Sample Letter Of Intent (Page 2 of 6) in pdf

upon completion of the transactions contemplated in the Purchase Agreement on the Closing Date, the

Purchaser shall pay to the Vendors, or as they may direct, in the agreed upon allocation, the aggregate sum

of Cdn$• (subject to full credit for the Deposit) via certified cheque or bank draft (the "Closing Cash

Portion")

the Cdn$• balance of the Purchase Price will be payable by delivery by the Purchaser to the Vendors (or

either of them) on the Closing Date of a promissory note (the "Note") in such amount bearing interest at the

annual rate of •% CALCULATED AND PAYABLE QUARTERLY, not in advance, and due to the

Vendors in • (•) equal [annual] instalments of Cdn.$• on each of •, • and •; the Purchaser will have full

rights to pay all principal/accrued interest under the Note at any time without notice, bonus or penalty

THE NOTE WILL BE SECURED BY THE GRANTING TO THE VENDORS BY THE

PURCHASER OF A GENERAL SECURITY INTEREST OVER ALL OF ITS ASSETS (SUBJECT

TO ALL EXISTING SECURITY INTERESTS PREVIOUSLY GRANTED BY THE PURCHASER

IN FAVOUR OF ITS PRINCIPAL LENDERS) PURSUANT TO THE TERMS OF A GENERAL

SECURITY

AGREEMENT

(THE

"SECURITY

AGREEMENT");

THE

SECURITY

AGREEMENT

SHALL

INCLUDE

SUCH

TERMS

AND

CONDITIONS

(INCLUDING

COVENANTS, EVENTS OF DEFAULT AND REMEDIES) AS AGREED UPON BY THE

PURCHASER AND THE VENDORS AND WILL INCLUDE, AMONG OTHER THINGS, (A)

USUAL FINANCIAL AND OTHER COVENANTS OF THE PURCHASER AS WOULD BE

PROVIDED TO ANY PRINCIPAL OPERATING LENDER AND (B) A COVENANT OF THE

VENDORS TO POSTPONE AND SUBORDINATE THEIR SECURITY INTERESTS GRANTED

UNDER THE SECURITY AGREEMENT IN FAVOUR OF ANY FUTURE SECURITY

INTERESTS GRANTED BY THE PURCHASER TO ANY NEW OR EXISTING PRINCIPAL

LENDERS

Timetable

THE PURCHASER, THE VENDORS AND THEIR ADVISORS WILL USE THEIR

REASONABLE BEST EFFORTS TO PREPARE, NEGOTIATE AND SIGN A DEFINITIVE

PURCHASE

AGREEMENT

(THE

“PURCHASE

AGREEMENT”)

REFLECTING

THE

PROVISIONS OF THIS LOI ON OR BEFORE •, 200• (THE “INTERIM DATE”) AND USE

THEIR

REASONABLE

BEST

EFFORTS

COMPLETE

THE

TRANSACTIONS

CONTEMPLATED BY THE PURCHASE AGREEMENT AS SOON AS POSSIBLE BUT, IN ANY

EVENT, NOT LATER THAN •, 200• (THE “CLOSING DATE”), IN ALL CASES SUBJECT TO

EXTENSION TO THE EXTENT NECESSARY TO SATISFY ALL OF THE CONDITIONS TO

THE PROPOSED TRANSACTION AS CONTEMPLATED HEREIN

Purchase Agreement

THE

PURCHASE

AGREEMENT

WILL

CONTAIN

SUCH

REPRESENTATIONS,

WARRANTIES,

COVENANTS,

CONDITIONS,

INDEMNITIES

(INCLUDING

THOSE

DETAILED BELOW) AND OTHER TERMS (INCLUDING MATTERS RELATING TO NON-

COMPETITION AND NON-SOLICITATION) AS WOULD NORMALLY BE ASSOCIATED

WITH A SHARE SALE TRANSACTION OF THE TYPE AND NATURE DESCRIBED ABOVE

AND WILL BE SUBJECT IN ALL RESPECTS TO THE MUTUAL APPROVAL OF THE

PARTIES AND THEIR RESPECTIVE LEGAL COUNSEL

Ancillary Transactions

immediately following the completion of the purchase and sale of the Purchased Shares on the Closing

Date, the Purchaser will cause the Corporation to enter into an employment agreement with • (the

“Employment Agreement”), on terms satisfactory to the Purchaser, the Corporation, • and their respective

counsel, providing for, among other things, particulars relating to salary/compensation, termination

compensation and other usual matters

Sample Letter Of Intent Page 2

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