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outstanding indebtedness of NMG, it was only a proposal, and it
cannot be construed as a legally operative offer for the purchase
of all the issued and outstanding shares of NMG. To that effect,
the letter of intent states:
This letter represents general intentions of the
parties and, except for paragraphs 4, 6 and 7, does not
purport to be and does not constitute a binding
agreement among the Buyer, Sellers and the Company, and
except as set forth in paragraphs 4, 6 and 7, none of
us will have any legal obligation to any other
hereunder until and unless the Agreement is executed by
the Exclusivity Date.
If you believe the foregoing reflects our
understanding, please so indicate by signing below.[15]
Further, despite respondent’s contentions otherwise, the
individuals from NMG who accepted and agreed to the letter of
intent did not accept an offer for the purchase of their stock
interests. Those individuals accepted and agreed to the letter
of intent (essentially to those sections dealing with
investigations by WCP, public disclosure, and an exclusivity
period) in their capacities as officers of NMG, and, in the case
of Ewel Grossberg, as chairman of NMG’s board of directors. They
15As the quoted matter above suggests, there were certain
parts of the letter of intent which constituted legally binding
obligations. However, those items represented typical
preliminary obligations which might appear in purchase and sale
negotiations. Par. 4 deals with WCP investigation rights, par. 6
deals with public disclosure of the proposed acquisition, and
par. 7 establishes an exclusivity period in favor of WCP with
respect to the purchase of NMG’s stock and prohibits any
distributions to its shareholders or other payments, loans, or
distributions out of the ordinary course of NMG’s business.
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