The due diligence time is in default. Estonian Life
16 Dec 2017 EL (Estonian Life)
Raivo Remmel, President, Estonian House Ltd.
December 5, 2017
Re: Resolution of the Board of Directors to Accept the project proposal by the 3 Orgs.
The due diligence time is in default.
On April 25, 2017 the board of Estonian House presented the shareholders with a resolution that would enable the board to enter into an agreement to sell the Estonian House to finance the proposed Estonian Centre on Madison Avenue. The resolution was contingent on the terms of the project proposal presented to the board by the three orgs dated February 24, 2017.and appended to the resolution as the attached Schedule “A”. (Project Proposal).
The project proposal set out the key Milestones for the project. The board attached an urgency to meeting these target dates for the project to advance. Shareholder approval had to be received prior to the end of April 2017 if the conditional offer of purchase of 9 Madison Avenue was to proceed. The board maintained that these dates were fixed and could not be deferred. If the shareholders did not approve the resolution, then the agreement to purchase 9 Madison Avenue would lapse.
Moreover, the resolution was presented as an agreement to proceed with the “due diligence” for the Madison Proposal and not an agreement to sell the Estonian House. The Due Diligence Period was spelled out in Schedule “A” with a completion date of November 2017.
The due diligence was required to establish that the Estonian Cultural Centre on Madison would be financially self-sufficient and that sufficient funds would be available from the sale of Estonian House to fund the project on Madison Avenue.
Schedule “A” states the conditions for the sale of Estonian House
1. If the due diligence is not satisfactory to all four organizations, then the sale of Estonian House does not close.
2. If the proceeds from the sale of Estonian House are insufficient to proceed with the project, then the purchase of 9 Madison Avenue does not close
3. Condition of sale to include leaseback to community to allow for the 1 move requirement.
Schedule “A” also states that the closing date for the sale of 9 Madison Avenue is December 2017.
Schedule “A” in fact lays out the terms and conditions of proceeding with the sale of Estonian House as any agreement for the Purchase and Sale of real property.
The Madison Project team has made it clear that they have not completed the “due diligence” which was to be completed by November. There is nothing for the four organizations to evaluate or approve.
The resolution as approved by the shareholders on April 25, 2017 is therefore in default. i.e. that we have not been able to complete the due diligence by the date specified in the agreement.
Through no fault of your own, the mandate given to the Board of Estonian House on April 25, 2017 has lapsed, and unless amended it will be null and void.
The board cannot unilaterally change the terms of the agreement/contract presented to the shareholders. This must be done by mutual consent.
Should the Board of Estonian House wish to continue with the Madison Project it should seek the approval of the shareholders on the same basis as the original resolution. It is up to you, to either call a special meeting of the shareholders to ratify an amendment or abandon the project.