My Background Continued...8

Step 12

One of the partners purchasing the warehouse had a personal loan with the Seller as well. The partner had loaned the seller a large sum of cash about five years prior and had a personal note. The note charged interest but had no terms for repayment. The note holder had been asking for repayment for the last two years with no result.

We had previously agreed that this would not be inserted into the purchase/sale as the note was a personal note between the two people and the purchase was between two companies. Each of the investors had invested personally or through their own company to buy 25% of the newly formed company in step 8, and this new company was the purchaser.

In comparison, the note that we the group of investors, had drawn up in Step 2-3, specified we would use our note to purchase this warehouse in exchange for a release on any claims in our Kansas City deal.

This personal note was supposed to be handled after the completion of the sale, but at the last moment, the partner with the note wanted it inserted and used as a credit on his portion of the payment for the warehouse.

I thought about the possibility of the purchase failing if that partner pulled out and refused to proceed unless his note was included. I had to call the seller and see if there was enough equity to complete with this new twist. I was not sure at all as there were two mortgages, a CPL, our note, and the one investor's note, all to be paid (or discounted) from the proceeds from the sale. The seller believed it could still complete.

I did not ask for all of the partners to approve of this insertion, but worked to see if it could be done, and had to discuss how to insert a non related personal note into a purchase between two companies.

I had to scramble here as that partner had hired a separate lawyer to advise him in collecting/getting the note repaid. After paying that lawyer for several years, and doing nothing, that lawyer had an argument with our company's lawyer. I suppose it was because our lawyer told that investor and his lawyer that he (out lawyer) would be charging that investor separately to discuss the issue with the seller and his lawyer and then insert this into the purchase documents.

Amazingly our lawyer was able to get it worked out and got the revised purchase documents completed with the notes as subjects for acceptance by the seller to be used in the statement of adjustments and sent the documents to the seller.