ProposaltoPurchaseStockoftheCompanyDearSellers:Thisletterisintendedtosummarizetheprincipaltermsofaproposalbeingconsideredby(the"Buyer”)regardingitspossibleacquisitionofalloftheoutstandingcapitalstockof(the"Company”)from(HAH)and,whoaretheCompany'ssolestockholders(the"Sellers”).Inthisletter,(i)theBuyerandtheSellersaresometimescalledthe"Parties/(ii)theCompanyanditssubsidiariesaresometimescalledthe"TargetCompanies/and(iii)theBuyer'spossibleacquisitionofthestockoftheCompanyissometimescalledthenPossibleAcquisition/1PARTIThePartieswishtocommencenegotiatingadefinitivewrittenacquisitionagreementprovidingforthePossibleAcquisition(aHDefinitiveAgreement”).TofacilitatethenegotiationofaDefinitiveAgreement,thePartiesrequestthattheBuyer'scounselprepareaninitialdraft.TheexecutionofanysuchDefinitiveAgreementwouldbesubjecttothesatisfactorycompletionoftheBuyer'songoinginvestigationoftheTargetCompanies1business,andwouldalsobesubjecttoapprovalbytheBuyefsboardofdirectors.BasedontheinformationcurrentlyknowntotheBuyer,itisproposedthattheDefinitiveAgreementincludethefollowingterms:1.BasicTransactiortTheSellerswouldsellalloftheoutstandingcapitalstockoftheCompanytotheBuyerattheprice(thenPurchasePrice11)setforthinParagraph2below.Theclosingofthistransaction(the”Closing”)wouldoccurassoonaspossible2.PurchasePrice.ThePurchasePricewouldbe$(subjecttoadjustmentasdescribedbelow)andwouldbepaidinthefollowingmanner:(a)attheClosing,theBuyerwouldpaytheSellersthesumof$incash;(b)attheClosing,theBuyerwoulddepositwithamutuallyacceptableescrowagentthesumof$，whichwouldbeheldinescrowforaperiodofatleastyearsinordertosecuretheperformanceoftheSellers1obligationsundertheDefinitiveAgreementandrelateddocuments;and(c)attheClosing,theBuyerwouldexecuteanddelivertoeachSelleranunsecured,non-negotiable,subordinatedpromissorynote・ThepromissorynotestobedeliveredtotheSellersbytheBuyerwouldhaveacombinedprincipalamountof$,wouldbearinterestattherateof%perannum,wouldmatureontheanniversaryoftheClosing,andwouldprovideforequal[annual][quarterly]paymentsofprincipalalongwith[annual][quarterly]paymentsofaccruedinterest.
ThePurchasePriceassumesthattheTargetCompanieshaveconsolidatedstockholders1equityofatleast$asoftheClosing.ThePurchasePricewouldbeadjustedbasedonchangesintheTargetCompanies1consolidatedstockholders1equityasoftheClosing,onadollar-for-dollarbasis.1.EmploymentandNon-CompetitionAgreements.AttheClosing:(a)theCompanyandAwouldenterintoa-yearemploymentagreementunderwhichAwouldagreetocontinuetoserveastheCompany's[VicePresidentandChiefOperatingOfficer]andwouldbeentitledtoreceiveasalaryof$peryear;and(b)eachSellerwouldexecutea-yearnoncompetitionagreementinfavoroftheBuyerandtheCompany.2.OtherTerms.TheSellerswouldmakecomprehensiverepresentationsandwarrantiestotheBuyer,andwouldprovidecomprehensivecovenants,indemnitiesandotherprotectionsforthebenefitoftheBuyer.TheconsummationofthecontemplatedtransactionsbytheBuyerwouldbesubjecttothesatisfactionofvariousconditions,including:(a)(b)PARTIIThefollowingparagraphsofthisletter(the"BindingProvisions")arethelegallybindingandenforceableagreementsoftheBuyerandeachSeller.1.Access.DuringtheperiodfromthedatethisletterissignedbytheSellers(the”SigningDate”)untilthedateonwhicheitherPartyprovidestheotherPartywithwrittennoticethatnegotiationstowardaDefinitiveAgreementareterminated(thenTerminationDate11),theSellerswillaffordtheBuyerfullandfreeaccesstoeachTargetCompany,itspersonnel,properties,contracts,booksandrecords,andallotherdocumentsanddata.2.ExclusiveDealing.Untilthelaterof(i)[90]daysaftertheSigningDateor(ii)theTerminationDate:(a)theSellerswillnotandwillcausetheTargetCompaniesnotto,directlyorindirectly,throughanyrepresentativeorotherwise,solicitorentertainoffersfrom,negotiatewithorinanymannerencourage,discuss,accept,orconsideranyproposalofanyotherpersonrelatingtotheacquisitionoftheSharesortheTargetCompanies,theirassetsorbusiness,inwholeorinpart,whetherdirectlyorindirectly,throughpurchase,merger,consolidation,orotherwise(otherthansalesofinventoryintheordinarycourse);and
(b)TheSellerswillimmediatelynotifytheBuyerregardinganycontactbetweentheSellers,anyTargetCompanyortheirrespectiverepresentativesandanyotherpersonregardinganysuchofferorproposaloranyrelatedinquiry.1.Break-UpFee.If(a)theSellersbreachParagraph2ortheSellersprovidetotheBuyerwrittennoticethatnegotiationstowardaDefinitiveAgreementareterminated,and(b)within[six]monthsafterthedateofsuchbreachortheTerminationDate,asthecasemaybe,eitherSelleroroneormoreoftheTargetCompaniessignsaletterofintentorotheragreementrelatingtotheacquisitionofamaterialportionoftheSharesoroftheTargetCompanies,theirassets,orbusiness,inwholeorinpart,whetherdirectlyorindirectly,tliroughpurchase,merger,consolidation,orotherwise(otherthansalesofinventoryorimmaterialportionsoftheTargetCompanies*assetsintheordinarycourse)andsuchtransactionisultimatelyconsummated,then,immediatelyupontheclosingofsuchtransaction,theSellerswillpay,orcausetheTargetCompaniestopay,totheBuyerthesum$.ThisfeewillnotserveastheexclusiveremedytotheBuyerunderthisletterintheeventofabreachbytheSellersofParagraph2ofthisPartTwooranyotheroftheBindingProvisions,andtheBuyerwillbeentitledtoallotherrightsandremediesprovidedbylaworinequity・2.ConductofBusiness.DuringtheperiodfromtheSigningDateuntiltheTerminationDate,theSellersshallcausetheTargetCompaniestooperatetheirbusinessintheordinarycourseandtorefrainfromanyextraordinarytransactions.3.Confidentiality.Exceptasandtotheextentrequiredbylaw,theBuyerwillnotdiscloseoruse,andwilldirectitsrepresentativesnottodiscloseorusetothedetrimentoftheSellersortheTargetCompanies,anyConfidentialInformation(asdefinedbelow)withrespecttotheTargetCompaniesfurnished,ortobefurnished,byeitherSeller,theTargetCompanies,ortheirrespectiverepresentativestotheBuyeroritsrepresentativesatanytimeorinanymannerotherthaninconnectionwithitsevaluationofthetransactionproposedinthisletter.ForpurposesofthisParagraph,nConfidentialInformationHmeansanyinformationabouttheTargetCompaniesstamped"confidential”oridentifiedinwritingassuchtotheBuyerbytheSellerspromptlyfollowingitsdisclosure,unless(i)suchinformationisalreadyknowntotheBuyeroritsrepresentativesortoothersnotboundbyadutyofconfidentialityorsuchinformationbecomespubliclyavailablethroughnofaultoftheBuyeroritsrepresentatives,(b)theuseofsuchinformationisnecessaryorappropriateinmakinganyfilingorobtaininganyconsentorapprovalrequiredfortheconsummationofthePossibleAcquisition,or(c)thefurnishingoruseofsuchinformationisrequiredbyornecessaryorappropriateinconnectionwithlegalproceedings.UponthewrittenrequestoftheSellers,theBuyerwillpromptlyreturntotheSellersortheTargetCompaniesordestroyanyConfidentialInformationinitspossessionandcertifyinwritingtotheSellersthatithasdoneso.4.Disclosure.Exceptasandtotheextentrequiredbylaw,withoutthepriorwrittenconsentoftheotherParty,neithertheBuyernoreitherSellerwill,andeachwilldirectitsrepresentativesnottomake,directlyorindirectly,anypubliccomment,statement,orcommunicationwithrespectto,orotherwisetodiscloseortopermitthedisclosureoftheexistenceofdiscussionsregarding,apossibletransactionbetweenthePartiesoranyoftheterms,conditions,orotheraspectsofthetransactionproposedinthisletter.IfaPartyisrequiredbylawtomakeany
suchdisclosure,itmustfirstprovidetotheotherPartythecontentoftheproposeddisclosure,thereasonsthatsuchdisclosureisrequiredbylaw,andthetimeandplacethatthedisclosurewillbemade.1.Costs,TheBuyerandeachSellerwillberesponsibleforandbearallofitsowncostsandexpenses(includinganybroker^orfindefsfeesandtheexpensesofitsrepresentatives)incurredatanytimeinconnectionwithpursuingorconsummatingthePossibleAcquisition.Notwithstandingtheprecedingsentence,theBuyerwillpayone-halfandtheSellerswillpayone-halfoftheHSRActfilingfee.2.Consents.DuringtheperiodfromtheSigningDateuntiltheTerminationDate,theBuyerandeachSellerwillcooperatewitheachotherandproceed,aspromptlyasisreasonablypractical,toprepareandtofilethenotificationsrequiredbytheHSRAct.3.EntireAgreement.TheBindingProvisionsconstitutetheentireagreementbetweentheparties,andsupersedeallpriororalorwrittenagreements，understandings,representationsandwarranties,andcoursesofconductanddealingbetweenthepartiesonthesubjectmatterhereof.Exceptasotherwiseprovidedherein,theBindingProvisionsmaybeamendedormodifiedonlybyawritingexecutedbyalloftheparties.4.GoverningLaw.TheBindingProvisionswillbegovernedbyandconstruedunderthelawsoftheStateofwithoutregardtoconflictsoflawsprinciples.5.Jurisdiction:ServiceofProcess.Anyactionorproceedingseekingtoenforceanyprovisionof,orbasedonanyrightarisingoutof,thisLettermaybebroughtagainstanyofthepartiesinthecourtsoftheStateof,Countyof,or,ifithasorcanacquirejurisdiction,intheUnitedStatesDistrictCourtfortheDistrictof,andeachofthepartiesconsentstothejurisdictionofsuchcourts(andoftheappropriateappellatecourts)inanysuchactionorproceedingandwaivesanyobjectiontovenuelaidtherein.Processinanyactionorproceedingreferredtointheprecedingsentencemaybeservedonanypartyanywhereintheworld・6.TerminatioiLTheBindingProvisionswillautomaticallyterminateon,19andmaybeterminatedearlieruponwrittennoticebyeitherpartytotheotherpartyunilaterally,foranyreasonornoreason,withorwithoutcause,atanytime;provided,however,thattheterminationoftheBindingProvisionswillnotaffecttheliabilityofapartyforbreachofanyoftheBindingProvisionspriortothetermination.UponterminationoftheBindingProvisions,thepartieswillhavenofurtherobligationshereunder,exceptasstatedinParagraphs2,3,5,7,9,10,11,12,13and14ofthisPartTwo,whichwillsurviveanysuchtermination.7.Counterparts.ThisLettermaybeexecutedinoneormorecounterparts,eachofwhichwillbedeemedtobeanoriginalcopyofthisLetterandallofwhich,whentakentogether,willbedeemedtoconstituteoneandthesameagreement.8.NoLiability.TheparagraphsandprovisionsofPartOneofthisletterdonotconstituteandwillnotgiverisetoanylegallybindingobligationonthepartofanyofthePartiesor
anyoftheTargetCompanies.Moreover,exceptasexpresslyprovidedintheBindingProvisions(orasexpresslyprovidedinanybindingwrittenagreementthatthePartiesmayenterintointhefuture),nopastorfutureaction,courseofconduct,orfailuretoactrelatingtothePossibleAcquisition,orrelatingtothenegotiationofthetermsofthePossibleAcquisitionoranyDefinitiveAgreement,willgiverisetoorserveasabasisforanyobligationorotherliabilityonthepartofthePartiesoranyoftheTargetCompanies.Ifyouareinagreementwiththeforegoing,pleasesignandreturnonecopyofthisletteragreement,whichthereuponwillconstituteouragreementwithrespecttoitssubjectmatter.BUYER:By:Name:Title:DulyexecutedandagreedastotheBindingProvisionson,199PROSPECTIVESELLERS:
