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05 Form of Letter of Intent for Joint Venture Transactions
THIS LETTER OF INTENT (this "Agreement") is entered into this __ day of ______,
20__, between A Corporation ("A Corp.") and B Corporation ("B Corp.").
Under a Confidentiality Agreement, dated ________ __, 20__ (the "Confidentiality
Agreement"), A Corp. and B Corp. have exchanged certain confidential and proprietary
information, and are now actively discussing and negotiating a proposed transaction pursuant to
which A Corp. and B Corp. will form a joint venture (the "Transaction"). The purpose of the joint
venture will be to combine the _______ business of A Corp. with the ______ business of B Corp.
and thereafter to conduct the combined businesses.
Summary Proposed Terms of Joint Venture between A Corp. and B Corp. (the "Summary
Proposed Terms") are attached hereto as Exhibit A. The Summary Proposed Terms are a brief
description of terms of the proposed Transaction for purposes of this Agreement.
In consideration of the mutual covenants and agreements contained herein, the adequacy of
which is hereby acknowledged by each party, the parties hereby agree as follows:
1. Good Faith Negotiations.
A Corp. and B Corp. acknowledge that each party is incurring and will continue to incur
substantial costs and expenses in connection with their evaluation and negotiation of the
Transaction. Therefore, each of A Corp. and B Corp. agrees that during the period from the date
hereof until _____ __, 20__, the parties will negotiate in good faith with the goal of entering into
mutually acceptable definitive written agreements regarding the Transaction by ______ __, 20__.
2. Expenses.
Each of A Corp. and B Corp. agrees that it shall be responsible for the payment of its own
investment banking, legal or other professional fees incurred in connection with this Agreement
and the proposed Transaction.
3. Intent Regarding Underlying Transaction.
A binding commitment with respect to the Transaction will exist only upon the execution of
mutually acceptable definitive written agreements, containing such covenants, representations,
warranties, closing conditions and other provisions as the parties may agree. However, the
Transaction is further subject to due diligence (the general scope of which has been discussed by
the parties) and the approval of the definitive written agreements by the respective boards of
directors of A Corp. and B Corp. Except for the provisions of this Agreement, the parties hereto
each hereby waives, in advance, any claims (including, without limitation, breach of contract) in

Confidentiality. This Agreement may not be amended except in writing by the parties hereto. Termination of this Agreement shall not. and B Corp. 6. This Agreement may be executed in one or more counterparts. 5. 7. Termination. however. 9. 20__. This Agreement shall be governed by and construed in accordance with the laws of the State of ________ without reference to the choice of law principles thereof.connection with the proposed Transaction contemplated hereby unless and until A Corp. This Agreement shall terminate if mutually acceptable definitive written agreements concerning the Transaction are not executed by ______ __. The parties intend to commence and complete due diligence as soon as possible from the date hereof. IN WITNESS WHEREOF. and all such counterparts taken together will constitute one and the same agreement. Due Diligence. A CORPORATION By: Name: Title: B CORPORATION . nor may any rights or remedies hereunder by waived except in writing by the parties hereto. Amendments. 8. Governing Law. 4. the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first written above. release any party hereto from liability for any breach of this Agreement or the Confidentiality Agreement. The terms of the Confidentiality Agreement shall remain in full force and effect. Counterparts. shall have entered into definitive written agreements with respect thereto.

By: Name: Title: Exhibit A Form of Summary Proposed Terms Purpose of the Joint Venture Purpose: The purpose of the joint venture shall be to pool all of the activities of the parties [relating to] [primarily relating to] [used in] [primarily used in] the Applicable Business in order to realize available synergies. to meet and use their reasonable good faith efforts to attempt a resolution of such dispute for a __-day period. Quorum for Board Meetings: A quorum for a board meeting is a majority of the A Corp. Governance and Management Board of Joint Venture. better meet the requirements of the parties' customers. an "Impasse"). accounting and other applicable concerns. directors (any such occurrence. increase the operating profit and market valuation of each of A Corp. and a designated senior executive of B Corp. directors and the B Corp. and ____ nominees of B Corp. Senior Management: The board of directors of the joint venture company shall initially consist of ____ nominees of A Corp. If two successive board meetings pass without (1) a quorum being present or (2) the board reaching a decision on any matter requiring a majority decision of both the A Corp. Dispute Resolution: The board of directors of the joint venture company shall use reasonable good faith efforts to resolve all disputes relating to the joint venture. directors and a majority of the B Corp. and B Corp. Structure: The parties will agree upon an appropriate structure and form of entity or entities reflecting the each party's tax. develop new products and market opportunities. Fields of Business and Structure Areas of Collaboration: Each party shall transfer to the joint venture its respective businesses. directors present in person or by proxy. operations. . and facilitate interoperability. the parties shall cause a designated senior executive of A Corp. assets and liabilities [relating to] [primarily relating to] [used in] [primarily used in] the Applicable Business.

or Impasse. or B Corp. but only for so long as they remain such. directors present at a meeting of the Board of Directors of the joint venture company at which a quorum is present shall be required to effect any matter on a list of significant events such as material acquisitions or sales. The parties recognize that the procedure need not be identical for each class of termination event. state and local income taxes on their respective share of the joint venture's earnings and such other amounts in respect of taxes as the parties may agree ("Tax Distributions"). to pay U. Discretionary Distributions: It will be the general objective of the joint venture to make distributions ("Discretionary Distributions") at least annually of all funds that are not reasonably necessary or desirable to fund the current operations or future capital requirements of the joint venture. Consequences of Termination: The parties shall in the definitive documentation agree upon appropriate mechanisms to effectuate the winding down of the joint venture and the distribution of its assets..Management: The day-to-day operations will be managed by the officers of the joint venture company. such amount as is required to enable A Corp. These transfers are referred to as "Exempt Transfers. federal. or B Corp. Transfer Restrictions Blackout Period: Other than in Exempt Transfers (as defined below) no shares of the joint venture company may be sold. A Corp. Termination Post-Closing Termination Events: Bankruptcy of either A Corp. such distributions shall be based on an assumed tax rate. directors and a majority of the B Corp. mergers or financings to be agreed upon prior to final documentation by the parties. and shall be made in the same amount to each party. to be adjusted in good faith from time to time by the parties to reflect the generally applicable tax regime rather than taxes actually due." . to wholly owned subsidiaries. Unless otherwise agreed by the parties. Change of Control of either A Corp. Discretionary Distributions shall be in addition to Tax Distributions. shall be permitted to transfer shares in the joint venture company. and B Corp.. subject to the requirements of applicable law.year period following the closing of the transaction (the "Blackout Period"). Authority of Management. and B Corp. Board Approval Requirements: The affirmative vote of a majority of the A Corp. Exempt Transfers: At any time following the Closing. and B Corp. transferred or otherwise disposed of during the __.S. directly or indirectly. Tax Distributions: The joint venture will be required to distribute to A Corp. pledged (except as set forth below). Material Breach which is not cured within __ days11 after written notice of such breach has been given by the nonbreaching party.

length market terms and conditions. Nevertheless. the parties recognize that from time to time it may be appropriate to provide the joint venture with . Publicity: Neither party may issue a press release or make a public statement regarding the joint venture or the related agreements without the written consent of the other party unless. B Corp. Arbitration. Miscellaneous Governing Law: _________ law. interpretation and termination of the joint venture agreement shall be subject to final and binding arbitration by a panel of three arbitrators (one chosen by A Corp. and B Corp. such other party shall be entitled to participate (tag-along) on the same terms and conditions. one chosen by B Corp. Tag-Along: In the event that A Corp." or "B Corp. Covenant Not to Compete: Each of A Corp. Corporate/Technical Services: The parties shall enter into a transitional services agreement relating to such services as are mutually agreed upon based on arm's. validity. will enter into covenants not to compete with the joint venture with respect to the joint venture's fields of activities in such areas as are agreed upon by the parties. such disclosure is required by law or regulation. Financing: Funds required by the joint venture for the conduct of its business shall be provided through the profits and cash flow of the joint venture to be derived from its business. The transferees in any such sales will be considered "A Corp. except for the costs of hir ing independent accountants to assist in valuing the parties' respective contributions to the joint venture. Right of First Refusal: Any proposed transfer following the Blackout Period shall be subject to a "Right of First Refusal" on such terms as shall be agreed upon by the parties in the definitive documentation.. or B Corp. which costs will be borne equally by A Corp. in the opinion of the disclosing party's counsel." as the case may be. elects to dispose of its interests in a private sale transaction and the other party elects not to exercise its right of first refusal as described above.. performance. Consent to Jurisdiction: A Corp. Key Personnel and Ordinary Course: The definitive documentation relating to the joint venture will provide that neither party shall transfer key personnel out of their respective businesses nor take or omit to take any other action out of the ordinary course of business prior to closing without the prior written consent of the other party. and one chosen by the first two arbitrators). Expenses: Each party will bear its own costs and expenses incurred in connection with the transaction.Such sales will not be subject to any tag-along or right of first refusal. and B Corp.. and the joint venture company shall agree that all disputes relating to the existence.

to retain or continue to use such IP outside of the joint venture's fields of activities. and B Corp. Nonbinding Summary of Proposed Terms: This Summary of Proposed Terms is not binding on A Corp. will mutually agree upon the actions that will require the prior written consent of each of A Corp. shall have any obligation to proceed with the joint venture described herein unless and until each enters into binding definitive documentation. Each of A Corp. Intellectual Property: A Corp. and each reserves the right to terminate discussions for any reason or for no reason. nor B Corp. Neither A Corp. . as and when funding is so required. and B Corp. to the extent such rights relate exclusively or nonexclusively to the joint venture's fields of activities and to allow A Corp. and B Corp. and B Corp. and agree to cooperate in addressing all regulatory issues that arise. and B Corp. may require for each of its public reporting and internal purposes. shall mutually agree prior to the creation of the joint venture on the best method for ownership of and access to IP developed by the joint venture outside the joint venture's fields of activities. including communicating on a formal or informal basis with any regulatory authority. Regulatory Cooperation: A Corp. and B Corp.. The joint venture agreement will provide that. Financial Information: The joint venture will provide A Corp. or B Corp. A Corp. each agree to notify the other before taking any step relating to regulatory issues. Customary Agreements: The definitive agreements will contain customary representations and warranties and will be subject to customary conditions for transactions of this kind. shall mutually agree prior to the formation of the joint venture on how best to allow the joint venture to use and exploit the intellectual property rights ("IP") of A Corp. A Corp. and B Corp.funding from its shareholders or from external sources.. and B Corp. the parties will work together in good faith to determine the best way to meet such funding requirements from external sources. and B Corp. in a format mutually agreed upon between A Corp. Accounting. and B Corp. shall consider on a case-by-case basis the licensing of additional technology rights. such periodic accounting and financial information as A Corp. and B Corp.