A LOI of intent for a joint venture (JV) carried out through a newly formed LLC with two members, each of which owns a 50% membership interest in the LLC. This Standard Document may also be referred to as a memorandum of understanding or written in the form of a term sheet. This Standard Document has integrated notes with important explanations and drafting and negotiating tips.

JOINT VENTURE PARTY A’S LETTERHEAD

[DATE]

[JOINT VENTURE PARTY B]

[ADDRESS OF JOINT VENTURE PARTY B]

Re: Proposed Joint Venture

Dear ___________________:

This LOI (“LOI”) is intended to summarize the principal terms of a proposal being considered by [___________________] (“[COMPANY]”) and [___________________] (“JV Party B”); and together with [COMPANY], the “Parties”) to form a new limited liability company, or such other type of entity as is agreed by the Parties after taking into account such tax, accounting, operational and other considerations as they deem relevant, under the laws of [___________________] (“Newco” or “Joint Venture”) for the purpose of engaging in the business of [___________________] (the “JV Business”). The possible formation of Newco, contributions to Newco, and other related matters described in this LOI are referred to herein collectively as the “Proposed Transaction.”

1. Initial Contributions.

(a) Subject to the satisfaction of the conditions described in this LOI, it is contemplated that, at a closing of the Proposed Transaction (“Closing”), each Party would enter into a contribution agreement (“Contribution Agreement”) and other necessary transfer or conveyance documents, pursuant to which it would contribute to Newco (each, a “Contribution”) cash in an amount to be determined and its respective non-cash assets, as mutually agreed upon, if any (collectively, the “Assets”) relating to the JV Business, free and clear of all security interests, liens, claims and encumbrances[, including without limitation:

(i) In the case of [COMPANY],[Description of Assets]; and

(ii) In the case of JV Party B, [Description of Assets].

(b) In consideration for its Contribution, each Party would be issued a 50% membership interest in Newco (each, a “JV Interest”; and, collectively, the “JV Interests”).

2. Proposed Definitive Agreements. As soon as reasonably practicable after the execution of this LOI, the Parties shall commence to negotiate definitive forms of a Contribution Agreement and a Limited Liability Company Operating Agreement of Newco (the “LLC Agreement”; and, together with the Contribution Agreement, the “Definitive Agreements”), each to be drafted by [COMPANY]’s counsel. The Definitive Agreements shall include the terms summarized in this LOI and such other representations, warranties, conditions, covenants, indemnities and other terms as are customary for transactions of this nature and not inconsistent with this LOI, including that each Party shall indemnify the other against damages arising from any breach of its representations and warranties or any undisclosed liabilities, subject to customary caps, baskets and survival periods to be set out in the Definitive Agreements. The Parties shall also commence to negotiate the forms of the ancillary agreements that are expected to be entered into between Newco and one or more of the Parties and/or their affiliates at a Closing, including [__________________] (collectively, the “Ancillary Agreements”), each to be drafted by [COMPANY]’s counsel.