EXHIBIT 10.17
September 24, 1998
Xx. Xxxx X. Xxxxxx
Beltway Management, Inc.
000 Xxxxxxxx Xxxxxx, #000
Xxxxxxxxxxxx, Xxxxxxxx 00000
RE: The Liberty Housing Partners Limited Partnership Portfolio
Dear Xxxx:
This letter serves to formalize our Agreement regarding your role in liquidating
the Liberty Portfolio. The intent of the parties hereto is to hire you as a
consultant to Liberty Housing Partners Limited Partnership acting as the Agent
of Liberty with Xxxxxxx Xxxxxx and Xxxxx Xxxxxx' direct involvement to liquidate
the Liberty Portfolio on terms as favorable to Liberty and Liberty's investor
partners as possible.
It is understood that in addition to your services, you will also engage Xxxxx
Xxxxxx (Attorney from Holland and Xxxxxx) and any other third parties that are
necessary to facilitate the liquidation. The terms of this agreement are as
follows:
Duties:
1. Negotiate the sale, transfer, or workout of all properties in
the Liberty portfolio.
2. Negotiate with property purchase money note holders.
3. Take any actions necessary to liquidate or workout the Liberty
portfolio.
4. Hire an outside accounting firm to perform a current valuation
on all properties in the portfolio in as-is condition and to
review each property's financial performance for propriety of
related party activity. The firm of Grubman and Associates has
hereby been approved to provide these services.
5. All of items 1-3 are subject to approval of TNG Properties,
Inc. acting as general partner of Liberty Housing Partners
Limited Partnership.
Term: The initial term shall be two (2) years and will automatically renew
thereafter on an annual basis unless either party notifies the other of their
intent to terminate this agreement with at least ninety (90) days written notice
prior to the automatic renewal. In addition, this agreement shall be subject to
termination with 60 days written notice by either party.
Compensation:
1. All interest and principal related to the Linden Park
Associates purchase money notes held by Liberty previously
held by Xxxxxxx and Xxxxxxxx (Linden Park Notes) shall be
placed in a trust under joint control of Xxxx X. Xxxxxx and
Liberty.
2. On a monthly basis Xxxx X. Xxxxxx, Xxxxx Xxxxxx, and any third
party that has performed services shall be compensated from
funds on deposit in this trust account for their time and
expenses. On a monthly basis Xxxx X. Xxxxxx shall only be
compensated for his expenses. Prior to payment of any costs,
invoices must be submitted for approval by TNG Properties,
Inc., approval not to be unreasonably withheld. If invoices
are not approved by TNG within 30 days after submission, the
invoices shall be deemed as approved.
3. If the services of Xxxx X. Xxxxxx shall be terminated by
Liberty all remaining funds in the trust account shall be
split 50/50 with Liberty including all principal and interest
from the Linden Park Notes whether paid or not, provided that
Xxxx X. Xxxxxx has performed reasonable efforts and has
provided Liberty with plans for at least fifty percent of the
portfolio. At the time of execution of this agreement the
principal and interest of the Linden Park notes shall be
deemed as being in the trust account.
4. For any properties liquidated, materially disposed, sold, or
entered into a workout Xxxx X. Xxxxxx shall receive a pro-rata
portion of the principal and interest in the trust account.
For purposes of this agreement "pro-rata" shall include the
number of units in each complex, including Linden Park,
divided by the total number of units. Upon completion of the
duties outlined herein, any remaining principal interest, and
other cash deposits remaining in the trust account shall be
paid to Xxxx X. Xxxxxx.
5. Fifty percent (50%) of the fee will be earned and paid upon
submission of a project's reasonable plan acceptable to TNG
Properties, Inc. The remaining 50% is earned and paid as each
closing or workout occurs. If Xxxxxxx rejects any project's
liquidation plan, disposition, sale, or workout plan which is
reasonable and presented in good faith then Xxxx X. Xxxxxx
shall receive the first 50% of the fee and no further fee will
be due. It shall be deemed that Xxxx X. Xxxxxx has materially
performed or completed the liquidation, disposition, sale, or
workout of each project only upon closing of a project or
workout on a plan as substantially presented by Xxxx X.
Xxxxxx.
6. If it is necessary to litigate with note holders or other
third parties, then Liberty shall have the final determination
regarding litigation. However, the cost of litigation shall be
determined and that cost shall be outside the scope of this
agreement.
7. As further compensation and a part of the liquidation plan, it
is agreed that the Liberty interest in Linden Park Apartments
(i.e. all remaining General and Limited Partnership interests
so that Xxxx X. Xxxxxx owns 100% of Linden Park Apartments)
shall be transferred or sold by Liberty to Xxxx X. Xxxxxx or
his designee at a future date to be determined as provided
herein. Xxxx X. Xxxxxx shall have the right to acquire the
remaining interest in Linden Park Apartments at any time over
the next three and one-half (3 1/2) years. The purchase price
with imputed interest shall initially be $400,000 during the
first eighteen (18) months of this agreement and that purchase
price shall increase at the rate of $100,000 per year
thereafter. This initial purchase price is based upon a
negotiation of current value, after repayment of debt,
purchase money notes and all other liabilities. The closing
date on such a purchase shall be mutually agreed, but not
later than three (3) months after the maturity of the Purchase
money notes, provided that the Purchase Money Notes have been
extended for that three (3) month period by all of the
Purchase Money Note holders. We are pleased to be working
together in this liquidation plan. Provided you are in
Agreement with this letter, please sign as provided below.
Sincerely,
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President and CEO
AGREED:
/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx Date 9-25-98
