November 7, 2014
Exhibit 10.4
November 7,
2014
This Binding Term
Sheet is between the Limited Partners of the 150 CCM Black
Oak LP. The Limited Partners are Xxxxxxx Family Trust II, CCM
Development USA Corp, and American Real Estate Investments, LLC
(“Partners”). Upon execution of this Binding Term
Sheet, the Limited Partnership Agreement (“LPA”)
between the Partners, dated March 20, 2014, will be amended to
incorporate the changes addressed below. All Partners understand
that this Binding Term Sheet is an amendment to the LPA in
accordance with Article XI of the LPA. As the General Partner is
comprised of two limited partners, the signatures of the applicable
limited partners will signify consent of the General
Partner.
CCM
Funding and Bank Refinancing
CCM shall fund the
immediate equity needs of Black Oak, defined as $7,440,697.29, as
outlined below (the “Additional Contribution”). This is
the total funding requirement. Under section 3.2 of the LPA, this
Additional Contribution will accrue interest at a 15% annual rate.
This Additional Contribution will be a loan with a standard
1st lien
note and deed of trust securing the repayment of the Additional
Contribution. The Partners will continue to work towards
refinancing the Additional Contribution with third party bank
financing. If refinancing the
Additional Contribution does not occur by January 1, 2015, CCM
will receive an additional equity interest of 5% (five
percent) in the form of a contribution of 5% from Xxxxxxx Family
Trust II’s current ownership and no contribution from
American Real Estate Investments, LLC. If necessary, CCM will
guarantee repayment of any loan that refinances the Additional
Contribution, but the refinancing must be on reasonable and
competitive lending terms.
Repayment of the
Additional Contribution will occur upon the earliest of: 1)
refinancing with a third party bank loan; or 2) sale of Black Oak
Section One lots (expected in the 2nd Quarter of 2015).
In the event the Additional Contribution is not repaid from third
party bank refinancing or the sale of section one lots, and the
partnership has Distributable Cash, the Additional Contributions
shall be paid as provided in Section 5.1 (2) of the
LPA.
Use
of Proceeds of Additional Contribution
|
Current
Liabilities
|
$76,887.26
|
|
Account
Payable
|
$87,597.09
|
|
A/P F&R
Professional Engineering
|
$70,443.90
|
|
N/P Xxxx
Xxxxx
|
$452,439.00 (Due
10/22/14)*
|
|
N/P Xxxxxxx &
Xxxxxx
|
$496,864.66
(Subject to extension)
|
|
N/P Xxxxxxxx/
Xxxxxx
|
$477,707.05
(Subject to extension)
|
|
N/P
Xxxx
|
$1,159,725.00
(Subject to extension)
|
|
N/P
Revere
|
$2,219,033.33
|
|
Development
Cost
|
$2,400,000.00
**
|
|
|
|
|
Total
Funding
|
$7,440,697.29
|
|
Expected Builder
Contribution
|
$1,300,000.00
|
|
Net
Funding
|
$6,140,697.29
|
* Unless
Extended.
** Development
costs on the above list will be paid as expenses (which shall be
approved by IAD), will be delivered directly to IAD, and will be
paid (when due) directly from an IAD bank account.
Page 1 of
3
Partnership
Contributions
As of November 7,
2014, the Partnership Contributions shall be adjusted to the
following amounts:
|
CCM
|
|
63.5%
|
|
Xxxxxxx Family
Trust II
|
|
28.5%
|
|
AREI
|
|
7.0%
|
|
General
Partner
|
|
1.0%
|
Partnership
Distributions
Shall remain the
same. Return of Initial Capital and Preferred Return are not
affected.
Reimbursements
For partnership
costs that are reimbursable, the reimbursed costs shall be
distributed to the Partners per the above updated percentage
partnership contributions. The Partners acknowledge that the
attached September 12, 2014 pro-forma financial statements estimate
a total of $13,581,115 of reimbursable costs to the partnership.
[This number is comprised of the estimates of $11,776,115 from land
sale to the improvement district (streets, drainage and parks) and
$1,805,000 of Aqua Reimbursements (W & S)].
Development
Costs to Consultants
ARETE will also
receive 3% of development costs and IAD will receive 2% of
development costs. Development costs are costs of the partnership,
excluding the cost to purchase the land.
Oversight
Fees
1)
The consulting and
oversight fees in section 9.17 of the LPA prior to this Binding
Term Sheet shall be waived.
2)
Beginning November
1, 2014:
a.
Consultants
appointed by Xxxxxxx Family Trust and CCM (currently ARETE and
Inter-American Development, LLC respectively) will each begin
receiving a $10,000 per month consulting and oversight fee;
and
b.
Consultant
appointed by AREI shall receive $2,000 per month consulting and
oversight fee.
3)
Consulting and
oversight fees shall only be payable after Outside Financing is
achieved (Outside Financing is refinancing of at least 65% of the
Additional Contribution and excludes financing from CCM, or
Inter-American Development, or affiliates of either); all
consulting and oversight fees shall be deferred until Outside
Financing.
4)
Upon Outside
Financing, the partnership shall pay AREI a one-time $40,000 fee to
represent reimbursement of all AREI expenses incurred on behalf of
partnership and acknowledgement that AREI will receive reduce
consulting and oversight fees for the life of the LPA.
Page 2 of
3
AGREED:
/s/ Xxx
Fogarty______________
/s/ Xxxxx
Weaver______________
Xxxxxxx
Family Trust
II
American Real
Estate Investments, Inc.
/s/ Conn
Flanigan____________
CCM Development USA
Corporation
(signature page for
Binding Term Sheet, November 7, 2014)
Page 3 of
3
