Letter of Intent Investment

Transcription

1 Letter f Intent Investment This Packet Includes: 1. General Infrmatin 2. Instructins and Checklist 3. Letter f Intent/Investment Letter f Intent/Investment 1

2 General Infrmatin Letter f Intent/Investment This Letter f Intent is between a cmpany and an entity and/r individual wh intends t invest in the cmpany in exchange fr the purchase f a set number f cmpany shares. This letter sets frth the specific intentins regarding the investment including the amunt t be invested, the business t be created and the clsing date f the transactin. A written Letter f Intent regarding an investment in a prspective cmpany is imperative. This letter will serve as frmal ntice f the investment and will prve invaluable in the event the parties experience disagreements regarding the investr's intentins. Letter f Intent/Investment 2

3 Instructins and Checklist Letter f Intent/Investment Bth parties shuld read the letter f intent carefully. Insert all requested infrmatin in the spaces prvided n the frm. Read the "Cnditin(s) Precedent" prvisins carefully. If any f the prvisins are ambiguus, set frth written examples t clarify any uncertainty r dubt. This frm cntains the basic terms and language that shuld be included in similar assignments. The ptential investr must sign the letter f intent. Bth parties shuld retain either an riginal r cpy f the signed letter. All legal dcuments shuld be kept in a safe lcatin such as a fireprf safe r safe depsit bx. Letter f Intent/Investment 3

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5 INVESTMENT LETTER OF INTENT Date T: RE: Purchase f all f the issued and utstanding shares (the "Shares") f The fllwing sets ut the basic terms upn which we wuld be prepared t purchase the Shares. The terms are nt cmprehensive and we expect that additinal terms, including reasnable warranties and representatins, will be incrprated int a frmal agreement (the "Frmal Agreement") t be negtiated. The basic terms are as fllws: 1. Purchaser:. (the "Purchaser") 2. Target: (cllectively, the "Target") 3. Principal Sharehlders: and any ther sharehlders f the Target (the "Vendrs") 4. Shares: The Purchaser agrees t purchase frm the Vendrs and the Vendrs agree t sell, assign and transfer and t cause all hlders f the Shares t sell, assign and transfer t the Purchaser, the Shares free and clear f all liens, charges and encumbrances. 5. Transactin: The Purchaser, the Target and the Vendrs will enter int a business cmbinatin (the "Cmbinatin") whereby the Purchaser will acquire all f the issued and utstanding securities f the Target frm all the Vendrs in exchange fr shares in the capital f the Purchaser and ptins t purchase shares in the capital f the Purchaser at an exercise price per share equal t the price per share paid by the institutinal investrs in the Financing (as defined herein), which ptins will vest as is mutually agreed t amng the Purchaser and the Vendrs (the "Acquisitin"). 6. Structure: In rder t facilitate the Acquisitin, the Purchaser, the Target and the Vendrs agree that each will use their best effrts t frmulate a structure fr the Cmbinatin which is acceptable t each f the parties and which is frmulated t: cmply with all necessary legal and regulatry requirements; minimize r eliminate any adverse tax cnsequences; and be as cst effective as pssible. 7. Financing: The Vendrs have advised the Purchaser that it will arrange fr the private

6 placement f shares in the capital f the Purchaser fr a minimum f $, which investment will clse n r befre the Clsing (as defined herein) and will be n the same terms as the investment t be made by institutinal investrs being arranged by the Purchaser's advisrs, Securities (the "Financing"). A prtin f the prceeds raised in cnnectin with this transactin cntemplated by this Letter f Intent, shall be allcated tward the purchase f a cmpany invlved in pst prductin vide services n terms acceptable t the Purchaser. 8. Access t Infrmatin: Immediately upn executin f this Letter f Intent, the Purchaser and its advisrs will have full access during nrmal business hurs t, r the Target and the Vendrs will deliver t the Purchaser, cpies f all dcuments (the "Materials") pertaining t the peratins f the Target. 9. Cnditin(s) Precedent: The bligatin f the Purchaser t purchase the Shares will be subject t satisfactin r written waiver by the Purchaser f the fllwing cnditin(s) (the "Cnditins Precedent") within 10 days after executin and delivery f the Frmal Agreement: review and apprval f all materials in the pssessin and cntrl f the Target and the Vendrs which are germane t the decisin t purchase the Shares; the Purchaser and its slicitrs having had a reasnable pprtunity t perfrm the searches and ther due diligence reasnable r custmary in a transactin f a similar nature t that cntemplated herein and that bth the slicitrs and the Purchaser are satisfied with the results f such due diligence; the Purchaser and its accuntant having had a reasnable pprtunity t review the audited financial statements (including crprate tax returns, general ledger listings, adjusting entries and pening trial balances) f the Target, prepared in accrdance with generally accepted accunting principles and that bth the Purchaser and its accuntant are satisfied with the cntent f such financial statements; satisfactry arrangements being made t hire hurly and salaried staff necessary t perate the business f the Target including the Target entering int an executive management cntract with ; the Purchaser btaining the cnsent frm any parties frm whm cnsent t the transfer f the Shares is required; the Purchaser btaining cnfirmatin that any names used in the business f the Target is available fr use by the Purchaser and can be registered as a trade mark f the Purchaser; n material adverse change having ccurred in cnnectin with the business f the Target r the Shares;

7 all representatins and warranties f the Target and the Vendrs being true and all cvenants f the Target and the Vendrs having been perfrmed in all material respects as f the Clsing; n legal prceedings pending r threatened t enjin, restrict r prhibit the transactins cntemplated in this Letter f Intent; a satisfactry legal pinin being available frm Vendrs' cunsel; cmpletin f satisfactry physical inspectin f the assets f the Target; satisfactry review f title t the assets f the Target; and apprval f the Bard f Directrs f the Purchaser being btained. It wuld be the expectatin f the Purchaser that many f the Cnditins Precedent will be narrwed r eliminated altgether as the Purchaser cmpletes its due diligence and the Frmal Agreement and schedules theret are finalized. 10. Return f Materials: The Materials will be returned t the Target and/r the Vendrs, as applicable, r destryed if the Frmal Agreement is nt executed within the time prvided. 11. Clsing: The clsing (the "Clsing") f the transactins cntemplated by this Letter f Intent will ccur nt later than 10 days fllwing the satisfactin r written waiver by the Purchaser f the Cnditins Precedent. At the Clsing, the Vendrs will transfer the Shares t the Purchaser free frm any utstanding liens, charges, claims r encumbrances and execute all such dcuments as the Purchaser's slicitrs may require in rder t effect such transfer including a restrictive cvenant agreement that the Vendrs will nt cmpete anywhere in Canada with the Purchaser in cnnectin with the business f the Target. The Clsing may take place by exchange f the apprpriate slicitr's undertakings, which will invlve each party's slicitrs delivering t his r her cunterpart all required cash and dcumentatin, t be held in trust and nt released until all such cash and dcumentatin has been executed and delivered t the Purchaser. 12. Csts: The Purchaser and the Vendrs will each bear their wn expenses in cnnectin with this Letter f Intent and the purchase and sale f the Shares. 13. Cnfidentiality: All negtiatins regarding the Target and the Shares will be cnfidential and will nt be disclsed t anyne ther than respective advisrs and internal staff f the parties and necessary third parties, such as lenders apprached fr financing. N press r ther publicity release will be issued t the general public cncerning the prpsed transactin withut mutual cnsent unless required by law, and then nly upn prir written ntice t the ther party.

8 14. Purchase and Sale Agreement: Upn executin f this Letter f Intent, the Purchaser will prepare a draft f the Frmal Agreement fr the Vendr s review. 15. Gd Faith Negtiatins: Each f the Purchaser and the Vendrs will act hnestly, diligently and in gd faith in their respective endeavrs t negtiate, settle and execute the Frmal Agreement within 90 days fllwing the executin f this Letter f Intent. 16. Exclusive Opprtunity: Fllwing the executin f this Letter f Intent, the Vendrs will nt negtiate r enter int discussins with any ther party r ffer the Shares r any interest therein fr sale t any ther party until the time herein prvided fr settlement f the Frmal Agreement has expired. 17. Standstill Agreement: Fllwing the executin f this Letter f Intent and until the Clsing, the Vendrs will nt, directly r indirectly, purchase r sell any securities f the Purchaser. 18. Nt a Binding Agreement: This Letter f Intent des nt create a binding cntract and will nt be enfrceable, except in respect f the bligatins set ut in paragraphs 10, 13, 15, 16 and 17. Only the Frmal Agreement, duly executed and delivered by the Vendrs and Purchaser, will be enfrceable, and it will supersede the prvisins f this Letter f Intent and all ther agreements and understandings between the Purchaser and the Vendrs with respect t the subject matter f this Letter f Intent. 19. Currency: All references t "$" in this Letter f Intent shall refer t currency f the United States f America. 20. Prper Law: This Letter f Intent will be gverned by and cnstrued in accrdance with the law f and the parties hereby agree t the jurisdictin f the Curts f cmpetent jurisdictin f the in any prceeding hereunder. 21. Cunterparts and Electrnic Means : This Letter f Intent may be executed in several cunterparts, each f which will be deemed t be an riginal and all f which will tgether cnstitute ne and the same instrument. Delivery t us f an executed cpy f this Letter f Intent by electrnic facsimile transmissin r ther means f electrnic cmmunicatin capable f prducing a printed cpy will be deemed t be executin and delivery t us f this Letter f Intent as f the date f successful transmissin t us. 22. Acceptance: If yu are agreeable t the freging terms, please sign and return a duplicate cpy f this Letter f Intent by n later than by 5:00 p.m. n. Facsimile is acceptable.

9 Yurs truly,