# LETTER OF INTENT
## Date, parties and status
Date: 8 April 2029
This letter is from Larkspur Creative Group Limited, company number 11745082, registered office at 40 Queen Square, Bristol BS1 4NH (Buyer), to Mosaic Harbour Design Limited, company number 06931877, registered office at 7 Paintworks Avenue, Bristol BS4 3EH (Target), and its shareholders Olivia Jane Mercer and Thomas William Reed (together, the Sellers). The Buyer, Target and Sellers are called the parties.
The parties intend to negotiate a share purchase agreement for all 12,000 issued ordinary shares in the Target. Except for clauses 4 to 8 and 11 of this letter, which are expressly binding, this letter records current intentions only. It is not an offer capable of acceptance, a sale contract, a partnership, or a promise that the transaction will complete. No party is obliged to sign a definitive agreement. A court will determine effect from the wording and circumstances, and the binding clauses are intended to have legal effect immediately.
## 1. Proposed transaction
The Buyer proposes to acquire all 12,000 shares from the Sellers in equal proportions: Olivia will sell 6,000 shares and Thomas will sell 6,000 shares. The Target will remain the employer, contracting party and owner of its business after completion. The business is a branding and packaging studio trading as Mosaic Harbour Studio, with 34 employees and 118 active client accounts.
The indicative enterprise value is £780,000 on a cash-free, debt-free basis, assuming normalised working capital of £120,000. The indicative equity price is calculated as £780,000 plus completion cash, less financial debt and debt-like items, plus or minus the difference between actual and target working capital. For illustration, if completion cash is £64,000, debt-like items are £94,000 and working capital is £132,000, the equity price is £780,000 + £64,000 - £94,000 + £12,000 = £762,000. This is an illustration, not an agreed fixed price.
## 2. Consideration and deferred payment
Subject to the definitive agreement, the base consideration will be paid in pounds sterling at completion. Ninety per cent of the agreed equity price will be paid to the Sellers in equal shares. Ten per cent will be retained in an escrow account for 18 months as security for warranty and tax claims. If the final equity price is the illustrative £762,000, the completion payment is £685,800 (90 per cent) and the escrow is £76,200 (10 per cent); each Seller receives £342,900 at completion before lawful deductions, and the escrow is released equally if no valid claim remains.
The Buyer also proposes an earn-out of up to £120,000 for the twelve months after completion. It will be £60,000 if the Target's qualifying recurring gross margin is £420,000 and £120,000 if it is £540,000 or more, with straight-line interpolation between those thresholds and no payment below £420,000. Qualifying recurring gross margin means recurring client fees actually invoiced and collected, less directly attributable freelance production costs, excluding VAT, one-off pitches, intercompany charges, refunds and bad debts. At £480,000 the earn-out would be £90,000: £60,000 plus one-half of £60,000. The definitive agreement will address accounting policies, leavers and an expert determination process.
## 3. Conditions and timetable
The proposed timetable is: electronic data room open by 15 April 2029; first diligence questions by 26 April; agreed heads of warranty and tax covenant by 17 May; signing targeted for 31 May; and completion targeted for 14 June 2029. These dates may be changed by written agreement. Completion will be conditional on satisfactory legal, financial, tax, employment, pension, intellectual-property, data-protection, insurance and commercial diligence; agreed financing; board approvals; delivery of the share certificates and stock transfer forms; and no material adverse change agreed in the definitive agreement.
The Target will continue ordinary business, maintain its insurance, preserve client and employee relationships, and not issue shares, incur unusual debt, dispose of material assets, settle a material claim or make a non-ordinary payment without the Buyer's prior written consent. Consent must not be unreasonably withheld for ordinary-course expenditure below £20,000 per item and £60,000 in aggregate in any calendar month.
## 4. Binding confidentiality
Each recipient must keep this letter, negotiations, diligence material and all non-public information about another party or the Target confidential. It may be used only to evaluate, finance and implement the proposed transaction and may be disclosed only to professional advisers, funders, insurers, directors, employees or group companies with a need to know and equivalent confidentiality duties, or where law, a court or regulator requires disclosure. The recipient remains responsible for a permitted recipient's breach.
Confidentiality does not cover information already lawfully known without restriction, independently developed, public other than through breach, or lawfully received from a third party. The obligation starts on signature and lasts for three years, except trade secrets remain protected while they retain that character. A party may seek an injunction or other equitable relief as well as damages. No announcement may be made without prior written consent, except for a compulsory disclosure.
## 5. Binding exclusivity
From the date the last party signs until 5.00 pm on 31 May 2029, the Sellers and Target must not solicit, encourage, negotiate or provide information for a competing acquisition, investment, merger or disposal involving the Target or its business. They must refer an unsolicited approach to the Buyer within one Business Day and disclose its material terms, without disclosing the Buyer's confidential information. The Sellers must ensure that their advisers and agents do not knowingly circumvent this restriction.
The Buyer may end exclusivity by written notice. Exclusivity ends earlier if the parties sign a definitive agreement, or on written termination under clause 9. It is a standalone obligation and does not require the Buyer to buy. Business Day means a day other than a Saturday, Sunday or bank holiday in England and Wales on which banks in London are open.
## 6. Binding access and conduct of diligence
The Target will provide reasonable access to records, premises, systems and personnel during normal business hours, subject to privilege, confidentiality owed to clients, data protection, information security and reasonable disruption controls. The Buyer will identify requested material and will not contact a client, employee or supplier without the Target's prior consent. The Target may redact irrelevant personal data and may provide aggregated information where individual disclosure is not lawful.
Each party bears its own legal, accounting, tax, financing and other costs. The Target must not incur a cost for the Buyer without prior written approval. Neither this letter nor diligence creates a warranty that information is complete or accurate; any reliance warranties will be negotiated in the definitive agreement.
## 7. Definitive agreement
The definitive share purchase agreement is expected to contain title and capacity warranties, business warranties, a tax covenant, identified-matter indemnities, limitations, disclosure arrangements, completion accounts, escrow, earn-out rules, restrictive covenants and transitional services. The Sellers will be asked to provide six months of reasonable transition support without additional salary, subject to an agreed consultancy arrangement. Existing staff will remain employed by the Target, and the parties will take advice on any TUPE implications.
The parties will negotiate in good faith, but good-faith negotiation does not create an obligation to agree. Either party may stop discussions at any time, subject to the binding clauses and accrued rights. No exclusivity fee, break fee or deposit is payable under this letter.
## 8. Notices and remedies
A notice under a binding clause must be in writing and delivered by hand, pre-paid recorded post or email to the address or email last notified by the receiving party. Hand delivery between 9.00 am and 5.00 pm on a Business Day is effective when left. Recorded post is effective at 9.00 am on the second Business Day after posting unless received earlier. An email sent before 5.00 pm on a Business Day is effective when sent if no delivery-failure message is received; an email sent at or after 5.00 pm is effective at 9.00 am on the next Business Day if no delivery-failure message is received. An email that produces a delivery-failure message is not effective and must be resent.
The parties acknowledge that breach of confidentiality or exclusivity may cause harm that damages alone cannot adequately remedy. The innocent party may seek an injunction, specific performance or other equitable relief, in addition to any damages or other remedy available by law. Nothing excludes liability for fraud or liability that cannot lawfully be excluded.
## 9. Termination of discussions
The Buyer or the Sellers may end this letter's negotiations by written notice. Clauses 4, 5, 6, 8 and 11 survive termination for the period stated in them. Ending discussions does not affect rights arising from an earlier breach or any obligation to return or securely destroy confidential material. The Target may retain one archival copy where required by law, regulation or professional indemnity policy, subject to continuing confidentiality.
## 10. No authority and no partnership
No party is an agent of another and no party may bind another, incur a cost for another or make a public statement for another. The parties do not create a partnership, joint venture, fiduciary relationship or employment relationship. Each party must obtain its own legal, tax and financial advice.
## 11. Governing law and jurisdiction
Clauses 4 to 8 and 11 and any non-contractual obligation arising from them are governed by the law of England and Wales. The courts of England and Wales have exclusive jurisdiction, subject to a party seeking urgent injunctive relief in any court with jurisdiction. Electronic signatures and counterparts are permitted.
## Signatures
For Larkspur Creative Group Limited:
Name: Maya Eleanor Brooks, Managing Director
Signature: __________________________
Date: 8 April 2029
For Mosaic Harbour Design Limited:
Name: Daniel Peter Holt, Director
Signature: __________________________
Date: 8 April 2029
Signed by Olivia Jane Mercer:
Signature: __________________________
Date: 8 April 2029
Signed by Thomas William Reed:
Signature: __________________________
Date: 8 April 2029