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Form 16-1: Letter of Intent to Enter into Stock Purchase Agreement for 100% of Stock of Privately Held Operating Business

Cash Base Price at Closing Plus Incentive Price Payable in Installments Based upon Earnout Formula


(9 pages)


Form addresses: 

  • Scheduled closing date.

  • Purchase price (Base Price of cash and installments).

  • Incentive Price (installments contingent upon the target company's revenues).

  • Uncollectible accounts receivable credited against Base Price.

  • Security: pledge of company's stock.

  • Indemnity.

  • Representations and warranties (extensive).

  • Stock purchase agreement.

  • Contingencies.

  • Due diligence.

  • Compliance with securities laws.

  • Covenants not to compete.

  • Company's covenants.

  • Liquidated damages.

  • Broker fees.

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