Blind Grading Number: 321

Adjunct Professor: William Ng

LETTER OF INTENT
Date: _________________

To: _________________

RE: [Name and Address of Property] (the “Property”)

The following Letter of Intent (“LOI”) is between Lima Holton/Holton Inns, LLC (the

“Buyer”) and [Name of Seller] (the “Seller”). When referencing the Buyer and Seller together,

they may hereinafter be referred to as the “Parties.”

BACKGROUND

Holton Inns, LLC purchases inns, bed and breakfasts, and other businesses. It typically

remodels and redecorates the businesses it purchases with the intent to keep the current owners

on to run the establishment under the supervision of the LLC.

TERMS

This LOI sets out the basic terms upon which the Buyer is prepared to purchase the

Property. All of the terms in this LOI are intended to be legally binding. However, the terms are

not comprehensive and we expect that additional terms will be incorporated into a formal

agreement (“Definitive Agreement”) to be negotiated.

A. Description of Assets

1. Acquired Assets. As used in this agreement, the term “Acquired Assets” shall

mean the assets of the Seller listed immediately below that are being purchased by

the Buyer under this agreement:

i. [Asset 1]

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 ii. [Asset 2]

iii. [Asset 3…]

2. Seller Bound: This LOI provides the Buyer the irrevocable option to acquire all or

any portion of the Acquired Assets of the Seller. By executing this LOI, the

Seller is bound to the sale.

B. Consideration

1. Purchase Price. The total purchase price to be paid by Buyer to Seller for the

Acquired Assets is [Purchase Price] (hereinafter “Purchase Price”).

i. The Purchase Price is subject to the Seller continuing to conduct business

on the Property without change to its current financial position.

2. Earnest Money. A portion of the Purchase Price consists of earnest money in the

amount of [Earnest Money] (hereinafter “Earnest Money”).

i. Earnest Money will be paid by Buyer to Seller on or before the execution

of this agreement.

ii. Earnest Money shall be fully returned to Buyer if the transaction is not

completed for any reason.

C. Negotiation of Transaction

1. Termination. This LOI will terminate automatically by [Termination date]

(hereinafter “Termination Date”), or before the Termination Date at the sole

discretion of the Buyer. If a Definitive Agreement is not executed by the Parties

by the Termination Date, then the transaction for the purchase of the Acquired

Assets will terminate.

2. Sole Discretion. The Buyer has the exclusive right to negotiate the additional

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 terms of the sale of the Acquired Assets. The Buyer has sole discretion in

terminating this agreement prior to the Termination Date.

3. Good Faith Negotiations. The Buyer and the Seller will act honestly, diligently

and in good faith in their respective endeavors to settle and execute the Definitive

Agreement. If the Seller fails to negotiate in good faith or fails to complete the

transaction for the Acquired Assets, the Seller will pay the Buyer for expenses

incurred during negotiation and for any reliance interest.

4. Exclusive Negotiations. Following the execution of this LOI, the Seller will not

negotiate or enter into discussions with any other party or offer the Acquired

Assets to any other party until the time provided by this LOI has terminated.

5. Closing. The closing date for this purchase shall be no later than 60 days after the

Parties have signed and executed this LOI. The closing shall include the

execution of the following documents:

i. Asset Purchase Agreement

ii. Bill of Sale

iii. Two-year Non-compete

iv. Employment Agreement (to which the Seller agrees to stay on for a

minimum of one year from the closing date)

6. Financing. The Buyer shall have 60 days after the Parties have signed and

executed this LOI to obtain financing.

7. Expenses. The Buyer and Seller will each bear their own expenses in conjunction

with this LOI and the purchase and sale of the Acquired Assets.

8. Settling Disputes. Should disputes arise, the Buyer and Seller agree that

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 jurisdiction will be valid in the Eastern District of Virginia. The Buyer and Seller

agree that service of process is satisfactory anywhere in the world.

D. Information & Confidentiality

1. Access to Information. Immediately upon execution of the LOI, the Buyer and its

advisors will have full access during normal business hours to all documents and

financials pertaining to the Property and within the Seller’s control, including but

not limited to:

i. [Document 1]

ii. [Document 2]

iii. [Document 3…]

2. Confidentiality. The transaction itself along with all negotiations regarding the

Property and Acquired Assets will be confidential and will not be disclosed to

anyone other than respective advisors and internal staff of the parties and

necessary third parties, such as lenders approached for financing.

i. No press or other publicity release will be issued to the general public

concerning the transaction without mutual consent, unless required by law.

E. Warranties

1. Express Warranties. The Seller expressly warrants that the Property and all

Acquired Assets are in excellent condition. The Buyer is relying on this express

warranty in puchasing the Property.

2. Implied Warranty. The Seller impliedly warrants that the Property and all

Acquired Assets are in excellent condition. The Buyer is relying on this implied

warranty in purchasing the Property.

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 ACCEPTANCE

If the terms above are agreeable, please sign and return a duplicate copy of this LOI by

no later than the Termination Date set forth above. Facsimile is acceptable.

_______________________________ _______________________________
(Signature) (Signature)

_______________________________ _______________________________
(Typed Name) (Typed Name)

_______________________________ _______________________________
(Title) (Title)

_______________________________ _______________________________
(Date) (Date)

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 June 16, 2005

BY FEDERAL EXPRESS PRIVILEGED ATTORNEY/

CLIENT COMMUNICATION
Lima Holton
Holton Inns, LLC
1111 West Paces, Unit 100
Arlington, VA 22201
Phone: (703) 993-0011

Re: Draft of Letter of Intent for Lima Holton/Holton Inns, LLC

Dear Mrs. Holton,

I enjoyed meeting with you to discuss the terms you would like incorporated into your
standard Letter of Intent (“LOI”). My understanding is that you are interested in purchasing a
series of existing inns or bed and breakfasts in Virginia. You plan to rejuvenate the struggling
establishments, by bringing in superior chefs, remodeling and keeping the owners on to run the
establishments under the supervision of your LLC. I have prepared a draft LOI into which you
can insert specific terms whenever you find an inn or bed and breakfast that you would like to
purchase.

The draft LOI incorporates the terms we discussed and was based off of a number of
samples readily available on the intranet at the following URLs:

 http://www.jurisint.org/pub/02/en/doc/422.htm
 http://www.jurisint.org/pub/02/en/doc/448.htm
 http://www.medlawplus.com/legalforms/instruct/sample-ltintent.pdf
 http://www.bcrelinks.com/Forms_and_Documents/Letter_of_Intent/
 http://www.coollawyer.com/webfront/internet_law_library/articles/law_library_le
tter_of_intent_article.php
 http://www.businesslaws.com/default.asp?htmlPage=toc201.htm
 http://contracts.onecle.com/remote-knowledge/seatow.jv.2002.04.19.shtml
 http://contracts.onecle.com/earthshell/prairie.jv.1996.11.13.shtml

In addition to the terms discussed in our meeting, this LOI includes the following items
that I would like to you to comment on:

1. I drafted the LOI in a way that makes the terms legally binding. Given that the majority
of LOI’s are not legally binding, I wanted you to confirm that this was your desire.
2. I assumed that the assets you will be acquiring from different inns and bed and breakfasts
will be different. Therefore, I have created a section that lists out the “Acquired Assets”
that you may specify for any particular property rather than just referring to the property
 itself.
3. I considered drafting the section on “Purchase Price” in a way that would not commit you
to the purchase upon the signing of the LOI but would commit the Seller. However, per
our discussion I have drafted it in a way that would commit you as well. Please confirm
that this is what you want.
4. We did not discuss any desire to have your negotiations be exclusive. However, I added
a clause that ensures that during your negotiations the Seller cannot negotiate the sale of
the property with any other party.
5. The section on “Closing” lists out documents that must be executed prior to the
transaction being completed. Please let me know if there are other documents you
anticipate the transaction requiring that should be added to this list.

I truly appreciate your assistance in this process. By helping me collect this information,
you are enabling us to better represent your interests in future use of this LOI. Please call me if
you have any questions. If I do not receive any corrections or additions to the LOI by June 23rd, I
will call you to confirm that you do not have any changes.

Very truly yours,

321