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Letter of Intent to Buy Capital Stock of a Corporation
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
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
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
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,
ACCEPTED AND AGREED TO: