Letter of Intent Merger and Acquisition

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									This Letter of Intent is used to outline the initial terms of a merger and acquisition
transaction between two companies. While a letter of intent is not mandatory to a
merger and acquisition, they often help streamline negotiations when the transaction is
complex. This letter sets forth the material terms and conditions of the proposed
agreement including the purchase of stock and the closing date. Once the parties agree
to the terms in the letter of intent, a formal purchase agreement must be drafted and
executed. This template can be customized to fit the specific needs of the parties. It
should be used by companies when negotiating a merger and acquisition.

Name and Address of [Company/Seller]

Dear [Insert Name of Recipient]:

This Letter of Intent (“Letter” sets forth our understanding of the mutual present intentions of
_________________ (“Purchaser”) and _________________ (“Company”) with respect to the
principal terms and conditions under which Purchaser will acquire all of the outstanding capital
stock of Company. This transaction is hereinafter referred to as the “Acquisition.”

The obligations of the parties to complete the Acquisition are conditional to the successful
negotiation and execution of the Purchase Agreement.

1.       Purchase of Stock

At the closing, subject to the satisfaction of all conditions precedent contained in the Purchase
Agreement, Purchaser will purchase all of the outstanding capital stock, warrants, options, and
convertible securities of Company, free and clear of any liens, charges, restrictions, or
encumbrances. After further review and upon mutual agreement of the parties, the Acquisition
may be modified so that Purchaser acquires the shares through a merger between Purchaser or
one of its subsidiaries and Company (the “Merger”).

2.       Price

Purchaser agrees to purchase all shares of [Insert Name of Company], subject to increase, by the
amount that the current assets of Company exceeds its current liabilities, as of the date of

3.       Closing Date

The Closing Date shall be a date mutually upon by both Purchaser and Company.

4.       Purchaser to Prepare Share Purchase Agreement

Upon acceptance of this Letter, Purchaser will prepare a Share Purchase Agreement that will
incorporate the terms and conditions of this Letter and contain the usual and expected
agreements, covenants, representations, warranties, indemnifications, and other provisions
commonly found in such agreements. Purchaser and Company will act in good faith to negotiate
and use their best efforts to enter into the Share Purchase Agreement within ___ (__) days of
Company’s acceptance of this Letter.

5.     This transaction is conditional upon: (a) entering into the Share Purchase Agreement, (b)
obtaining appropriate financing, (c) procuring approval from competent regulatory authorities,

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and (d) conducting satisfactory due diligence in regards to legal, accounting, financial,
technologic, and environmental matters, as well as other preliminary conditions.

6.     Until completion of the Acquisition, or in the event that the parties do not complete the
Acquisition, Purchaser will not solicit or recruit the employees of Company.

7.      Seller represents and warrants that Purchaser will not incur any liability in connection
with completion of the Acquisition to any third party with whom Seller or its agents have had
discussions regarding the disposition of Company or its business activities. Seller agrees to
indemnify, defend, and hold harmless Purchaser, its officers, directors, shareholders, and lenders
from any claims. The covenants contained in this paragraph shall survive the termination of this
Letter agreement.

Please sign and date the enclosed copy of this Letter and return to Company on or before [date].

Yours Truly,

Name of Buyer

Dated: _________________

Name of Seller

Dated: _________________

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