Practitioner’s Guide

Overview

This is a founder-friendly letter of intent for the proposed sale of all of the outstanding capital stock of a privately held US target corporation. It memorializes the principal economic and structural terms before the parties commit to negotiating a definitive stock purchase agreement, and — unlike its Practical Law pro-buyer counterpart — it is drafted to preserve seller leverage, protect board fiduciary duties, and limit the buyer’s optionality until the definitive agreement is signed.

The buy-side form maximizes buyer optionality: unrestricted diligence access, a long exclusivity (“no-shop”) period, optional buyer expense reimbursement if the deal doesn’t close, a broad termination right, and a wide-open “any material change” MAC condition. This sell-side version preserves the architecture (same section numbering, same binding/non-binding split, same Section 14 carve-out structure) but materially rebalances each provision: shorter exclusivity, explicit fiduciary out, tighter diligence scope, narrower MAC, no break-fee or expense reimbursement running one way, and a clear cut-off of all good-faith negotiation duties on expiration.

The document remains non-binding as to the commercial terms themselves (price, conditions, definitive agreement) and binding only as to exclusivity, confidentiality, expenses, and governing law via the Section 14 carve-out. Keep that structure — it protects both parties from prematurely committing to a deal — but negotiate every binding provision as if it were a fully enforceable contract, because it is.

When to Use

Use this LOI at the front end of a stock deal once preliminary diligence has confirmed a workable price range and the buyer is ready to commit to confirmatory diligence and definitive-document drafting. The LOI is the right vehicle when (i) the parties have agreed in principle on enterprise value and structure, (ii) consideration is cash (or cash with a modest escrow holdback), (iii) a working-capital adjustment is contemplated, and (iv) both parties want a written framework for the next 30–60 days without the cost of drafting a full purchase agreement.

This sell-side form is well-suited to bilateral negotiations where the buyer has sent a buy-side draft and the seller needs a comprehensive mark-up. It is also the right starting point for auction processes where the seller is sending its own LOI to bidders and wants to set favorable terms from the beginning rather than negotiating down from a buyer form.

Do not use it for asset deals (use the LOI Asset Acquisition form), for mergers (including reverse triangular mergers), for public-company targets, for stock-consideration transactions, or for structures built around large earn-outs — any of those contexts requires a more developed LOI or term sheet with materially different provisions.

Binding vs. Non-Binding Provisions

The single most important concept in any LOI: which provisions bind and which do not. In this form, Sections 1–6, 8, and 9 are non-binding — they are statements of present intent only, with no enforceable obligation to close the transaction or to negotiate to definitive agreement. These are the purchase price, definitive agreement covenant, conditions, due diligence, employment arrangements, interim-period covenants, termination, and bid expiration.

Sections 7 and 10 through 15 ARE binding: exclusivity and no-shop, governing law, confidentiality, no third-party beneficiaries, expenses, the “no binding agreement” carve-out itself, and miscellaneous. Section 14 is the operative carve-out — it states expressly that paragraphs 7 through 15 are binding even though the rest is not. A drafter should always confirm Section 14 remains intact and accurate after any edits, because an inadvertent deletion or renumbering can flip the entire binding/non-binding structure.

For the seller, the binding provisions are where the real negotiation happens. “Non-binding” price and conditions will be reopened the minute diligence surfaces something; but the exclusivity clock, the no-shop scope, the confidentiality framework, and the governing law selection will hold throughout the process and, in the case of the confidentiality and no-shop tail, may survive termination. Treat every binding provision as if it were fully enforceable — because it is.

Key Variables to Complete

• [BUYER] / [SELLER] / [COMPANY] — full legal names of the parties and the target company. Confirm that Seller is the holder of all of the Company’s outstanding capital stock (or, for multiple sellers, use a joint-and-several signature block and list each stockholder).
• $[AMOUNT] — total Purchase Price for the Shares (Section 1(b)). Should equal enterprise value less net debt plus/minus working capital adjustment. Keep the calculation methodology explicit to avoid post-LOI fights.
• $[AMOUNT] — closing payment portion of Purchase Price (Section 1(b)(i)). Seller preference: maximize closing payment and minimize holdbacks.
• $[AMOUNT] — escrow holdback amount and [NUMBER] [months/years] escrow period (Section 1(b)(ii)). Seller preference: 5% of purchase price or less, for 12–18 months. Pro-buyer markets push to 10–15% for 18–24 months.
• $[AMOUNT] — assumed / target working capital at closing for the dollar-for-dollar adjustment (Section 1(c)). Base on a normalized trailing 12-month average, not a snapshot.
• Diligence scope — confirm whether customers and suppliers are within scope (Section 4). Seller preference: exclude customers and suppliers until definitive agreement or at least until very late in the process; sensitive commercial relationships should not be disturbed.
• [NUMBER] years — non-compete and non-solicit duration for Seller (Section 3(f)). Seller preference: 2 years for non-compete, 2 years for non-solicit, limited to direct competitors in the specific business of the Company, not to the whole industry.
• Key employee names — list for the employment-agreement closing condition (Section 3(e)). Seller should push to limit this to a small number of truly essential employees, not every senior manager.
• Exclusivity Period length — typically 30, 45, 60, or 90 days; defined indirectly via the Section 8 termination date. Seller preference: 30 days. 45 days with specific buyer milestones is the maximum a seller should grant without material concessions.
• Buyer expense reimbursement (Section 7(b)) — seller should strike this provision entirely. If kept, cap the amount (e.g., $100,000 or similar) and limit triggering events to seller’s bad-faith termination only.
• Termination outside date — [TIME] on [DATE] (Section 8). Should align with the exclusivity period end.
• Bid Expiration date and time (Section 9).
• [RELEVANT STATE] — governing law, used three times in Section 10. Seller preference: Delaware for corporate matters, seller’s home state as an alternative. Avoid buyer’s home jurisdiction unless it is a neutral forum.
• Confidentiality agreement reference date (Section 11) — must match the actual NDA execution date.
• Counterpart signature blocks for [BUYER] and [SELLER].

Negotiation Points

• Exclusivity length (Section 7(a) / Section 8). The single most-negotiated term. Buyer push: 60–90+ days to complete financing, regulatory review, and definitive documentation. Seller counter: 30 days, with any extension requiring mutual written agreement and subject to the buyer’s demonstrated good-faith progress. Accept 45 days only if the buyer has committed financing and has delivered a concrete diligence workplan and draft definitive agreement timeline. Never sign a 60-day or 90-day standalone exclusivity without material offsetting concessions (higher price, larger non-refundable deposit, stricter buyer milestones).
• Fiduciary out. Non-negotiable for any target whose board owes fiduciary duties to stockholders (including most Delaware corporations, and any target with institutional preferred stockholders). The fiduciary out should be added as a carve-out to Section 7(a), permitting the board to (i) receive unsolicited bona fide written proposals, (ii) enter into confidentiality agreements no more restrictive than the existing NDA with third parties making such proposals, (iii) furnish information and engage in discussions if the board determines in good faith (after consultation with counsel) that failure to do so would be inconsistent with its fiduciary duties, and (iv) change or withdraw any recommendation. Buyer-side push will be for a matching right and/or a termination fee; for a short-window LOI-stage exclusivity, the seller should resist both — matching rights and break fees belong in the definitive agreement, not the LOI.
• Expense reimbursement (Section 7(b)). The bracketed provision is a one-way break fee: if the deal doesn’t close, seller pays buyer’s expenses. Seller should strike it entirely. If the buyer insists, negotiate: (i) a hard cap ($100k–$250k is typical); (ii) triggering events limited to seller’s bad-faith termination or acceptance of a Superior Proposal; (iii) exclusion of reimbursement if the buyer walks away, fails to pursue diligence in good faith, materially changes economic terms, or fails to deliver a draft definitive agreement on schedule; (iv) reciprocal expense reimbursement if the buyer is the party at fault.
• Diligence scope (Section 4). The form grants buyer “full access” to facilities, records, key employees, and (optionally) customers and suppliers. Seller should (i) delete the customer and supplier brackets until very late in the process; (ii) require reasonable advance notice and scheduling of site visits, management meetings, and key-employee interviews; (iii) require that diligence be conducted in a manner that does not unreasonably disrupt the Company’s operations; (iv) require buyer to use clean teams for competitively sensitive information (particularly pricing, customer lists, and strategic plans); (v) incorporate the existing NDA by reference into the diligence process.
• Working capital target (Section 1(c)). Heavily negotiated and one of the most common sources of post-LOI and post-closing disputes. Seller preference: base the target on a normalized 12-month trailing average (excluding one-time or non-recurring items) rather than a snapshot or a buyer-selected month. Specify the accounting methodology (US GAAP, consistently applied with historical practice) and include tie-breaker mechanics (independent accountant, with scope limited to items in dispute, costs split pro rata). Never leave the target to be “mutually agreed” without an objective determination mechanism.
• Material adverse change (Section 3(g)). The form has a bare “no material adverse change” condition. Seller should insist on carve-outs for: (i) general economic, political, or financial market conditions; (ii) industry-wide conditions affecting similarly situated businesses; (iii) changes in law or accounting standards; (iv) acts of war, terrorism, pandemics, or natural disasters; (v) changes caused by the announcement or pendency of the Transaction; (vi) actions taken at buyer’s request or with buyer’s consent. The MAC should be limited to disproportionate effects on the Company relative to peers and should exclude normal operating variability.
• Escrow holdback (Section 1(b)(ii)). Buyer markets push 10–15% for 18–24 months; seller preference is 5% for 12 months. Negotiate: (i) size of holdback; (ii) duration; (iii) what it covers (general indemnity versus specific items like working capital true-up and fundamental-rep breaches); (iv) release mechanics and dispute procedures; (v) whether fundamental reps (authority, capitalization, taxes) have a longer survival period funded outside the general escrow.
• Restrictive covenants (Section 3(f)). Buyer wants broad non-compete and non-solicit. Seller counter: (i) narrow the geographic scope to jurisdictions where the Company actually does business, not the whole United States or “worldwide”; (ii) limit duration to 2 years (not 5); (iii) define the restricted business narrowly (the specific products and services, not the broad industry); (iv) carve out passive investments below a threshold (typically 5% of a public company); (v) for individual seller-employees, ensure enforceability under applicable state law (California in particular bans non-competes, and several other states have narrow limits).
• Definitive Agreement drafted by Buyer’s counsel (Section 2). Seller should push to share drafting responsibility — either by having seller’s counsel draft the ancillary agreements (employment agreements, escrow agreement, restrictive covenant agreements) or by agreeing on a drafting split from the beginning. The party holding the pen has meaningful leverage over language and interpretation.
• Interim covenants (Section 6). The form requires seller to operate the Company in the “ordinary course” through signing of the definitive agreement. Seller should: (i) specify that ordinary course means consistent with past practice over the prior 12 months; (ii) carve out actions required by law, existing contracts, or the operation of the Company in response to market conditions; (iii) carve out decisions made with buyer’s consent (not to be unreasonably withheld); (iv) resist buyer’s efforts to add affirmative veto rights over normal operating decisions.
• Tax considerations for S-corp targets. For S-corp targets, the LOI should flag whether a Section 338(h)(10) or 336(e) election will be made, which has material tax consequences for both parties and affects the purchase price. Missing this in the LOI is a common source of post-LOI renegotiation.
• HSR Act. The LOI does not start the HSR clock. If the deal is HSR-reportable (current thresholds), add a provision committing both parties to file promptly after signing the definitive agreement and to share filing fees or allocate them to the buyer.

Common Pitfalls

• Inadvertently creating a binding obligation to close by leaving “shall” language in non-binding sections without a clear Section 14 carve-out. Review every occurrence of “shall” in Sections 1–6 and confirm it does not create an enforceable obligation.
• Failing to update cross-references in Section 8 (or elsewhere) if you renumber sections during mark-up. Section 14 specifically identifies which sections are binding; a renumbering error can flip the binding/non-binding structure.
• Forgetting to align the Section 11 confidentiality reference date with the actual NDA execution date. A mismatched date creates a gap in NDA protection.
• Accepting a 60-day or 90-day exclusivity period without offsetting concessions. Long exclusivity windows are the single biggest leverage transfer in any LOI.
• Failing to insist on a fiduciary out. For any target with institutional stockholders or a real board, this is a non-negotiable regardless of what the buyer says.
• Treating the working capital adjustment mechanic as boilerplate. Disputes over working capital calculation are one of the most common sources of post-LOI deal friction and post-closing litigation.
• Leaving the MAC condition as a bare “no material adverse change.” Without carve-outs, the buyer has a free option to walk.
• Allowing buyer-side diligence on customers and suppliers before the definitive agreement is signed. Customer and supplier interviews before signing can damage relationships whether or not the deal closes.
• Not accounting for HSR Act timing. The LOI does not start the HSR clock, so the exclusivity period should account for the buyer’s 30-day waiting period after signing the definitive agreement.
• Using this stock form when the deal is structured as an asset purchase or merger — pick the right LOI. Asset and merger deals have materially different structures, tax consequences, and liability allocation.
• For S-corp targets, failing to flag the need for a Section 338(h)(10) or 336(e) election in the LOI tax language. This can add or subtract 10%+ of enterprise value.
• Granting a buy-side expense reimbursement without reciprocal seller protection. A one-way break fee is a free option for the buyer to walk away with its expenses covered.

When NOT to Use This Form

• Asset acquisitions — use the LOI Asset Acquisition form. Asset deals have different tax consequences, liability allocation, and consents mechanics.
• Statutory mergers, including reverse triangular mergers — the LOI and definitive agreement structure is materially different and requires specific merger-agreement concepts (effective time, conversion of securities, appraisal rights).
• Public-company targets — fiduciary duty analysis, Regulation M-A, proxy/tender mechanics, and Revlon/Unocal doctrine all require a different LOI approach and typically a go-shop provision.
• Auction processes where the seller has already provided its own LOI form — start with the seller form rather than this buy-side-derived template.
• Transactions where the consideration is buyer stock or a mix of cash and stock — stock consideration requires valuation mechanics, registration rights, lock-ups, and other provisions not addressed in this form.
• Earn-out heavy structures — earn-outs require detailed definition of metrics, calculation mechanics, disputes resolution, and acceleration events that belong in a more developed term sheet rather than an LOI.

Key Founder Protections (Summary)

• 30-day exclusivity period (not 60–90), with any extension requiring mutual written amendment tied to buyer milestones.
• Explicit fiduciary out: board may receive unsolicited proposals, engage under NDAs, and change recommendations consistent with fiduciary duties.
• Diligence scope limited to records, management, and facilities; no customer or supplier contact until very late in the process; clean-team protocols for sensitive information.
• Working capital target based on 12-month trailing normalized average with objective determination mechanics.
• MAC condition with full set of standard carve-outs (general economy, industry, law, pandemics, announcement effects, actions at buyer’s request).
• Escrow limited to 5% of purchase price for 12 months; fundamental reps survive outside the general escrow.
• Restrictive covenants narrowed geographically, temporally, and in scope to the specific Company business.
• Section 7(b) expense reimbursement deleted, or capped and made reciprocal.
• Interim operating covenants limited to ordinary course consistent with past 12-month practice; buyer consent not unreasonably withheld.
• Section 14 “No Binding Agreement” carve-out retained and explicitly identifies Sections 7 and 10–15 as the only binding provisions.
• Governing law defaulted to Delaware or seller’s home jurisdiction, not buyer’s home jurisdiction.
• Confidentiality incorporated by reference from the existing NDA with no modification of confidentiality terms.

Form Document

[BUYER’S LETTERHEAD]

[DATE]

[SELLER]

[SELLER’S ADDRESS]

Attention: [NAME], [TITLE]

Re: Letter of Intent — Proposed Acquisition of [COMPANY]

Ladies and Gentlemen:

This letter (the “Letter”) sets forth the principal terms of a proposed transaction (the “Transaction”) between [BUYER] (“Buyer”) and [SELLER] (“Seller”, and together with Buyer, the “Parties”) under which Buyer would acquire all of the outstanding capital stock of [COMPANY] (the “Company”) from Seller. The Parties acknowledge that, except as expressly set forth in Sections 7 and 10 through 15, this Letter is non-binding and creates no obligation of any kind to close the Transaction, to negotiate to a definitive agreement, or to continue discussions beyond the Exclusivity Period. Any such obligations shall arise only upon execution and delivery of definitive agreements relating to the Transaction.

1. Acquisition of Shares and Purchase Price.

(a) Subject to the satisfaction of the conditions described in this Letter, at the closing of the Transaction (the “Closing”) Buyer would acquire all of the outstanding shares of capital stock of the Company (the “Shares”), free and clear of all claims, liens, and encumbrances (other than restrictions under applicable securities laws), at the purchase price set forth in Section 1(b).

(b) The purchase price for the Shares would be $[AMOUNT] (the “Purchase Price”) in cash, subject to the adjustments set forth in Section 1(c), and payable as follows: (i) $[AMOUNT] payable at the Closing by wire transfer of immediately available funds; and (ii) $[AMOUNT] (representing approximately 5% of the Purchase Price) to be deposited with a mutually agreeable escrow agent at Closing, to be held for a period of twelve (12) months after the Closing to secure the performance of Seller’s post-closing indemnification obligations under the definitive purchase agreement (other than obligations relating to Fundamental Representations, which would have longer survival and would not be subject to the general escrow).

(c) Buyer has calculated the Purchase Price based on information made available to Buyer through the date of this Letter and the following assumptions: (i) Working capital at the Closing is $[AMOUNT] (the “Target Working Capital”), calculated in accordance with US GAAP consistently applied with the Company’s historical practice over the preceding twelve (12) months (normalized to exclude one-time or non-recurring items). The Purchase Price payable at Closing would be increased or decreased on a dollar-for-dollar basis based on the difference between actual working capital at Closing and the Target Working Capital, with any dispute resolved by an independent accounting firm whose scope is limited to items in dispute and whose costs are shared pro rata based on the proportion of each party’s position adopted; (ii) Net indebtedness of the Company at Closing is $[AMOUNT]; (iii) The Company has no undisclosed liabilities, off-balance-sheet obligations, or contingent liabilities outside the ordinary course; and (iv) [SET OUT ANY OTHER ASSUMPTIONS]. If any of these assumptions proves materially inaccurate at Closing, the Purchase Price would be adjusted accordingly.

2. Proposed Definitive Agreement.

As soon as reasonably practicable after the execution of this Letter, the Parties shall commence to negotiate in good faith a definitive stock purchase agreement (the “Definitive Agreement”) relating to Buyer’s acquisition of all the Shares. The initial draft of the Definitive Agreement would be prepared by [Buyer’s / Seller’s] counsel; the initial drafts of the ancillary agreements (including any escrow agreement, employment agreements, and restrictive covenant agreements) would be prepared by Seller’s counsel. The Definitive Agreement would include the terms summarized in this Letter and such other representations, warranties, conditions, covenants, indemnities, and other terms that are customary for transactions of this kind and are not inconsistent with this Letter. The Parties’ obligation to negotiate in good faith shall automatically terminate upon the earlier of the Closing, the execution of the Definitive Agreement, or the expiration or termination of the Exclusivity Period, and no duty to negotiate in good faith shall survive such expiration or termination.

3. Conditions.

Buyer’s obligation to close the proposed Transaction would be subject to customary conditions, including: (a) Buyer’s satisfactory completion of confirmatory due diligence, limited to matters that were not reasonably discoverable prior to the date of this Letter; (b) the Board of Directors [and stockholders] of Buyer and Seller approving the Transaction; (c) the Parties’ execution of the Definitive Agreement and any required ancillary agreements; (d) the receipt of any regulatory approvals and material third-party consents; (e) [each of [NAMES OF KEY EMPLOYEES] (limited to no more than [NUMBER] individuals) entering into employment agreements with the Company on terms to be mutually agreed]; (f) [Seller entering into restrictive covenants, in a form to be mutually agreed, with a two (2) year non-compete and two (2) year non-solicit duration, scope limited to the specific business of the Company, and geographic scope limited to jurisdictions where the Company actively does business as of the Closing]; and (g) there being no Material Adverse Change in the business, results of operations, condition (financial or otherwise) or assets of the Company, excluding any effects resulting from (i) general economic, political, or financial market conditions, (ii) industry-wide conditions affecting similarly situated businesses, (iii) changes in law or accounting standards, (iv) acts of war, terrorism, pandemics, or natural disasters, (v) changes caused by the announcement or pendency of the Transaction, or (vi) actions taken at Buyer’s request or with Buyer’s written consent, in each case except to the extent disproportionately affecting the Company relative to its peers.

4. Due Diligence.

From and after the date of this Letter, Seller will authorize the Company’s management to provide Buyer and its advisors with reasonable access, during normal business hours and upon reasonable advance notice, to the Company’s facilities, books and records, senior management, and outside advisors for the purpose of completing Buyer’s confirmatory due diligence review. Diligence shall be conducted in a manner that does not unreasonably disrupt the Company’s operations. Buyer shall use “clean team” protocols for competitively sensitive information, including pricing, customer lists, and strategic plans. Buyer shall not contact the Company’s customers, suppliers, or employees (other than senior management specifically designated by Seller) regarding the Transaction without Seller’s prior written consent. All information furnished to Buyer is subject to the Confidentiality Agreement referenced in Section 11 and shall be used only in connection with Buyer’s evaluation of the Transaction.

5. Employment Arrangements.

[Buyer would offer employment at Closing to substantially all of the Company’s employees on terms not less favorable in the aggregate than their current terms of employment, and would expect the Company’s management to use commercially reasonable efforts (without being required to grant additional compensation, retention bonuses, or other incentives out of the Purchase Price) to assist Buyer in retaining those employees. Nothing in this Letter shall be deemed to create any third-party beneficiary rights in any employee of the Company or to require Buyer to continue the employment of any individual following the Closing.]

6. Covenants of Seller.

[During the period from the execution of this Letter through the earlier of the execution of the Definitive Agreement and the expiration of the Exclusivity Period, Seller will cause the Company to: (i) conduct its business in the ordinary course consistent with its practice over the preceding twelve (12) months, subject to reasonable responses to market conditions and actions required by applicable law or existing contracts; (ii) use commercially reasonable efforts to preserve intact its business, assets, and relationships with employees, customers, and suppliers, as an ongoing concern; and (iii) not take any action outside the ordinary course that would reasonably be expected to materially impair the Transaction, except with Buyer’s prior written consent (which shall not be unreasonably withheld, conditioned, or delayed). Nothing in this Section 6 shall restrict the Company from taking actions in response to emergencies, complying with legal or regulatory requirements, making decisions in the ordinary course of business, or responding to changes in market conditions.]

7. Exclusivity.

(a) In consideration of the expenses that Buyer has incurred and will incur in connection with the proposed Transaction, and subject in all cases to the Fiduciary Out set forth in Section 7(c) below, Seller agrees that during the period commencing on the date of this Letter and continuing until 11:59 PM Eastern Time on the date that is thirty (30) calendar days after the date of this Letter, or such earlier date as may result from termination pursuant to Section 8 (such period, the “Exclusivity Period”), neither Seller nor any of its representatives, officers, directors, or affiliates that receive Confidential Information in connection with the Transaction (collectively, the “Seller Group”) shall directly or indirectly: (i) initiate, solicit, or knowingly encourage any proposal or offer from any person other than Buyer and its affiliates (an “Acquisition Proposal”) to acquire all or any significant part of the business, properties, capital stock or assets of the Company, whether by merger, stock purchase, asset purchase, tender offer, or otherwise; (ii) enter into substantive negotiations with any third party regarding an Acquisition Proposal; (iii) furnish non-public information regarding the Company to any third party in connection with an Acquisition Proposal; or (iv) enter into any letter of intent, term sheet, or definitive agreement with any third party regarding an Acquisition Proposal. Immediately upon execution of this Letter, Seller shall terminate any then-ongoing discussions with any person other than Buyer regarding an Acquisition Proposal.

(b) [Expense Reimbursement: Deleted. The parties agree that each party bears its own transaction expenses under Section 13, and no break-up fee, expense reimbursement, or similar payment shall be payable by either party in connection with the termination of this Letter or the failure to consummate the Transaction.]

(c) Fiduciary Out. Notwithstanding anything to the contrary in this Letter, and in recognition of the fiduciary duties owed by the Company’s board of directors (the “Board”) to the Company and its stockholders, nothing in this Letter shall prevent the Board or the Company from: (i) receiving, considering, discussing, or responding to any unsolicited, bona fide written proposal received from a third party during the Exclusivity Period that the Board determines in good faith, after consultation with its financial and legal advisors, constitutes, or would reasonably be expected to lead to, a Superior Proposal; (ii) furnishing non-public information to, or engaging in discussions or negotiations with, any such third party, in each case subject to such third party executing a confidentiality agreement no less restrictive than the existing NDA; (iii) changing, modifying, or withdrawing any recommendation by the Board; or (iv) taking any other action the Board determines in good faith, after consultation with counsel, is required to discharge its fiduciary duties under applicable law. “Superior Proposal” means a bona fide written proposal that the Board determines in good faith, after consultation with its financial and legal advisors, is reasonably likely to be consummated and, if consummated, would be more favorable to the Company’s stockholders than the Transaction, taking into account all factors the Board deems relevant.

(d) Notice. If, during the Exclusivity Period, Seller receives an unsolicited bona fide written proposal that the Board determines in good faith (after consultation with counsel) constitutes or would reasonably be expected to lead to a Superior Proposal, Seller shall, within five (5) business days after such determination, notify Buyer in writing of the fact that such a proposal has been received and the material economic terms of such proposal. Seller shall not be required to disclose the identity of the third party or any additional terms unless and until the Board determines to engage in substantive discussions with such third party pursuant to the Fiduciary Out.

8. Termination.

This Letter will automatically terminate and be of no further force and effect upon the earliest of (i) execution of the Definitive Agreement by Buyer and Seller (and the Company, if required), (ii) mutual written agreement of Buyer and Seller, (iii) 11:59 PM Eastern Time on the date that is thirty (30) calendar days after the date of this Letter, (iv) Seller’s termination upon written notice to Buyer if Buyer fails to pursue diligence in good faith for any continuous period of seven (7) business days, materially changes the principal economic terms of the Transaction to Seller’s detriment, or fails to deliver a draft Definitive Agreement to Seller within fourteen (14) days after the date of this Letter, or (v) the Board’s determination, consistent with the Fiduciary Out, to accept a Superior Proposal. Notwithstanding the foregoing, Sections 10, 11, 12, 13, 14, and 15 shall survive the termination of this Letter and the termination of this Letter shall not affect any rights any Party has with respect to the breach of this Letter prior to such termination. All obligations arising under Section 7 (including the obligation to negotiate in good faith and any no-shop obligations) shall terminate automatically on the expiration or termination of the Exclusivity Period and shall not survive in any form.

9. Bid Expiration.

This offer will remain in effect until [TIME], [CITY] time, on [DATE], unless accepted or rejected by Seller, or withdrawn by Buyer prior to that time. Withdrawal by Buyer prior to Seller’s acceptance shall terminate all obligations under this Letter (including Seller’s Exclusivity obligations under Section 7).

10. Governing Law.

This Letter shall be governed by and construed in accordance with the internal laws of the State of [RELEVANT STATE: Delaware preferred], without giving effect to any choice or conflict of law provision or rule (whether of the State of [RELEVANT STATE] or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of [RELEVANT STATE]. Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [Wilmington, Delaware / relevant forum] for the resolution of any dispute arising out of or relating to this Letter, and waives, to the fullest extent permitted by law, any right to a jury trial in any such dispute.

11. Confidentiality.

This Letter is confidential to the Parties and their respective Representatives and is subject to the confidentiality agreement entered into between Buyer and Seller on [NDA DATE] (the “NDA”), which remains in full force and effect. Neither party shall disclose the existence or contents of this Letter or the Transaction except (i) as permitted under the NDA, (ii) as required by applicable law or legal process, or (iii) to such party’s Representatives on a need-to-know basis. The NDA shall remain in full force and effect notwithstanding the execution of this Letter, and nothing in this Letter modifies or supersedes the terms of the NDA.

12. No Third Party Beneficiaries.

Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the Parties and their successors or assigns any rights or remedies under or by reason of this Letter. Without limiting the foregoing, no employee of the Company shall be a third-party beneficiary of any provision of this Letter or the Definitive Agreement by reason of any reference to employment matters.

13. Expenses.

The Parties will each pay their own transaction expenses, including the fees and expenses of investment bankers, attorneys, accountants, and other advisors, incurred in connection with the proposed Transaction, this Letter, and any Definitive Agreement. Without limiting the foregoing, no party shall be entitled to any expense reimbursement, break-up fee, topping fee, or other payment in the event that (i) the Exclusivity Period expires without a Definitive Agreement being executed, (ii) either party terminates this Letter pursuant to Section 8, or (iii) the Board of Seller accepts a Superior Proposal consistent with the Fiduciary Out.

14. No Binding Agreement.

This Letter reflects the intention of the Parties, but for the avoidance of doubt neither this Letter nor its acceptance shall give rise to any legally binding or enforceable obligation on any Party to consummate the Transaction, to negotiate to a definitive agreement, or to continue discussions beyond the Exclusivity Period, except with regard to Sections 7 and 10 through 15, which shall be binding upon the Parties from and after the execution of this Letter. No contract or agreement providing for any transaction involving the Company shall be deemed to exist between Buyer and any of its affiliates and Seller unless and until a final definitive agreement has been executed and delivered. The Parties expressly disclaim any obligation to negotiate in good faith that would survive the expiration or termination of the Exclusivity Period.

15. Miscellaneous.

This Letter may be executed in counterparts (including by PDF, DocuSign, or other electronic means), each of which shall be deemed an original, but all of which together shall constitute one agreement. The headings of the various sections of this Letter have been inserted for reference only and shall not be deemed to be a part of this Letter. This Letter may only be amended by a writing signed by both Parties. No waiver of any provision shall be effective unless in writing and signed by the party against whom the waiver is asserted.

If you are in agreement with the terms set forth above and desire to proceed with the proposed Transaction on that basis, please countersign this Letter in the space provided below.

Very truly yours,

[BUYER]

By: ____________________________

Name: [NAME]

Title: [TITLE]

Agreed to and accepted:

[SELLER]

By: ____________________________

Name: [NAME]

Title: [TITLE]

Date: ____________________________

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This template is provided for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Every transaction is different; consult qualified M&A counsel before using or adapting this document. The form below is drafted from the seller’s perspective as a counter to buy-side forms; public company targets, reverse triangular mergers, and earn-out heavy structures require additional review.