3.

05 Form of Letter of Intent for Joint Venture Transactions

FORM OF LETTER OF INTENT
THIS LETTER OF INTENT (this "Agreement") is entered into this __ day of ______,
20__, between A Corporation ("A Corp.") and B Corporation ("B Corp.").
Premises
Under a Confidentiality Agreement, dated ________ __, 20__ (the "Confidentiality
Agreement"), A Corp. and B Corp. have exchanged certain confidential and proprietary
information, and are now actively discussing and negotiating a proposed transaction pursuant to
which A Corp. and B Corp. will form a joint venture (the "Transaction"). The purpose of the joint
venture will be to combine the _______ business of A Corp. with the ______ business of B Corp.
and thereafter to conduct the combined businesses.
Summary Proposed Terms of Joint Venture between A Corp. and B Corp. (the "Summary
Proposed Terms") are attached hereto as Exhibit A. The Summary Proposed Terms are a brief
description of terms of the proposed Transaction for purposes of this Agreement.
In consideration of the mutual covenants and agreements contained herein, the adequacy of
which is hereby acknowledged by each party, the parties hereby agree as follows:
1. Good Faith Negotiations.
A Corp. and B Corp. acknowledge that each party is incurring and will continue to incur
substantial costs and expenses in connection with their evaluation and negotiation of the
Transaction. Therefore, each of A Corp. and B Corp. agrees that during the period from the date
hereof until _____ __, 20__, the parties will negotiate in good faith with the goal of entering into
mutually acceptable definitive written agreements regarding the Transaction by ______ __, 20__.
2. Expenses.
Each of A Corp. and B Corp. agrees that it shall be responsible for the payment of its own
investment banking, legal or other professional fees incurred in connection with this Agreement
and the proposed Transaction.
3. Intent Regarding Underlying Transaction.
A binding commitment with respect to the Transaction will exist only upon the execution of
mutually acceptable definitive written agreements, containing such covenants, representations,
warranties, closing conditions and other provisions as the parties may agree. However, the
Transaction is further subject to due diligence (the general scope of which has been discussed by
the parties) and the approval of the definitive written agreements by the respective boards of
directors of A Corp. and B Corp. Except for the provisions of this Agreement, the parties hereto
each hereby waives, in advance, any claims (including, without limitation, breach of contract) in

connection with the proposed Transaction contemplated hereby unless and until A Corp. and B
Corp. shall have entered into definitive written agreements with respect thereto.
4. Due Diligence.
The parties intend to commence and complete due diligence as soon as possible from the
date hereof.
5. Confidentiality.
The terms of the Confidentiality Agreement shall remain in full force and effect.
6. Termination.
This Agreement shall terminate if mutually acceptable definitive written agreements
concerning the Transaction are not executed by ______ __, 20__. Termination of this Agreement
shall not, however, release any party hereto from liability for any breach of this Agreement or the
Confidentiality Agreement.
7. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the
State of ________ without reference to the choice of law principles thereof.
8. Amendments.
This Agreement may not be amended except in writing by the parties hereto, nor may any
rights or remedies hereunder by waived except in writing by the parties hereto.
9. Counterparts.
This Agreement may be executed in one or more counterparts, and all such counterparts
taken together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
duly authorized officers as of the date first written above.
A CORPORATION
By:
Name:
Title:

B CORPORATION

By:
Name:
Title:

Exhibit A
Form of Summary Proposed Terms

Purpose of the Joint Venture

Purpose: The purpose of the joint venture shall be to pool all of the activities of the parties [relating
to] [primarily relating to] [used in] [primarily used in] the Applicable Business in order to realize
available synergies, increase the operating profit and market valuation of each of A Corp. and B
Corp, better meet the requirements of the parties' customers, develop new products and market
opportunities, and facilitate interoperability.

Fields of Business and Structure

Areas of Collaboration: Each party shall transfer to the joint venture its respective businesses,
operations, assets and liabilities [relating to] [primarily relating to] [used in] [primarily used in] the
Applicable Business.
Structure: The parties will agree upon an appropriate structure and form of entity or entities
reflecting the each party's tax, accounting and other applicable concerns.

Governance and Management

Board of Joint Venture; Senior Management: The board of directors of the joint venture company
shall initially consist of ____ nominees of A Corp. and ____ nominees of B Corp.
Quorum for Board Meetings: A quorum for a board meeting is a majority of the A Corp. directors
and a majority of the B Corp. directors present in person or by proxy.
Dispute Resolution: The board of directors of the joint venture company shall use reasonable good
faith efforts to resolve all disputes relating to the joint venture. If two successive board meetings
pass without (1) a quorum being present or (2) the board reaching a decision on any matter
requiring a majority decision of both the A Corp. directors and the B Corp. directors (any such
occurrence, an "Impasse"), the parties shall cause a designated senior executive of A Corp. and a
designated senior executive of B Corp. to meet and use their reasonable good faith efforts to
attempt a resolution of such dispute for a __-day period.

Management: The day-to-day operations will be managed by the officers of the joint venture
company.
Authority of Management; Board Approval Requirements: The affirmative vote of a majority of the
A Corp. directors and a majority of the B Corp. directors present at a meeting of the Board of
Directors of the joint venture company at which a quorum is present shall be required to effect any
matter on a list of significant events such as material acquisitions or sales, mergers or financings to
be agreed upon prior to final documentation by the parties.
Tax Distributions: The joint venture will be required to distribute to A Corp. and B Corp. such
amount as is required to enable A Corp. and B Corp. to pay U.S. federal, state and local income
taxes on their respective share of the joint venture's earnings and such other amounts in respect of
taxes as the parties may agree ("Tax Distributions"). Unless otherwise agreed by the parties, such
distributions shall be based on an assumed tax rate, to be adjusted in good faith from time to time
by the parties to reflect the generally applicable tax regime rather than taxes actually due, and shall
be made in the same amount to each party.
Discretionary Distributions: It will be the general objective of the joint venture to make
distributions ("Discretionary Distributions") at least annually of all funds that are not reasonably
necessary or desirable to fund the current operations or future capital requirements of the joint
venture, subject to the requirements of applicable law. Discretionary Distributions shall be in
addition to Tax Distributions.

Termination
Post-Closing Termination Events: Bankruptcy of either A Corp. or B Corp.; Change of Control of
either A Corp. or B Corp.; Material Breach which is not cured within __ days11 after written notice
of such breach has been given by the nonbreaching party; or
Impasse.
Consequences of Termination: The parties shall in the definitive documentation agree upon
appropriate mechanisms to effectuate the winding down of the joint venture and the distribution of
its assets. The parties recognize that the procedure need not be identical for each class of
termination event.

Transfer Restrictions
Blackout Period: Other than in Exempt Transfers (as defined below) no shares of the joint venture
company may be sold, pledged (except as set forth below), transferred or otherwise disposed of
during the __- year period following the closing of the transaction (the "Blackout Period").
Exempt Transfers: At any time following the Closing, A Corp. and B Corp. shall be permitted to
transfer shares in the joint venture company, directly or indirectly, to wholly owned subsidiaries,
but only for so long as they remain such. These transfers are referred to as "Exempt Transfers."

Such sales will not be subject to any tag-along or right of first refusal. The transferees in any such
sales will be considered "A Corp." or "B Corp.," as the case may be.
Right of First Refusal: Any proposed transfer following the Blackout Period shall be subject to a
"Right of First Refusal" on such terms as shall be agreed upon by the parties in the definitive
documentation.
Tag-Along: In the event that A Corp. or B Corp. elects to dispose of its interests in a private sale
transaction and the other party elects not to exercise its right of first refusal as described above,
such other party shall be entitled to participate (tag-along) on the same terms and conditions.

Miscellaneous
Governing Law: _________ law.
Arbitration; Consent to Jurisdiction: A Corp., B Corp. and the joint venture company shall agree
that all disputes relating to the existence, validity, performance, interpretation and termination of
the joint venture agreement shall be subject to final and binding arbitration by a panel of three
arbitrators (one chosen by A Corp., one chosen by B Corp. and one chosen by the first two
arbitrators).
Publicity: Neither party may issue a press release or make a public statement regarding the joint
venture or the related agreements without the written consent of the other party unless, in the
opinion of the disclosing party's counsel, such disclosure is required by law or regulation.
Expenses: Each party will bear its own costs and expenses incurred in connection with the
transaction, except for the costs of hir ing independent accountants to assist in valuing the parties'
respective contributions to the joint venture, which costs will be borne equally by A Corp. and B
Corp.
Key Personnel and Ordinary Course: The definitive documentation relating to the joint venture will
provide that neither party shall transfer key personnel out of their respective businesses nor take or
omit to take any other action out of the ordinary course of business prior to closing without the
prior written consent of the other party.
Corporate/Technical Services: The parties shall enter into a transitional services agreement relating
to such services as are mutually agreed upon based on arm's- length market terms and conditions.
Covenant Not to Compete: Each of A Corp. and B Corp. will enter into covenants not to compete
with the joint venture with respect to the joint venture's fields of activities in such areas as are
agreed upon by the parties.
Financing: Funds required by the joint venture for the conduct of its business shall be provided
through the profits and cash flow of the joint venture to be derived from its business. Nevertheless,
the parties recognize that from time to time it may be appropriate to provide the joint venture with

funding from its shareholders or from external sources. The joint venture agreement will provide
that, as and when funding is so required, the parties will work together in good faith to determine
the best way to meet such funding requirements from external sources.
Accounting; Financial Information: The joint venture will provide A Corp. and B Corp., in a format
mutually agreed upon between A Corp. and B Corp., such periodic accounting and financial
information as A Corp. and B Corp. may require for each of its public reporting and internal
purposes.
Customary Agreements: The definitive agreements will contain customary representations and
warranties and will be subject to customary conditions for transactions of this kind.
Regulatory Cooperation: A Corp. and B Corp. each agree to notify the other before taking any step
relating to regulatory issues, including communicating on a formal or informal basis with any
regulatory authority, and agree to cooperate in addressing all regulatory issues that arise. A Corp.
and B Corp. will mutually agree upon the actions that will require the prior written consent of each
of A Corp. and B Corp.
Intellectual Property: A Corp. and B Corp. shall mutually agree prior to the formation of the joint
venture on how best to allow the joint venture to use and exploit the intellectual property rights
("IP") of A Corp. and B Corp. to the extent such rights relate exclusively or nonexclusively to the
joint venture's fields of activities and to allow A Corp. and B Corp. to retain or continue to use such
IP outside of the joint venture's fields of activities.
A Corp. and B Corp. shall mutually agree prior to the creation of the joint venture on the
best method for ownership of and access to IP developed by the joint venture outside the joint
venture's fields of activities.
Each of A Corp. and B Corp. shall consider on a case-by-case basis the licensing of
additional technology rights.
Nonbinding Summary of Proposed Terms: This Summary of Proposed Terms is not binding on A
Corp. or B Corp. Neither A Corp. nor B Corp. shall have any obligation to proceed with the joint
venture described herein unless and until each enters into binding definitive documentation, and
each reserves the right to terminate discussions for any reason or for no reason.