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What is a Letter of Intent?

• General Purpose. This form is designed to be used to create a "letter of intent" for the sale of assets between individuals and small businesses. A "letter of intent" is a non-binding document which sets forth the terms under which the parties intend to close an asset sale in the future. However, our "letter of intent" form allows the user to add three provisions that are legally binding: (a) seller "standstill" clause, agreement of buyer to hold certain information given to it by seller as "confidential", and (c) agreement to reimburse seller for certain expenses.
  
• Features of this form. This form contains the following features:
  1. Allows for up to 3 different prospective sellers and 3 different prospective buyers to be parties;
  2. Breaks up the prospective purchase price for the asset(s) into three components: (a) down-payment, (b) payments to be made after execution of the contract, and (c) debts of seller assumed by buyer;
  3. Allows user to select an interest rate for past-due payments called for under the future sales contract;
  4. 
     
     Allows the user to indicate whether seller (or those affiliated with seller) are to receive employment or consulting contracts as part of the proposed transaction;
  5. Allows the user to add a seller "standstill" agreement to the Letter of Intent;
  6. Allows the user to add an agreement by the prospective Buyer to be bound by a confidentiality agreement regarding confidential information of Seller disclosed to Buyer;
  7. Allows the user to add agreement of buyer to reimburse seller for certain expenses such as attorney fees incurred prior to the closing of the sale.
  
  
• Employment / Consulting Contracts. Our Letter of Intent form system also allows the user to indicate the details of any employment agreements or consulting contracts that are to be given to seller (or those affiliated with seller) as part of, or in conjunction with, the final assets sales agreement. Please note that, as is customary with letters of intent, only the most salient terms of these contracts are to be listed. If there are contingencies under which the employment or consulting contract can be terminated by the buyer prior to its stated term (such as unsatisfactory work performance), we suggest you put these in a side letter and attach it to the Letter of Intent created under our system.
  
  
• "Standstill Agreement". A "standstill agreement", as used in our forms, is one where the prospective seller agrees not to seek, nor even converse with, additional potential buyers for the assets covered by the Letter of Intent other than the prospective buyer named in the document. The purpose of a "standstill agreement" is to give the prospective buyer some protection against his or her investment in time and expenses necessary to perform all tasks related to completing the final asset sales agreement such as attorneys or accountants fees, appraisal fees, title searches, etc.

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