Sample Letter of Intent

LETTER OF INTENT FOR PURCHASE OF THE ASSETS OF [COMPANY NAME]

STRICTLY PRIVATE AND CONFIDENTIAL

BUYER COMPANY NAME

Buyer Contact Name & Title

[DATE]

[Contact Person]

[Title]

[Company Name]

[Address]

Dear [Contact Person]:

[Buyer Company Name] ("Buyer") a [name of state] corporation, is pleased to submit this letter of intent (the "Letter of Intent") regarding the acquisition of 100% of the assets of [Company Name] (the "Company"), [a wholly-owned subsidiary of [Parent Company], if any] (the "Current Shareholders") by a corporation ("Newco") to be formed by [Buyer] and current management of the Company.

The acquisition of the assets by Newco from the Current Shareholders shall hereafter be known as the "Transaction" and the date of the consummation of the Transaction shall be the "Close" or the "Closing". Newco will pay a total consideration (the "Total Consideration") composed of a cash purchase price (the "Cash Purchase Price") for the assets of the Company of $[purchase price amount]plus the assumption of [$ ] composed of certain liabilities, subject to the terms and conditions of this Letter of Intent.

At the Closing, Newco will be owned by [Buyer] (and/or it's appointees and affiliates) and certain members of the management team of the Company (the "Future Management Owners") that [Buyer] intends to form at the Closing. The Transaction, including terms and conditions, is described in greater detail below.

A.  DEFINITIVE PURCHASE AGREEMENT

The parties to this Letter of Intent will endeavor to finalize and execute a definitive asset purchase agreement (the "Definitive Purchase Agreement") defining the Transaction which shall include the terms below and such other provisions as may be mutually agreed upon, prior to the Expiration Date.

1.  THE TRANSACTION

a.  ASSETS PURCHASED

The Transaction shall include the purchase of all of the assets of the Company, including but not limited to:

All Right, title and exclusive interest to all patents, trademarks, trade names, technical processes, know-how or other intellectual property associated with the business of the Company, whether registered or not;

All tangible and intangible property related to the business of the Company including customer lists, records, goodwill and other intangible assets;

All contracts for purchases from suppliers or deliveries, to customers of the Company; and

Any other assets of any nature whatsoever that are related to or used in connection with the business of the Company and its goodwill.

1.  TOTAL CONSIDERATION

The Total Consideration of [$ ], shall be payable to the Shareholders as follows:

a.  CASH PURCHASE PRICE

A cash amount of $[purchase price amount] to be paid at Closing, subject to adjustments as described under A3a below (the "Cash Purchase Price").

b. ASSUMED LIABILITIES

The assumption of [$ ] composed of certain liabilities as listed on the Closing balance sheet (the "Assumed Liabilities").

c. OWNERSHIP OF NEWCO

Common Stock in Newco representing [ ]% of the fully diluted stock at Closing.

3. PURCHASE PRICE ADJUSTMENT

a. CLOSING ADJUSTMENT

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AGREEMENT OF SALE AND PURCHASE OF ASSETS

THIS AGREEMENT OF SALE AND PURCHASE OF ASSETS is made this ___ day of ______, 2006, by and among XYZ, Inc., a Maryland Corporation (the “Corporation”); ______, a ______Corporation (“Buyer”).

BACKGROUND OF AGREEMENT

The Corporation, through its imaging services division, is engaged in the business of document management and conversion services (the “Business”).

The Corporation now desires to sell, transfer, and assign to Buyer, and Buyer desires to purchase and acquire from the Corporation, certain assets of the Corporation’s Business, pursuant to the terms and conditions set forth in this Agreement.

IN CONSIDERATION, of the premises, the respective representations, warranties, covenants, and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties mutually agree as follows:

1. PURCHASE AND SALE OF ASSETS.

1.1 Assets to be Sold to Buyer. Subject to the terms and conditions set forth in this Agreement, and for the purchase price set forth in Section 4.3 of this Agreement (the “Purchase Price”), as adjusted pursuant to Section 8 of this Agreement (the “Post Closing Adjustments”), on the Closing Date (as defined in Section 7.1), the Corporation will sell, deliver, transfer, and assign to Buyer and Buyer will purchase and acquire from the Corporation, the following assets (collectively, the “Assets”):

(a) all of the Corporation’s inventory used solely in the Business and owned as of the Closing Date, including all parts and finished goods (the “Closing Date Inventory”);

(b) all of the Corporation’s furniture, fixtures, equipment, machinery, tools, parts, supplies, and other similar tangible personal property on hand as of the Closing Date identified on attached Exhibit A (the “Equipment”);

(c) all of the following intangible assets (collectively, the “Intangible Assets”): (i) all equipment leases identified on attached Exhibit B (the “Equipment Leases”) and the real estate Lease for the premises currently leased by the Corporation; (ii) all licenses, permits, orders, and approvals of federal, state, and local governmental and regulatory bodies identified on attached Exhibit C (the “Licenses and Permits”); (iii) all contracts identified on the attached Exhibit D (the “Contracts”); (iv) all of the Corporation’s patents, trademarks, trade names, trade secrets, and copyrights identified on attached Exhibit E (the “Intellectual Property”); and (v) all of the customer lists, customer files, and all other business records primarily relating to the operation of the Corporation’s Business and reasonably required to continue the operation of the Corporation’s Business (the “Business Records”).

1.2 Exclusions from Sale. The following assets of the Corporation shall not be sold or assigned to Buyer under this Agreement, and Buyer shall not assume any liability for the following:

(a) any and all cash on hand, marketable securities, tax refund receivable, prepaid expenses, prepaid taxes, cash value of life insurance, deposits, or deferred income taxes; and

(b) notwithstanding anything contained in this Agreement to the contrary, Buyer does not assume any debt, obligation, contract, or liability (including, but not limited to, tax liabilities, obligations to any employee, and any PBGC Multi-Employer Pension Plan Withdrawal Liability) of the Corporation, of any kind or nature whatsoever, absolute or contingent, known or unknown, incurred or arising out of transactions occurring prior to, on, or after the Closing date, except that Buyer agrees to assume the liabilities relating to the Equipment Leases and the Contracts arising after the Closing Date and except further that Buyer agrees to assume the accounts payable (the “Assumed Accounts Payable”) relating to: (i) inventory ordered before the date of this Agreement and not received as of the date of the physical inventory taking referred to under Section 4.3(b) and (ii) inventory ordered between the date of this Agreement and the Closing Date that has been approved by Buyer in advance and that has not been received as of the date of the physical inventory taking referred to under Section 4.3(b). On the Closing Date, Exhibit E shall be amended to reflect the Assumed Accounts Payable, which will be countersigned by the Corporation and Buyer.

2. REPRESENTATIONS AND WARRANTIES OF CORPORATION.

The Corporation represents and warrants to the Buyer the following:

2.1 Corporate Status. The Corporation is a corporation duly organized, validly existing, and in good standing under the laws of the State of Maryland. It has full power and authority to own or lease its property and assets and to carry on its business as it has been, and is, conducted. The Corporation is not required to qualify to do business in any other state or jurisdiction or apply for authorization to any state or federal regulatory body.

2.2 Authorization. The Corporation has full power and authority to consummate the transactions contemplated under this Agreement. This Agreement constitutes the legal, valid, and binding obligation of the Corporation enforceable in accordance with the terms and conditions set forth in this Agreement, except as enforceability may be limited by general principles of equity and laws affecting the rights of creditors generally. Except for the consents of the Corporation’s lessors, vendors, manufacturers and parties to the contracts set forth on Exhibit D hereto, the Corporation has acquired all required consents to the purchase and sale under this Agreement.

2.3 Financial Statements. The Corporation has delivered to Buyer copies of the unaudited financial statements of the Business, including a pro forma profit and loss statement and a pro forma balance sheet as of [December 31, 1996] (the “Financial Statements”). To the best of the Corporation’s knowledge based upon due inquiry, the Financial Statements are true, correct, and complete, and fairly and accurately reflect the financial position of the Business as of the end of the period reflected thereon.

2.4 Assets. The Corporation has delivered to Buyer a schedule listing the material assets of the Business. On the Closing Date, the Corporation will have good and marketable title to the Assets, free and clear of any imperfection of title, security interest, mortgage, lien, encumbrance, charge, equity, or restriction.

2.5 Equipment Leases. Except as set forth on Schedule 2.6, the Corporation is not in default under any Equipment Lease, and has received no notice of default from any party to the Equipment Leases nor any notice of noncompliance with applicable state, federal, or municipal regulations. Except as set forth on Schedule 2.6, the Corporation has no obligation under any Equipment Lease that it has not fully performed, and is not aware of any expenditures which are likely to be required under the provisions of any Equipment Lease for any purpose other than the payment of rent.

2.6 Licenses and Permits. All Licenses and Permits required to conduct the Business are in full force and effect and no suspension or cancellation of any

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