PLESAE NOTE. THE ITEMS DISCUSSED IN THIS E-MAIL AND THE AGREEMENT ARE VERY IMPORTANT. PLESAE LET US KNOW IF YOU WOULD LIKE US TO HAVE THEM TRANSLATED INTO THAI FOR YOUR BENEFIT OR IF YOU DO NOT UNDERSTAND ANY OF THESE ITEMS.
We received a draft purchase agreement from Dennis Holly, which is the first attachment above.
The second two attachments are a marked and clean version of my suggested changes to his agreement. The marked version (the middle attachment), shows changes from his version.
When reviewing these materials, please note the following:
1. Pursuant to the Court’s order of this morning, the Estate is now the sole owner of the University, and as its personal representative, you are authorized to exercise all rights with respect to those LLC Interests. Hence, you can sell them for the Estate, vote them, etc.
2. The proceeds from the sale of these membership interests will need to be retained by the Estate until the applicable notice periods to other beneficiaries and creditors have expired, which period is expected to end in November. Thus, even if we sell the University now, you may not be able to take those proceeds out of the Estate until it is authorized to do so.
3. The decision of whether to sell at this price and on these terms is a personal decision for you and the Estate. We are not making any recommendation on whether to sell the LLC Interests. Please note that the University was apparently doing quite well at the time of Jerry’s death, as evidenced by the cash it had accumulated in the bank, its increasing number of students, and its progress in seeking to be licensed, accredited and approved for things like grants and loans for students, veterans and others. In light of those factors, it is possible that these interests could be more valuable than the proposed amounts to be paid by Mr. Holly, perhaps many times that value.
4. On the other hand, the University has been effectively dormant during the past few weeks due to the inability to gain access to its bank accounts, access or use certain websites and other matters. Hence, the value of the University could be diminishing rapidly. As time elapses, the possibility exists that competitors with the University may capture some of the University’s business, and professors may cease their affiliation with the University. Moreover, the existing students may seek refunds of their tuition paid if they do not receive the instruction for which they paid.
5. The proposed transaction with Mr. Holly has some advantages to you, including:
a. The purchaser will assume all liabilities of the University, except for any tax obligations the Estate and Jerry owed prior to the closing.
b. The purchase price will reimburse the Estate for any bills it paid for the University between the date of Jerry’s death and the Closing, including any legal bills, lease payments, etc.
c. You get to keep the cash in the bank accounts except for any student tuition received after the date of Jerry’s death unless the student has received its instruction.
d. You do not have to make representations or warranties regarding the business, and only have to make them regarding your ownership of the LLC Interests and your right to sell them.
e. You do not have liability for prior debts or activities of the University.
f. The Holly offer has a quick (2 week) diligence period, and he does not need to borrow money to fund the purchase price.
g. He will put $10,000 down, which is only refundable if you decide not to pursue this transaction (for example, you get a better offer). At the end of the diligence period, he deposits another $15,000, for a total of $25,000. If he walks, the Estate keeps his deposit.
h. Once you sell the LLC Interests, you will not have to be responsible for administering the University or spend additional efforts on its behalf, except to the limited extent the purchaser needs assistance and for which it will bear the expense.
6. We have received possible indications of interest from three other parties (Unmanned Experts, John Minor and Mr. Ferguson), but none of them have as of yet provided a Letter of Intent or otherwise indicated that they are willing to pay more or offer better terms than Mr. Holly. If they do so and you want to accept those offers, you will have to return the deposit.
7. If we wait for those other parties, you may lose Mr. Holly, as noted in his e-mail.
8. The terms of the purchase agreement may change, including after Mr. Holly completes his diligence. However, he has appeared to be fairly flexible in accepting the risks to date, compared with other typical buyers we have encountered in other deals.
9. In light of these items, you could reasonably conclude that it is appropriate for the Estate to sell those LLC interests at this price and on these terms, if you are willing to do so. The choice is yours.
We would be pleased to discuss these items with you and the proposed changes to the Agreement at your convenience.
Very truly yours,