Letter of Understanding

RedStone M&A Group, LLC

[ENTER ADDRESS]

[DATE]

Randy Hazelton

[ENTER ADDRESS]

This is the Letter of Understanding between RedStone M&A Group, LLC and Randy Hazelton (hereinafter “the parties”) that states official terms of the undertaking that these two parties have decided upon. These two parties have decided to work together under the terms of this letter of understanding. The following are the abiding rules and conditions that they have agreed on to proceed with the M&A transaction.

The parties have agreed to work together on the acquisition and turnaround of FUI – a franchisor and franchise operator. Accordingly, each party shall have the following roles and responsibilities under this agreement:

Redstone:

1. Create Investment Package,
2. Create Financial Model,
3. Create Investment Fund/Syndicate,
4. Structure Transaction,
5. Lead underwriting efforts,
6. Lead Quality of Earnings, and
7. Serve as interim-CFO/CIO.

Randy:

1. Provide operational assumptions for model,
2. Conduct operational diligence,
3. Lead seller relationship management,
4. Lead lease negotiations,
5. Serve as turnaround consultant post-close,
6. Attract a leadership team, and
7. Lead development of turnaround plan.

The parties will receive compensation for their services according to the following compensation schedule:

1. Randy has engaged RedStone with a retainer of $5,000 per month for a minimum of ninety (90) days to work on the transaction. After ninety (90) days, the contract will renew unless terminated in writing by one or both parties.
2. RedStone’s retainer will be reimbursed to Randy at closing.
3. If Randy will be a member of management, he agrees to invest a TBD amount into the transaction to make investors interested.
4. Other members of management must likewise make an investment to make raising outside capital easier.
5. Randy may receive a finder’s fee up to $1,000,000 in cash, options, or bonuses depending on investor negotiations. Notably, this may or may not be counted as part of any management compensation if Randy takes a role post-closing.
6. RedStone may receive similar compensation to Randy depending on investor negotiations. Notably, RedStone’s compensation may include investor fees paid to join the syndication. These fees may or may not occur and the amount is unknown.
7. If this transaction does not close, the RedStone retainer can be rolled towards another acquisition and the next immediate retainer will be $2,500/month. This rollover will continue as long as Randy continues to seek to acquire a company.

The parties acknowledge that closing M&A transactions can be faced by potential challenges including but not limited to unrealistic seller expectations, unrealistic investor expectations, operating business deterioration, diligence findings or issues in the capital markets. Also parties agree that no positive return is guaranteed. In that regard, the parties acknowledge that the success of the parties’ initiative is measured by the general return experienced by the Russell 2,000 small caps index, and not whether the return I positive or negative. Notably, we prefer to have our performance judged by beating our index 6 out of 10 years and/or earning a 10 year IRR 5% greater than the normalized Russell 2,000 small caps index.

The focus of the parties is on win-win transactions. Accordingly, the Parties want sellers to feel they have been properly compensated for their business. This often requires the seller to provide debt or equity funding for the transaction.

Furthermore, it is agreed that the parties’ method of raising capital is more time consuming and challenging. In that regard, the parties forecast a probable three to six months period to raise sufficient capital.

In light of the foregoing, it is incumbent for both parties to carry out due diligence, and make sure the transaction works for them, and they only invest what they are prepared to lose.

The parties agree with the terms in this Letter of Understanding. If any of them still has some doubt, the party may make it clear before appending their signature.

Sincerely,