Free Letter of Intent Template

LETTER OF INTENT

Private And Confidential  ·  Subject To Contract  ·  England And Wales

Dear Bright Spark Technologies Ltd,

This Letter of Intent (the "LOI") sets out the proposed principal terms on which Apex Capital Partners LLP wishes to progress the transaction described below with Bright Spark Technologies Ltd. Except for Clauses 5 and 6, this LOI is not legally binding and is made expressly "subject to contract" (Rose and Frank Co v JR Crompton and Bros [1925] AC 445; Confetti Records v Warner Music UK [2003] EWHC 1274 (Ch)). Nothing in this LOI creates any obligation to complete the transaction.

Type: Business / Share Acquisition

Description: Proposed acquisition of 100% of the issued share capital of Bright Spark Technologies Ltd, a developer of AI-driven quality control software for the manufacturing sector.

Indicative Value: £4,500,000 (enterprise value, cash-free debt-free basis)

Basis: £4,000,000 cash at completion plus £500,000 deferred consideration payable 12 months post-completion, subject to achievement of the FY2026 EBITDA target of £750,000.

All figures are indicative only, exclusive of VAT where chargeable, and subject to adjustment on the basis of agreed completion accounts, working capital mechanisms, and due diligence findings.

This proposal is made (a) Completion of satisfactory financial, legal, tax, technical and commercial due diligence by no later than 30 May 2026; (b) Negotiation and execution of a binding Share Purchase Agreement on terms customary for UK mid-market transactions; (c) Board and where required shareholder approval of both parties; (d) No material adverse change in the business of the target between signing of this LOI and completion; (e) Continued employment of the two founder-directors for a minimum of 24 months post-completion on service agreements in agreed form..

Target Completion: 30 June 2026
LOI Expiry: This LOI shall automatically expire on 9 May 2026 unless extended by the parties in writing.

The parties intend to work together in good faith and with reasonable expedition towards executing definitive legally binding documentation (Yam Seng Pte Ltd v International Trade Corp [2013] EWHC 111 (QB)), while acknowledging that under English law a bare duty to negotiate in good faith is unenforceable (Walford v Miles [1992] 2 AC 128).

Save as expressly set out in Clauses 5 and 6, nothing in this LOI is legally binding on either party. In particular:

(a) this LOI does not constitute an offer capable of acceptance, nor does it create any contract for the proposed transaction;
(b) no obligation to negotiate, to reach agreement, or to complete any transaction is created;
(c) either party may withdraw from negotiations at any time without liability (save in respect of the Binding Provisions);
(d) a binding contract shall arise only upon execution by both parties of definitive documentation;
(e) this LOI is made expressly "subject to contract" and the principle in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH [2010] UKSC 14 is acknowledged such that commencement of work or part-performance shall not give rise to an implied contract on the terms of this LOI.

The following provisions of this Letter of Intent are legally binding and shall come into effect on countersignature:

5.1 Confidentiality. Binding (Clause 5.1). Both parties shall keep the existence and terms of this Letter of Intent and all information disclosed in connection with the proposed transaction strictly confidential. The confidentiality obligation shall survive the expiry or withdrawal of this Letter of Intent for a period of two (2) years. This clause is grounded in the common-law duty of confidence (Coco v A. N. Clark (Engineers) Ltd [1968] FSR 415) and the Trade Secrets (Enforcement, etc.) Regulations 2018.

5.2 Exclusivity. Binding (Clause 5.2). From the date of this Letter of Intent and for a period of 60 days (the "Exclusivity Period"), Apex Capital Partners LLP shall not, and shall procure that none of its directors, officers, employees, agents or advisers shall, directly or indirectly: (a) solicit, initiate, encourage or entertain any offer, proposal or enquiry from any third party in connection with the proposed transaction or any alternative transaction; (b) engage in discussions or negotiations with any such third party; or (c) enter into any agreement (whether binding or non-binding) with any such third party. This lock-out obligation is made in accordance with Pitt v PHH Asset Management Ltd [1994] 1 WLR 327. Breach shall entitle Bright Spark Technologies Ltd to equitable relief (including injunction) in addition to damages.

5.3 Costs. Binding (Clause 5.3). Each party shall bear its own costs of and incidental to the negotiation, preparation and execution of this Letter of Intent and the proposed transaction (whether or not completed).

5.5 Data Protection. Each party shall comply with the UK General Data Protection Regulation and the Data Protection Act 2018 in respect of personal data shared during due diligence. Data shall be used solely for evaluating the proposed transaction and shall be returned or destroyed on written request (save for copies required by law or retained by professional advisers).

5.6 Non-Reliance. Each party acknowledges that it has not relied on any representation, warranty or assurance made in connection with this LOI save as expressly set out herein. Nothing in this clause shall exclude liability for fraud or fraudulent misrepresentation.

The Binding Provisions (and any non-contractual obligation arising out of or in connection with them) shall be governed by and construed in accordance with the law of England and Wales. Any dispute arising under the Binding Provisions shall first be referred to mediation under the CEDR Model Mediation Procedure. If not resolved within sixty (60) days, either party may commence proceedings in the courts of England and Wales.

Third-Party Rights. A person who is not a party to this LOI shall have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

If this LOI accurately reflects the terms on which you wish to proceed, please countersign and return the enclosed copy. Upon countersignature, the parties will instruct their respective legal advisers to prepare and negotiate definitive documentation as soon as reasonably practicable.

Additional Notes. Management access, financial information and customer references will be provided within 10 Business Days of countersignature. The Proposing Party will use reasonable endeavours to complete confirmatory due diligence within 45 Business Days.