EXHIBIT 10.12
November 30, 1993
Pelican Sound Apartments, Inc.
c/o 1231 Yonge Street
Suite 300
Toronto, Ontario
M4T 2T8
CANADA
Re: Agreement for Purchase and Sale of Pelican Sound
Apartments, 10200 Gandy Boulevard, St. Petersburg,
Florida (the "Project") between Decade Companies Income
Properties, A Limited Partnership ("Buyer") and Pelican
Sound Apartments, Inc. ("Seller")
Gentlemen:
This letter confirms and sets forth the agreements between
Pelican Sound Apartments, Inc. ("Seller"), Decade Companies
Income Properties, a Limited Partnership ("Buyer") and Dunvegan
Mortgage Corporation ("Dunvegan") with respect to the purchase of
the Project by the Buyer. It is understood that on even date
herewith, the Buyer and the Seller have entered into a certain
Purchase and Sale Agreement with respect to a purchase of a 100%
interest in the Project by the Buyer. The following are
additional agreements between the parties hereto:
1. It is understood that the Seller is unwilling to close
on the purchase of a 100% interest in the Project by
the Buyer unless the Buyer pays to Dunvegan at closing
a fee in the amount of $550,000 in consideration of
Dunvegan's assistance and the termination of Dunvegan's
interest in the Project. The Buyer shall pay to
Dunvegan said fee in the amount of $550,000 in the
event the Buyer closes on the purchase of a 100%
interest in the Project. Said fee shall be due only in
the event the Buyer actually closes the purchase from
the Seller of a 100% interest in the Project. It is
understood that the payment of said $550,000 fee is a
fee necessary in the acquisition of the Project and the
Buyer would not be permitted to acquire the Project
without the payment of said fee. Notwithstanding that
the $550,000 fee is being paid to Dunvegan, Dunvegan
agrees that in the event any cash is needed from Seller
to complete the closing with respect to any cost or
expense due by Seller or credit due to Buyer which is
not paid by Seller at closing, Buyer shall be permitted
to deduct said amounts from the fee due to Dunvegan and
the fee shall be deemed reduced by said amount. It is
understood and agreed that this letter agreement along
with the Purchase and Sale Agreement will be assigned
by the Buyer to Associated Bank, Milwaukee as the
Facilitator for the purpose of effecting the Buyer's
like-kind exchange, the Project being the Replacement
Property with respect thereto.
2. In the event the Buyer closes on the purchase of a 100%
interest in the Project, then in consideration of the
assistance to be provided by Dunvegan in renegotiating
the interest rate on the mortgage on the Project in
favor of River Bank America to be taken subject to by
Buyer, if (a) the interest rate of the loan is less
than 7.5% per annum and if (b) the loan is payable in
monthly installments of interest only with no monthly
principal payments required, then Buyer shall pay to
Dunvegan as a fee an amount equal to 25% of the
interest expense savings achieved from a reduction of
the mortgage interest rate below 7.5% per annum. The
interest savings fee shall be payable in quarterly
installments until the Project is sold by the Buyer but
in no event shall the interest savings fee be due for
longer than the Initial Term and shall not exceed in
the aggregate $250,000. The interest savings fee as
and when paid from time to time shall be credited
against the Deferred Fee described in Paragraph 3
below. It is understood that it is expected that the
interest rate shall be reduced to 7% with no principal
amortization for 2 years after closing resulting in a
total fee to Dunvegan for interest-savings of $25,000.
3. In the event the Buyer closes on the purchase of a 100%
interest in the Project, then if the Buyer sells the
Project at any time for more than $13,300,000 (the
"Minimum Amount") or refinances the Project for more
than the Minimum Amount, in consideration of Dunvegan's
assistance and the termination of Dunvegan's interest
in the Project, the Buyer shall pay Dunvegan a total
back-end fee of $250,000, together with interest
thereon as hereinafter provided and reduced by interest
savings payments made pursuant to Paragraph 2 above and
payments in the event of a refinancing as provided
below (hereinafter the "Deferred Fee"). The $250,000
sum (reduced by interest savings payments made pursuant
to Paragraph 2 above and payments in the event of a
refinancing as provided below), shall bear interest at
the rate of 7% per annum, calculated from the fourth
(4th) anniversary of the closing of the Agreement for
Purchase and Sale until the $250,000 fee has been paid
in full, which interest shall be accrued and compounded
annually and be a part of the Deferred Fee. In the
event the selling price or the refinanced loan amount
is less than the Minimum Amount, then the Deferred Fee
shall be reduced by the same difference up to the
amount of the Deferred Fee. In the event that the
aggregate of the sales or brokerage commissions or loan
fees payable to third parties unrelated to the Buyer in
the resale or refinancing of the Project together with
the documentary stamp taxes and intangible taxes and
the premium for the title insurance for which the Buyer
(as seller on the resale or borrower on such
refinancing) is responsible on closing is less than
$345,000, then the Minimum Amount shall be reduced by
the same difference. In the event that the aggregate
of the sales or brokerage commissions or loan fees
payable to third parties unrelated to the Buyer on the
resale or the refinancing of the Project together with
the documentary stamp taxes and intangible taxes and
the premium for the title insurance for which the Buyer
(as seller on the resale or borrower on such
refinancing) is responsible on closing is more than
$345,000, then the Minimum Amount shall be increased by
the same difference. It is understood that in making
all calculations hereunder, the sales or brokerage
commissions shall be deemed to be $200,000
notwithstanding that the actual commissions may be more
or less than said sum. A resale by the Buyer shall
only be made by Buyer to an entity which is unrelated
to Buyer and for not less than a 100% interest in the
Project. It is understood that the Deferred Fee is a
one-time payment (except for amounts of interest
savings payments and amounts from refinancing as
provided below credited against it) which is only due
upon a sale by the Buyer of the Project at a sales
price qualifying for the payment of the Deferred Fee
hereunder, provided that with respect to any
refinancing for an amount qualifying for the payment of
the Deferred Fee hereunder, such amounts paid by the
Buyer to Dunvegan as part or all of the Deferred Fee
shall be credited against the Deferred Fee payable upon
a sale. In the event of a second or subsequent
refinancing by the Buyer, the amount qualifying for the
Deferred Fee shall be only the excess of the new
refinanced amount over the previous refinanced amounts.
Upon a sale of the Project by the Buyer, whether the
full Deferred Fee has been paid or not, Dunvegan's
right to receive any further Deferred Fee shall
terminate (provided that all amounts previously due to
Dunvegan have been paid). The Deferred Fee, if any is
due, shall be payable at the closing of sale of the
Project by the Buyer. In no event shall the total
Deferred Fee (taking into consideration all previous
payments credited to it) exceed $250,000 plus interest
at 7% after the fourth anniversary of closing.
Very truly yours,
DECADE COMPANIES INCOME PROPERTIES, A
LIMITED PARTNERSHIP
By: Decade Companies, General Partner
By: _______________________________
Jeffrey Keierleber, Managing
General Partner
We agree and accept the foregoing terms and agree to be bound
thereby.
PELICAN SOUND APARTMENTS, INC.
Dated: November 30, 1993 By: _____________________________
Rene Gareau, Vice President
DUNVEGAN MORTGAGE CORPORATION
Dated: November 30, 1993 By: _____________________________
Rene Gareau, Vice President
ACKNOWLEDGEMENT
The undersigned hereby acknowledges that notwithstanding
that Decade Companies Income Properties, A Limited Partnership,
is not signing the Closing Statement with respect to the
acquisition of Pelican Sound Apartments, 10200 Gandy Boulevard,
that Decade Companies Income Properties, A Limited Partnership,
agrees to be bound by the provisions thereof.
Further notwithstanding the involvement of Associated Bank
Milwaukee as a qualified intermediary in the acquisition of
Pelican Sound Apartments as the Replacement Property in the like-
kind exchange by Decade Companies Income Properties, A Limited
Partnership, Decade Companies Income Properties, A Limited
Partnership, is bound by that certain Letter Agreement dated as
of November 30, 1993, dealing with, among other things, interest-
savings payments and the "Deferred Fee."
Dated as of the 30th day of November, 1993.
DECADE COMPANIES INCOME PROPERTIES,
A LIMITED PARTNERSHIP
By: Decade Companies,
General Partner
By: _______________________________
Jeffrey Keierleber,
Managing General Partner
ACKNOWLEDGEMENT
November 30, 1993
Pelican Sound Apartments, Inc.
c/o 1231 Yonge Street
Suite 300
Toronto, Ontario
M4T 2T8
CANADA
Re: Agreement for Purchase and Sale of Pelican Sound
Apartments, 10200 Gandy Boulevard, St. Petersburg,
Florida (the "Project") between Decade Companies Income
Properties, A Limited Partnership ("Buyer") and Pelican
Sound Apartments, Inc. ("Seller")
Gentlemen:
The undersigned acknowledges the following as it relates to
that certain Letter Agreement of even date herewith between Buyer
and Seller with respect to the purchase of the Project by the
Buyer.
1. In the event that Dunvegan provides assistance in
renegotiating the interest rate on the mortgage
loan on the property in favor of RIVER BANK
AMERICA, and in the event the Project is sold or
refinanced prior to the first two years after
closing for any amount, the Buyer agrees to pay to
Dunvegan the total fee for interest savings of
$25,000, which would have been earned by Dunvegan
if the property had not been sold or refinanced
prior to the first two years after closing. In
addition, Buyer agrees to pay to Dunvegan any
amounts called for in Paragraph 3 of the Letter
Agreement, if applicable.
2. In the event, the General Partner's interest is
sold, transferred or otherwise compromised, the
Buyer agrees to pay Dunvegan the total back-end
fee of $250,000 together with interest thereon, as
provided in the Letter Agreement, reduced only by
interest-savings payments made pursuant to
Paragraph 2 of the Letter Agreement, and payments
in the event of refinancing, as provided in
Paragraph 3 of the Letter Agreement.
3. Notwithstanding the foregoing, the General
Partners of Decade Companies or either of them may
voluntarily withdraw therefrom and substitute in
their place a corporation having a net worth of at
least $1,000,000. In addition, the General
Partner may incorporate, provided at such time it
has a net worth of at least $1,000,000. In either
of any of these events, the sum payable to
Dunvegan shall not be accelerated.
Dated as of this 30th day of November, 1993.
DECADE COMPANIES INCOME PROPERTIES,
A LIMITED PARTNERSHIP
By: Decade Companies,
General Partner
By: _______________________________
Jeffrey Keierleber,
Managing General Partner
DECADE COMPANIES, GENERAL PARTNER
By: _______________________________
Jeffrey Keierleber,
Managing General Partner