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Strictly private and confidential

To: [Insert seller name]

[Insert potential seller address] (the Seller)

FAO: [insert name of relevant contact at the seller]

Date: [insert date]

Subject to contract

Heads of terms (also known as a letter of intent, offer letter, term sheet or memorandum of understanding) set out, in a short document, a broad outline of the parties' expectations, understanding and agreement of the key terms of the proposed transaction which they have agreed in principle. Where used, heads will be signed at the beginning of the transaction as soon as the parties agree key terms and before the buyer incurs costs in conducting its due diligence and negotiating the transaction documents. While the heads will not compel the parties to conclude the transaction on the stated terms, or even at all, they are intended to establish, in principle, the main commercial terms of a deal.

There is no standard format for heads of terms and they can either take the form of a letter (as is common and is provided here) or an agreement. Either party can prepare