Letter of Intent (LOI) to Buy Shares Template

Letter of Intent (LOI) to Buy Shares 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 out certain preliminary terms and conditions under which [Buyer Legal Name] or its designated affiliate (“Buyer”) proposes to purchase from [Seller Legal Name] and any other selling shareholders identified below (collectively, the “Seller”) certain shares of [Target Company Legal Name] (the “Company”).

Except for the provisions expressly stated to be binding in Section 12 of this LOI, this LOI is intended only as an expression of interest and as an outline of key terms. It is not a binding agreement to complete any share purchase 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 or “To be identified during due diligence”]

3. Target Company and Shares

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

Shares to Be Purchased (the “Shares”)

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

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

• Approximate Ownership Percentage: [Percentage of Issued and Outstanding Shares on a Fully Diluted Basis]

At closing, the Shares are expected to be transferred to Buyer free and clear of any liens, pledges, or other encumbrances, except as otherwise disclosed and agreed in the definitive share purchase agreement (the “Definitive 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]

The Purchase Price may be subject to adjustment in the Definitive Agreement, including potential adjustments for net debt, working capital, or other agreed factors.

4.2 Payment Structure

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

• Cash at Closing: [Cash Amount and Currency]

• Deferred Consideration or Promissory Note (if any): [Principal Amount, Basic Terms, and Payment Schedule]

• Equity Consideration in Buyer or Affiliate (if any): [Number or Type of Securities and Basic Terms]

• Earn-Out or Contingent Consideration (if any): [Summary of Performance Metrics, Period, and Payment Mechanism]

The final structure and allocation of consideration will be set out in the Definitive Agreement.

5. Preliminary Understanding on Representations, Warranties, and Covenants

The Definitive Agreement is expected to contain customary and negotiated:

• Representations and warranties of Seller (and, where appropriate, the Company) regarding, among other things: organization and good standing, capitalization, ownership of the Shares, financial statements, operations, material contracts, compliance with laws, taxes, intellectual property, employment matters, and litigation.

• Representations and warranties of Buyer as to 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 regarding cooperation, transition, confidentiality, and other agreed matters.

6. Due Diligence

Buyer’s willingness to proceed with the transaction will be subject to Buyer’s completion of due diligence to its satisfaction.

6.1 Due Diligence Period

The parties anticipate a due diligence period of [Number] days beginning on the date Seller provides Buyer with initial access to the Company’s data room or other agreed information sources (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, during normal business hours, to:

• Historical and interim financial statements and supporting records;

• Organizational documents, minute books, and shareholder records;

• Material contracts, leases, and licenses;

• Key customer, supplier, and partner information, subject to confidentiality and applicable law;

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

• Intellectual property, IT systems, and data security information;

• Information regarding litigation, disputes, and regulatory matters;

• Company facilities and key assets, by prior arrangement.

7. Conditions to Closing

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

• Negotiation, approval, and execution of a mutually satisfactory Definitive Agreement and related documents.

• Completion of Buyer’s due diligence to Buyer’s satisfaction within the Due Diligence Period.

• Receipt of all necessary corporate approvals from Buyer, Seller, and the Company, including board and, where required, shareholder approvals.

• Receipt of any required third-party consents, including for key contracts, leases, financial facilities, or change-of-control provisions.

• Receipt of any required regulatory or governmental approvals or clearances.

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

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

• No material adverse change in the business, operations, assets, or financial condition of the Company between the date of this LOI and closing.

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

Depending on the percentage of Shares acquired and the parties’ objectives, the Definitive Agreement and/or a separate shareholders’ agreement may include:

• Board composition and nomination rights.

• Reserved matters requiring special approval.

• Dividend and distribution policies.

• Information rights for Buyer.

• Post-closing non-compete and non-solicitation obligations on Seller and certain related parties, within reasonable scope, territory, and duration.

• Indemnification provisions including baskets, caps, survival periods, and any escrows or holdbacks.

9. Target Timeline

9.1 Target Date for Definitive Agreement

The parties intend to negotiate and finalize the Definitive Agreement by approximately:

Target Signing Date: [Target Date]

9.2 Target Closing Date

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 set out in the Definitive Agreement.

10. Exclusivity (No-Shop) – Binding

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

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

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

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

If Seller or the Company receives any unsolicited inquiry, proposal, or offer relating to a potential competing transaction during the Exclusivity Period, Seller will promptly notify Buyer of its existence in general terms, to the extent permitted by confidentiality obligations and applicable law.

11. Confidentiality – Binding

Any existing confidentiality or non-disclosure agreement between Buyer and Seller and/or the Company will remain in full force and effect and will govern 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 non-public information received from the other party or the Company confidential and will use such information solely to evaluate and negotiate the Transaction.

• Disclosure of confidential information will be limited to those employees, officers, and professional advisors who need to know the information for that purpose and are subject to confidentiality obligations.

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 to enter into the 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 (Governance and Post-Closing Concepts)

• Section 9 (Target Timeline)

No binding contract for the purchase and sale of the Shares will exist unless and until the Definitive Agreement has been negotiated, approved, and executed by both Buyer and Seller.

12.2 Binding Provisions

The parties intend that the following sections are binding and enforceable according to 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 legal, accounting, tax, and advisory fees) incurred in connection with this LOI, the evaluation and negotiation of the Transaction, and the preparation of the Definitive Agreement, unless otherwise agreed in writing.

15. Miscellaneous – Binding

15.1 No Obligation to Close

Nothing in this LOI obligates either party to proceed with the Transaction unless and until the Definitive Agreement is executed and delivered 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 counterparts, each of which will be deemed an original, and all counterparts together will constitute one and the same document. Signatures delivered electronically 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 acknowledge 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) to Buy Shares for the purposes stated in it.

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