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Founder M&A Letter of Intent Seller Protective

Matter Completion Sheet — Not Part of the Letter

A. Seller objectives and process

B. Certainty and binding-effect controls

LETTER OF INTENT

[DATE]

[BUYER CONTACT]
[ADDRESS]

Re: Proposed acquisition of [TARGET COMPANY / BUSINESS]

Dear [NAME]:

This letter summarizes terms on which [TARGET COMPANY], its applicable equityholders, and [SELLER REPRESENTATIVE] (collectively, “Seller”) are willing to proceed with [BUYER] or an approved acquisition Affiliate (“Buyer”) regarding a possible acquisition of [TARGET / BUSINESS]. Sections 1 through 13 are nonbinding statements of proposed terms. Sections 14 through 22 are binding when signed. No Transaction obligation exists until definitive agreements are signed and delivered.

Nonbinding Transaction Terms

1. Structure

Buyer proposes to acquire [all outstanding equity through a stock purchase / the Company through a merger / specified assets and liabilities] (the “Transaction”). Buyer may use a designated Affiliate only if Buyer and the identified guarantor remain fully liable and the change does not reduce certainty, delay Closing, increase Seller Tax, or add a consent, approval, or regulatory burden.

2. Purchase price and bridge

The proposed enterprise value is $[AMOUNT]. Equity value will be calculated under Exhibit A by adding only agreed Closing Cash, subtracting only agreed Closing Debt and Transaction Expenses, and applying the Working Capital Adjustment, without duplication. Definitions, the measurement time, accounting hierarchy, sample calculation, and treatment of deferred revenue, leases, transaction bonuses, payroll Taxes, customer deposits, restricted cash, and prepayments will be agreed before exclusivity begins or listed as open issues.

The price will be paid as follows: $[CASH] at Closing; $[ESCROW/HOLDBACK] subject to specified release terms; $[ROLLOVER]; earnout up to $[AMOUNT]; seller note of $[AMOUNT]; and representative fund of $[AMOUNT]. Any founder employment, retention, consulting, noncompetition, or release consideration is separately identified and not deducted from equity value.

3. Capitalization and allocation

The Transaction assumes the capitalization in Exhibit B. The definitive consideration schedule will apply the charter and governing agreements, address options, warrants, SAFEs, notes, restricted equity, promised grants, preferences, participation, conversion, vesting, acceleration, repurchase, and withholding, and state each holder’s payment. No holder will be required to give a broader release or obligation merely to surrender a certificate or receive consideration unless separately agreed for adequate consideration and lawful.

4. Purchase-price adjustment

Seller will prepare the estimated Closing statement. Buyer will have a defined comment period; Seller’s good-faith estimate will govern Closing subject to one post-Closing adjustment. Buyer’s final statement must be delivered within [60] days or the estimate becomes final except for manifest mathematical error. Seller Representative will receive supporting records and may object. An independent accountant will decide only accounting items within the parties’ positions. Buyer bears purchase accounting and post-Closing operational effects.

5. Limited confirmatory diligence

Buyer confirms that it has completed substantial diligence and requires only the prioritized items in Exhibit C. Remaining diligence will be confirmatory, proportionate, coordinated through designated persons, and completed by [DATE]. Buyer will not condition Closing on generalized satisfaction or reopen valuation for matters fairly disclosed before this letter, except for an agreed quantified issue. Contacts with employees, customers, suppliers, lenders, landlords, or regulators require Seller approval.

6. Definitive documentation

Seller expects a negotiated acquisition agreement appropriate to a founder-led private company and the disclosed risks. It will contain no duplicative or public-company representations, unlimited compliance representation, forward-looking representation, undisclosed strict liability, or implied warranty. Disclosure Schedules will qualify representations where relevance is reasonably apparent. Seller may update schedules before Closing, with the negotiated remedy stated expressly.

7. Recourse and RWI

The parties intend [[buyer-side RWI with no Seller recourse except specified matters / a limited traditional indemnity / a hybrid]]. General representation claims will be subject to a deductible basket of $[AMOUNT], cap of $[AMOUNT OR %], survival of [PERIOD], and recovery only from [RWI / ESCROW]. Seller liability will be several, not joint, and no Seller’s cap will exceed that Seller’s proceeds. Fraud will be actual common-law fraud by the Person charged and will not be imputed solely by agency. Exclusive remedy, no-recourse, no-subrogation, mitigation, insurance, Tax benefit, and no-double-recovery terms will be integrated.

8. Financing certainty

Buyer will deliver executed equity and debt commitments, if applicable, when this letter is signed. The definitive agreement will not include a financing condition. Commitment conditions will be limited, objective, and no broader than Closing conditions. Buyer will use required efforts to obtain financing, enforce commitments, keep Seller informed, and replace unavailable financing. [GUARANTOR] will provide a limited guaranty. If Buyer fails to close when required, Seller will have [specific performance meeting stated conditions and/or a reverse termination fee of $AMOUNT] under an integrated remedy structure.

9. Regulatory risk

Buyer will take primary responsibility for required filings and fees. The definitive agreement will state information, cooperation, strategy, communications, timing, litigation, remedy, divestiture, behavioral commitment, and Outside Date terms. Seller’s preferred standard is that Buyer take all actions necessary subject only to the quantified limits in Exhibit D. Neither party may use stale thresholds; specialist counsel must confirm current HSR, CFIUS, foreign investment, export, sanctions, industry, and securities requirements.

10. Interim operations

Seller will operate the business in the ordinary course in all material respects. Buyer consent rights will be limited to significant actions listed in Exhibit E and may not be unreasonably withheld, conditioned, or delayed. Consent will be deemed given after [two] Business Days for ordinary-course requests, except specified fundamental actions. The covenant will allow emergency, legal, fiduciary, and protective action after prompt notice and will not transfer control before Closing.

11. Employees founders and rollover

Buyer’s proposed treatment of employees and benefits appears in Exhibit F. Founder employment, retention, consulting, restrictive-covenant, rollover, incentive, and release arrangements are separately negotiated, supported by separate consideration where appropriate, and subject to Sections 280G and 409A, wage, securities, and Tax review. Unless expressly named as a Closing condition, failure to agree one arrangement does not excuse Buyer.

12. Conditions and Closing

Conditions will be limited to required approvals; expiration of specified regulatory periods; no final prohibitory order; representation accuracy under negotiated standards; material covenant performance; no Material Adverse Effect; and delivery of specifically listed instruments. No financing, diligence-satisfaction, Buyer approval, market, customer, employee, or discretionary condition applies. Closing will occur [two] Business Days after satisfaction or waiver through an agreed signature and funds-release protocol.

13. Post-Closing protections

Buyer will maintain D&O tail coverage for [six] years, honor existing indemnification rights, preserve Tax and corporate records, provide reasonable Seller access, and implement the negotiated privilege arrangement. Any earnout, rollover, seller note, transition services, restrictive covenant, and release will contain its full economics and remedies rather than relying on informal understandings.

Binding Process Terms

14. Confidentiality and process documents

The confidentiality agreement dated [DATE] remains binding. [[The NDA / this Section]] controls a conflict on confidentiality; this letter controls exclusivity only. Buyer will enforce clean-team, data-room, privilege, privacy, security, and securities-trading restrictions. Seller may withhold, redact, aggregate, or use clean teams for privileged, competitively sensitive, personal, export-controlled, or contract-restricted information.

15. Exclusivity conditioned on milestones

From signature until [DATE AND TIME ZONE], Seller will not knowingly solicit or enter discussions or agreements concerning an Alternative Transaction, subject to Exhibit G. Buyer must meet the following milestones: deliver the first definitive draft by [DATE]; complete priority diligence by [DATE]; deliver final financing commitments by [DATE]; resolve identified principal issues by [DATE]; and be ready to sign by [DATE]. Exclusivity ends automatically if Buyer misses a milestone and fails to cure within [one] Business Day after notice, materially changes price or structure adversely, adds a financing condition, or states it will not proceed.

“Alternative Transaction” must be calibrated to control transactions and material dispositions, not ordinary financing or commercial arrangements. Existing contacts, unsolicited inquiries, fiduciary obligations, information parity, notice, match rights, and board authority are stated in Exhibit G. Seller is not liable for actions of a representative it did not direct if it promptly cures after knowledge.

16. Access and conduct

Seller will provide reasonable, prioritized access without unreasonable disruption. Buyer will route requests through designated coordinators and will not contact stakeholders without approval. Buyer will not use information to compete, recruit, trade, circumvent, or interfere. No access grants operational control or waives privilege. Seller may create a clean room or redact sensitive information.

17. Expenses and deposit

Each party bears its expenses. [[OPTIONAL: Buyer will deposit $[AMOUNT] with [ESCROW AGENT]. It is credited at Closing, returned if Seller breaches, and paid to Seller if Buyer abandons the process or materially breaches exclusivity-era obligations, subject to the agreed sole-remedy and penalty analysis.]] Buyer will reimburse Seller’s documented external expenses up to $[CAP] if Buyer materially breaches a binding section or changes agreed headline economics during exclusivity without a diligence basis listed in Exhibit C.

18. Publicity

No party may disclose this letter, the process, or the proposed Transaction or use another’s name without consent, except as law requires after advance consultation where practicable. Seller may disclose to its board, equityholders, personnel, financing sources, and advisers with a need to know and confidentiality obligations.

19. No Transaction obligation or reliance

Sections 1 through 13 create no binding obligation, agreement to agree, or duty to continue or negotiate in good faith. Either party may stop negotiations, subject to binding sections. No draft, email, oral statement, data-room disclosure, partial performance, or reliance binds a party to the Transaction. Only signed definitive agreements approved through required processes create a Transaction obligation.

20. Equitable relief and damages

Breach of confidentiality or exclusivity may cause irreparable harm, and equitable relief may be available without proof of actual damages or bond except as law requires. Damages for binding sections exclude speculative, consequential, punitive, and lost-opportunity damages except amounts paid to a third party or express reimbursement. There is no duplicative recovery.

21. Governing law notices and forum

The binding sections are governed by [DELAWARE] law. The parties submit to exclusive jurisdiction in [COURTS], waive venue objections, and waive jury trial to the extent lawful. Formal notices must be sent by email with confirmation and overnight courier to Exhibit H.

22. Term assignment and counterparts

Binding sections survive until [DATE] and thereafter only as stated. Buyer may not assign without Seller consent except to an acquisition Affiliate if Buyer and guarantor remain liable and certainty is not reduced. Amendments and waivers must be signed. Counterparts and electronic signatures are effective.

Signature Page

BUYER: [BUYER] By: ______________________________
Name: [NAME]
Title: [TITLE]

ACKNOWLEDGED AND AGREED solely as to Sections 14 through 22:

COMPANY: [TARGET COMPANY] By: ______________________________
Name: [NAME]
Title: [TITLE]

SELLER REPRESENTATIVE OR SELLERS: [NAME / AUTHORITY] By: ______________________________
Name: [NAME]
Capacity: [CAPACITY]

Schedules and Exhibits

Exhibit A Price Bridge and Accounting Principles

Exhibit C Confirmatory Diligence List

Exhibit G Exclusivity Scope and Milestones

List Alternative Transaction definition, covered persons, existing contacts, permitted conduct, unsolicited-proposal notice, fiduciary process, information parity, match rights, each Buyer milestone, cure, and automatic termination event.

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