DIY Legal Forms

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Letter of Intent to Buy Capital Stock of a Corporation


To: [names]


Dear Shareholders:

Purpose of Letter. The purpose of this letter is to set forth our mutual intentions with respect to a proposed transaction in which we (hereafter Buyer) would purchase all of the capital stock of [name] (hereafter Company) from you (hereafter collectively Seller), subject to the following terms and conditions.

1. Date of Closing. It is proposed that the transaction will be closed by and as of [date] (the Closing Date).

2. Purchase Price. The proposed purchase price is ---------- dollars ($----------), which will be increased or decreased by any postclosing adjustments agreed to by Buyer and Seller. ---------- dollars ($----------) of the proposed purchase price would be held in escrow for the period covered by the representations and warranties set forth below [omitted].

3. Employment Agreements. On the Closing Date, Buyer will enter into employment agreements with [name] and [name], which will provide, among other things, the following: [describe financial terms, length of contracts, term of contracts, duties of employees, titles of employees, etc.].

4. Employees' Benefits. Buyer intends to provide Company's employees with benefits that in the aggregate will be substantially equivalent to (or, better than) the benefits currently provided to the employees. Buyer will assume Company's pension liabilities and would receive from Company pension assets that are at least equal to those liabilities, valued at the greater of an ongoing or termination basis.

5. Conditions Precedent. The following conditions must be satisfied prior to the consummation of the transaction:

a. Definitive Agreement. Negotiation, execution, and delivery of a mutually satisfactory definitive agreement containing representations, warranties, covenants, and conditions customary in a transaction of this nature and size that will survive the closing date by at least [number] years, except those dealing with taxes that will survive for the applicable statute of limitations period.

b. Noncompete Agreement. Seller's execution on the Closing Date of noncompete agreements that are mutually satisfactory to Seller and Buyer.

c. Approvals. The making of all required governmental filings and approvals and the required corporate approvals of Company.

d. Business Review. The completion of a satisfactory business review of Company by Buyer.

e. Conduct of Company. Seller's management of Company in the normal and ordinary course without any material adverse change from the date hereof to the Closing Date.

f. Other Conditions. [List any other conditions].

6. No Negotiations With Others. Until the execution and delivery of a definitive and binding agreement (or such earlier date if negotiations are terminated), (a) Seller will not discuss the sale of Company's stock with any other prospective purchaser without Buyer's consent; (b) Company, its officers, directors, and agents will not discuss the sale of Company's stock with any other prospective purchaser without Buyer's consent; (c) Seller and Company will make available to Buyer, Buyer's counsel, accountants, actuaries, and other representatives access to such information and documents regarding Company as Buyer may reasonably request; and (d) Buyer will keep and cause others to keep such information confidential.

7. Nondisclosure of Proposed Transaction. Seller and Buyer will not make any public disclosures about the existence or contents of this letter or the transactions contemplated hereby without prior notice to and the approval of the other party.

8. Each Party to Bear Own Expenses. Buyer and Seller will each bear its respective expenses incurred in connection with the negotiation, preparation, and consummation of the contemplated transaction.

9. Letter Not a Binding Contract. Except with respect to Paragraphs 6, 7, and 8 hereof, this letter shall not constitute a binding contract between Buyer and Seller, but purports only to set forth their present intentions with respect to the terms proposed to be incorporated in the definitive purchase agreement.

10. Acceptance and Approval. Please indicate your acceptance and approval of this letter by signing below. Kindly return one fully executed copy of the letter. The duplicate original is for your files. Upon receipt of the executed letter of intent, we will begin drafting the definitive Stock Purchase Agreement for your review.

Very truly yours,

[company name]

By: [signature]