AI Generated Letter of Intent for use in the United States
PDF & Word - 2026 Updated

This Letter of Intent is made as of October 15, 2023.

The address of the sender is 456 Oak Avenue, Los Angeles, California 90210.

The address of the recipient is ABC Corporation, 123 Main Street, New York, New York 10001.

Dear Mr. Smith,

For purposes of this Letter of Intent, the following terms shall have the meanings set forth below: (a) "Buyer" means Acme Acquisition Corp., a Delaware corporation with its principal place of business at 456 Oak Avenue, Los Angeles, California 90210; (b) "Seller" means ABC Corporation, a New York corporation with its principal place of business at 123 Main Street, New York, New York 10001; (c) "Confidential Information" means any proprietary information, trade secrets, financial data, business plans, customer lists, intellectual property, or other non-public information disclosed by one party to the other during negotiations or due diligence; (d) "Material Adverse Effect" means any change, effect, event, occurrence, or development that is materially adverse to the business, assets, financial condition, or results of operations of the Seller, taken as a whole; (e) "Transaction" means the proposed asset purchase transaction described herein; and (f) any other capitalized terms used but not defined herein shall have the meanings ascribed to them in the context of their use or in any definitive agreement to be negotiated.

This Letter of Intent sets forth the mutual understanding of Acme Acquisition Corp. (the "Buyer") and ABC Corporation (the "Seller") regarding the principal terms and conditions pursuant to which the Buyer proposes to acquire certain assets from the Seller in an asset purchase transaction (the "Transaction"). This Letter of Intent is a non-binding expression of the parties\' current intentions and does not create any obligation to consummate the Transaction or to negotiate in good faith except as expressly set forth in the binding provisions identified below.

The proposed Transaction consists of the acquisition by the Buyer of the Seller\'s manufacturing equipment, inventory, intellectual property, customer contracts, and related business assets associated with the Seller\'s widget production division for an aggregate purchase price of $1,500,000 (subject to customary adjustments), which includes the $500,000 allocated to equipment as part of the overall valuation.

The proposed purchase price for the Transaction is $1,500,000 USD (the "Purchase Price"), which shall be subject to adjustment based on a final inventory count and verification of equipment condition at closing. The $500,000 referenced for equipment forms part of this overall Purchase Price and is not a separate transaction.

The proposed structure for the payment is 70% cash at closing with the balance in seller financing pursuant to a promissory note bearing interest at 5% per annum, secured by the acquired assets.

The proposed date for closing the Transaction is March 31, 2024.

The structure preferred for the Transaction is an asset purchase of the manufacturing equipment, inventory, intellectual property, customer contracts, and related business assets associated with the Seller\'s widget production division.

The payment shall be structured as 70% cash at closing with the balance in seller financing pursuant to a promissory note.

The target date for closing the Transaction is March 31, 2024.

The Buyer shall have a due diligence period of 45 days.

The due diligence period shall commence on the date of execution of this Letter of Intent and end 45 days thereafter.

The Seller shall be obligated to provide full cooperation in the due diligence process, subject to the Access and Cooperation section below.

The scope of the due diligence investigation shall consist of a comprehensive review of financial statements, legal contracts, operational procedures, and intellectual property holdings.

The due diligence process will involve a thorough examination of all relevant business aspects to verify representations and ensure no undisclosed liabilities.

The Buyer shall have access to financial records and books, physical facilities inspection, and contracts and legal documents during the due diligence period, subject to the Access and Cooperation section below.

The Buyer shall be required to maintain confidentiality of all information obtained during due diligence in accordance with the confidentiality provisions set forth herein.

The designated contact person for coordinating due diligence is John Doe, CFO of the Buyer.

If material issues (including any Material Adverse Effect) are found during due diligence, the Buyer shall have the right to terminate this Letter of Intent at the Buyer\'s sole discretion.

The Seller shall, and shall cause its representatives, employees, and agents to, provide the Buyer and its representatives with reasonable access during normal business hours to the Seller\'s premises, books, records, contracts, employees, customers, and other information reasonably requested by the Buyer for purposes of conducting due diligence. Such access shall be subject to reasonable limitations to protect competitive information, comply with applicable law, and avoid disruption to the Seller\'s business. All information provided shall be subject to the confidentiality obligations set forth in this Letter of Intent. The Seller shall use reasonable efforts to make its key employees available to answer questions from the Buyer.

During the period commencing on the date of this Letter of Intent and ending 45 days thereafter (or upon earlier termination of this Letter of Intent), the Seller shall not, and shall cause its affiliates, officers, directors, employees, agents, and representatives not to, directly or indirectly solicit, initiate, encourage, or entertain any inquiries, proposals, or offers from any third party regarding the sale of the assets or any similar transaction, or negotiate, furnish information, or enter into any agreement with respect thereto (the "Exclusivity Period"). This provision is intended to be legally binding on the parties. In the event of a breach by the Seller, the Buyer shall be entitled to seek specific performance, injunctive relief, or other equitable remedies (in addition to any other remedies at law or in equity), and the Seller shall be liable for any damages suffered by the Buyer, including the Buyer\'s costs and expenses.

Except for the provisions relating to confidentiality, exclusivity and no-shop, access and cooperation, expenses, governing law, dispute resolution, effect of termination, amendments, counterparts, and any other provisions expressly stated to be binding, this Letter of Intent is a non-binding expression of intent only. It does not create any legally binding obligation on any party to consummate the Transaction, to continue negotiations, or to negotiate in good faith. This Letter of Intent is subject to the execution of a definitive agreement containing mutually acceptable terms and conditions.

The provisions relating to confidentiality, exclusivity and no-shop, access and cooperation, expenses and fees, governing law, dispute resolution, effect of termination, amendments, counterparts and electronic signatures, and any other sections expressly identified as binding shall be legally binding on the parties.

Each party shall bear its own expenses incurred during the negotiations and due diligence, including legal fees, accounting fees, travel and accommodation, and advisory costs. There shall be no reimbursement obligation by one party to the other for any such costs unless separately agreed in a definitive agreement. The parties acknowledge there is no cap on total expenses.

This Letter of Intent may be terminated by either party upon 15 days written notice to the other party.

This Letter of Intent may be terminated by mutual agreement of both parties.

This Letter of Intent may be terminated upon the occurrence of failure to agree on definitive terms by the target closing date or upon a material breach of any binding provision.

This Letter of Intent may be terminated if the Transaction has not closed by March 31, 2024.

The confidentiality obligations shall survive any termination of this Letter of Intent.

Upon termination of this Letter of Intent, the parties shall have no further obligations hereunder except that the following provisions shall survive: confidentiality, exclusivity and no-shop (for the full stated period), governing law, dispute resolution, expenses and fees, effect of termination, amendments, counterparts and electronic signatures, and any liability for breach of any binding provision occurring prior to termination. Termination does not relieve a party from liability for any pre-termination breach of a binding obligation.

Each of the Buyer and the Seller (each, a "Party") represents and warrants to the other Party, to the best of its knowledge and in all material respects (except as to representations qualified by materiality, which shall be true in all respects), as follows: (a) such Party is a validly organized and existing corporation in good standing under the laws of its state of incorporation; (b) such Party has full power and authority to enter into this Letter of Intent and to perform its obligations hereunder, and this Letter of Intent has been duly authorized and executed by such Party and constitutes a valid and binding obligation enforceable in accordance with its terms (subject to bankruptcy, insolvency, and equitable principles); (c) the execution and performance of this Letter of Intent will not conflict with or violate such Party\'s organizational documents, any material contract, or applicable law; (d) no consents from third parties or governmental authorities are required for such Party to enter into this Letter of Intent (except as may be required for the Transaction itself); and (e) such Party is not subject to any pending or threatened litigation that would impair its ability to perform. The Seller additionally represents and warrants the matters set forth in the original list above (sections 14.2 through 14.15 of the prior draft), qualified by materiality or "to the best of knowledge" as appropriate for a non-binding LOI. These representations and warranties are made solely for purposes of this Letter of Intent and shall not survive the execution of a definitive agreement (except as may be expressly provided therein).

The indemnification obligations provided in any definitive agreement shall be mutual. Each party shall indemnify the other against losses arising from breach of representations, warranties, or covenants, third-party claims related to intellectual property infringement, and environmental liabilities. The indemnification obligations shall survive for 12 months after closing for most representations (24 months for fundamental representations such as authority and capitalization, and indefinitely for fraud or intentional misrepresentation). Liability shall be subject to a basket of $25,000 (with claims only recoverable in excess thereof) and a cap equal to 10% of the Purchase Price (except for fraud or intentional breaches). Claims shall be made by written notice describing the claim in reasonable detail. For third-party claims, the indemnifying party shall have the right to assume control of the defense with counsel reasonably acceptable to the indemnified party, and the indemnified party shall cooperate. These terms are indicative only and shall be negotiated in the definitive agreement.