Overview: In this week's assignment, you are asked to review and revise a letter of intent. It establishes the preliminary understandings of the parties about a possible deal without fully committing the parties to close the deal before each side has done its due diligence. Among the questions you will have to decide is whether the letter of intent should be legally binding as to certain terms and, if so, which terms should be binding and which should not. Instructions: This is an email from your client, Elan Fashion, Inc.: Dear Lawyer: We need your help on another deal. This is for a joint venture our company wants to enter into with Wendy Ellis Designs (WED). The joint venture will be operated as a limited liability company formed under California law. Its purpose will be to design, manufacture, and sell jewelry containing semi-precious stones in North America. Elan Fashion, Inc. will contribute $ 1 million USD to the capital of the joint venture company. Wendy will license her name and her existing proprietary jewelry designs to the joint venture company and will work for the joint venture company as head of design for at least two years. Elan Fashion is willing to consider making loans to the company in the future, but that decision would be up to Elan Fashion's management. We've already signed a nondisclosure agreement with WED. We haven't started our due diligence yet, so we're not yet ready to commit fully to doing a deal. However, because Wendy Ellis is a very desired designer, we do want to make sure she is only negotiating with us and not talking to other suitors at the same time. In addition, because there's still a lot of fact-finding to be done, even after the parties have signed the letter of intent, we don't want either party to make an announcement until we have signed a final, binding contract. Attached is a rough draft letter of intent that my assistant has put together.

Please help me with each of the following three parts:

Part 1: Is there anything missing from the letter of intent my assistant prepared, or are there any terms you think need to be changed or removed? I'm a little concerned that the letter of intent may not be exactly accurate, so please check it carefully.

Part 2: Do you have any questions about the letter of intent?

Part 3: Please mark up the letter of intent with whatever terms you think are advisable. Please redline the document (by using track changes), so I can see what you are suggesting. Rewrite it if you think that's necessary. If there are provisions you recommend we add, please add the entire provision. Thanks. Sincerely, Brad Elan, President of Elan Fashion, Inc. LETTER OF INTENT:

Letter of IntentThis letter of intent sets forth our understanding of the joint venture (the "Joint Venture") between Elan Fashion, Inc. ("Elan") and Wendy Ellis Designs, Inc. ("WED"). The principal terms and conditions of the Joint Venture will include the following: The Joint Venture will be operated as a limited liability company. Elan will contribute $1million to the Joint Venture. WED will license the name of Wendy Ellis and will provide Wendy Ellis's services to create jewelry pieces for the Joint Venture WED and Elan each will own 50% of the Joint Venture. The name of the Joint Venture will be "Ellis-Elan Jewelry Design". WED will loan funds to the Joint Venture as determined is needed by the board of managers (the "Board") of the Joint Venture. WED and Elan will each appoint a manager of the Joint Venture. Elan will appoint the officers of the Joint Venture.Wendy Ellis Designs, Inc.Elan Fashion, Inc.

By:________________________________

By:___________________________ Wendy Ellis, President Brad Elan, President