___________, 200_

Seller A
[Address]
__________________
Seller B
[Address]
__________________
Re: Proposal to Purchase Stock of the Company
Dear Sellers:
This letter is intended to summarize the principal terms of a proposal bein considered b!
__________________ "the #Bu!er$% reardin its possible ac&uisition of all of the outstandin
capital stoc' of ________________ "the #(ompan!$% from ______________"#A$% and
_____________________, )ho are the (ompan!*s sole stoc'holders "the #Sellers$%+ ,n this
letter, "i% the Bu!er and the Sellers are sometimes called the #-arties,$ "ii% the (ompan! and its
subsidiaries are sometimes called the #Taret (ompanies,$ and "iii% the Bu!er*s possible
ac&uisition of the stoc' of the (ompan! is sometimes called the #-ossible Ac&uisition+$
PART ONE
The -arties )ish to commence neotiatin a definiti.e )ritten ac&uisition areement pro.idin
for the -ossible Ac&uisition "a #Definiti.e Areement$%+ To facilitate the neotiation of a
Definiti.e Areement, the -arties re&uest that the Bu!er*s counsel prepare an initial draft+ The
e/ecution of an! such Definiti.e Areement )ould be sub0ect to the satisfactor! completion of
the Bu!er*s onoin in.estiation of the Taret (ompanies* business, and )ould also be sub0ect
to appro.al b! the Bu!er*s board of directors+
Based on the information currentl! 'no)n to the Bu!er, it is proposed that the Definiti.e
Areement include the follo)in terms:
1. Basic Transaction
The Sellers )ould sell all of the outstandin capital stoc' of the (ompan! to the Bu!er at
the price "the #-urchase -rice$% set forth in -araraph 2 belo)+ The closin of this transaction
"the #(losin$% )ould occur as soon as possible after the termination of the applicable )aitin
period under the 1art2Scott23odino Antitrust ,mpro.ements Act of 4567 "the #1S3 Act$%+
. Purchase Price
The -urchase -rice )ould be 8____________ "sub0ect to ad0ustment as described belo)%
and )ould be paid in the follo)in manner:
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[Seller A]
[Seller B]
-ae 2
!a" at the (losin, the Bu!er )ould pa! the Sellers the sum of 8_____ in cash<
!#" at the (losin, the Bu!er )ould deposit )ith a mutuall! acceptable escro) aent
the sum of 8_______, )hich )ould be held in escro) for a period of at least _____ !ears in order
to secure the performance of the Sellers* obliations under the Definiti.e Areement and related
documents< and
!c" at the (losin, the Bu!er )ould e/ecute and deli.er to each Seller an unsecured,
non2neotiable, subordinated promissor! note+ The promissor! notes to be deli.ered to the
Sellers b! the Bu!er )ould ha.e a combined principal amount of 8_______, )ould bear interest
at the rate of ___= per annum, )ould mature on the _____ anni.ersar! of the (losin, and
)ould pro.ide for _____ e&ual [annual] [&uarterl!] pa!ments of principal alon )ith [annual]
[&uarterl!] pa!ments of accrued interest+
The -urchase -rice assumes that the Taret (ompanies ha.e consolidated stoc'holders*
e&uit! of at least 8____________ as of the (losin+ The -urchase -rice )ould be ad0usted based
on chanes in the Taret (ompanies* consolidated stoc'holders* e&uit! as of the (losin, on a
dollar2for2dollar basis+
$. Employment an% Noncompetition A&reements
At the (losin:
!a" the (ompan! and A )ould enter into a _____2!ear emplo!ment areement under
)hich A )ould aree to continue to ser.e as the (ompan!*s [>ice -resident and (hief ?peratin
?fficer] and )ould be entitled to recei.e a salar! of 8_____ per !ear< and
!#" each Seller )ould e/ecute a _____2!ear noncompetition areement in fa.or of the
Bu!er and the (ompan!+
'. Other Terms
The Sellers )ould ma'e comprehensi.e representations and )arranties to the Bu!er, and
)ould pro.ide comprehensi.e co.enants, indemnities and other protections for the benefit of the
Bu!er+ The consummation of the contemplated transactions b! the Bu!er )ould be sub0ect to the
satisfaction of .arious conditions, includin:
!a"

!#"

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[Seller A]
[Seller B]
-ae 9
PART T(O
The follo)in pararaphs of this letter "the #Bindin -ro.isions$% are the leall! bindin
and enforceable areements of the Bu!er and each Seller+
1. Access
Durin the period from the date this letter is sined b! the Sellers "the #Sinin Date$%
until the date on )hich either -art! pro.ides the other -art! )ith )ritten notice that neotiations
to)ard a Definiti.e Areement are terminated "the #Termination Date$%, the Sellers )ill afford
the Bu!er full and free access to each Taret (ompan!, its personnel, properties, contracts,
boo's and records, and all other documents and data+
. E)clusi*e +ealin&
@ntil the later of "i% [50] da!s after the Sinin Date or "ii% the Termination Date:
!a" the Sellers )ill not and )ill cause the Taret (ompanies not to, directl! or
indirectl!, throuh an! representati.e or other)ise, solicit or entertain offers from, neotiate )ith
or in an! manner encourae, discuss, accept, or consider an! proposal of an! other person
relatin to the ac&uisition of the Shares or the Taret (ompanies, their assets or business, in
)hole or in part, )hether directl! or indirectl!, throuh purchase, merer, consolidation, or
other)ise "other than sales of in.entor! in the ordinar! course%< and
!#" The Sellers )ill immediatel! notif! the Bu!er reardin an! contact bet)een the
Sellers, an! Taret (ompan! or their respecti.e representati.es and an! other person reardin
an! such offer or proposal or an! related in&uir!+
$. Break,up -ee
,f "a% the Sellers breach -araraph 2 or the Sellers pro.ide to the Bu!er )ritten notice that
neotiations to)ard a Definiti.e Areement are terminated, and "b% )ithin [si/] months after the
date of such breach or the Termination Date, as the case ma! be, either Seller or one or more of
the Taret (ompanies sins a letter of intent or other areement relatin to the ac&uisition of a
material portion of the Shares or of the Taret (ompanies, their assets, or business, in )hole or
in part, )hether directl! or indirectl!, throuh purchase, merer, consolidation, or other)ise
"other than sales of in.entor! or immaterial portions of the Taret (ompanies* assets in the
ordinar! course% and such transaction is ultimatel! consummated, then, immediatel! upon the
closin of such transaction, the Sellers )ill pa!, or cause the Taret (ompanies to pa!, to the
Bu!er the sum 8_______+ This fee )ill not ser.e as the e/clusi.e remed! to the Bu!er under this
letter in the e.ent of a breach b! the Sellers of -araraph 2 of this -art T)o or an! other of the
Bindin -ro.isions, and the Bu!er )ill be entitled to all other rihts and remedies pro.ided b!
la) or in e&uit!+
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[Seller A]
[Seller B]
-ae :
'. Con%uct of Business
Durin the period from the Sinin Date until the Termination Date, the Sellers shall
cause the Taret (ompanies to operate their business in the ordinar! course and to refrain from
an! e/traordinar! transactions+
.. Confi%entiality
A/cept as and to the e/tent re&uired b! la), the Bu!er )ill not disclose or use, and )ill
direct its representati.es not to disclose or use to the detriment of the Sellers or the Taret
(ompanies, an! (onfidential ,nformation "as defined belo)% )ith respect to the Taret
(ompanies furnished, or to be furnished, b! either Seller, the Taret (ompanies, or their
respecti.e representati.es to the Bu!er or its representati.es at an! time or in an! manner other
than in connection )ith its e.aluation of the transaction proposed in this letter+ Bor purposes of
this -araraph, #(onfidential ,nformation$ means an! information about the Taret (ompanies
stamped #confidential$ or identified in )ritin as such to the Bu!er b! the Sellers promptl!
follo)in its disclosure, unless "i% such information is alread! 'no)n to the Bu!er or its
representati.es or to others not bound b! a dut! of confidentialit! or such information becomes
publicl! a.ailable throuh no fault of the Bu!er or its representati.es, "b% the use of such
information is necessar! or appropriate in ma'in an! filin or obtainin an! consent or appro.al
re&uired for the consummation of the -ossible Ac&uisition, or "c% the furnishin or use of such
information is re&uired b! or necessar! or appropriate in connection )ith leal proceedins+
@pon the )ritten re&uest of the Sellers, the Bu!er )ill promptl! return to the Sellers or the
Taret (ompanies or destro! an! (onfidential ,nformation in its possession and certif! in
)ritin to the Sellers that it has done so+
/. +isclosure
A/cept as and to the e/tent re&uired b! la), )ithout the prior )ritten consent of the other
-art!, neither the Bu!er nor either Seller )ill, and each )ill direct its representati.es not to
ma'e, directl! or indirectl!, an! public comment, statement, or communication )ith respect to,
or other)ise to disclose or to permit the disclosure of the e/istence of discussions reardin, a
possible transaction bet)een the -arties or an! of the terms, conditions, or other aspects of the
transaction proposed in this letter+ ,f a -art! is re&uired b! la) to ma'e an! such disclosure, it
must first pro.ide to the other -art! the content of the proposed disclosure, the reasons that such
disclosure is re&uired b! la), and the time and place that the disclosure )ill be made+
0. Costs
The Bu!er and each Seller )ill be responsible for and bear all of its o)n costs and
e/penses "includin an! bro'er*s or finder*s fees and the e/penses of its representati.es%
incurred at an! time in connection )ith pursuin or consummatin the -ossible Ac&uisition+
Cot)ithstandin the precedin sentence, the Bu!er )ill pa! one2half and the Sellers )ill pa!
one2half of the 1S3 Act filin fee+
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[Seller A]
[Seller B]
-ae D
1. Consents
Durin the period from the Sinin Date until the Termination Date, the Bu!er and each
Seller )ill cooperate )ith each other and proceed, as promptl! as is reasonabl! practical, to
prepare and to file the notifications re&uired b! the 1S3 Act+
2. Entire A&reement
The Bindin -ro.isions constitute the entire areement bet)een the parties, and
supersede all prior oral or )ritten areements, understandins, representations and )arranties,
and courses of conduct and dealin bet)een the parties on the sub0ect matter hereof+ A/cept as
other)ise pro.ided herein, the Bindin -ro.isions ma! be amended or modified onl! b! a
)ritin e/ecuted b! all of the parties+
13. 4o*ernin& 5a6
The Bindin -ro.isions )ill be o.erned b! and construed under the la)s of the State of
________________ )ithout reard to conflicts of la)s principles+
11. 7uris%iction: Ser*ice of Process
An! action or proceedin see'in to enforce an! pro.ision of, or based on an! riht
arisin out of, this Eetter ma! be brouht aainst an! of the parties in the courts of the State of
______________, (ount! of __________________, or, if it has or can ac&uire 0urisdiction, in
the @nited States District (ourt for the _______________ District of ____________________,
and each of the parties consents to the 0urisdiction of such courts "and of the appropriate
appellate courts% in an! such action or proceedin and )ai.es an! ob0ection to .enue laid therein+
-rocess in an! action or proceedin referred to in the precedin sentence ma! be ser.ed on an!
part! an!)here in the )orld+
1. Termination
The Bindin -ro.isions )ill automaticall! terminate on _______, 45___ and ma! be
terminated earlier upon )ritten notice b! either part! to the other part! unilaterall!, for an!
reason or no reason, )ith or )ithout cause, at an! time< pro.ided, ho)e.er, that the termination
of the Bindin -ro.isions )ill not affect the liabilit! of a part! for breach of an! of the Bindin
-ro.isions prior to the termination+ @pon termination of the Bindin -ro.isions, the parties )ill
ha.e no further obliations hereunder, e/cept as stated in -araraphs 2, 9, D, 6, 5, 40, 44, 42, 49
and 4: of this -art T)o, )hich )ill sur.i.e an! such termination+
1$. Counterparts
This Eetter ma! be e/ecuted in one or more counterparts, each of )hich )ill be deemed
to be an oriinal cop! of this Eetter and all of )hich, )hen ta'en toether, )ill be deemed to
constitute one and the same areement+
1'. No 5ia#ility
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[Seller A]
[Seller B]
-ae 7
The pararaphs and pro.isions of -art ?ne of this letter do not constitute and )ill not
i.e rise to an! leall! bindin obliation on the part of an! of the -arties or an! of the Taret
(ompanies+ Foreo.er, e/cept as e/pressl! pro.ided in the Bindin -ro.isions "or as e/pressl!
pro.ided in an! bindin )ritten areement that the -arties ma! enter into in the future%, no past
or future action, course of conduct, or failure to act relatin to the -ossible Ac&uisition, or
relatin to the neotiation of the terms of the -ossible Ac&uisition or an! Definiti.e Areement,
)ill i.e rise to or ser.e as a basis for an! obliation or other liabilit! on the part of the -arties
or an! of the Taret (ompanies+
,f !ou are in areement )ith the foreoin, please sin and return one cop! of this letter
areement, )hich thereupon )ill constitute our areement )ith respect to its sub0ect matter+
>er! trul! !ours,
B@GA3:
B!:
Came:
Title:
Dul! e/ecuted and areed as to the Bindin -ro.isions on _________, 200__+
-3?S-A(T,>A SAEEA3S:


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