SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE
OF THE COMMISSION ONLY
(AS PERMITTED BY RULE
14a-6(e)(2))
[ ] 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)
Filed By Registrant
(Name of Person(s) Filing Proxy Statement,
if Other Than Registrant)
Dear Limited Partner:
On behalf of Decade Companies Income Properties--A Limited
Partnership ("DCIP"), we are pleased to enclose this proxy
statement relating to a proposed amendment to DCIP's limited
partnership agreement and request your written consent to the
proposed amendment.
The proposed amendment is designed to grant partners
additional rights to receive cash for their DCIP partnership
interests ("Interests") subject to certain terms and conditions
discussed in detail in the enclosed proxy statement. If approved
by a majority of the outstanding Interests, the proposed Fair
Price Provision amendment would become Section 8.6 of DCIP's
limited partnership agreement.
The enclosed proxy statement contains a more complete
description of the terms of the proposed amendment and other
important information. 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 as soon as possible
to DCIP.
Very truly yours,
/s/ Michael G. Sweet
Michael G. Sweet
Partnership Manager
INTRODUCTION
This Proxy Statement, dated as of _____________, 1996, is in
connection with the proposed adoption of a new section 8.6 to its
limited partnership agreement. Decade Companies requests that
you please 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 DCIP as of December 23, 1996. DCIP
will accumulate signed consents until __________, 1997 [30 days
after distribution date]. The Proposed Amendment will become
effective once Consents for a majority of the outstanding
Interests are received (and not revoked) by DCIP.
BACKGROUND
Decade Companies believes that the value of DCIP's
properties (and therefore the Interests) will likely increase
over time, although no assurances can be provided.
While Decade Companies cannot provide assurances of future
performance, the General Partner believes that the economy and
the current state of the real estate market make it more likely
than not that the value of DCIP's properties will continue to
increase. For example, if a capital gains tax reduction is
enacted (as is being discussed), the General Partner believes the
real estate market will continue to improve.
Decade Companies has appreciated and valued your past
confidence and looks forward to the eventual sale of DCIP's
properties at prices that justify the wait. As part of this
process and because the General Partner believes the properties
will more likely than not increase in value, Decade Companies
wants to provide a means for partners who support the General
Partner to receive cash for their Interests in the event Decade
Companies is ever removed as General Partner or a new General
Partner added (collectively, "Different General Partner") and
proposes the adoption of a Fair Price Provision, described below.
Decade Companies hopes to and intends to remain as General
Partner of DCIP through the liquidation of the partnership.
The General Partner desires to provide a way for partners to
obtain the greater of (1) original investment with a 6% annual
return less all cash distributions received to date, or (2) fair
value ("Put Price"), if, without the consent of the Existing
General Partner a Different General Partner is appointed. The
General Partner believes that any partner who does not vote for
the removal of the Existing General Partner should have the right
to sell their Interests and receive the Put Price in cash. Upon
the occurrence of a Triggering Event (described below), a partner
can choose whether to exercise the Put and receive the Put Price
in cash for their Interests. Accordingly, the General Partner
proposes to amend the Limited Partnership Agreement to provide
the partners with such a right, on the terms and conditions
specified below.
The General Partner believes that this is the best way to
balance the interests of all of the partners so that a partner
cannot be forced to accept a Different General Partner without
having a right to receive cash for their Interests.
This proposed amendment arises from the General Partner's
awareness that Wellington Management Corporation has taken some
steps to attempt to remove Decade Companies as DCIP's General
Partner. The General Partner wants to provide partners with a
right to receive cash for their Interests if they disagree with
the addition of a Different General Partner. The Proposed Fair
Price Provision Amendment is intended to ensure that persons
seeking to acquire control of DCIP have sufficient funds to pay
Interest holders for their Interests. Decade Companies intends
to remain as General Partner, but wants to allow certain rights
to its partners in the event of a Different General Partner.
THE PROPOSED AMENDMENT
DCIP proposes to add Section 8.6 to its Limited Partnership
Agreement and provide:
Section 8.6 Fair Price Provision
Upon either (1) the removal of the General Partner (the
"Existing General Partner") or (2) the addition of a
replacement or another General Partner (the "Different
General Partner") without the consent of the Existing
General Partner (the "Triggering Event"), any limited
partner or Existing General Partner who did not vote for or
consent to the Different General Partner shall have the
right to sell their partnership interests to the Different
General Partner at the greater of (a) the original purchase
price increased by six percent per annum less cash
distributions previously received by the partner or (b) the
fair value of the partnership interest (the "Put").
Within 15 days of the occurrence of the Triggering Event,
the Different General Partner must send a notice via
certified mail to all partners who did not consent to the
removal of the Existing General Partner or addition of a
Different General Partner that the Put has become effective
and must allow all partners at least 30 days (and not more
than 60 days) to decide whether to exercise the Put. Within
20 days of the receipt of a notice of exercise of the Put,
the Different General Partner must pay the Put price in cash
to all partners so electing to exercise the Put.
For purposes of this section, fair value shall mean the
value of the partnership interests, whether limited or
general, immediately before the effective date of the
Triggering Event.
If a partner disagrees with the fair value determination
made by the Different General Partner, and a resolution
cannot be effected within 30 days of receipt of the Put
payment, the Different General Partner shall bring a special
proceeding and petition the Court to determine the fair
value of the Interests and pay accrued interest (at 6%
annually) on the determined fair value amount. The
Different General Partner shall bear all the expenses and
costs of the proceeding (including a partner's attorneys'
fees), which expenses and costs shall not be passed through
to or paid by the Partnership unless the Court determines it
is manifestly inequitable and provides otherwise.
EFFECTS OF THE AMENDMENT
DCIP believes that anyone who attempts to become a Different
General Partner will need to be well financed in order to fulfill
the obligations imposed under this proposed amendment. If
adopted, this proposed amendment could make it more difficult to
replace the Existing General Partner. This arises because a
person who proposes to remove DCIP's General Partner or become a
Different General Partner must have sufficient funds to purchase
the Put Interests and any costs incurred in a challenge
contesting the fair value determination. The adoption of the
proposed amendment may have significant effects, positive or
negative, on the ability of limited partners to benefit from
certain transactions which are opposed by the Existing General
Partner. These provisions could be considered to be anti-
takeover devices that could deter a takeover attempt and entrench
the Existing General Partner even if the terms of the proposed
Different General Partner could have been desirable or beneficial
to limited partners. The General Partner believes, after having
considered the above factors, that the benefits of the proposed
Fair Price Provision Amendment outweigh any possible disadvantage
resulting from the additional difficulties associated with
removing or replacing the Existing General Partner.
CERTAIN TAX CONSIDERATIONS
As with any sale of Interests, the receipt of cash for
Interests plus, if applicable, the release of a proportionate
share of DCIP's liabilities to which DCIP's assets are subject in
exchange for the Put Price would be a taxable transaction for
federal income tax purposes and could also be a taxable
transaction under applicable state, local and other tax laws.
Partners are urged to seek specific tax advice on their
particular circumstances before exercising the Put, if it is
adopted and triggered.
Possible Termination of DCIP 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 twelve-month
period, that partnership would terminate for tax purposes. Thus,
if 50% or more of the Interests are sold or exchanged within a
twelve-month period (excluding successive transfers of the same
Interests), including as a result of the Put, DCIP would
technically terminate for federal income tax purposes. If a
termination occurred, the assets of DCIP would be deemed to be
constructively distributed to the partners and then recontributed
by them to DCIP. In general, the adverse tax effects of a tax
termination are as follows:
(i) The tax basis of assets in the hands of DCIP after
termination may be different from (either greater or less
than) DCIP's basis in such assets immediately before the
termination. Accordingly, a limited partner's allocable
share of taxable income or loss of DCIP may be greater or
less than his share of such income would have been if DCIP
did not terminate. Due to accounting and administrative
complexities and expenses, the limited partnership agreement
does not provide for special allocations which otherwise
would minimize this result;
(ii) If the allocable portion of DCIP cash
constructively distributed to a limited partner exceeds the
adjusted tax basis of his Interests at the time of the
constructive distribution, a limited partner will be
required to recognize gain to the extent of such excess.
The gain will be treated as gain from the sale or exchange
of Interests; and
(iii) DCIP's taxable year will end upon termination
and, if a limited partner's taxable year differs from DCIP's
calendar taxable year, the termination could result in the
"bunching" of more than one year of DCIP income or loss in
the limited partner's income tax return for the taxable year
in which DCIP terminates.
It is impossible to advise whether a termination could occur
if the proposed amendment is adopted, because the results would
depend upon factors outside of DCIP's control.
VOTING MATTERS
Under Wisconsin law and Section 14.1 of DCIP's limited
partnership agreement, approval of the proposed amendment
requires the affirmative vote of a majority of Interests. As of
December 23, 1996, approximately 1,361 limited partners hold
13,414.024 Interests, and, therefore, the affirmative vote of
6,707.013 Interests is required to adopt this proposed amendment.
Jeffrey Keierleber, an individual General Partner in Decade
Companies, directly and indirectly, holds 193.04 Interests
(approximately 1.4% of the outstanding Interests) and intends to
vote for adoption of the Amendment. Michael Sweet, an officer in
Decade 80, Inc. and DCIP's Partnership Manager, also holds 3.05
Interests and intends to vote for the proposed Amendment.
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 __________, 1997 [30
days after distribution]. DCIP is not required to and has not
had annual meetings of the limited partners. A consent is also
revocable by any limited partner until the above date by sending
notice to DCIP that the limited partner intends to revoke the
consent 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 DCIP in adopting the Fair Price Provision.
There are no dissenter's rights for limited partners who
disagree with adoption of this proposed amendment.
SOLICITATION EXPENSES
The expenses of preparing, printing and making these proxy
materials and the costs of soliciting consents (which are
estimated at $7,000) will be paid by DCIP. Proxies are being
solicited principally by mail, but proxies may also be solicited
personally by telephone, telecopy, telegraph and similar means by
DCIP and its affiliates. DCIP may also reimburse brokerage firms
and others for their expense in forwarding proxy solicitation
materials to the beneficial owners of the Interests.
The limited partners can help DCIP avoid the necessity and
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.
SECURITY OWNERSHIP
No person of record is known by DCIP to own more than 5% of
the outstanding Interests.
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 proxy 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 Proposed Fair Price
Provision (Section 8.6)
For Abstain Against
[ ] [ ] [ ]
The General Partner 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 North 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.