Merger - Letter of Intent


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									This is a template for a letter of intent regarding a type C merger and tax-free
reorganization. In the merger the prospective buyer acquires all of the assets and
agreed liabilities of the prospective seller, in exchange, the prospective buyer transfers
shares of its voting stock. Ultimately, the prospective seller dissolves and transfers the
voting stock to its shareholders. This letter is to be negotiated and signed prior to the
merger agreement and can be customized to fit the needs of the drafting parties.
          ___________ [Instruction: Insert Prospective Buying Corporation Name]
                  ___________ [Instruction: Insert Company Address 1]
                  ___________ [Instruction: Insert Company Address 2]

                                                         ___________ [Instruction: Insert Date]

___________ [Instruction: Insert Prospective Selling Corporation Name]
___________ [Instruction: Insert Address 1]
___________ [Instruction: Insert Address 2]

       Re:       Letter of Intent re: Merger of ___________ [Instruction: Insert Prospective
                 Buying Corporation Name] and ___________ [Instruction: Insert Prospective
                 Selling Corporation Name]


       The purpose of this binding letter (the "Letter of Intent") is to set forth an understanding
between and among ___________ [Instruction: Insert Prospective Buying Corporation
Name], a ___________ [Instruction: Insert State] corporation (the "Prospective Buyer"), and
___________ [Instruction: Insert Prospective Selling Corporation Name], a ___________
[Instruction: Insert State] corporation (the "Prospective Seller"), with respect to the possible
merger and acquisition by Prospective Buyer of certain assets and liabilities of Prospective Seller
in exchange for the issuance and delivery to Prospective Seller of certain voting shares of
Prospective Buyer’s common stock.

        Until a fully integrated, definitive agreement (the "Merger Agreement") and other related
documents have been prepared, authorized, executed and delivered by and between all parties,
this Letter of Intent shall bind both parties to such an extent as stated herein unless terminated
pursuant hereto.

1. The Transaction. Subject to the conditions set forth in this Letter of Intent, the Prospective
Buyer will acquire from Prospective Seller all of the Assets of Prospective Seller, as set forth in
paragraph 1(A), along with the Liabilities of Prospective Seller, as set forth in paragraph 1(B).
In exchange, the Prospective Buyer shall issue and deliver to the Prospective Seller,
___________ (______) [Instruction: Insert Amount] fully paid and non-assessable voting
shares of Prospective Buyer’s common stock (the “Shares”). The foregoing transaction shall
henceforth be referred to as the “Transaction”. The parties intend to execute an agreement of
merger (the “Merger Agreement”) by no later than ___________ [Instruction: Insert Date] and
to close the the “Transaction as soon as possible thereafter, but in no event later than
___________ [Instruction: Insert Date] (the "Closing Date"). The Closing Date may be
extended by the mutual consent of the Prospective Seller and the Prospective Buyer. It is
understood and agreed that following the Closing Date, Prospective Seller shall liquidate any
remaining assets, dissolve and wind up its affairs and transfer the Shares acquired in the
Transaction to the Prospective Seller’s shareholders. The parties intend to structure the
Transaction and the Merger Agreement as a merger and tax-free reorganization pursuant to
Internal Revenue Code of 1986 § 368(c), as amended.
     A. Assets. In connection with the Transaction, Prospective Buyer shall acquire from
Prospective Seller all assets, properties and rights of Prospective Seller, including but not limited
to, the good will of the business of the Prospective Seller, its corporate name and all variants of
such name, its patents, trademarks, and tradenames, and all other assets of the business owned
and operated by the Prospective Seller (the “Assets”).

    B. Liabilities. In connection with the Transaction, Prospective Buyer shall assume,
discharge, and indemnify the Prospective Seller against, all debts, contracts, obligations, and
liabilities of Prospective Seller as reflected or referred to in Exhibit “A”, attached hereto, and
incorporated herein. In addition, Prospective Buyer shall assume, discharge and indemnify
Prospective Seller against, all debts, obligations, and liabilities of Prospective Seller that have
arisen or will arise in the ordinary course of its business prior to the Closing Date (the
“Liabilities”). Buyer shall not, however, be liable for: (A) any income tax or other tax arising
out of this merger and reorganization or the distribution of the proceeds to the shareholders of
Prospective Seller or the winding up and dissolution of Prospective Seller; or (B) Any liabilities
incurred by Prospective Seller as a result of agreements that it may enter into in violation of the
terms of this agreement; and (C) all other obligations and liabilities incurred by Prospective
Seller after the Closing Date.

2. Due Diligence. The Prospective Buyer shall have a period of up to fifteen (15) business days
commencing on the day after the execution of this Letter of Intent (the “Due Diligence Period”)
to conduct an investigation of the prospects, business, assets, contracts, rights, liabilities and
obligations of the Prospective Seller, including financial, marketing, employee, legal, regulatory
and environmental matters of the Prospective Seller and the Subsidiaries, to satisfy itself as to the
desirability of proceeding with the Transaction and of the condition of the Prospective Seller,
both financial and otherwise. During the Due Diligence Period, the Prospective Buyer shall have
access to the books, records and all aspects of the business of the Prospective Seller. The Due
Diligence Period may be extended by the mutual agreement of the parties.

3. Proposed Form of Agreement. The Prospective Buyer and the Prospective Seller shall
expeditiously negotiate to reach a written Merger Agreement, subject to the approval of the
Prospective Buyer's Board of Directors and shareholders and the Prospective Seller's Board of
Directors and shareholders. The Merger Agreement shall provide for all matters of material
concern within the scope of this Letter of Intent as well as comprehensive representations,
warranties, indemnifications, conditions and agreements by the Prospective Seller and other
appropriate third parties, if any. It is the intent of the parties hereto that they shall exercise their
best efforts to conclude the Merger Agreement to achieve these objectives. Any conflict or
inconsistency shall be resolved amicably by both parties.

4. Conditions to Transaction. The parties intend to be bound by this Letter of Intent subject to
the execution and delivery of the Merger Agreement which, if successfully negotiated, would
provide that the Transaction will be subject to customary terms and conditions, including without
limitation, the following:
   A. Receipt of all necessary consents and approvals of governmental bodies, lenders, lessors
and other third parties;

   B. Absence of any material adverse change in the Prospective Seller’s business, financial
condition, prospects, assets or operations following the date of this Letter of Intent;

    C. Absence of pending or threatened litigation regarding the Merger Agreement or the
transactions to be contemplated thereby;

    D. Delivery of customary legal opinions, closing certificates and other documentation as
shall be reasonably requested by the Prospective Buyer;

    E. Execution of the Merger Agreement on terms found acceptable in the discretion of each
party hereto;

   F. Receipt of fairness opinions by both parties;

    G. Receipt by Prospective Seller of a legal opinion in form reasonably acceptable to it that
the Transaction qualifies as a tax-free reorganization under the provisions of the Internal
Revenue Code of 1986, as amended; and

   H. Approval by the shareholders of Prospective Buyer and Prospective Seller as required.

5. Exclusivity. In consideration of the substantial time and expense to be incurred by the
Prospective Buyer in investigating the proposed Transaction, Prospective Seller agrees that
between the date hereof and ___________ [Instruction: Insert Date], Prospective Seller will not
directly or indirectly enter into, or commence negotiations or discussion for the purpose of
exploring whether to enter into any agreement of merger or similar transaction with any party
other than the Prospective Buyer.

6. Access. The Prospective Buyer and its agents shall have reasonable access at all reasonable
times to the premises, books and records, and personnel of Prospective Seller for the purpose of
conducting their due diligence with respect to Prospective Seller and the transactions
contemplated by this Letter of Intent.

7. Miscellaneous.

    A. Each oparty ereto shall be responsible for and bear all of its own costs and expenses
(including any broker's, finder's, counsel and investment banking fees) incurred in connection
with the Transaction, including expenses of its Representatives (as defined below) incurred at
any time in connection with pursuing or consummating the Transaction.

    B. This Letter of Intent is being submitted in confidence and no term, provision, or condition
of this letter shall be disclosed to any person without the consent of each party hereto. Without
the prior approval of the other party to this letter, no party will hereafter make any public or
private announcement of the transactions contemplated hereby until the Merger Agreement is
executed by all parties hereto.

    C. This Letter of Intent shall be construed in accordance with and governed by, for all
purposes, the laws of the State of __________ [Instruction: Insert State], applicable to
contracts executed and wholly performed therein. The Parties herein agree to submit to the
personal jurisdiction and venue of Federal and State courts located in ________ County
[Instruction: Insert County], State of ______________ [Instruction: Insert State].

    D. This Letter of Intent and the Exhibits annexed hereto constitutes the entire understanding
between the Parties and supersedes any and all other agreements, either oral or in writing,
between the parties hereto. If any provision of this Letter is held by a Court of competent
jurisdiction to be invalid, void or unenforceable, it will be severed from it and the remaining
provisions shall nevertheless continue in full force and effect without being impaired or
invalidated in any way. This Letter of Intent may be amended only by written agreement, signed
by all Parties hereto.

    E. No promise, inducement, representation or agreement, other than as expressly set forth
herein, has been made to or by the parties hereto.

      Please sign this Letter of Intent in the space provided below to confirm the mutual
agreements set forth herein, and return a signed copy to the undersigned.

                                            Very Truly Yours,

                                            ___________ [Instruction: Insert Prospective
                                            Buying Corporation Name]

                                            [Instruction: sign]
                                            ___________ [Instruction: Insert Name of
                                            Signatory], ___________ [Instruction: Insert

Acknowledged and agreed as of the foregoing date.

___________ [Instruction: Insert Prospective Selling Corporation Name]

________________________________ [Instruction: sign]
___________ [Instruction: Insert Name of Signatory],
___________ [Instruction: Insert Title]
Exhibit “A”

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