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DHARMASHASTRA NATIONAL LAW UNIVERSITY,

JABALPUR

(Session 2021-2022)

Topic

Contract Drafting: Letter of Intent Document for Business

Purchase of Sagar Pvt. Ltd. by Ms.Sanskrati.

Submitted To: Submitted By:

Mr. Ankit Shrivastava Sanskrati Jain

[Assistant Professor Section B

Of Law] BALLB/116/20

Semester -III
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ACKNOWLEDGEMENT

The completion of this project required counselling and assistance from many people and I’m
really thankful towards them for their counselling in my project.

I would like to express my deep gratitude towards my teacher asst. Mr. Ankit Shrivastava
who took acute interest in my project and guided me all along. I’m feeling extremely
privileged to have him as my instructor in the project. I owe my deep gratitude to the vice-
chancellor Prof. V. Nagraj for his valuable support throughout the project. This project
helped me in gathering a lot of knowledge and becoming more aware of things related to my
topic.

I would like to extend my gratefulness to my parents and friends for their valuable support
and advice.

I am making this project not only to get marks but also to enhance my knowledge. At the end
I would like thank everyone who helped me and invested their valuable time for this project.

Sanskrati Jain
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BRIEF FACTS

Ms. Sanskrati is an ambitious woman working in a company dealing in women cosmetics.

She is looking forward to leave her job and is willing to buy a small-scale company with
money she saved from her salary in past 5 years. She analysed the market situation and her
financial resources. And shortlisted the name of Sagar Pvt. Ltd.

Sagar Pvt. Ltd. is a small company dealing in women cosmetics and was established in 2019.
It is owned by Mr. Sagar. The company has become popular in short span of time but the
growth of company wasn’t exponential and after covid lockdown the financial position of
company wasn’t as good as earlier.

Ms. Sanskrati set up a number of meetings with Mr. Sagar, in which he agreed to the Ms.
Sanskrati’s plan to acquire his company for ₹10,00,000. Before any agreement can be made
both of them it was required to negotiate the terms. But the main details are determined, such
as the purchase price or payment for services, a letter of intent was decided to be written by
Ms. Sanskrati to purchase Sagar Pvt. Ltd.

Hence the Letter of Intent which was handed over to Sagar Pvt. Ltd. is here with its certain
clauses .
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LETTER OF INTENT

Sanskrati Jain
337, M.G. Road
Near Jio Showroom, Kannod (M.P.), 455332
Effective Date: December 12, 2021

Sagar Pandey
550, M.G. Road
Near Airtel Tower, Kannod (M.P.), 455332

Re: Purchase of Sagar Pvt. Ltd.

This business purchase letter of intent (the “Letter of Intent”) represents basic terms agreed
upon by the Buyer and Seller. After this Letter of Intent has been made a formal agreement
may be constructed to the benefit of the Parties involved.

I. The Buyer: Ms. Sanskrati Jain (the “Buyer”)

II. The Seller: Mr. Sagar Pandey (the “Seller”).

III. The Business: Sagar Pvt. Ltd. (the “Business”).

IV. Purchase Price: The Buyer will enter into an agreement with the Seller for Ten Lakh
Rupees (₹10,00,000) for 100% ownership interest in the Business.

V. Real Estate: This Letter of Intent includes real estate.

a. Description: The real estate is located at 550, M.G. Road, Near Airtel Tower, Kannod
(M.P.), 455332.

b. Purchase Price: Ten Lakh Rupees (₹10,00,000).

VI. Payment: The Purchase Price shall be paid in the following manner:

☐ - One (1) Payment at Closing.

☑ - Owner Financing: In accordance with the following payment structure:

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a. Down Payment: Four Lakh Rupees (₹4,00,000)

b. Interest Rate: 3%

c. Term: 12 Months

d. Payment Due: On the 3rd day of every month.

VII. Financing: The Buyer has made it known that this Letter of Intent is ☐ conditional ☑

not conditional on their ability to obtain financing.

If this letter is conditional on financing, it shall be under the following terms: The letter is
non conditional.

VIII. Binding Effect: This Letter of intent that shall be considered:

Initial and Check (√)

___ - ☐ Binding – Therefore, the parties acknowledge that remedies at law will be
inadequate for any breach of this Agreement and consequently agree that this Agreement
shall be enforceable by specific performance. The remedy of specific performance shall be
cumulative of all of the rights at law or in equity of the parties under this Agreement.

√- ☑ Non-Binding – Therefore, the parties acknowledge that this Letter of Intent is not
enforceable by any Party. The terms outlined herein are solely for the purposes of reaching a
later agreement in the future, of which, Buyer and Seller are not bound.

IX. Bank Accounts: In order to keep necessary bank accounts in operation, the Seller agrees
to leave One Lakh Rupees (₹ 1,00,000) collectively across their financial accounts.

X. Formal Agreement: Choose One (1)

☑ - Pending the satisfaction of all materials by the Seller within 14 days a formal agreement
(the “Formal Agreement”) shall be created between the parties.

☐ - There shall be no formal agreement (the “Formal Agreement”) created.

XI. Seller’s Conduct: The Seller agrees that during the purchase process to hold a fiduciary
duty in the best interests of the Business. The Seller shall in no way conduct any action that
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would disrupt the on-going status of the Business’s day-to-day operations. This obligation
shall continue until the closing date.

XII. Closing: The closing (the “Closing”) is the act of closing the transaction where the
Seller exchanges the Business for the Purchase Price. The Closing shall be agreed upon
between the Buyer and Seller following a formal agreement, later to be signed, or after the
terms are met in this Letter of Intent.

XIII. Closing Costs: All costs associated with the Closing shall be the responsibility of ☐

Buyer ☐ Seller ☑Both parties bearing their own expenses.

XIV. Termination: This Letter of Intent will terminate if there has not been a formal
agreement signed or a closing within 20 days from the Effective Date.

XV. Access to Information: After the execution of this Letter of Intent the Buyer, and its
advisors, shall have full access to any and all information about the Business. The Buyer shall
maintain a fiduciary duty to keep the information that it obtains confidential and agrees to not
share with any third (3rd) party unless the Seller gives their written consent.

XVI. Return of Materials: Any information that is obtained by the Buyer through the Seller
shall be returned if a Formal Agreement or Closing cannot be completed.

XVII. Conditions: It shall be the obligation of the Buyer to review all materials provided
and, subject to the satisfaction of the Buyer, enter into a formal agreement within the
specified time-period as outlined in Section XI.

The conditions of this Letter of Intent include:

a. The review and approval of all materials in the possession and control of the Seller;

b. The Buyer and its advisors having had a reasonable opportunity to perform any
searches and due diligence to their satisfaction;

c. The Buyer being able to communicate with necessary clients, employees, customers,
vendors, tenants, or other third (3rd) party necessary; and

XVIII. Confidentiality: All negotiations regarding the Business between the Buyer and
Seller shall be confidential and not to be disclosed with anyone other than respective advisors
and internal staff of the parties and necessary third (3 rd) parties. No press or other public
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releases will be issued to the general public concerning the Business without the mutual
consent or as required by law, and then only upon prior written notice to the other party
unless otherwise not allowed.

XIX. Good Faith Negotiations: The Buyer and the Seller agree to act honestly and diligently
to enter into "good faith" negotiations to execute a formal agreement and/or enter into a
Closing.

XX. Exclusive Opportunity: Following the execution of this Letter of Intent, the parties
agree to not negotiate or enter into discussions with any other party unless there are any
existing agreements in place (e.g., option to purchase, first right of refusal, etc.).

XXI. Standstill Agreement: Following the execution of this Letter of Intent, and until the
Closing, the Seller, agrees not to sell any portion of the Business.

XXII. Currency: All mentions of money or the usage of the "₹" icon shall be known as
referring to the Indian Rupees.

XXIII. Governing Law: This Letter of Intent shall be governed under the laws by the State
of State of Madhya Pradesh (India).

XXIV. Severability: In case any provision or wording in this Letter of Intent shall be held
invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

XXV. Counterparts and Electronic Means: This Letter of Intent may be executed in
several counterparts, each of which will be deemed to be an original and all of which will
together constitute one and the same instrument. Delivery to us of an executed copy of this
Letter of Intent by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy will be deemed to be execution and
delivery to us of this Letter of Intent as of the date of successful transmission to us.

SELLER

Seller’s Signature ______________________ Date ______________________

Print Name ______________________

BUYER

Buyer’s Signature ______________________ Date ______________________

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Print Name ______________________