Letter of Intent (LOI) for Stock Purchase Template

Letter of Intent (LOI) for Stock Purchase Template

[Buyer Letterhead, if any]

[Date]

[Seller Name]
[Seller Company or Holding Entity Name]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]

1. Introduction and Purpose

This non-binding Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Buyer Legal Name] or its designated affiliate (“Buyer”) proposes to acquire from [Seller Legal Name] or its designated affiliate (“Seller”) certain shares of [Target Company Legal Name] (the “Company”).

Except for the provisions expressly stated to be binding in Section 12, this LOI is intended only as an expression of interest and an outline of key terms. It is not a binding agreement to consummate any stock purchase or other transaction.

2. Parties

Buyer
Legal Name: [Buyer Legal Name]
Jurisdiction and Entity Type: [Buyer Jurisdiction and Entity Type]
Address: [Buyer Address]

Seller
Legal Name: [Seller Legal Name]
Jurisdiction and Entity Type: [Seller Jurisdiction and Entity Type]
Address: [Seller Address]

Additional Selling Shareholders (if any): [Names of Additional Shareholders, or “To be identified”]

3. Target Company and Shares

Target Company
Legal Name: [Target Company Legal Name]
Jurisdiction of Incorporation/Organization: [Jurisdiction]
Entity Type: [Corporation / Limited Company / Other]
Principal Office Address: [Company Address]

Shares to Be Purchased (the “Shares”):

• Class / Series: [e.g., “Common Shares,” “Ordinary Shares,” “Class A Shares”]

• Number of Shares: [Number of Shares to Be Purchased]

• Percentage: [Approximate % of Company’s issued and outstanding shares on a fully diluted basis]

The parties expect that at closing, the Shares will be free and clear of all liens, pledges, and encumbrances, except as otherwise disclosed and agreed in the definitive Stock Purchase Agreement.

4. Purchase Price and Payment Structure

4.1 Purchase Price

Subject to due diligence and final negotiation, the proposed purchase price for the Shares is:

Purchase Price: [Total Purchase Price Amount and Currency]

This may be adjusted in the definitive Stock Purchase Agreement for items such as working capital, net debt, or other agreed adjustments.

4.2 Payment Structure

The Purchase Price is currently expected to be paid as follows:

• Cash at Closing: [Cash Amount]

• Promissory Note (if any): [Principal Amount and Basic Terms]

• Equity Consideration (if any): [Description of Equity to Be Issued]

• Earn-Out or Contingent Consideration (if any): [Summary of Earn-Out Formula or Milestones]

Final allocation and detailed terms will be set out in the definitive Stock Purchase Agreement.

5. Preliminary Understanding on Representations, Warranties, and Covenants

The definitive Stock Purchase Agreement is expected to include customary and negotiated:

• Representations and warranties from Seller and, as appropriate, the Company, regarding organization, capitalization, ownership of Shares, financial statements, operations, material contracts, compliance with laws, taxes, intellectual property, employees, litigation, and other matters.

• Representations and warranties from Buyer regarding organization, authority, and ability to perform its obligations and pay the Purchase Price.

• Covenants of the parties, including pre-closing covenants regarding the conduct of the Company’s business and post-closing covenants relating to confidentiality, transition, and other agreed matters.

6. Due Diligence

Buyer’s obligation to proceed will be subject to completion of financial, legal, tax, commercial, and operational due diligence to Buyer’s satisfaction.

6.1 Due Diligence Period

The parties anticipate a due diligence period of [Number] days, starting on the date Seller first provides Buyer with requested initial information and access (the “Due Diligence Period”).

6.2 Information and Access

During the Due Diligence Period, Seller and the Company will provide Buyer and its advisors with reasonable access to:

• Historical and interim financial statements and accounting records;

• Organizational documents and corporate records;

• Material contracts, leases, and licenses;

• Customer, supplier, and pipeline information (subject to confidentiality and applicable law);

• Employee, payroll, and benefit information, to the extent appropriate and legally permitted;

• Regulatory, compliance, intellectual property, and litigation information;

• Company facilities, equipment, and other key assets, by arrangement.

7. Conditions to Closing

The completion of the stock purchase (the “Transaction”) will be subject to customary and mutually agreed conditions, which are expected to include:

• Negotiation, approval, and execution of a definitive Stock Purchase Agreement and related documents acceptable to Buyer and Seller.

• Completion of due diligence by Buyer to its satisfaction.

• Obtaining required corporate approvals from Buyer, Seller, and the Company (including board and shareholder approvals, as applicable).

• Receipt of required third-party consents, including from key customers, suppliers, landlords, lenders, and contract counterparties, where necessary.

• Receipt of any required regulatory or governmental approvals, if applicable.

• Accuracy in all material respects of the representations and warranties of the parties at closing.

• Performance in all material respects of the covenants and obligations of the parties through closing.

• Absence of any material adverse change in the business, assets, operations, or financial condition of the Company between the date of this LOI and closing.

8. Post-Closing Concepts (Non-Binding Outline)

The definitive Stock Purchase Agreement may include, where applicable:

• Post-closing covenants and cooperation for transition.

• Indemnification provisions allocating certain risks between the parties, with possible baskets, caps, and survival periods.

• Escrow or holdback arrangements to secure specific indemnity obligations or adjustments.

• Non-compete and non-solicitation covenants in favor of Buyer, reasonably tailored in scope, territory, and duration.

9. Target Timeline

9.1 Target for Definitive Agreement

The parties intend, in good faith, to negotiate and finalize the definitive Stock Purchase Agreement by approximately:

Target Signing Date: [Target Date]

9.2 Target Closing

Subject to satisfaction of the conditions to closing, the parties anticipate that closing will occur on or about:

Target Closing Date: [Target Closing Date]

The actual closing date will be specified in the definitive Stock Purchase Agreement.

10. Exclusivity (No-Shop) – Binding

From the date of this LOI until the earlier of (a) the execution of a definitive Stock Purchase Agreement, or (b) [Expiration Date or Number of Days from the Date of this LOI] (the “Exclusivity Period”), Seller agrees that neither Seller, the Company, nor any of their respective representatives will, directly or indirectly:

• Solicit, initiate, or encourage any inquiry, proposal, or offer from any third party concerning a sale of Shares, merger, sale of all or substantially all assets, or similar transaction concerning the Company;

• Enter into or continue any discussions or negotiations with any third party regarding any such transaction; or

• Provide any non-public information about the Company to any third party for the purpose of evaluating a competing transaction, except as required by law.

If Seller, the Company, or their representatives receive any unsolicited approach or proposal relating to such a transaction during the Exclusivity Period, Seller will promptly inform Buyer of the existence of such contact, in general terms, without breaching any existing confidentiality obligations.

11. Confidentiality – Binding

Any existing confidentiality or non-disclosure agreement between Buyer and Seller (and/or the Company) remains in full force and effect and governs the use and protection of confidential information exchanged in connection with the Transaction.

If no separate confidentiality agreement exists, the parties may agree that:

• Each party will keep all non-public information received from the other party or the Company confidential and will use such information solely for evaluating the proposed Transaction; and

• Disclosure to third parties will be limited to professional advisors who are bound by confidentiality obligations, or as required by law or regulation.

12. Non-Binding Nature; Binding Sections

12.1 Non-Binding Provisions

The parties agree that the following sections of this LOI are non-binding and do not obligate either party to complete the Transaction or sign a definitive agreement:

• Section 1 (Introduction and Purpose)

• Section 2 (Parties)

• Section 3 (Target Company and Shares)

• Section 4 (Purchase Price and Payment Structure)

• Section 5 (Preliminary Understanding on Representations, Warranties, and Covenants)

• Section 6 (Due Diligence)

• Section 7 (Conditions to Closing)

• Section 8 (Post-Closing Concepts)

• Section 9 (Target Timeline)

No binding contract for the purchase and sale of the Shares will exist unless and until a definitive Stock Purchase Agreement is executed and delivered by Buyer and Seller.

12.2 Binding Provisions

The parties intend that the following sections are binding and enforceable in accordance with their terms:

• Section 10 (Exclusivity – No-Shop)

• Section 11 (Confidentiality – to the extent set out or incorporated)

• Section 12 (Non-Binding Nature; Binding Sections)

• Section 13 (Governing Law)

• Section 14 (Expenses)

• Section 15 (Miscellaneous)

13. Governing Law – Binding

This LOI, to the extent its provisions are binding, will be governed by and construed in accordance with the laws of:

Governing Law: [State/Province, Country]

without giving effect to any choice-of-law or conflict-of-law rules that would result in the application of the laws of another jurisdiction.

14. Expenses – Binding

Each party will bear its own costs and expenses (including the fees and expenses of its legal, accounting, tax, and other advisors) incurred in connection with this LOI, the evaluation and negotiation of the Transaction, and the preparation of any definitive agreements, unless otherwise agreed in the definitive Stock Purchase Agreement.

15. Miscellaneous – Binding

15.1 No Obligation to Close

Nothing in this LOI obligates either party to proceed with the Transaction until a definitive Stock Purchase Agreement has been negotiated, approved, and executed by both Buyer and Seller.

15.2 Amendments

This LOI may be amended or modified only by a written agreement signed by both Buyer and Seller.

15.3 Counterparts and Electronic Signatures

This LOI may be signed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same document. Signatures delivered electronically (including by PDF or via e-signature platform) will be treated as originals for all purposes.

Signatures

If the terms and framework set out in this LOI are acceptable, please sign below to indicate your agreement with the binding and non-binding provisions described above.

Buyer:
Signature: _______________________________
Printed Name: [Buyer Signatory Name]
Title: [Buyer Signatory Title]
Date: [Date Signed by Buyer]

Seller:
Signature: _______________________________
Printed Name: [Seller Signatory Name]
Title: [Seller Signatory Title]
Date: [Date Signed by Seller]

Witnesses (If Used)

Witness 1:
Signature: _______________________________
Printed Name: [Witness 1 Full Legal Name]
Address: [Witness 1 Address]
Date: [Date Signed by Witness 1]

Witness 2 (if required):
Signature: _______________________________
Printed Name: [Witness 2 Full Legal Name]
Address: [Witness 2 Address]
Date: [Date Signed by Witness 2]

Notary Acknowledgment (If Required)

State/Province of [State/Province]
County of [County]

On [Notarization Date], before me, [Notary Full Name], a Notary Public, personally appeared [Buyer Signatory Name] and [Seller Signatory Name], who proved their identities on the basis of satisfactory evidence and acknowledged that they executed this Letter of Intent (LOI) for Stock Purchase for the purposes stated in it.

Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Name]
My Commission Expires: [Commission Expiration Date]
Notary Seal: ☐