Suggesting Ways to Purchase a Business: Letter of Intent

This report presents a detailed letter of intent, drafted for Sunny Clarke and Michael Waugh, who are interested in acquiring the New Horizon College of Architecture. The letter outlines the proposed terms of the business purchase, including the purchase price of $900,000, the assets included (campuses, facilities, and liabilities), and the payment structure. It covers essential clauses such as the effective date, buyer and seller details, buying areas, liabilities to be assumed, conduct in the ordinary course, and the definitive purchase agreement. The letter also addresses employment agreements, payment installments, financing contingencies, registration of the sale deed, and the binding effect of the agreement. Furthermore, it includes provisions for a bank account, formal agreement modifications, buyer conduct, closing procedures, access to information, confidentiality, termination, return of materials, conditions, good faith negotiation, exclusive opportunity, standstill agreement, currency, governing law, severability, counterparts, broker's fee, and all other essential details related to the business purchase. The letter is designed to serve as a foundation for a definitive purchase agreement.

To,
Mr. Sunny Clarke and Mr. Micheal Waugh
Managing Director
Business Research Company
NSW
Australia
22nd Jan 2020
Subject: Letter suggesting ways to purchase a business
Dear Mr. Sunny Clarke and Mr. Micheal Waugh,
As per our discussion held in my office on 19th of January, 2020 about your interest to buy the
business of New Horizon College of Architecture, including all its listings and assets, I am
writing this letter to you. This is to notify you that I made a thorough research about the business
and assets of the company and below is my best suggestion to you two as buyers to acquire the
business. Please note, I have mentioned some important terms and conditions below, that usually
consider by the buyer and seller in the event of selling or purchasing any property. The following
terms can be use and include as main clauses in the formation of the contract of sale and initially
can be referred as business purchase letter of intent. This letter will reflect the basic terms agreed
between the Buyer and the Seller. Please note you can send the letter of intent to the management
of the New Horizon College of Architecture for their better understanding and also to understand
their point of view or requirements about the sale. I propose the following terms for the
transaction that can be present in the form of letter of intent;
Letter of Intent
This letter approves the common intention of the seller and the buyer with respect to the
prospective transaction described below;
Effective date: The date agreed between the parties.
I. Buyer: Sunny Clarke and Micheal Waugh
II. Seller: Geroge Brown
III. The Business: New Horizon College of Architecture
IV. Purchase Price: The “Buyer” will enter into an agreement with the “Seller” for 900
hundred thousand dollars ($900,000.00) and for 100% ownership interest in the
Business.
V. Buying areas: The “Buyer” would acquire New Horizon College of Architecture
including its facilities located in the following places;
 53 Maddox Street, NSW, Australia,
 70 Oxford St, Sydney, Australia
 55 Mario St., Brisbane, Australia.

As a part of buying, we will acquire all campuses, hostels, laboratories, parking
facilities, and staff quarters.
VI. Liabilities to be assumed: The “Buyer” would acquire all of the assets, tangible and
intangible, owned by “Seller” that are used in, or necessary for the conduct of, its
business running subject to limitations, including all the licenses related to any
software use or related to any intellectual property rights or any other associated fix
asset of the “Seller” related to the business, including the client and student list,
goodwill associated with the business along with any liabilities in the nature of
mortgage or security interests.
VII. Conduct in ordinary course: In addition to the terms and conditions discussed
herein and any other additional conditions that to be added in a definitive written
purchase agreement (the “Purchase Agreement”), it will be the duty of the “Seller”
not to make any adverse and major changes in the ordinary course in respect to the
business, from the effective date till the date of completion of the contract.
VIII. Definitive purchase agreement: All the terms and conditions stated in the letter of
intent will only be binding to both the parties (Seller and Buyer) when executed
through a definitive purchase agreement. Both the parties are not legally bound by
any oral or written conditions which may arise through the process of negotiation but
not a part of the purchase agreement.
IX. Employment agreement: All the employees and persons associated with the day to
day business of the college, will be bound by the new terms and conditions mentioned
in the new employee contract, terms of which would be negotiated and agreed
between the employee and the “Buyer” after the execution of the purchase agreement.
X. Payment: The purchase price will be paid by the “Buyer” at installments. The earnest
money or initial deposit will consist ¼ of the total price and the same will be paid at
the time of making of sale deed and the rest of the amount will be paid in 3 parts
within a period of one year to the “Seller”.
XI. Financing: This letter of intent to purchase business is not compulsory and depends
on the “Buyer’s” ability to obtain finance. However, if the “Buyer” fails to comply
with the purchase terms after entering into the agreement or fail to complete the
agreement after the payment of the token money, then the “Seller” will be at liberty to
deduct 1/3rd of the token amount as a penalty for the buyer’s failure to continue with
the purchase.
XII. Registration of sale deed: The sale deed will be registered in the name of the
“Buyer” after the final payment from their side in favor of the “Seller”. The
registration has to take place within a week after the final payment. After the
registration of the sale deed the title of the business will be completely transferred in
favor of the “Buyer”.
XIII. Binding effect: Both the parties has to agree on the fact that in case of any dispute,
the suitable remedies available under the governing law of the letter of intent, will be
adequate to resolve the differences and subsequently has to agree that this Agreement

can be enforceable by specific performance in special cases. The remedies available
for specific performance shall be collective of all of the rights at law or in equity of
the parties under this Agreement.
XIV. Bank Account: In order to keep the part payment transaction account in operation,
the “Buyer” can agree to keep a particular amount in the bank account agreed
between the parties amicably.
XV. Formal agreement: This letter of intent is non-binding and both the parties can enter
into a formal agreement to complete the purchase by taking in to consideration the
facts agreed upon by this letter of intent. However, terms of this letter of intent can be
modified as per the requirement of the situations.
XVI. Buyer’s conduct: The “Buyer” agrees to hold a fiduciary duty towards the seller
during the whole process of purchase of the business. The “Buyer” further agrees to
act for the best interest of the business. The “Buyer” agrees not to act or involve in
any conduct that can interrupt the day to day affairs of the college until the title deed
transferred in the name of the “Buyer”.
XVII. Closing: The closing will refer the closing of the transaction and the transfer of
business from the “Seller” to the “Buyer”. The closing will be completed when the
sale deed will be registered and the title deed will be made in the favor of the
“Buyer”.
XVIII. Closing cost: The onus will be on the “Buyer” to meet up all the cost relating to
closing of the contractual relationship.
XIX. Access of Information: If the “Seller” and the “Buyer” agrees upon the execution of
this letter of Intent or agrees to input the clauses of this letter of intent in the formal
agreement of sale, in such a case the “Buyer” and its advisors can obtain full access to
the information pertaining to the business without any objection from the “Seller’s”
side. The “Buyer” can offer inspection in respect of any matter related to the purchase
of business at the discretion of the “Buyer” and after informing the “Seller” about the
same.
XX. Confidentiality of information: The “Seller” on the basis of fiduciary relationship
cannot disclose any confidential information about the business up to a permissible
limit until the completion of the contractual relationship. In case of breach of any
such duty the “Buyer” will be at the discretion to rescind the contract or asked for
damages if any suffered due to such breach, according to the relevant provision of
law.
XXI. Termination: The purpose of this letter of intent will be terminated if a formal
agreement has not been signed by both the parties within 180 days from the effective
date (that can be agreed amicably between the parties to the agreement).
XXII. Return of materials: In the case of non-completion of the formal agreement or any
other failure, the information or documents of the “Buyer” or “Seller”, if accessed at
any point of time, shall be returned to each other without any delay.
XXIII. Conditions: The “Seller” will be under the obligation to resolve disputes, in any
regarding the business or its entities or assets before proceeding further with the sale.

In cases of failure of the “Seller” to comply with the same, the “Buyer” will be at a
discretion to rescind the contract on the event of finding of such dispute.
The “Buyer” will be under the obligation to review all the requisite materials related
to the business which are in the possession of the seller and upon satisfaction with the
same, the “Buyer” may enter into a formal agreement regarding the same. The
“Buyer” must comply with all business compliance on its own before entering into an
agreement. The “Buyer” must have the right to communicate with all necessary
persons, clients, student and employees of the college or any other third party to
ensure the compliance standard.
XXIV. Confidentiality: The “Seller” and “Buyer” are under the duty to protect all necessary
information regarding the terms of negotiation agreed between the parties.
Confidential information must not be disclosed with any persons other than the legal
advisors, internal staff of the parties and authorized third parties. In the event of any
press release it is not permissible without the mutual consent of both the parties or it
is authorized by law to do the same. The party disclosing a facts of the case have to
give prior notice to the other party about the same.
XXV. Good faith negotiation: The “Buyer” and the “Seller” must agree to act honestly and
diligently to enter into “good faith” negotiations to execute a formal agreement and
also follow the same rule in the case of closing terms. In case of breach of the duty
under this clause, the breach causing party can be held liable for damages as per the
governing rule of law agreed between the parties.
XXVI. Exclusive opportunity: The “Seller” and “Buyer” must agree that following the
execution of the letter of intent, they must not discuss or negotiate the terms of the
contract or anything related to the sale of the business with any other party until the
execution of the formal agreement or unless there is any pre-existing contract
between any of the parties to the contract and a third party.
XXVII. Standstill agreement: The “Seller” must agree that following the execution of
the letter of intent, they will not sell any part of the business to any other party until
the closing of the contractual relationship.
XXVIII. Currency: The parties must agree about the currency to be used for the purpose
of transaction in the agreement. The agreement must clearly specify by using the sign
of the particular currency that are agreed between the parties for transaction
XXIX. Governing Law: The letter of intent must clearly specify the law governing the letter
of intent and future formal contract, and it must also mention about other the legal
provisions, if any that the parties are going to follow in the future cases of conflict
between them.
XXX. Severability: The parties must agree between them that, in cases of invalidity or
illegality of any of the clause of this letter of intent does not invalidate the
enforcement of other remaining provisions.
XXXI. Counterparts and electronic means: This Letter of Intent can be executed in several
counterparts and in the same way that may be decided between the parties and each of
such part will be deemed to be an original one and together it will constitute one and

the same instrument. (The seller can deliver to the buyer an executed copy of this
Letter of Intent by any mean of electronic communication within the prescribed date)
XXXII. Broker’s fee: The “Buyer” and “Seller” have to agree about the non-employment
of any broker in this regard and non-payment of any fees to any broker in the case of
transaction anticipated by the letter of intent.
If the mentioned terms and conditions are suitable to both of you, please refer the same in the
formal letter of intent and send it to the seller for their acknowledgement. In case of any query
regarding any term of the proposed structure feel free to contact.
Looking forward to your positive response.
Sincerely,
George Brown
Profession accountant
Atlas consultancy.