More from Len Krick in the All-Important Stock vs Asset Issue

26 Apr More from Len Krick in the All-Important Stock vs Asset Issue

I delivered my 200,000 pages of documents plus 2,757 e-files by the deadline, last Friday, to the State of Nevada in response to their subpoena. I also decided to “kiss their ring” and amend my listing agreement on another deal I am doing right now (set to close this Friday or a week from today, to a consulting agreement. This will cost me $52,500 in foregone fee, but I can’t slap the State securities Division in the face right now with another stock sale, now that I am under investigation. I have included the amendment language below that we are doing  to satisfy the State (we hope), until a permanent solution can be found. Note that the State specifically DOES NOT recognize the November 2006 “CBI” No-Action Letter.

I am now soliciting all my friends with the following e-mail. If we can find commercial deals that converted to stock deals, then the State will have to take on the commercial real estate people as well. This would be good for business brokers. Here’s what I am sending out. Note that this is the message to my friends, so they already know who I am, etc.:

Dear____:

I am searching for a few “real life” examples of commercial real estate transactions where the Buyer purchased all, or part of, the equity in selling entity, instead of the actual assets being offered for sale. These need to be transactions which were brokered by a Nevada Real Estate Licensee for real property located in Nevada. It doesn’t matter if the real property was unimproved or improved, or if the sale included a going concern.

I have been told that this happens frequently in the sale of:

· shopping centers,

· apartment buildings,

· office buildings,

· warehouses,

· self-storage,

· casinos,

· assisted living (etc.) centers,

· mortuaries, and

· medical clinics.

Sometimes, the selling entity sells a percentage of the equity with a “Buy-Sell Agreement” or a “First Right of Refusal” for the balance of the equity in the selling entity. Sometimes, the person who owns the equity sells their stock, partnership units, or membership units directly to a buyer.

I would really appreciate your assistance in this, or a referral to someone who would know about a deal of this type. Title and escrow companies would be the best source. However, they are not permitted to give me that information.

Let me know if you can point me in the right direction.

Thanks,

Len

SECOND AMENDMENT TO LISTING AGREEMENT

THIS SECOND AMENDMENT TO LISTING AGREEMENT (this “Amendment”) is made and entered into as of the _____ day of April, 2011, by and between XXXXXXXXXXXXX, Inc. (“Seller”) and Sunbelt Business Brokers of Las Vegas, Inc., a Nevada corporation (“Sunbelt”).

RECITALS

A. The parties entered into a certain Listing Agreement on July 7, 2010 (the “Agreement”) in connection with the proposed sale of all or substantially all of Seller’s assets (“Business Sale”). The Agreement was amended on October 27, 2010 (collectively with the Agreement, the “Original Agreement).

B. Prior to the Conversion Date (defined below), Sunbelt had spent in excess of 700 hours assisting Seller in connection with the marketing of Seller’s assets and the identification of potential buyers; and Sunbelt did, in fact, locate a buyer for the assets.

C. Following the location of the buyer, Seller determined not to sell its assets; rather the stockholders of Seller determined to sell their stock in Seller to the buyer (the “Transaction”).

D. The parties desire to amend the Original Agreement to provide that under certain circumstances the services offered by Sunbelt under the Original Agreement will be limited to consulting services, with compensation paid at an hourly rate.

NOW THEREFORE, it is agreed between the parties as follows:

1. All of the above recitals are true and correct and incorporated into this Amendment by this reference.

2. The Original Agreement is hereby amended by adding the following paragraph:

Notwithstanding any other provision of this Agreement, in the event that rather than sell all or substantially all of Seller’s assets, the owner(s) of Seller (the “Owner”) determine(s) to sell all or part of the ownership interests in Seller, the following shall occur and be in effect:

(a) On the date that the Owner determines to sell all or part of the ownership interests in Seller (the “Conversion Date”) services provided to Seller under this Agreement shall be limited to consulting services for which Seller shall pay Sunbelt for such services at the hourly rate of $350 per hour, with payment to be made no later than the closing of the sale transaction.

(b) Following the Conversion Date, Sunbelt shall discontinue any further services to Seller, and Seller shall be obligated to pay Sunbelt for all consulting services rendered up to and including, the Conversion Date, but Seller shall not be liable to Sunbelt for any services provided by Sunbelt following the Conversion Date.

3. On or before the closing of the Transaction, Seller shall pay Sunbelt the amount of $245,000 in full payment of the more than 700 hours in consultations services performed by Sunbelt for Seller under this Agreement prior to the Conversion Date.

4. Except as amended herein, the Original Agreement shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

By: ______________________________     By: _______________________________
Its: ______________________________     Its: _______________________________