks $200,000 $276,000 $300,000 $350,000

ROI to Associated persons 80% 44% 27% 9%



The Return on Investment before taxes (calculated by net profit plus associated wages and addbacks) has been 80%, 44% and 27% for the respective 2005/2006, 2006/2007 and 2007/2008 financial years.

In terms of historical revenue: Historically revenue has increased reason 1 Historically revenue has increased reason 1

In terms of historical profit: Historically the business has driven an excellent return on investment to the shareholders. Comment Historical profit 2



Business Analysis Summary of business ABC Company is one of the leading publishing, consulting and training firms that specialise in "step-by-step" profit improvement programs. The company has a range of self help software, videos and resources that are designed for businesses as well as a range that is targeted at the coaching and consulting community. The company is involved in the development and distribution of an entire range of materials. Products The Product Category Sales Table lists the major product categories that were marketed by ABC Company' in the 2007/2008 financial year together with a comparison against the 2008/2009 forecast financial year. *Note these are "approximations only" as the company has a variety of different packages and value added offerings that are not broken down into individual unit sales.* Table - Product Category Sales Sales by product category

Product Category Description 2007/2008 2008/2009

Widgets: An innovative widget product that is targeted at the SME market

18% 9%

Moppit: An innovative mop that mops by itself 35% 18% Product xxxx: Another type of product that is extremely

innovative 26% 13%

Product 4: Product Description 21% 11% Product 5: Product Description Product 6: Product Description Product 7: Product Description Product 8: Product Description

100% 100% Source: ABC Company management account.



Revenue by Major Product Summary

Product Category 2007/2008

Widgets:

$100,000 Moppit: $200,000 Product xxxx: $150,000 Product 4: $120,000 Product 5: $- Product 6: $- Product 7: $- Product 8: $-

$570,000

Source: ABC Company management accounts

1. This data is obtained from the Shopping Cart proprietary back end software. This software is highly accurate in terms of reporting units. However because of bundle packages, and

exchange rate variations, there may be a slight discrepancy between the management reports and the financial reports.



Market Analysis The major market that ABC Company operates in is the SME market. This market consists of all small to medium sized business and is currently estimated to be $10,000,000. We expect that the market will remain at the same level from $10,000,000 for the year 2007/2008 to $10,000,000 for the year 2008/2009. Over the next 5 years the market is expected to stay at same level 100%. The forecast market size in 2011/2012 is estimated to be $20,000,000.



Seasonal Fluctuations Like most businesses the level of sales is strongly influenced by the following seasonal fluctuations. • Sales normally slump over the December January holiday period. • Sales normally improve dramatically at the end of each financial year and then start to taper

off during the fourth quarter. • Description of seasonal

Internet Marketing Strategy Management have adopted an aggressive product focused internet strategy. The company maintains the following ongoing initiatives to maintain its dominance in the marketplace. • The maintenance of its own web site • Regular search engine submission and optimisation for all websites • Competitor ranking analysis and keyword evaluation • Creation of strong links with online business partners • Newsgroup and internet forum postings • PR releases through the internet • Affiliate and reseller programs • Email marketing and monthly newsletter distribution



Segmentation Analysis The company targets the following segments • SME Market • Segment 2 • Segment 3 • Segment 4 The table below provides a breakdown of the major segments that the company is targeting and an estimate of the proportion that this segment accounts for total revenue. We have indicated in the table the major benefit or solution that the segment requires and how we intend to position our products to meet their needs.

Segmentation Analysis

Market Segments SME Market Segment 2 Segment 3 Segment 4

Est Revenue 35% 0% 0% 0%

Is this segment market size increasing?

It is estimated to grow quite strongly

It is estimated to remain at the same level

This segment is estimated to decline moderately

This segment is estimated to grow quite strongly

Major benefit or solution that this segment requires

We offer the best value for money product

The segment would like a product that will

The segment would like a product that will

The SME market will buy primarily on price

Our product positioning

We will position our product as being the best value. (Not the cheapest)

We will position our product We will position our product We will position our product

General Comments about this Segment

This segment is This segment is This segment is This segment is



Competitive Analysis The table below indicates who the company regards as the major competitors in the market and the approximate size of each company.

Competitive Profile

Our Company Our Competitors

Major Competitors

Product x Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5

Est Revenue

$800,000 $1,400,000 $200,000 $- $- $-

General positioning

We offer the best value for money

They are the cheapest They have the best distribution channels

They are the market leader

Small innovative competitor

General Comments about this competitor

General comments about your offerings

Write some general comments that describe this competitor







Competitive Strategy Comparison The accompanying table outlines the strategies of our competitors.

Competitive Strategy Analysis

Product x Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5

Price Strategy Your price strategy Describe this competitors

price strategy Describe this competitors price strategy

Describe this competitors price strategy



Product Strategy

Your product strategy Explain the features of this competitors product

Explain the features of this competitors product




Promotional Strategy

Your promotional strategy

Explain the promotional strategy





Distribution Strategy

Your distribution strategy

Explain the distribution strategy







Competitive Positioning The graph below indicates where we are positioned in relation to our competitors. We have chosen to position our products based on the following parameters, Price and Quality.

Hig

h

Q

ualit

y

Low

High Price Low



Major Products and planned developments Planned developments In the 2008/2009 financial year the company will launch 3 new products. It is forecast that these new products will earn $620,000 in booked revenue and make up approximately 49% of total revenue in this financial year. The scheduled new product launches are as follows. • New Product 1 • New Product 2 • New Product 3 • New Product 4

The table below shows a breakdown of the new products that will be launched and the estimated percentage of revenue that each product will contribute.

New Product Overview New Product 1 New Product Description $20,000

New Product 2 New Product Description $100,000


New Product 4 New Product Description $-

ABC Company's new product portfolio is described in the Major Innovation Projects Table.



Table Major Innovation Projects

Proposed New

Product Description Est Revenue




New Product 4 New Product Description $-

Product Development Products are developed based on the brainstorming activities of the senior management team as well as through customer and market feedback programs.



Customers and Databases Over the last 7 years in business the company has acquired an impressive list of very satisfied customers. Some of these include:- BHP, TNT, Abco Pty Ltd

"Your products are excellent and your service brilliant!" John Mcann, MD TNL

"Your products are even more excellent and your service brilliant!" Peter Watson, MD TNL

"Your products are even more excellent and your service brilliant!" Peter Watson, MD TNL ABC Company management estimates that it has a unique customer database consisting of 5,000 customers. This is a list of enquires as at 30th June 2008 from our MYOB database.. ABC Company management also estimates that it has an additional database consisting of 10,000 enquires and an additional 2,000 mailing list database . This is a list of customers as at 30th June 2008 from our CRM database.. These are mailing lists that we have acquired as at 30th June 2008. Customer acquisition and processing The company has developed an efficient back-office system that manages the enquiry to order process. Most of our clients call up and place an order. All orders are recorded in our CRM system and then given to accounts. Accounts then transfers the details into MYOB and an invoice is produced. The invoice is faxed through to our warehouse and it is shipped directly. Most payments are taken upfront. At the end of each month all outstanding debtors are called.



Distribution Channels Reseller and Distributors ABC Company has a number of affiliate partners and higher margined distributors. The respective margins offered are as follows::

• Referral Partners : Receive a 30% margin • Dealer Resellers: Receive a 40-50% margin (based on their monthly

sales volume) • Other

Distribution Channels The graph below demonstrates that approximately 55% of ABC Company's sales are derived through Direct channels and 23% is derived from Direct channels. We sell mainly direct to the public. However we do have a few resellers and alliance partners.

Percentage sales by distribution channel

Source: ABC Company management accounts



The Opportunity The sale of ABC Company provides a prospective purchaser the opportunity to: • Acquire a growing, profitable and well established business; • Substantially increase profits through the immediate distribution of the company’s products into

their own database. Having shipped in excess of 25,000 units of software, the products that the company sells can easily be adapted and sold to any business customer list.

• To enter one of the fastest growing markets in xx market and yy market. With a range of already developed products and established service division, capable of catering to the YY market.

• To become a dominant player in the “XX area” and “YY area” market and to tap into an expanding billion dollar worldwide market.

• Secure a quality and market leading portfolio of desktop products; • Continue the low cost expansion of the company’s product range; • Obtain a range of backend technologies and processes enabling the expansion of the companies

present portfolio. • Leverage the company’s North American database to form strategic alliances with international

advertising agencies. • Leverage the leads, technology and web presence of the company to fastrack the development of

an “XX product” and Service Division. • Great opportunity to establish business partnerships with other companies. Currently the company

has strong relationships with world leading companies including Company A, B and Company C. The company's technology has attracted various companies in this field interested in forming official partnerships and licencing.

• Great opportunity to enter into a billion dollar industry of high end growth products. • Expansion of its new xx network, which has been proved to be a successful business model.



Financial Projections The table below combines a summary of historical earnings and projected forecasts. And represents the financial years 2005/2006, 2006/2007, 2007/2008 and the projected result for the year 2008/2009, 2009/2010, 2010/2011, 2011/2012.

Historical

Projected

Actual Actual Actual Actual/Proj Projected Projected Projected

2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000)

Revenue $250,000 $624,000 $1,100,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000

Sales Growth 150% 76% 465% 25% 20% 17%

Gross profit $496,000 $537,000 $630,000 $630,000 $1,000,000 $1,700,000 $1,700,000

Gross margin % 198% 86% 57% 16% 20% 28% 24%









Adv and promotion

$72,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

Other $222,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000

Total overheads $294,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000

EBIT $50,000 $126,000 $150,000 $200,000 $750,000 $1,000,000 $1,100,000

Profit Margin before tax

20% 20% 14% 5% 15% 17% 16%

Growth Rate 152% 19% 33% 275% 33% 10%

PLUS ADD BACKS

Associated Wages (AW) included in expenses $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000

Other addbacks $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 Profit plus Addbacks $200,000 $276,000 $300,000 $350,000 $900,000 $1,150,000 $1,250,000

ROI to Associated persons 80% 44% 27% 9% 18% 19% 18%



Forecast assumptions: The company believes that this forecast is achievable for the following reasons. • This forecast assumes that we will launch the 3 new products by October next year as

planned and that the new products will contribute to 20% of our total revenue. • It assumes that the market will continue to expand as in recent years. • We have access to a distribution channel at the moment. The budget assumes that the

products can be successfully implemneted through our existing channels • We have a proven track record and growth path. We have the technical expertise internally. Projected revenue reason 1 Projected revenue reason 1 Comment Projected profit 1 Comment Projected profit 1



*Note: The profit and loss and balance sheets will be supplied at due diligence



Key Person Overview Tom Flannery Tom joined the company in 1980 and has a Bachelor of Commerce Major in Accounting. Tom has over 10 years experience in the industry. Jenny Marks Jenny joined the company in 1980 and has a Bachelor of Commerce Major in Accounting Tom has over 10 years experience in the industry Fred Merco Fred joined the company in 1980 and has a Bachelor of Commerce Major in Accounting. Tom has over 10 years experience in the industry. Jeff Kennett Jeff joined the company in 1980 and has a Bachelor of Commerce Major in Accounting. Tom has over 10 years experience in the industry.



Reason for sale Where we are now! ABC Company is currently in Growth Phase.

The graph above shows that the company is currently in Growth Phase. At this stage the company is in growth mode. Repeat business and contracts have been secured. Expansion of the business model to new geographical

and product areas.. The company recognises that in order to achieve its full growth potential, it requires expertise and resources to build its new service and training based divisions. The company has exceptional technical capabilities and has proven that with a succession of profitable products. The company however does lack the expertise in terms of training and service management. The company considers that the launch of its service based division has been key to the company’s strategy in moving forward. To successfully maintain this division the company will need to either find an external investor to fund a planned rapid growth path or merge with a larger company that has experience in “service and subscription management”.



Workout Period The current Directors are committed to the business and would seek to remain with the existing business for an agreed period of time to assist the new owner(s) develop and implement an appropriate expansion strategy.



Sale Matters All communications with David Fox and/or ABC Company in respect of the sale process must be made through MAUS. Where necessary MAUS will arrange contact with David Fox and/or ABC Company. During the sale process prospective purchasers may wish to clarify issues with MAUS. These enquires should be directed to: Brett Nelson MAUS Business Systems Level 1, 39 East Esplanade Manly NSW 2095 Australia Email: [email protected] Ph: 61 2 9976 2177 Fax: 61 2 9976 2137 Under no circumstances are prospective purchasers to contact management, employees, agents, clients or suppliers of the Company to discuss any matter in connection with the sale process or this Confidential Information Memorandum without the prior written consent of the Shareholders or the Consultant. Sales Process MAUS (hereafter referred to as the "Consultant") has been appointed to manage the communication process for the sale of ABC Company, (hereafter referred to as the "Company") and as such represents the interests of David Fox (hereafter referred to as the "the Director(s)") in dealing with prospective purchasers relating to the sale process and the offers received. Further detailed information and access to the business and its management team will only be provided to those parties who establish a strong and genuine interest to proceed with an acquisition of this size and nature. To that end we anticipate that the sale process will involve: • Submission of a written indicative offer; • Short listing of parties; • Completion of detailed due diligence; • Submission of a formal unconditional offer; and • Signing of a contract of sale and completion within a relatively short period following submission

of the formal offer. Discussion will be held with short-listed parties during the due diligence period to verify and resolve sale preconditions and the terms and conditions set out in the proposed contract of sale.



Indicative Offer Prospective purchasers who have executed a Confidentiality Deed and substantiated their capacity to proceed with the proposed transaction will be provided with this Memorandum. Prospective purchasers are required to submit in good faith an indicative offer. Such offers will not constitute an offer binding the party but will form part of the basis on which prospective parties will be short listed. The Director(s) seeks a written indicative offer from prospective purchasers which must contain the following:

a) Full name of respondent and name and details of contact for correspondence and further information;

b) Background information on the prospective purchaser and their business;

c) Details of the legal and beneficial ownership and control (direct or indirect) of the prospective purchaser;

d) Confirmation as to whether the purchaser wishes to acquire the business and the net assets it employs or the shares in the Company and the impact this has on the indicative offer;

e) An indicative non-binding offer detailing the purchase price to be offered for the Company business based on the net assets employed as at 30 June 2008 plus a fixed goodwill payment with scope to adjust the final price to reflect changes in the net asset positions between 30 June 2008 and Completion;

f) An explanation of the means by which the proposed transaction is to be funded which substantiates the prospective purchaser's capacity to proceed with a transaction of the size and nature contemplated;

g) Details of the level of approval that has been obtained in submitting the indicative offer (e.g. Board, Chief Executive) and all additional internal or external (including regulatory) approvals (e.g. Board, shareholder, FIRB, trade practices) which would be required prior to entering into an unconditional binding sale agreement;

h) Any other additional information that the Consultant would reasonably require and reasonably expect to receive for the purpose of considering the indicative offer and in particular, prospective purchasers should specify:-

• any material commercial or financial assumptions that underlie the indicative offer;

• any circumstances which, if varied, would cause the prospective purchaser to vary the price or conditions of the indicative offer;

• any facts or circumstances relating to the recipient that may impact on the successful assignment of material contracts or impact on the successful fulfilment of any other conditions; and

• any critical timing issues; and

i) Any special or specific due diligence matters that the prospective purchaser will require information on if they proceed to the due diligence phase.



Key Terms of Sale Without in anyway prejudicing the final terms that the vendors may wish to include in such sale documentation, the following key terms are envisaged; Purchase The sale of the Company has been presented as a sale of the Company and the net assets it employs. Purchase Price The final purchase price will be structured as: • an amount for purchase for the net assets employed as at Completion; plus • A fixed goodwill payment.

Post Completion Audit The net assets employed at completion will be audited and there will be a post-completion adjustment to the purchase price to reflect the changes in the Company' net assets employed position between 30 June 2006 and Completion. Payment The full purchase price will be payable based on the estimated Completion Accounts with any post-completion adjustments to be paid in full within seven days for the receipt of the audited statement of net assets employed as at the Completion date. Conditions and Warranties The conditions and warranties which the vendor is prepared to accept will be detailed in the sale agreement provided to prospective purchasers during the Due Diligence phase of the sale process. Due Diligence Prospective purchasers who submit acceptable indicative offers will be short listed and invited to undertake a due diligence review of the Company. The due diligence process will include access to additional information concerning the Company, and access where appropriate to senior management. Prospective purchasers will be required to submit written requests for further information or access to management.



Formal Sale Agreement It is envisaged that discussions in respect of the proposed sale agreement will be held during the due diligence period to clarify and resolve the material terms and conditions to be included in the formal sale agreement. The formal sale agreement will contain: • the only representations and warranties on which a purchaser can rely; and • An acknowledgment by the purchaser that it has not relied on any representations or warranties

by the Company or the Consultant in entering into the sale agreement, other than the representations and warranties set out in the sale agreement.

Submission of Offer Following completion of the due diligence process, prospective purchasers will be invited to submit a binding unconditional offer based on the information received and verified through their own due diligence inquiries. Decision on Sale The Director(s) reserve the right to evaluate any expression of interest, detailed proposal or offer in connection with the Company submitted by any party and to reject any or all of them without giving reasons for rejection. No party is entitled to the basis of the Director(s) decision to accept or reject any expression of interest, detailed proposal or offer. The Director(s) may at any time have discussions or negotiations with any party or any other interested parties to enter into an agreement or agreements with any one or more of them in relation to the proposal without giving reason for so doing or any prior notice to any or all interested parties. The Director(s) is not under any obligation to accept an offer submitted by any party or any other person. The Director(s) may accept an offer from any party without attributing a reason. Responsibility for Costs The Director(s), the Company and the Consultant and their respective officers, employees and representatives are not liable to reimburse or compensate any party or any of their representatives for any costs or expenses incurred by any party or its representatives in conducting their review and evaluation of the proposal, submitting an expression of interest or detailed proposal, making an offer or otherwise in connection with the proposal.



Conditions of Issue of Memorandum This Memorandum is supplied on the following conditions, which conditions are expressly accepted and agreed to by the Recipient, in part consideration of the supply of the Memorandum, as evidenced by the retention by the Recipient of this document. If these conditions are not acceptable, the Memorandum is to be returned immediately. 1. This Memorandum does not purport to contain all of the information that may be required to

evaluate an acquisition of the Company and any intending purchasers and their respective advisors should conduct their own independent review, investigations and analysis of the Company and of the information contained or referred to in this document.

2. Neither the Director(s), the Company, the Consultant, and the partners and employees of the Consultant or their respective subsidiary or associated companies or businesses, shareholders, directors, partners, offices or employees (collectively the "Beneficiaries") makes any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information contained in this Memorandum or subsequently provided to the Recipient by any of the Beneficiaries including, without limitation, any historical financial information, the estimates and projections and any other financial information derived there from, and nothing contained in this Memorandum is, or shall be relied upon as, a promise or representation, whether as to the past or the future.

3. Except insofar as liability under any law cannot be excluded, the Beneficiaries shall have no responsibility arising in respect of the information contained in this Memorandum or in any other way for errors or omissions (including responsibility to any person by reason of negligence).

4. The estimates and projections contained in this Memorandum involve significant elements of subjective judgement and analysis which may or may not be correct. There are usually differences between forecast and actual results because events and circumstances frequently do not occur as forecast and these differences may be material. The Recipient, any intending purchasers and their respective advisors should make their own independent review of the relevant assumptions, calculations and accounting policies upon which the estimates and projections are based.

5. The Beneficiaries may in their absolute discretion, but without being under any obligation to do so, update or supplement this Memorandum. Any further information will be provided subject to these terms and conditions.

6. This Memorandum including any update or supplement to this document does not and will not form part of any sale agreement that may result from the review, investigations and analysis of the Company by the Recipient, and intending purchasers and/or their respective advisors. Any agreement for the sale of the Company will contain any and all information, representations and warranties upon which he Recipient or any other intending purchaser should rely. The formal sale agreement will also contain an acknowledgment by the Recipient that it has not relied on any representations or warranties by any of the Beneficiaries in entering into the sale agreement other than any representations and warranties set out in the sale agreement itself.

7. The Company and the Consultant, reserve the right to evaluate any offers and to reject any and all offers submitted, without giving reasons for rejection. The Beneficiaries shall not be liable to compensate the Recipient or any intending purchasers for any costs or expenses incurred in



reviewing, investigating or analysing any information in relation to the Company, in making an offer or otherwise.

8. The information in this Memorandum is provided to the Recipient only as a matter of interest.

It does not amount to a recommendation either expressly or by implication with respect to the purchase of the Company.

9. The information in this Memorandum may not be appropriate for all persons and it is not

possible for the Beneficiaries to have regard to the investment objectives, financial situation and particular needs of each person who reads or uses the information in this Memorandum. Before acting in reliance on the information in this Memorandum the Recipient should check its accuracy, reliability and completeness and obtain independent and specific advice from appropriate experts.

10. By accepting a copy of this Memorandum, the Recipient agrees that it shall not contact or

discuss the Company, the contents of this Memorandum or any other information supplied to the Recipient as contemplated hereby or any proposal concerning the Company arising out of this Memorandum with any officer, employee, supplier, customer, licensor, franchisee or associate of the Company without the prior consent of the Shareholders which may be given by the Consultant.

11. This Memorandum and further information which may be supplied as contemplated hereby are supplied on the terms set out above and on the terms contained in a confidentiality agreement entered into by the Recipient, the terms of which incorporate the above conditions and which contain restrictions on the use of the information, its disclosure and on the conduct of the Recipient subsequent to the recipient thereof. The Recipient acknowledges the foregoing and it is hereby agreed that the terms of the confidentiality agreement are incorporated into, and forms part of, these conditions.

sample of information memorandum

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