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Founder M&A Letter of Intent Buyer Protective

Matter Completion Sheet — Not Part of the Letter

A. Transaction and economics

B. Binding effect and process protections

LETTER OF INTENT

[DATE]

[SELLER OR TARGET CONTACT]
[ADDRESS]

Re: Proposed acquisition of [TARGET COMPANY / BUSINESS]

Dear [NAME]:

This letter states the principal terms on which [BUYER] or a designated Affiliate (“Buyer”) is prepared to pursue an acquisition of [TARGET COMPANY / BUSINESS] (the “Company”). Sections 1 through 12 describe a proposed transaction and are nonbinding. Sections 13 through 21 are binding upon signature. No party is obligated to negotiate or complete the proposed transaction unless and until definitive agreements are signed and delivered, except for the expressly binding sections.

Nonbinding Transaction Terms

1. Transaction structure

Buyer proposes to acquire [all outstanding equity of the Company by stock purchase / the Company through a reverse triangular merger / substantially all operating assets and specified liabilities] (the “Transaction”). Buyer may select an Affiliate as acquisition entity if the change does not reduce closing certainty or materially increase Seller Tax, regulatory, or consent burden. The definitive agreement will identify excluded assets, retained liabilities, security treatment, and pre-Closing restructuring.

2. Valuation and price bridge

The proposed enterprise value is $[AMOUNT], on a cash-free, debt-free basis and assuming normalized net working capital of $[TARGET]. Equity value will equal enterprise value, plus unrestricted Closing Cash, minus Closing Debt, minus Transaction Expenses, plus or minus the Working Capital Adjustment, and plus or minus only agreed items, without duplication. Exhibit A lists the included and excluded categories, measurement time, accounting hierarchy, and illustrative calculation.

The proposal assumes: [cash at Closing]; an adjustment escrow of $[AMOUNT]; an indemnity or RWI retention escrow of $[AMOUNT]; a representative fund of $[AMOUNT]; rollover of $[AMOUNT OR %]; an earnout up to $[AMOUNT]; and a seller note of $[AMOUNT]. Each noncash component remains subject to definitive terms, Tax and securities review, and Buyer investment-committee approval.

3. Capitalization and allocation assumptions

The proposal assumes the capitalization in Exhibit B is complete and that Buyer will receive [100%] of the fully diluted equity free of liens. The definitive distribution schedule will address preferred rights, options, warrants, SAFEs, notes, restricted equity, promised grants, change-in-control payments, and withholding. Compensation, retention, employment, restrictive-covenant, and rollover consideration will be identified separately from security consideration.

4. Purchase-price adjustment

The definitive agreement will include an estimated Closing statement and post-Closing true-up based on explicit definitions and a sample. Buyer will receive reasonable supporting records and a right to object. Unresolved accounting disputes will be submitted to an independent accountant acting as expert. No item may be counted in Debt, Transaction Expenses, Working Capital, earnout, and indemnity more than once.

5. Due diligence

Buyer’s proposal is subject to satisfactory completion of confirmatory legal, financial, accounting, Tax, commercial, technical, product, intellectual-property, open-source, AI, privacy, cybersecurity, employment, benefits, regulatory, insurance, environmental, real-estate, compliance, capitalization, founder, and customer diligence. The parties will agree a prioritized request list, management schedule, clean-team rules, and a decision timetable. Buyer will not contact employees, customers, suppliers, lenders, landlords, or regulators without Company coordination.

6. Definitive agreements

The parties expect a buyer-prepared acquisition agreement with customary representations, covenants, conditions, termination rights, Disclosure Schedules, and ancillary documents appropriate to the Company’s size, stage, industry, diligence, and process. Material negotiation points include Knowledge, Material Adverse Effect, interim operating covenants, bring-down standards, schedule updating, regulatory efforts, fraud, nonreliance, survival, baskets, caps, special indemnities, and exclusive remedies.

7. Risk allocation and RWI

The parties will evaluate [buyer-side representation and warranty insurance / traditional seller indemnity / a hybrid]. If RWI is used, the definitive documents will address retention, exclusions, no-subrogation except Fraud, coverage of fundamental and Tax matters, seller recourse, escrow, and gaps. Buyer’s proposed seller recourse is [DESCRIPTION]. No Seller will be jointly liable for another Seller’s breach except as expressly negotiated.

8. Financing and approvals

Buyer expects to fund the Transaction with [balance-sheet cash / equity financing / debt financing]. Buyer’s obligation to close will [[not be conditioned on financing / be subject only to the conditions in attached commitment papers]]. Buyer’s internal approvals are [LIST / NONE AFTER SIGNING]. The parties will negotiate any equity commitment, debt commitment, limited guaranty, reverse termination fee, specific-performance right, and financing-cooperation covenant as an integrated package.

9. Regulatory matters

The parties will promptly assess HSR, CFIUS, foreign investment, export, sanctions, industry, securities, antitrust, and other filings. Definitive documents will allocate filing fees, strategy, control of communications, information access, timing, litigation, remedy commitments, divestiture or behavioral obligations, outside date, and failure risk. No numerical threshold in this letter substitutes for current specialist analysis.

10. Founder employee and retention arrangements

Buyer anticipates discussing employment, consulting, retention, rollover, incentive, release, and restrictive-covenant arrangements with the persons listed in Exhibit C. These arrangements are separate from the purchase price and subject to independent negotiation, board approval, applicable law, Sections 280G and 409A review, and clear allocation. Failure to reach an arrangement is a closing condition only if the definitive agreement expressly says so.

11. Closing conditions

Expected conditions are required corporate and stockholder approvals; expiration of specified regulatory periods; no prohibitory order; accuracy of representations under negotiated standards; material covenant compliance; delivery of specified consents and transaction documents; agreed equity-security treatment; and no Material Adverse Effect. Financing, generalized diligence satisfaction, Buyer internal approval, and discretionary conditions will not be included unless expressly agreed in the definitive agreement.

12. Timing

The proposed timetable is: management kickoff [DATE]; priority diligence complete [DATE]; first definitive draft [DATE]; principal terms resolved [DATE]; signing [DATE]; and Closing [DATE OR CONDITIONS]. Each date is a planning target, not a binding obligation. The parties will maintain a shared issues list and approvals calendar.

Binding Process Terms

13. Confidentiality and use of information

The confidentiality agreement dated [DATE] remains in effect and applies to this letter, the Transaction, and the process. If it conflicts with this Section, [[the confidentiality agreement / this Section]] controls. Information may be used only to evaluate and negotiate the Transaction. Buyer will enforce need-to-know, clean-team, privilege, privacy, security, and securities-trading restrictions and will comply with applicable return or destruction obligations.

14. Exclusivity

From signature until [DATE AND TIME ZONE] (the “Exclusivity Period”), the Company, Sellers, and their controlled representatives will not knowingly solicit, encourage, initiate, continue, or enter discussions or agreements concerning an Alternative Transaction; furnish nonpublic information for that purpose; waive transfer or standstill restrictions; or approve one. “Alternative Transaction” means a sale, merger, recapitalization, financing with change-of-control effect, license or disposition of material IP, or transfer of [20%] or more of equity, assets, revenue, or earning power, excluding ordinary-course commercial transactions.

Existing discussions and persons covered must be listed in Exhibit D. On signature, the Company will terminate unlisted discussions and request return or destruction where contractually entitled. It will notify Buyer within [one] Business Day of an unsolicited proposal, identifying material terms and providing nonprivileged written material, subject to the negotiated fiduciary exception. Any extension based on milestones must be objectively stated; no automatic extension arises from Buyer delay.

15. Access and conduct of process

The Company will provide reasonable access requested through designated coordinators, subject to law, privilege, confidentiality, data-security, antitrust, contractual restrictions, and operational burden. Buyer will make requests proportionate and prioritized. No party obtains operational control. The Company may redact or use a clean team and may withhold privileged material while describing its general nature where lawful.

16. Expenses and reimbursement

Each party bears its own expenses. [[OPTIONAL: If the Company materially breaches Section 14 and closes an Alternative Transaction within [12] months, it will reimburse documented Buyer external expenses up to $[CAP], as liquidated reimbursement and not a penalty.]] No broker or advisor is entitled to compensation from another party based on arrangements made by the first.

17. Publicity and contacts

No party will announce this letter or the proposed Transaction or use another party’s name without prior written approval, except disclosure required by law after advance consultation where practicable. Buyer will not contact Company personnel, customers, suppliers, lenders, landlords, or regulators about the Transaction without Company authorization, except Buyer’s financing sources and advisers bound by confidentiality.

18. No binding transaction obligation

Sections 1 through 12 are statements of present intention only. They create no duty to negotiate in good faith, continue discussions, enter definitive agreements, finance, approve, or close. Either side may stop negotiations at any time, subject to Sections 13 through 21. No course of dealing, partial performance, email, draft, oral statement, or reliance creates a Transaction obligation. Only signed definitive agreements approved through each party’s required process can do so.

19. Remedies

The parties acknowledge breach of confidentiality or exclusivity may cause irreparable harm and that equitable relief may be available without proving actual damages or posting bond except as law requires. Remedies are cumulative for binding sections, but there may be no duplicative recovery. Any expense reimbursement is subject to the express sole-remedy treatment, if selected, in Section 16.

20. Governing law and forum

The binding sections are governed by [DELAWARE] law without conflict-of-laws rules. The parties submit to exclusive jurisdiction in [COURTS], waive venue objections, and waive jury trial to the extent lawful. Notices under binding sections must be sent to the persons and addresses in Exhibit E by email with confirmation and overnight courier.

21. Termination assignment and counterparts

The binding sections terminate on the earliest of definitive agreement execution, written mutual termination, or [DATE], except confidentiality, expenses, remedies, governing law, and provisions intended to survive. Buyer may assign this letter to a controlled Affiliate if Buyer remains liable. No other assignment is permitted without consent. Amendments and waivers must be written and signed. Counterparts and electronic signatures are effective.

If these terms are acceptable, please sign below.

Signature Page

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

ACKNOWLEDGED AND AGREED solely as to Sections 13 through 21:

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

SELLERS: [IDENTIFY SIGNING SELLERS OR REPRESENTATIVE AND AUTHORITY] By: ______________________________
Name: [NAME]
Capacity: [CAPACITY]

Schedules and Exhibits

Exhibit A Enterprise to Equity Value Bridge

Exhibit B Capitalization Assumptions

List authorized and outstanding securities, options, warrants, SAFEs, notes, promised grants, preferred rights, liquidation preferences, conversion, vesting, acceleration, repurchase, and consideration allocation assumptions.

Exhibit C Founder and Employee Discussions

Exhibit D Existing Alternative Transaction Contacts

Identify each permitted existing contact, last contact date, stage, materials shared, standstill or confidentiality terms, and required termination or return request.

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