LETTER OF INTENT (LOI)

PREAMBLE

This Letter of Intent ("LOI") dated [Date] from [Buyer] to [Target Company] expresses buyer's intent to acquire [target business/assets]. **PRIMARILY NON-BINDING** (except as specified). Legal Framework: German BGB §311 (Pre-Contractual Obligation of Good Faith), US Securities Law 15 USC §78 (M&A), FTC Act §5 (Good Faith).

1.1 Target Company: [Name, jurisdiction, industry, business description]
1.2 Transaction Type: ☐ Asset sale ☐ Stock purchase ☐ Merger ☐ Combination ☐ Other
1.3 Valuation Range: EUR/USD [X - Y Million] (subject to due diligence confirmation)
1.4 Valuation Basis: Based on [EBITDA multiple, comparable transactions, DCF analysis, revenue multiple]

2.1 Consideration Composition: [X% cash / X% buyer stock / X% earn-out / X% seller note]
2.2 Payment Timeline: [X% at close / X% at 6 months / X% at 12 months / X% contingent on performance]
2.3 Assumption of Liabilities: Buyer assumes [specified liabilities: debt, contracts, payables]; Seller retains [excluded liabilities: litigation, contingencies]
2.4 Earn-out Terms: ☐ YES: [EUR/USD X based on revenue/EBITDA targets for X years] | ☐ NO

3.1 Scope: Buyer shall conduct comprehensive due diligence on:
• Financial statements (audited 3-year history, quarterly actuals)
• Contracts (customer, vendor, employment, leases, IP licenses)
• Intellectual property (patents, trademarks, copyrights, trade secrets)
• Litigation & compliance (pending cases, regulatory status, license compliance)
• Environmental matters (Phase I/II environmental assessments)
• Tax records (returns, audits, contingencies)
• Material permits & licenses
3.2 Timeline: [60 / 90 / 120 days] from LOI signature per BGB §311
3.3 Data Room Access: Seller shall provide access to virtual data room with complete materials

4.1 Exclusivity Period: Target shall NOT solicit, encourage, discuss, or negotiate with other potential buyers for [90 / 120 days]. Violation = damages per BGB §311 pre-contractual duty
4.2 Confidentiality (BINDING): Both parties maintain confidentiality of LOI, financial data, and transaction discussions. Duration: [2 / 5 years] per EU Trade Secrets Directive
4.3 Public Announcement: No public announcement without written consent (except as required by law)

Obligation to negotiate definitive purchase agreement contingent on:

• ✓ Satisfactory due diligence results (financial/legal/tax/environmental)
• ✓ No material adverse changes (MAC) to Target business/assets
• ✓ Satisfactory financing confirmation from Buyer's lender
• ✓ Board/shareholder approval (both parties)
• ✓ Required third-party consents obtained (major contracts, regulatory)
• ✓ Regulatory approval (if applicable; antitrust, FCC, etc.)
• ✓ No material litigation against Target discovered

6.1 MAC Definition: Material adverse change means any event/condition materially adverse to business, assets, or financial condition. Threshold: >EUR/USD [X million] impact or >X% EBITDA decline
6.2 Excluded from MAC: General economic conditions, industry-wide effects (unless disproportionate to Target), acts of war/terrorism
6.3 Buyer Remedy: If MAC occurs, Buyer may terminate LOI and cease negotiations

Suggested Timeline:
• [30 days] - Definitive legal documents (SPA, ancillary) drafted by counsel
• [60 days] - Due diligence completed, results reviewed
• [75 days] - Purchase Agreement signed (final documents executed)
• [120 days] - Closing (funds transferred, title transferred, subject to conditions)

BINDING (Legally Enforceable):

• ☑ Exclusivity obligation
• ☑ Confidentiality obligations
• ☑ Expense allocation (who pays if deal fails)
• ☑ Dispute resolution (mediation/arbitration)

NON-BINDING (Intent Only / Subject to Negotiation):

• ☐ Transaction structure, valuation, price
• ☐ Due diligence scope & timeline
• ☐ Financing terms & conditions
• ☐ Representations & warranties (final terms subject to SPA negotiation)

LOI terminates if: (a) Definitive Purchase Agreement not signed within [90 days], (b) Material due diligence findings require renegotiation beyond [X days], (c) Buyer financing not confirmed, (d) Regulatory approval denied, (e) Either party terminates for convenience with written notice

10.1 Financing Contingency (BINDING): Buyer's obligation contingent on securing financing from [lender/investor] on terms acceptable to Buyer (at Buyer's sole discretion). If financing cannot be obtained by [Date], Buyer may terminate LOI without penalty per Securities Laws 15 USC §78. Buyer shall use commercially reasonable efforts to secure financing but not obligated to accept unfavorable terms.

10.2 Board/Shareholder Approval: Both parties' obligations contingent on approval by respective boards/shareholders within [60 days] of LOI signature. Failure to obtain approval = termination right

10.3 Regulatory Approvals: If transaction requires regulatory approval (antitrust, FCC, foreign investment review, etc.), Buyer shall bear costs. Filing deadlines per Hart-Scott-Rodino Act 15 USC §18a (US), EU TFEU Art. 4-5 (EUMR). If approval cannot be obtained, either party may terminate

10.4 Earnout Clawback: If post-closing financial performance does not meet [X% / EUR X] target, Buyer entitled to clawback [up to X% of earnout] per BGB §313 (Change of Circumstances)

9.1 Target Representations: Target represents:

• Financial statements (3-year history) are accurate, complete, not misleading per German HGB
• No undisclosed liabilities > EUR/USD [X million]
• All material contracts disclosed; no hidden commitments
• IP ownership clear; no infringement claims pending
• No pending/threatened litigation that would materially impair business
• Compliance with all laws; no regulatory violations

9.2 Buyer Representations: Buyer represents: (a) Financial capability to complete transaction, (b) Authority to negotiate + execute agreements, (c) No conflicting obligations

10.1 Continued Operations: Seller covenants to operate Target business in ordinary course during LOI period: (a) maintain financial performance, (b) preserve customer relationships, (c) no extraordinary transactions without Buyer consent, (d) no asset sales, debt incurrence, or major contracts without approval

10.2 Cooperation in Due Diligence: Seller shall: (a) provide full access to books, records, contracts, (b) arrange management meetings/interviews, (c) respond to information requests within [3 business days] per BGB §311 (Good Faith)

11.1 Reverse Termination Fee (RTF): If Seller terminates LOI without cause or accepts competing offer during exclusivity: Seller owes Buyer [EUR/USD X / X% of deal value] as reimbursement for due diligence costs per BGB §280 (Breach Damages)

11.2 Reverse Termination Fee Waiver: RTF waived if: (a) Material Adverse Change occurs, (b) Buyer financing falls through (despite good faith efforts), (c) Buyer materially breaches LOI

12.1 Dispute Process (Binding Provisions Only): If disputes arise over exclusivity/confidentiality compliance (which ARE binding):

12.2 Costs on Failed Deal: Each party bears own deal costs if transaction terminates (legal, accounting, advisory). EXCEPTION: If termination caused by other party's breach, breaching party reimburses all documented third-party costs

Law: ☐ German law (BGB) ☐ [US State] | Disputes: Binding arbitration (exclusivity/confidentiality); mediation for commercial disputes