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_______, _____


Attention: ___________

Re: Acquisition of [Target]


The purpose of this letter is to confirm our understanding of the general

terms for the potential acquisition by Buyer Company or its designee (“Buyer”)
of substantially all of the business and assets of [Target] (“[TARGET]”). The
contemplated acquisition is referred to in this letter as the “Acquisition.” Based
solely on your representation to us, we understand that _____________ and
__________ (collectively, the “Stockholders”) own in the aggregate one hundred
percent (100%) of the issued and outstanding capital stock of [TARGET].

Our respective obligations to consummate the Acquisition are subject to

the completion of the matters set forth in paragraph 9 hereof including the
negotiation, execution and delivery of a definitive acquisition agreement by and
among Buyer and [TARGET] (and the Stockholders, if applicable) (the
“Acquisition Agreement”) in the form and containing the representations,
warranties, covenants and conditions to closing that are usual and customary in
transactions such as the Acquisition.

Subject to the foregoing, we intend to consummate the Acquisition on the

following terms:

1. Interests to be Acquired.

(a) Buyer proposes to acquire substantially all of the assets of

[TARGET] that are used or useful in the ownership and operation by [TARGET] of
its business of the sale, application, design, engineering and service of lighting
control systems for industrial and commercial buildings (the “Business”),
including without limitation, accounts receivable; raw material, work-in-process,
and finished goods inventory; personal property, furniture, fixtures, machinery
and equipment; patents, trademarks, and copyrights (including without
limitation all applications therefor and any claims or causes of action for

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infringement thereof); trade names, trade secrets, technical documentation,

other know-how and intellectual property rights, books, records, customer and
vendor lists, contract rights, goodwill and general intangibles which [TARGET]
owns or has the right to use in the Business (the “Acquired Assets”). The
Acquisition will be a taxable transaction structured as a purchase of assets from
[TARGET] by Buyer, free of any and all liens, claims and encumbrances, as
provided in the Acquisition Agreement; provided, however, that at Buyer’s sole
discretion upon the request of [TARGET], the Acquisition may be structured as a
purchase of all of the issued and outstanding capital stock of [TARGET] from the
Stockholders and the terms of this Letter of Intent shall apply mutatis mutandis
to such stock purchase.

(b) [TARGET] will assign to Buyer and, subject to Buyer’s review and
acceptance of the terms thereof, Buyer will assume, such contracts and
purchase orders relating to the Business as it may in its sole discretion elect.
[TARGET] shall solely be responsible for all payments required to be made or
that are necessary in order to secure the consent of any third party to the
assignment of any contracts, that are assigned to Buyer.

(c) Except as expressly set forth in the Acquisition Agreement, Buyer

will not assume or be liable in any way for liabilities or indebtedness of
[TARGET] as a result of the consummation of the Acquisition including, without
limitation, any liabilities relating to back wages, vacation or sick pay for any
employees; any severance claims of any employees not hired by Buyer on the
Closing Date (defined below); any claims relating to alleged unfair labor
practices and the like; any taxes owed by [TARGET] prior to or as a result of the
consummation of the Acquisition; any product liability or warranty claims; any
accounts payable; any customer deposits; or any other guarantees, liabilities or
indebtedness of [TARGET] to its creditors. Without in any way limiting the
generality of the forgoing, [TARGET]’s existing agreement (the “GE
Agreement”) with General Electric Corporation (“GE”) shall have terminated
prior to the Closing Date and [TARGET] shall have satisfied all of its outstanding
obligations under the GE Agreement other than [TARGET]’s obligations under
the GE Agreement which by its terms are to be performed in the ordinary
course after the termination thereof and [TARGET] will provide evidence of the
termination of the GE Agreement and use its best efforts to obtain a written
acknowledgement from GE that, other than such obligations to be performed in
the ordinary course after the termination of the GE Agreement, all of such
obligations have been satisfied in full.

2. Purchase Price. The purchase price to be paid by Buyer for the

Acquired Assets shall be the sum of the following:

(a) Cash at Closing. Ten Million Dollars (US $10,000,000) (the

“Preliminary Purchase Price”), based upon a net asset value of the Business to
be determined by Buyer based upon a pre-closing balance sheet of [TARGET]

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to be provided to Buyer. The Preliminary Purchase Price will be subject to

reduction (but not increase) based upon the net asset value of the Business
determined as of the Closing Date. The Acquisition Agreement will contain
customary provisions relating to the preparation and examination of a Closing
Date balance sheet for the Business, and related accounting records and
workpapers, and the determination and agreement or other resolution of any
adjustment to the Preliminary Purchase Price. The “Adjusted Purchase Price” as
used in this Letter of Intent will mean the Preliminary Purchase Price as
adjusted (if appropriate) in accordance with the preceding provisions. To the
extent not otherwise provided on the closing date balance sheet, net asset
value of the Business shall be determined in accordance with generally
accepted accounting principles consistently applied. Subject to the provisions of
paragraph 2(c), the Preliminary Purchase Price shall be paid in cash at the

(b) Earn-Out. In addition to the Adjusted Purchase Price, Buyer will pay
to [TARGET] an additional amount not exceeding Five Million Dollars
($5,000,000) (the “Earn-Out”) based on, and subject to, certain performance
factors over a period of four (4) years after the Closing Date as mutually agreed
upon in the Acquisition Agreement including, without limitation, performance
factors tied to Peter Horton, William Horton and Robert Beatty.

(c) Holdback Escrow. A portion of the Adjusted Purchase Price will be

placed in escrow as protection for Buyer against any inaccuracies of any
representations and warranties or breaches of any covenants by [TARGET]
contained in the Acquisition Agreement.

3. Allocation of Purchase Price. The Adjusted Purchase Price and

the Earn-Out will be allocated among the Acquired Assets for tax purposes of
Buyer and [TARGET] in the manner set forth in the Acquisition Agreement.

4. Closing; Exclusivity. We anticipate that the closing of the

Acquisition will take place not later than ______________ (the “Closing Date”).
From the date that this Letter of Intent is accepted by [TARGET] until the earlier
of the signing of the definitive Acquisition Agreement or ninety (90) days from
the date hereof, [TARGET] shall not (nor shall any of [TARGET]’s officers,
directors, stockholders, managers, employees or agents) directly or indirectly:
(a) take any action to solicit, initiate or encourage any “Offer” (as that term
hereinafter is defined); or (b) continue, initiate or engage in negotiations with,
or disclose any non-public information relating to [TARGET] or its business or
financial affairs, to any corporation, partnership, limited liability company,
person or entity, other than Buyer, that may be considering making or that has
made an “Offer”. As used herein, the term “Offer” shall mean any offer or
proposal or expression of interest in a merger, consolidation, asset or stock
purchase, or other business combination involving a substantial portion of the
assets or capital stock of [TARGET]. Buyer and [TARGET] agree to proceed in

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good faith with negotiations toward the consummation of the Acquisition until
____________, or such later date as the parties may in writing agree.

5. Key Personnel. Buyer will not be required to employ any

employees of [TARGET] other than those that Buyer elects in its sole discretion
to hire and at salaries or wages and with such benefits as Buyer shall
determine. [TARGET] will terminate on the Closing Date all employees whom
Buyer desires to hire (the “Employees”) and use its best efforts to cause such
Employees to agree to become employees of Buyer. Buyer expects to enter into
employment and noncompetition agreements with certain of the key Employees
including, without limitation, ________________ and ___________ (collectively, the
“Key Employees”). Subject to the immediately preceding sentence, unless
otherwise agreed by Buyer in its sole and absolute discretion, employees of
[TARGET] hired by Buyer shall be employees at-will of Buyer.

6. Noncompetition. [TARGET], the Stockholders, the Key Employees

and certain other key personnel as identified by Buyer will enter into
noncompetition covenants with Buyer upon such terms to be negotiated among
the parties.

7. Access to Records. [TARGET] will cooperate with Buyer and its

employees, financial advisers, legal counsel, agents, accountants and other
consultants and representatives (collectively, the “Representatives”) in the
conduct of Buyer’s due diligence investigation of [TARGET] and shall provide
Buyer and its Representatives, during normal business hours, access to all
personnel, properties, books, contracts, records, reports, evaluations and other
business documents and papers pertaining to the business affairs of [TARGET]
(including, without limitation, financial statements, tax returns and filings,
environmental reports, payroll information and any documents prepared in
connection with or relating to the sale of [TARGET]) as Buyer or any of its
Representatives reasonably may request.

8. Conduct of Business. From the period hereof until the Closing

Date, [TARGET] will cause the Business to be operated in the ordinary course,
consistent with past practice, with no material change in business operations,
staffing (regarding key personnel) or acquisition or disposition of assets outside
the ordinary course of business, consistent with past practice, other than as
disclosed to Buyer.

9. Conditions. Consummation of the Acquisition is subject to

satisfaction of the following conditions, as well as others as may be set forth in
the Acquisition Agreement:

(a) negotiation, execution and delivery of the Acquisition Agreement

and such other agreements containing representations, warranties,
terms and conditions, mutually satisfactory to the parties;

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(b) satisfactory completion by Buyer of its due diligence review of

[TARGET] and the Business;

(c) obtaining required corporate approvals by each of Buyer and


(d) obtaining all necessary governmental and third-party consents,

permits, and approvals, including waiver by third parties of any
rights triggered by a change in control;

(e) evidence of the termination of the GE Agreement and satisfaction

of all outstanding obligations of [TARGET] to GE (other than
ongoing obligations to be performed in the ordinary course);

(f) receipt by Buyer of assurances from each Employee, including,

without limitation, all Key Employees, of his or her willingness to
accept employment by Buyer following the Closing on terms
acceptable to Buyer and execution by each Key Employee and
such other Employees as Buyer shall identify of an employment
agreement satisfactory to Buyer;

(g) execution by each of [TARGET], the Key Employees and such other
Employees as Buyer shall identify of a non-competition agreement
satisfactory to Buyer;

(h) operation by [TARGET] of the Business in the ordinary course

through the Closing Date; and

(i) no material adverse change in the Business or the Acquired Assets

after the date hereof.

10. Confidentiality. Buyer agrees to treat as confidential all

information concerning [TARGET] furnished, or to be furnished by or on behalf
of [TARGET] in accordance with the provisions of this paragraph 10 (collectively,
the “Information”). The Information will be used solely for the purpose of
evaluating the Acquisition contemplated hereby, and will be kept confidential by
Buyer and its representatives, agents and advisors; provided, however, that
(a) any of such Information may be disclosed to Buyer’s representatives,
agents, and advisors who need to know such Information for the purpose of
evaluating the proposed Acquisition, (b) any disclosure of such Information may
be made to which [TARGET] consents in writing, and (c) such Information may
be disclosed if so required by law upon the advice of counsel. If transactions
contemplated hereby are not consummated or upon written demand therefor
by [TARGET], Buyer shall return to [TARGET] all material containing or reflecting
the Information and will confirm in writing that it has not retained any copies,

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extracts or other reproductions thereof. The provisions of this paragraph shall

survive the termination of this Letter of Intent.

11. Disclosure. Except as required by law, neither party shall make

any public announcements or public disclosures with respect to the matters
hereby without the consent of the other party, which consent will not be
unreasonably withheld or delayed.

12. Non-Binding Effect. This Letter of Intent shall be ineffective

unless executed by all parties hereto on or before _______, ____. This letter will
signify the intention of the parties to negotiate and complete the transactions
contemplated hereby but, except for paragraphs 4, 7, 10, 11, 13 and 14 hereof
and this paragraph 12 (which paragraphs shall be binding upon the parties in
accordance with their respective terms), will not be binding upon such parties.
Except as set forth in such paragraphs, binding obligations among the parties
hereto concerning the transaction described herein will be created only through
execution and delivery of the definitive Acquisition Agreement and the
documents described therein. The covenants and agreements of the parties in
the paragraphs listed in this paragraph 12 were made to induce the parties to
proceed with the transaction described herein and will be binding upon the
parties in accordance with their respective terms. This letter supersedes all
prior letters, term sheets, agreements and arrangements by or among the
parties hereto concerning the Acquisition.

13. Brokers. Each party represents to the other that there are no
brokers or finders entitled to compensation with respect to this transaction.
Each party shall indemnify the other for any expenses or damages incurred as a
result of a breach of this representation.

14. Whether or not the transaction is consummated, Buyer shall pay

its expenses and [TARGET] shall pay its expenses, including legal and
accounting fees, incurred in connection with this transaction. However, if
[TARGET] does not complete the Acquisition for any reason other than Buyer’s
material breach of its obligations herein, including Buyer’s failure to proceed in
good faith with negotiations toward the consummation of the Acquisition,
[TARGET] shall pay to Buyer a break-up fee of Five Hundred Thousand Dollars

15. Amendment, Etc. This letter may be amended, and compliance

with any binding provision of this letter may be waived, only by an instrument
in writing signed by the parties hereto.

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If this Letter of Intent accurately reflects our mutual understanding,

kindly indicate your acceptance of the terms contained herein by
countersigning below where indicated, and returning a fully executed copy to

Very truly yours,


By: ________________________



By: ________________________