LETTER OF INTENT TEMPLATE

PandaTip: A letter of intent is a legal document outlining the major terms of an agreement between two parties, in
advance of actually entering into the final agreement.  It establishes the intent of the parties, and while it is often non-
binding, it can be.  As such, care should be taken in drafting any letter of intent.

[DATE]

[CEO NAME]

[COMPANY]

[COMPANY ADDRESS]

Subject:        Letter of Intent for the Acquisition of [COMPANY] by

[ACQUIRER]

PandaTip: This letter of intent establishes the intent of one company to buy another, by way of a “stock purchase”.  An
alternative to this would be an “asset purchase”, and each carries certain legal and tax implications.

Dear [CEO NAME]:

This letter confirms your and our mutual intent with respect to the
potential transactions described herein between [ACQUIRER] (“Buyer”,
“us”, “our”) and [COMPANY] (“Seller”, “you”, or “your”), including its
shareholders.  This document, in and of itself, does not represent an
enforceable legal contract.

WHEREAS, Buyer is interested in acquiring all of the outstanding stock

(“Shares”) of [COMPANY] / Seller, and will be performing certain due
diligence with respect to Seller’s corporation; and
 WHEREAS, Buyer and Seller intend to negotiate the substantive terms
of such acquisition, including the terms of Buyer’s employment
agreements with certain key employees and executives of Seller;

NOW, THEREFORE, the parties enter into this Letter of Intent as

follows:
1. Terms.  The principal terms of the proposed transaction would be
substantially as follows:
1. Real and Effective Acquisition.  Subject to the successful
due diligence, and the successful negotiation of a purchase
price for the Shares, Buyer would acquire the Shares.
2. Consideration.  The aggregate purchase price for the Shares
is to be negotiated between the parties in good faith,
provided that the Purchase Agreement (as defined below)
and employment agreements can be successfully
negotiated concurrently with each other.
3. Due Diligence Review.  Promptly following the execution of
this Letter of Intent, you will allow us to complete our
examination of your financial, accounting and business
records and the contracts and other legal documents and
generally to complete due diligence.  Any information
obtained by us as a result thereof will be maintained by us
in confidence subject to the terms of the Non-Disclosure
Agreement executed by the parties and dated as of [DATE]
(the “NDA”).  The parties will cooperate to complete due
diligence as expeditiously as possible.
4. Definitive Purchase Agreement.  All of the terms and
conditions of the proposed transactions would be stated in
the Purchase Agreement and employment agreements, to
be negotiated in good faith concurrently with each other,
and if agreed, executed by you and us.  Neither party
intends to be bound by any oral or written statements or
 correspondence concerning the Purchase Agreement or
employment agreements arising during the course of
negotiations, notwithstanding that the same may be
expressed in terms signifying a partial, preliminary or
interim agreement between the parties.
5. Conduct in Ordinary Course.  In addition to the conditions
discussed herein and any others to be contained in a
definitive written stock purchase agreement (the “Purchase
Agreement”), consummation of the acquisition would be
subject to having conducted your business in the ordinary
course during the period between the date hereof and the
date of closing and there having been no material adverse
change in your business, financial condition or prospects.
Seller shall not be liable in the event of any Buyer
determination that Seller did not conduct its business in the
ordinary course, or for any adverse changes Buyer may
deem to have occurred.
6. Contract of Employment.  Simultaneously with the
execution of the Purchase Agreement, we would offer
employment to the following individuals currently
employed by Seller and you hereby agree to accept such
employment, subject to the negotiation of mutually
acceptable employment agreements, it being understood
that the term of such employment agreements will be for a
period of not less than three (3) years.
2. Expenses & Limitation of Liability.  You and we will pay our
respective expenses incident to this Letter of Intent, the Purchase
Agreement, the employment agreements and the transactions
contemplated hereby and thereby, and NEITHER PARTY SHALL
BE LIABLE TO THE OTHER FOR ANY CAUSE WHATSOEVER
ARISING UNDER THIS LETTER OF INTENT.
 3. Public Announcements.  Neither you nor we will make any
announcement of the proposed transaction contemplated by this
Letter of Intent prior to the execution of the Purchase Agreement
and employment agreements without the prior written approval
of the other, which approval will not be unreasonably withheld or
delayed.  The foregoing shall not restrict in any respect your or
our ability to communicate information concerning this Letter of
Intent and the transactions contemplated hereby to your and
our, and your and our respective affiliates’, officers, directors,
employees and professional advisers, and, to the extent relevant,
to third parties whose consent is required in connection with the
transaction contemplated by this Letter of Intent.
4. Broker’s Fees.  All parties have represented to each other that no
brokers or finders have been employed who would be entitled to
a fee by reason of the transaction contemplated by this Letter of
Intent.

PandaTip: The below clause is one that acquirers will most certainly want in a letter of intent. It ensures they are the only
ones “at the table”, which excludes competition and increases their leverage in the negotiation. On the other hand,
business sellers most certainly want to keep their options open (or the appearance that they have other interested
acquirers), which increases their leverage.  The clause below is one example of a clause that does impose a legal
obligation.

5. Exclusive Negotiating Rights.  In order to induce us to commit

the resources, forego other potential opportunities, and incur the
legal, accounting and incidental expenses necessary properly to
evaluate the possibility of acquiring the outstanding capital stock
and business described above, and to negotiate the terms of,
and consummate, the transactions contemplated hereby,
including the employment agreements, you agree that for a
period of ninety (90) days after the date hereof, you, your
affiliates and your and their respective officers, directors,
employees and agents shall not initiate, solicit, encourage,
directly or indirectly, or accept any offer or proposal, regarding
 your employment and/or the possible acquisition of substantially
all outstanding capital stock of [COMPANY] by any person other
than us, including, without limitation, by way of a purchase of
majority shares, purchase of substantially all assets or merger, of
all or any substantial part of your equity securities or assets, and
shall not (other than in the ordinary course of business as
heretofore conducted) provide any confidential information
regarding your assets or business to any person other than us
and your and our representatives, without our prior written
consent.
6. Miscellaneous.  This letter shall be governed by the substantive
laws of the State of [STATE] without regard to conflict of law
principles.  This letter, together with the aforementioned NDA,
constitutes the entire understanding and agreement between the
parties hereto and their affiliates with respect to its subject
matter and supersedes all prior or contemporaneous
agreements, representations, warranties and understandings of
such parties (whether oral or written).  No promise, inducement,
representation or agreement, other than as expressly set forth
herein, has been made to or by the parties hereto.  This letter
may be amended only by written agreement, signed by the
parties to be bound by the amendment. Evidence shall be
inadmissible to show agreement by and between such parties to
any term or condition contrary to or in addition to the terms and
conditions contained in this letter.  This letter shall be construed
according to its fair meaning and not strictly for or against either
party.
7. No Binding Obligation.  THIS LETTER OF INTENT DOES NOT
CONSTITUTE OR CREATE, AND SHALL NOT BE DEEMED TO
CONSTITUTE OR CREATE, ANY LEGALLY BINDING OR
ENFORCEABLE OBLIGATION ON THE PART OF EITHER PARTY TO
THIS LETTER OF INTENT.  NO SUCH OBLIGATION SHALL BE
 CREATED, EXCEPT BY THE EXECUTION AND DELIVERY OF THE
PURCHASE AGREEMENT AND EMPLOYMENT AGREEMENTS
CONTAINING SUCH TERMS AND CONDITIONS OF THE
PROPOSED TRANSACTIONS AS SHALL BE AGREED UPON BY THE
PARTIES, AND THEN ONLY IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF SUCH PURCHASE AGREEMENT AND
EMPLOYMENT AGREEMENTS.  The NDA is hereby ratified and
confirmed as a separate agreement between the parties thereto.

If the foregoing terms and conditions are acceptable to you, please so

indicate by signing this letter where indicated below and returning it
to the attention of the undersigned.

Sincerely,

[ACQUIRER]

_________________________________

[ACQUIRER REP NAME]

[TITLE]

ACCEPTED AND AGREED:

[COMPANY]