SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
Decade Companies Income Properties--A Limited Partnership
(Name of Registrant as Specified In Its Charter)
___________________________________
(Name of Person(s) Filing Proxy Statement,
if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
April 26, 2002
Re: Decade Companies Income Properties ("DCIP")
Dear Limited Partner:
Enclosed you will find a proxy statement relating to a
proposed Amendment to the DCIP limited partnership agreement. We
request your vote for the proposed Amendment.
In addition to the "offer to purchase" at $895 per DCIP
Limited Partnership "Interest" that you recently received, we are
proposing an Amendment to DCIP's limited partnership agreement
(the
"Agreement"). This proposed Amendment is designed to grant DCIP
the right to purchase limited partnership Interests on terms no
less favorable than those offered by third parties for Interests,
including a right of first refusal over any Interests subject to
a
third party tender offer. If adopted, this proposed Amendment
will
amend the Agreement and affect the holders as described in the
following proxy statement, which you should read carefully.
We feel that this proposed Amendment is advisable at this time
for two reasons. First, under applicable tax laws your
partnership
may be terminated if greater than 50% of the Interests are
transferred to third parties during a 12 month period. This
proposed Amendment will allow DCIP to liquidate your Interest in
the partnership even though the threshold limitation which would
trigger a termination of the partnership has been reached because
the restriction does not apply to redemptions of Interests by the
Partnership. As a result of the tender offer for $895, we may be
close to those limits and need to restrict transfers, other than
those to the Partnership. This proposed Amendment will allow
liquidity for those who want to transfer if we reach that level.
Second, DCIP is attempting to reduce the number of holders to
fewer
than 300, which would provide DCIP the right to terminate its
registration of the Interests under the Securities Exchange Act
of
1934 ("Exchange Act"). By terminating registration, DCIP
estimates
that it would save approximately $50,000 in legal, accounting and
other related compliance costs per year to your partnership. The
proposed Amendment will reduce the likelihood of having to re-
register under the Exchange Act due to subsequent transfers of
Interests. If approved by a majority of the outstanding
Interests,
the proposed right of first refusal amendment would become
Section
9.1(F) of DCIP's limited partnership agreement. If adopted, this
proposed Amendment will also apply to any transfers and
encumbrances, including gifts and inheritance. Please see the
proxy statement for information on this proposed Amendment. If
adopted, the proposed Amendment may make it less likely that a
third party will bid for the Interests and may otherwise permit
the
General Partner to retain control of DCIP.
The enclosed proxy statement contains a more complete
description of the terms of the proposed Amendment and other
important information, including possible negative effects. You
are urged to read the proxy statement carefully.
Voting only takes a few minutes--please respond promptly. The
General Partner proposes this Amendment to the limited
partnership
agreement and recommends that you vote for it.
Please complete and return your Consents in the enclosed self-
addressed postage paid envelope as soon as possible to DCIP.
Very truly yours,
/s/ Michael Sweet
Michael G. Sweet
Partnership Manager
INTRODUCTION
This Proxy Statement is being distributed on or about April
26, 2002 in connection with the proposed adoption of a new
section
9.1(F) (the "proposed Amendment") to Decade Companies Income
Properties' (the "Partnership") limited partnership agreement.
The
Partnership requests that you complete and return the enclosed
Consent (an extra copy is enclosed) at your first convenience to:
Decade Companies Income Properties--A Limited Partnership
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045
This Proxy Statement and the enclosed Consent are being sent
to all limited partners of the Partnership as of April 26, 2002.
As of that date, there were approximately 13,261.51 Partnership
Interests ("Interests") outstanding. The Partnership will
accumulate signed Consents until May 27, 2002, unless extended by
the General Partner in a written notice to all limited partners.
The proposed Amendment will immediately become effective once
Consents approving the proposed Amendment by a majority of the
then
outstanding Interests as of such date are received (and not
revoked
by holders) by the Partnership. If the number of Interests
outstanding changes because of consummation of the pending tender
offer, we will send you written notice of the number of Interests
then outstanding and the revised number required to approve the
proposed Amendment. A holder can withdraw their vote at any time
until the proposed Amendment becomes effective by giving written
notice to DCIP at the above address of your intent to revoke. If
the proposed Amendment is adopted, we will notify you of its
adoption.
BACKGROUND
The Partnership is proposing an Amendment to the limited
partnership agreement following an "offer to purchase" Interests
that was recently sent to its limited partners. The proposed
Amendment is designed to grant the Partnership the right to
purchase your limited partnership Interests on terms and
conditions
no less favorable than those offered to you by third parties in
exchange for your Interests.
The proposed Amendment would provide the Partnership with an
option to acquire, and subsequently retire, Interests that would
otherwise be transferred to other individuals or entities.
Although this provision, if adopted, would impose some conditions
on the transfer of the Interests, the Partnership feels that it
is
advisable for the following reasons:
Under applicable tax laws, the Partnership is terminated if
greater than 50% of the Interests are transferred to third
parties during a 12 month period. This rule generally applies
to transfers made to entities or individuals other than to the
Partnership. Thus, this proposed Amendment is designed so
that you may have the ability to liquidate your Interests even
though the threshold limitation which would trigger a
termination of the Partnership has otherwise been reached
during the applicable period. As a result of the pending
tender offer, the Partnership may be close to those limits and
may need to restrict transfers in order to avoid a termination
of the Partnership.
The Partnership is attempting to reduce the number of holders
to fewer than 300. This would allow the Partnership to
terminate its registration for the Interests under the
Exchange Act. By terminating registration, the Partnership
estimates that it would save $50,000 annually in legal,
accounting and other related compliance costs.
If the Partnership is facing the threshold limitations for
termination, the Partnership would like to provide limited
partners who wish to liquidate some or all of their Interests
with an alternative to waiting for up to 12 months to transfer
Interests.
If adopted, the proposed Amendment will limit all transfers
and encumbrances, including, without limitation, gifts and
inheritances, unless first offered to the Partnership. This
would be done to eliminate the likelihood that subsequent
transfers of Interests could cause the Partnership to have to
re-register under the 1934 Act.
Under the proposed Amendment, the Partnership would be
provided with the opportunity to purchase Interests from a
limited
partner proposing to transfer such Interests on terms no less
favorable than those stated in a third party offer to purchase
such
Interests. If the proposed Amendment is adopted, the Partnership
intends, but would not be required, to purchase all Interests
that
it would have the right to purchase under the limited partnership
agreement provided the Partnership has sufficient funds or can
borrow funds, if necessary. Depending upon the number of
Interests
offered, these purchases would most likely be made in cash from
available funds of the Partnership.
The Amendment is being proposed to achieve the above stated
benefits as well as because of the Partnership's awareness that
an
unaffiliated third party has taken steps to purchase Interests
from limited partners and has used offering materials which the
Partnership believes contain incomplete and misleading
information.
On March 11, 2002, Everest Properties II and its affiliates
offered
certain limited partners $550 per Interest to acquire Interests
until April 19, 2002.
THE PROPOSED AMENDMENT
The Partnership proposes to add Section 9.1(F) to its limited
partnership agreement and provide:
SECTION 9.1(F) PARTNERSHIP'S RIGHT OF FIRST REFUSAL
PROVISION
Partnership's Right of First Refusal. A Limited Partner may not
transfer, assign, sell, mortgage or otherwise encumber all or any
part of his or its Interests or other economic interest as a
Limited Partner in the Partnership, its capital, profits and
losses
unless and until the Limited Partner has first offered to sell
all
of his or its Interests to the Partnership at a price equal to
the
price offered in a bona fide offer for such Interests by a third
party, or the weighted average selling price of Interests sold
solely to the Partnership during the last 12 months, whichever is
greater. The Limited Partner shall notify the General Partner in
writing of the Limited Partner's intention to transfer the
Interests within 10 days of receiving a bona fide offer from a
third party for such Interests or deciding to transfer such
Interests. The notice shall set forth the terms and conditions of
any bona fide offer from a third party. Within 30 days of
receiving such notice, the General Partner shall notify the
Limited
Partner in writing as to whether it will exercise its right under
this paragraph 9.1(F) to purchase the Limited Partner's Interests
and acquire all of such Limited Partner's right, title, interests
and claims. Any purchase of Interests by the Partnership under
this paragraph 9.1(F) shall be completed within 90 days of the
General Partner's receipt of the Limited Partner's notice
provided
under this paragraph 9.1(F). If the Partnership does not
exercise
its right to purchase, then the transfer to a third party may
proceed, provided it is consummated within 15 days of notice from
the Partnership to the Limited Partner on the exact terms
described
in the Limited Partner's notice to the Partnership. If a bona
fide
third party offer contains consideration other than cash, the
Partnership, in matching the terms of a bona fide third party
offer, may elect to pay the portion of the entire amount of
consideration in cash at the weighted average selling price of
Interests sold solely to the Partnership during the last 12
months.
The parties agree to execute any documents required to implement
this provision and effect any transfer.
POSSIBLE NEGATIVE EFFECTS OF THE PROPOSED AMENDMENT
If adopted, this proposed Amendment could decrease the market
value of your Interests. This may arise because persons who
propose to purchase Interests from limited partners may be
deterred
from making an offer because of the Partnership's proposed
Amendment and right to purchase the Interests upon the same terms
and conditions as their offer. The adoption of the proposed
Amendment may significantly affect the ability of limited
partners
to benefit from certain transactions which are opposed by the
General Partner. It could be considered to be an anti-takeover
device that could deter a takeover attempt and entrench the
existing management. Merely by way of example, the proposed
Amendment may deter others from making offers because of the
Partnership's right of first refusal and may also limit the
ability
of others to undertake a third party tender offer. The proposed
Amendment may also reduce the price and liquidity of Interests
because others may decide not to make offers for your Interests.
In addition, if adopted, it could result in the use of the
Partnership's cash reserves and potentially, borrowings, to fund
repurchases. Greater borrowings by the Partnership may give rise
to unrelated debt-financed income which would increase unrelated
business taxable income and which could negatively impact tax-
exempt limited partners. The General Partner believes, after
having considered the above factors, that the benefits of the
proposed Amendment outweigh the possible disadvantages. The
General Partner has no present plans to propose other amendments
to
the limited partnership agreement, but may do so in the future.
CONFLICTS OF INTEREST
In proposing the Amendment, the Partnership and its General
Partner may be viewed as having a conflict of interest in that
adoption of the proposal would make it less likely that the
General
Partner could be removed and replaced and/or that a different
property manager would be selected for the Partnership's
properties. Further, if the Partnership purchases Interests as a
result of the proposed Amendment, the General Partner, and
limited
partners, including Mr. Jeffrey Keierleber, an affiliate of the
General Partner, who do not sell their Interests to the
Partnership, will acquire a greater share of the equity, profit,
losses and distributions of the Partnership. As reported in
periodic information and financial statements provided to the
limited partners, and as disclosed in the Partnership's offering
prospectus and limited partnership agreement, the General Partner
and certain of its affiliates derive certain fees in return for
providing specified services to the Partnership, including a
property management fee. In addition, depending upon the
financial
success of the Partnership, the General Partner may be entitled
to
a portion of the profits upon the winding up of the Partnership
and
sale of its properties ("Back-end Fee"). Any such Back-end Fees
to
the General Partner are subordinated to a return to the limited
partners of their initial capital investment plus six or ten
percent per annum (for certain fees), less cash distributions
previously received. A repurchase of Interests by the
Partnership
will reduce the number of outstanding Interests and thus the
dollar
amount of return to which the General Partner's Back-end Fee is
subordinate.
CERTAIN TAX CONSIDERATIONS
The sale of Interests and, if applicable, the release of a
proportionate share of the Partnership's liabilities to which the
Partnership's assets are subject, are a taxable transaction for
federal income tax purposes and would also likely be a taxable
transaction under applicable state, local and other tax laws.
Limited partners are urged to seek specific tax advice on their
particular circumstances before transferring their Interests.
Adoption of the proposed Amendment should not result in any tax
consequences.
POSSIBLE TERMINATION OF THE PARTNERSHIP FOR FEDERAL INCOME TAX
PURPOSES
In general, the Internal Revenue Code, as amended, provides
that if 50% or more of the total capital and profits interests in
a partnership are sold or exchanged within a single 12 month
period, the partnership will terminate for tax purposes. Thus,
if
50% or more of the Interests are sold or exchanged within a 12
month period (excluding successive transfers of the same
Interests), the Partnership would technically terminate for
federal
income tax purposes.
If a termination occurs, the Partnership is deemed to
contribute all of its assets and liabilities to a new partnership
in exchange for an interest in the new partnership, and,
immediately thereafter, the terminated partnership is deemed to
distribute interests in the new partnership to the remaining
partners in proportion to their respective interests in the
terminated partnership in liquidation of the terminated
partnership. In general, the following adverse tax consequences
may result:
(i) The Partnership's taxable year will end upon a
termination and, if a limited partner's taxable year
differs from the Partnership's calendar taxable year, the
termination could result in the inclusion of more than
one year of Partnership income or loss in the limited
partner's income tax return for the taxable year in
which the Partnership terminates.
(ii) The treatment of Partnership liabilities is
uncertain.
The applicable Regulations provide no guidance as to the
effect of the constructive contribution to the new
partnership of the liabilities of the terminated
partnership. The Code generally provides that the
reduction of liabilities of a partnership is treated as
a distribution of money to the partners in proportion as
they share in those liabilities, resulting in a reduction
in the basis of their partnership interests, and in the
realization of gain if the deemed distribution exceeds
the adjusted basis in their partnership interests.
However, the reduction in the partners' shares of
liabilities of the terminated partnership should be
offset by their shares of the liabilities of the new
partnership by reason of the distribution of the
interests in the new partnership. Unfortunately,
applicable law does not specifically provide for this
treatment. Accordingly, there can be no assurances that
gain would not be realized if the deemed distribution of
money exceeded a limited partner's adjusted basis in his
Interest.
It is not possible to predict whether a termination could
occur if the proposed Amendment is adopted, because the results
would depend upon factors outside of the Partnership's control.
If
adopted, the proposed Amendment is designed to minimize the
likelihood of such event.
VOTING MATTERS
Under Section 14.1 of the Partnership's limited partnership
agreement, approval of the proposed Amendment requires the
affirmative vote of a majority of Interests and consent of the
General Partner (which has been received). As of April 8, 2002,
approximately 1129 limited partners hold 13,261.51 Interests,
and,
therefore, the affirmative vote of 6,630.76 Interests is required
to adopt this proposed Amendment. Jeffrey Keierleber, an
individual General Partner in Decade Companies, directly and
indirectly, currently holds 3,209.47 Interests (approximately
24.2%
of the outstanding Interests) and intends to vote for adoption of
the proposed Amendment. Michael G. Sweet, an officer in Decade
80,
Inc., a General Partner of Decade Companies, and Partnership
Manager, holds 8.05 Interests and also intends to vote for the
proposed Amendment. In the last two years, Jeffrey Keierleber
has
purchased 858.09 Interests and Michael G. Sweet has not purchased
any Interests. Neither Jeffrey Keierleber nor Michael G. Sweet
has
sold any Interests in the last two years and, except for the
pending tender offer by Mr. Keierleber and the Partnership,
neither
are a party to any contract, arrangement or understanding with
respect to any Partnership Interests.
Each limited partner is entitled to one vote for each Interest
held of record by such holder. No meeting of the limited
partners
is required or will be held and the General Partner intends to
accept Consents until May 27, 2002, unless extended or the
proposed
Amendment is adopted by a majority of the Interests. The
Partnership is not required to and has not had annual meetings of
the limited partners.
A Consent is revocable by any limited partner until the above
date, or any extension thereof, by sending notice that the
limited
partner intends to revoke the Consent to the Partnership at:
Decade Companies Income Properties--A Limited Partnership
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045
No matter how many Interests you may own, we urge you to
support the Partnership in adopting the Partnership's proposed
Amendment.
There are no dissenter's rights for limited partners who
disagree with adoption of this proposed Amendment.
REVOCATION OF THE AMENDMENT ONCE ADOPTED
Under Section 14.1, amendments to the limited partnership
agreement require the consent of the General Partner and limited
partners. If the proposed Amendment is adopted, it could only be
revoked with the consent of a majority of Interests and consent
of
the General Partner. The General Partner does not intend to
consent to a revocation. Under such circumstances, in order to
revoke the proposed Amendment, the General Partner would have to
be
removed, which could be expensive and require the payment to the
General Partner for its general partnership interest and would
require compliance with the terms of the limited partnership
agreement.
RECENT EVENTS
The Partnership and Mr. Keierleber have recently begun a
tender offer for up to 7,700 Interests. If the offer is fully
accepted, Mr. Keierleber will own approximately 77% of the
Interests and would vote any acquired Interests to approve the
proposed Amendment and would not vote to remove the General
Partner.
SOLICITATION EXPENSES
The expenses of preparing, printing and mailing these proxy
materials and the costs of soliciting Consents (which are
estimated
at $10,000, exclusive of any expenses associated with salaries or
wages of officers who may participate in the solicitation
efforts)
will be paid by the Partnership. Consents are being solicited
principally by mail, but Consents may also be solicited
personally
by telephone, telecopy, telegraph and similar means by the
Partnership and employees of its affiliates. The Partnership may
also reimburse brokerage firms and others for their expense in
forwarding proxy solicitation materials to the beneficial owners
of
the Interests.
It is anticipated that any solicitation for this proposal will
be undertaken by Mr. Jeffrey Keierleber and Mr. Michael G. Sweet,
General Partner of Decade Companies and Partnership Manager of
the
Partnership, respectively. Jeffrey Keierleber is also the sole
director and shareholder of Decade 80, Inc., a General Partner of
Decade Companies. Both Mr. Keierleber and Mr. Sweet maintain
offices at Decade Companies, 250 Patrick Boulevard, Brookfield,
WI
53045. It is not anticipated that any specially engaged
employees,
representatives, or other persons will be employed to solicit
Consents. To date, the Partnership estimates that it has
incurred
$4,000 in costs and expenses in connection with this solicitation
and preparing the proxy statement.
No participant in the solicitation has been convicted in a
criminal proceeding.
The limited partners can help the Partnership avoid the
additional expense of further solicitations by promptly returning
the executed Consent. The enclosed addressed envelope requires no
postage if mailed in the U.S. and is intended for your
convenience.
LEGAL BASIS FOR PROPOSED AMENDMENT
DCIP believes it can adopt this proposed Amendment, including
its applicability to all transfers and encumbrances, including
without limitation, gifts and inheritance, under Wis. Stats.
Chapter 179 and the DCIP limited partnership agreement.
Wisconsin
law does not prohibit a limited partnership from imposing
limitations on transfers (even by inheritance or gift) and
encumbrances and DCIP believes the proposed Amendment will permit
additional flexibility for the reasons stated in the proxy
statement. The limited partnership agreement permits amendments
with the consent of the General Partner and holders of a majority
of Interests.
POSSIBLE IMPACT OF THE TENDER OFFER
The Partnership and Jeffery Keierleber have begun a tender
offer for Interests at $895 per Interest. The Partnership will
purchase the first 3,000 Interests and Mr. Keierleber will
purchase
the next 4,700 Interests. Such purchase may make it easier for
Mr.
Keierleber, who owns approximately 24.2% of Interest before the
tender offer, to approve the proposed Amendment.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the persons who, as of April 24,
2002, were known by the Partnership to be the beneficial owners
of
more than 5% of any Partnership Interests. The following
information is based on the Partnership's list of holders.
Title of Class
Name and Business Address of
Beneficial Owner Amount and Nature of
Beneficial Ownership
Percent of Class
Limited Partnership
Interest Mr. Jeffrey Keierleber(1)
250 Patrick Blvd.
Brookfield, WI 53045
3,209.47 (2)
24.2%
Limited Partnership
Interest Mr. Michael G. Sweet
250 Patrick Blvd.
Brookfield, WI 53045
8.05
0%
Limited Partnership
Interest Mr. Steven Cooper
250 Patrick Blvd.
Brookfield, WI 53045
0(3)
0
Limited Partnership
Interest Decade Companies (1)
250 Patrick Blvd.
Brookfield, WI 53045
0
0
Limited Partnership
Interest Decade 80, Inc. (1)
250 Patrick Blvd.
Brookfield, WI 53045
0
0
General Partnership
Interest Mr. Jeffrey Keierleber(1)
250 Patrick Blvd.
Brookfield, WI 53045
1
100%
(1) The General Partner of Decade Companies Income Properties
is Decade Companies, a Wisconsin general partnership. Mr.
Keierleber is a General Partner in Decade Companies along with
Decade 80, Inc. Mr. Keierleber owns 100% of the outstanding
shares
of Decade 80, Inc.
(2) The amount is before any purchases in the pending tender
offer.
(3) Mr. Cooper is a key employee of Decade Properties, Inc.,
which provides services to the Partnership.
DECADE COMPANIES INCOME PROPERTIES
CONSENT
THIS CONSENT IS SOLICITED ON BEHALF OF
DECADE COMPANIES INCOME PROPERTIES
The undersigned hereby appoints Michael G. Sweet and Jeffrey
Keierleber with the power to act alone and with full power of
substitution and revocation to represent and vote, as specified
below, all Interests which the undersigned is entitled to vote.
The Interests represented by the Consent will be voted
concerning the adoption of the proposed Amendment as indicated
below. The undersigned hereby acknowledges receipt of the proxy
statement.
Proposed Amendment: To adopt the Partnership's Right of First
Refusal Provision. (Section 9.1(F))
For Abstain Against
[ ] [ ] [ ]
THE PARTNERSHIP RECOMMENDS THAT YOU VOTE FOR THE PROPOSED
AMENDMENT.
[Name of Owner and Number of Interests Owned]
Date _______________ ______________________________
*Signature
Date _______________ ______________________________
*Signature (if jointly held)
Please check a box and sign, date and return this Consent to:
Decade Companies Income Properties
Suite 140
250 Patrick Boulevard
Brookfield, WI 53045
*Please sign as name appears herein. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee
or
guardian, please give full title as such and sign. If a
corporation, please sign in full corporate name by authorized
officer. If a partnership, please sign in partnership name by
authorized person.