Blind Grading Number: 321

Adjunct Professor: William Ng LETTER OF INTENT Date: _________________ To: _________________

RE: [Name and Address of Property] (the Property) The following Letter of Intent (LOI) is between Lima Holton/Holton Inns, LLC (the Buyer) and [Name of Seller] (the Seller). When referencing the Buyer and Seller together, they may hereinafter be referred to as the Parties. BACKGROUND Holton Inns, LLC purchases inns, bed and breakfasts, and other businesses. It typically remodels and redecorates the businesses it purchases with the intent to keep the current owners on to run the establishment under the supervision of the LLC. TERMS This LOI sets out the basic terms upon which the Buyer is prepared to purchase the Property. All of the terms in this LOI are intended to be legally binding. However, the terms are not comprehensive and we expect that additional terms will be incorporated into a formal agreement (Definitive Agreement) to be negotiated. A. Description of Assets 1. Acquired Assets. As used in this agreement, the term Acquired Assets shall mean the assets of the Seller listed immediately below that are being purchased by the Buyer under this agreement: i. [Asset 1]

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ii. [Asset 2] iii. [Asset 3] 2. Seller Bound: This LOI provides the Buyer the irrevocable option to acquire all or any portion of the Acquired Assets of the Seller. By executing this LOI, the Seller is bound to the sale. B. Consideration 1. Purchase Price. The total purchase price to be paid by Buyer to Seller for the Acquired Assets is [Purchase Price] (hereinafter Purchase Price). i. The Purchase Price is subject to the Seller continuing to conduct business on the Property without change to its current financial position. 2. Earnest Money. A portion of the Purchase Price consists of earnest money in the amount of [Earnest Money] (hereinafter Earnest Money). i. Earnest Money will be paid by Buyer to Seller on or before the execution of this agreement. ii. Earnest Money shall be fully returned to Buyer if the transaction is not completed for any reason. C. Negotiation of Transaction 1. Termination. This LOI will terminate automatically by [Termination date] (hereinafter Termination Date), or before the Termination Date at the sole discretion of the Buyer. If a Definitive Agreement is not executed by the Parties by the Termination Date, then the transaction for the purchase of the Acquired Assets will terminate. 2. Sole Discretion. The Buyer has the exclusive right to negotiate the additional

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terms of the sale of the Acquired Assets. The Buyer has sole discretion in terminating this agreement prior to the Termination Date. 3. Good Faith Negotiations. The Buyer and the Seller will act honestly, diligently and in good faith in their respective endeavors to settle and execute the Definitive Agreement. If the Seller fails to negotiate in good faith or fails to complete the transaction for the Acquired Assets, the Seller will pay the Buyer for expenses incurred during negotiation and for any reliance interest. 4. Exclusive Negotiations. Following the execution of this LOI, the Seller will not negotiate or enter into discussions with any other party or offer the Acquired Assets to any other party until the time provided by this LOI has terminated. 5. Closing. The closing date for this purchase shall be no later than 60 days after the Parties have signed and executed this LOI. The closing shall include the execution of the following documents: i. Asset Purchase Agreement ii. Bill of Sale iii. Two-year Non-compete iv. Employment Agreement (to which the Seller agrees to stay on for a minimum of one year from the closing date) 6. Financing. The Buyer shall have 60 days after the Parties have signed and executed this LOI to obtain financing. 7. Expenses. The Buyer and Seller will each bear their own expenses in conjunction with this LOI and the purchase and sale of the Acquired Assets. 8. Settling Disputes. Should disputes arise, the Buyer and Seller agree that

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jurisdiction will be valid in the Eastern District of Virginia. The Buyer and Seller agree that service of process is satisfactory anywhere in the world. D. Information & Confidentiality 1. Access to Information. Immediately upon execution of the LOI, the Buyer and its advisors will have full access during normal business hours to all documents and financials pertaining to the Property and within the Sellers control, including but not limited to: i. [Document 1] ii. [Document 2] iii. [Document 3] 2. Confidentiality. The transaction itself along with all negotiations regarding the Property and Acquired Assets will be confidential and will not be disclosed to anyone other than respective advisors and internal staff of the parties and necessary third parties, such as lenders approached for financing. i. No press or other publicity release will be issued to the general public concerning the transaction without mutual consent, unless required by law. E. Warranties 1. Express Warranties. The Seller expressly warrants that the Property and all Acquired Assets are in excellent condition. The Buyer is relying on this express warranty in puchasing the Property. 2. Implied Warranty. The Seller impliedly warrants that the Property and all Acquired Assets are in excellent condition. The Buyer is relying on this implied

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warranty in purchasing the Property. ACCEPTANCE If the terms above are agreeable, please sign and return a duplicate copy of this LOI by no later than the Termination Date set forth above. Facsimile is acceptable.

_______________________________ (Signature) _______________________________ (Typed Name) _______________________________ (Title) _______________________________ (Date)

_______________________________ (Signature) _______________________________ (Typed Name) _______________________________ (Title) _______________________________ (Date)

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June 16, 2005 BY FEDERAL EXPRESS Lima Holton Holton Inns, LLC 1111 West Paces, Unit 100 Arlington, VA 22201 Phone: (703) 993-0011 Re: Draft of Letter of Intent for Lima Holton/Holton Inns, LLC Dear Mrs. Holton, I enjoyed meeting with you to discuss the terms you would like incorporated into your standard Letter of Intent (LOI). My understanding is that you are interested in purchasing a series of existing inns or bed and breakfasts in Virginia. You plan to rejuvenate the struggling establishments, by bringing in superior chefs, remodeling and keeping the owners on to run the establishments under the supervision of your LLC. I have prepared a draft LOI into which you can insert specific terms whenever you find an inn or bed and breakfast that you would like to purchase. The draft LOI incorporates the terms we discussed and was based off of a number of samples readily available on the intranet at the following URLs:

PRIVILEGED ATTORNEY/ CLIENT COMMUNICATION

http://www.jurisint.org/pub/02/en/doc/422.htm http://www.jurisint.org/pub/02/en/doc/448.htm http://www.medlawplus.com/legalforms/instruct/sample-ltintent.pdf http://www.bcrelinks.com/Forms_and_Documents/Letter_of_Intent/ http://www.coollawyer.com/webfront/internet_law_library/articles/law_library_le tter_of_intent_article.php http://www.businesslaws.com/default.asp?htmlPage=toc201.htm http://contracts.onecle.com/remote-knowledge/seatow.jv.2002.04.19.shtml http://contracts.onecle.com/earthshell/prairie.jv.1996.11.13.shtml

In addition to the terms discussed in our meeting, this LOI includes the following items that I would like to you to comment on: I drafted the LOI in a way that makes the terms legally binding. Given that the majority of LOIs are not legally binding, I wanted you to confirm that this was your desire. 2. I assumed that the assets you will be acquiring from different inns and bed and breakfasts will be different. Therefore, I have created a section that lists out the Acquired Assets that you may specify for any particular property rather than just referring to the property itself.
1.

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I considered drafting the section on Purchase Price in a way that would not commit you to the purchase upon the signing of the LOI but would commit the Seller. However, per our discussion I have drafted it in a way that would commit you as well. Please confirm that this is what you want. 4. We did not discuss any desire to have your negotiations be exclusive. However, I added a clause that ensures that during your negotiations the Seller cannot negotiate the sale of the property with any other party. 5. The section on Closing lists out documents that must be executed prior to the transaction being completed. Please let me know if there are other documents you anticipate the transaction requiring that should be added to this list.
3.

I truly appreciate your assistance in this process. By helping me collect this information, you are enabling us to better represent your interests in future use of this LOI. Please call me if you have any questions. If I do not receive any corrections or additions to the LOI by June 23rd, I will call you to confirm that you do not have any changes. Very truly yours, 321

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