Exhibit 10.8
AGREEMENT OF
LIMITED PARTNERSHIP OF
HUMBLE SPRINGS, LTD.
THIS AGREEMENT
OF LIMITED PARTNERSHIP (the "Agreement") is made and entered
into as of March 12, 2003, by and between NEHC PROPERTIES, INC., a
Texas
corporation ("NEHC"), whose address is 340 North Sam
Houston Parkway East #140
Houston, Texas 77060 as general partner ("General
Partner"), and each of the
individuals or entities whose names are set forth on Exhibit "A"
attached to
this Agreement as limited partners ("Limited Partners") and have executed
multiple originals of this Agreement.
ARTICLE I
ORGANIZATION OF THE PARTNERSHIP
1.1 FORMATION OF LIMITED PARTNERSHIP.
The parties hereby form, pursuant to
the Texas Revised Limited Partnership
Act, Article 6132a-l of the Revised Civil
Statutes of the State of Texas, (the "Act"), a Limited Partnership (the
"Partnership"). The rights and liabilities of the
Partners shall be as provided
for in this Agreement and in the Act.
1.2 CERTIFICATE OF LIMITED
PARTNERSHIP. The parties shall execute and file
a Certificate of Limited Partnership (the "Certificate"),
and other relevant
documents ancillary to the Certificate, with the office of the Secretary
of
State of the State of Texas as required by the Act, and take all other
appropriate action to comply with all legal
requirements for the formation and
operation of a limited partnership under the Act.
1.3 PARTNERSHIP NAME. The name of the
Partnership shall be HUMBLE SPRINGS,
LTD. if considered necessary in the opinion of counsel to the
Partnership to
preserve the limited liability of the Limited
Partners, the business conducted
by the Partnership shall be conducted
under that name or under such other name
or names as the General Partner may select and
might be necessary to preserve
such limited liability.
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1.4 LOCATION OF OFFICE. The principal business
office of the Partnership
shall be at 340 North Sam Houston Parkway East #140 Houston, Texas 77060
1.5 PURPOSE OF PARTNERSHIP. The purpose of the Partnership shall
be as
follows: To buy, develop, manage and sell, as appropriate, the Property
(hereinafter defined) acquired by the Partnership, including
improvements and
personal property located thereon.
1.6 TERM OF
PARTNERSHIP. The Partnership shall become effective on the date
that the Certificate of Limited Partnership
of this Partnership is duly filed in
the office of the Secretary of State of the State of
Texas, and shall remain
effective until December 31, 2070, or until
such earlier date as the Partnership
is dissolved pursuant to the Act or the provisions of this
ARTICLE II
DEFINITIONS
The following terms used in this Agreement shall, unless otherwise
expressly provided in this Agreement or unless the
contest otherwise requires,
have the following respective meanings:
2.1 AGREEMENT shall mean this Agreement of Limited Partnership.
2.2 EFFECTIVE DATE shall mean the date the
Certificate is filed with the
Secretary of State of Texas.
2.3 GENERAL
PARTNER shall mean NEHC or such substitute or different General
Partner as may be subsequently named pursuant to
the terms of this Agreement.
2.4 INITIAL CAPITAL CONTRIBUTIONS
shall mean the amount contributed to the
Partnership by any Partner as determined in
accordance with Section 3.1 hereof.
2.5 LIMITED
PARTNERS shall mean those persons who execute this Agreement or
any counterpart of this Agreement as Limited Partners and whose names and
residence addresses appear on Exhibit "A" ,
which is attached to this Agreement
and made a part of this Agreement for all purposes.
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2.6 MAJORITY IN INTEREST OF LIMITED PARTNERS shall mean those
Limited
Partners who at the time of any
determination of a majority have more than fifty
percent (50%) of the Partnership Interest of the Limited Partners.
2.7 PARTNER shall mean the reference to the
General Partner or any one of
the Limited Partners.
2.8 PARTNERS
shall mean the collective reference to the General Partner and
the Limited Partners.
2.9 PARTNERSHIP
INTEREST shall mean the percentage set opposite the name of
each Partner on Exhibit "B" attached to this
Agreement and made a part of this
Agreement for all other purposes.
2.10
PERSON shall mean any
individual, corporation, partnership, trust, or
other entity.
2.11 PROPERTY
shall mean those certain tracts or parcels of land containing
various lots and real property in the future Humble Springs
subdivision and
adjacent area as may be determined by the
Partnership and in particular, that
tract of real property described in Exhibit C.
2.14
WINDING UP shall mean the period following a dissolution of the
Partnership after which its business is not continued as
set forth in Article
XII.
2.15
AVAILABLE CASH shall mean cash that is available
in the accounts of
the Partnership, less such amounts as
the General Partner reasonably determines
to be necessary to meet current or reasonably foreseeable Partnership
obligations or expenditures (including the repayment of loans made to the
Partnership by third parties or Partners).
2.16
PREFERRED RETURN shall mean, with respect limited
partner, American
Homestar Corporation, and with respect to any other Partner which makes
Additional Capital Contributions, the aggregate amount of cash
distributions
sufficient to yield such Partner a return equal to the amount of simple
non-compounding interest at a rate of 8% per annum on such Partners'
then
unreturned Additional Capital Contributions previously paid pursuant to
Paragraph 3.2 hereof from the respective dates that each such
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additional Capital Contribution was made. In the event that any
Partner other
than American Homestar Corporation makes an Additional Capital
Contribution
pursuant to Paragraph 3.2, then all Additional Capital
Contributions shall be
paid in the order in which they were made. Only the original
acquisition
financing loan in the sum of $487,500.00 from Texas State Bank and any
subsequent development financing shall have a priority
claim on Available Cash
ahead of the Paragraph 3.2 Additional
Capital Contributions of Partners.
2.17
PREFERRED RETURN PAYOUT EVENT shall mean the time at which the
aggregate amount of cash distributions that American
Homestar Corporation and
other Partners who may have made Additional Capital
Contributions pursuant to
Paragraph 3.2 actually have received from the
Partnership equals the Preferred
Return.
ARTICLE III
CAPITAL CONTRIBUTIONS AND
PARTNERSHIP INTERESTS
3.1 INITIAL CAPITAL CONTRIBUTIONS. The
capital to be contributed initially
to the Partnership by the General
Partner and all the Limited Partners shall be
cash, property, goods or services as the General Partner shall agree.
The
initial capital to be contributed by each
Partner, General and Limited, shall be
the sum set opposite his or her name in
the attached Exhibit "A." Each Partner
shall be personally liable to the
Partnership for the full amount of his or her
initial capital contribution in the amounts set forth on Exhibit A.
3.2 ADDITIONAL CAPITAL CONTRIBUTION OF AMERICAN HOMESTAR
CORPORATION AND
OTHER PARTNERS. In addition to the
contributions required by other provisions of
this Agreement, American Homestar Corporation, a limited partner of this
Partnership shall have the capital contribution obligations
required by this
paragraph 3.2. American Homestar Corporation shall provide for the timely
payment as obligations accrue of all funds
necessary for (1) the earnest money
and extension fees to acquire the
property, (2) economic, market, environmental
and other feasibility type studies,
(3) reimbursement of costs of organization,
accounting, survey, preliminary engineering and other
reasonable and necessary
start up costs and expenses of the
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types that are often and/or normally incurred
for the development of property
prior to closing of a development loan (4) other cash amounts
required for
capital equity interest by the financial institution making the
acquisition
and/or development loans relating to the Property, (5) recurring interest
payments on the acquisition loan between
the closing of the acquisition loan and
the closing of a future development loan and (6) all closing costs for
the
acquisition and development loans. The foregoing
costs shall not be reimbursed
at any loan closing, but shall be
reflected on the books of the Partnership as
Partner's capital equity. The total of the
obligation under this paragraph 3.2
shall not exceed $547,000.00. The amounts in
the capital account which results
from this paragraph 3.2 shall be subject to
a preferred return of 8% per annum
to accrue from the date of each such
contribution. The preferred return and the
balance in the capital account which is
created under this paragraph 3.2 shall
be paid to this Partner out of available
cash flow from operations after payment
of all creditors and all financial institution
financing for acquisition and
development.
Partners
other than American
Homestar Corporation may also make Additional
Capital Contributions pursuant to this paragraph and shall receive the
same
preferred return if they do so.
3.3 ADDITIONAL
CAPITAL CONTRIBUTIONS. Except as provided in Section 3.1 and
3.2, the Partners shall not be obligated to
make any additional contributions to
the capital of the Partnership. If
additional capital is needed for the purposes
of the Partnership as agreed by the General Partner
after contributions have
been made by the Partners pursuant to Section 3.1 and 3.2 hereof,
then the
General Partner, in their sole discretion, may, but
shall not be obligated to
request additional capital from the Limited Partners
in the same proportion of
Initial Capital Contributions set forth in Column I of Exhibit
"A" hereto, or
borrow such additional capital on behalf of the Partnership. Any
such loans
shall be on commercially reasonably terms
and shall be from any third party or
from any one or more of the Partners.
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ARTICLE IV
PROFITS AND LOSSES
4.1 ALLOCATIONS. Allocations of income, gains, deductions, losses and
credits among the Limited and General Partner shall be determined by the
Partnership Interest percentage set opposite his or her name on
Exhibit "B".
4.2 TRANSFER - TRANSFEREE ALLOCATIONS. If a Partnership Interest is
transferred in accordance with Article 10 during any year,
the income, gains,
losses, and deductions allocable in respect to
that Partnership Interest shall
be prorated between the transferor and the
transferee on the basis of the number
of days in the year that each was the
holder of that Interest, without regard to
the results of the Partnership operations
during the period before and after the
transfer, Unless the transferor and transferee
agree to an allocation based on
the result as of the record date of transfer and agree to reimburse the
Partnership for the cost of making and reporting their agreed
allocation.
4.3 RECAPTURE. In the event that the Partnership
recognizes income, gain,
or addition to tax by virtue of the recapture of any
previously deducted or
credited item, such recaptured income or gain or addition to tax shall be
allocated to the Partners in the same
percentage as allocated at the time of its
deduction.
ARTICLE V
CASH DISTRIBUTIONS
5.1 CASH DISTRIBUTIONS. After all trade debts and any loans made
to the
Partnership by third parties for acquisition
and/or development of the Property
are repaid, then Available Cash shall be paid to the partners in the
same
proportion as the total of their capital
accounts (including a preferred return,
if any) and any loans (including accrued interest) until all such
capital
accounts and loans, if any, have been liquidated. For
example if partner A's
capital account (including a calculated
preferred return) is $1000, and partner
B's capital account is $400 and partners B's loan to the
partnership is $100
(for a total of $500) 2/3 of all
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available cash would be distributed to
partner A and 1/3 to partner B until the
entire $1500 has been paid.
Thereafter,
Available Cash shall
be paid to the Partners in the same ratio
as profits and losses are shared. Cash
distributions from the Partnership may be
made by the General Partner to all Partners without
regard to the profits or
losses of the Partnership from
operations; provided, that no cash distributions
shall be made that will impair the ability of
the Partnership to pay its just
debts as they mature. The General Partner shall
determine when, if ever, cash
distributions shall be made to the Partners,
pursuant to the provisions and the
tenor of this Agreement.
There
shall be no obligation to return to the General Partner or the
Limited Partners, or to any one of them, any part of
their capital contributed
to the Partnership, for so long as the Partnership continues in
existence;
provided, however, no cash should be distributed to the Partners until
the
Initial Capital Contributions of the
Partners are returned to them. No interest
shall be paid to any Partner on the Initial
Capital Contributions to the capital
of the Partnership.
5.2 NO COMPENSATION OF GENERAL PARTNER. The General
Partner shall not be
entitled to any compensation for their time, effort and services to the
Partnership, except for their Partnership Interest. However, the
Partnership
shall be obligated to reimburse the General Partner all
reasonable costs and
expenses incurred by the General Partner as
they may mutually agree on behalf of
the Partnership, including those relating to the
formation and organization of
the Partnership.
ARTICLE VI
OWNERSHIP OF PARTNERSHIP PROPERTY
6.1 All real property, including all improvements placed or located
thereon, and all personal property acquired
by the Partnership shall be owned by
the Partnership, such ownership being
subject to the other terms and provisions
of this Agreement. Each Partner hereby expressly waives
the right to require
partition of any Partnership property or any part thereof.
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ARTICLE VII
BOOKS AND RECORDS
7.1 ELECTIONS. The Partnership shall elect as a
fiscal year the calendar
year. The Partnership shall elect to be taxed on such
method of accounting as
the General Partner shall determine. The
Partnership shall not elect to be taxed
other than as a partnership.
7.2 CAPITAL ACCOUNTS OF PARTNERS. The
Partnership shall maintain a capital
account for each Partner, the initial balance of
each of which shall be zero.
Each Partner's capital account shall be increased (1) by
any income and gains
allocated to that Partner for federal income
tax purposes pursuant to Article 4
of this Agreement, and (2) by the
amount of cash contributed to the Partnership
by that Partner. The Partner's capital account shall be
decreased (1) by any
deductions and losses allocated to that
Partner for federal income tax purposes
pursuant to Article 4 of this Agreement, and (2) by the amount of cash
distributed by the Partnership to that Partner.
7.3 FINANCIAL STATEMENTS. Annually, the General
Partner shall cause to be
prepared statements showing the financial condition of
the Partnership, copies
of which shall be transmitted to all Partners.
7.4 TAX RETURNS. The General Partner shall use its
best efforts to cause
the Partnership to file all tax and information returns required of the
Partnership and to furnish to the Limited
Partners the tax information required
by them for federal, state and local tax purposes in a timely fashion.
7.5 MAINTENANCE AND INSPECTION OF BOOKS. The
Partnership shall maintain a
complete and accurate set of books,
records, and supporting documents. The books
of account and all other financial records of
the Partnership shall be kept at
the Partnership's principal place of business, and may be inspected at any
reasonable time by the Limited Partners or their representatives.
7.6 BANK ACCOUNTS, FUNDS AND ASSETS.
The funds of the Partnership shall be
deposited in such bank or banks as the General
Partner shall deem appropriate.
Subject to the
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provisions of this Agreement, the funds may be withdrawn only by
the General
Partner or its duly authorized agents. All bank accounts shall require
the
signatures of both General Partner on all
checks. The General Partner shall have
a fiduciary responsibility for the safekeeping and use of all funds of the
Partnership, whether or not in their immediate
possession or control, and they
shall not employ, or permit another to employ, the funds or assets in
any
manner, except for the exclusive benefit of
the Partnership. The General Partner
shall not commingle or permit the commingling of the
funds of the Partnership
with the funds of any other person.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 ADMISSION OF LIMITED PARTNERS. No
additional Limited Partners shall be
admitted to the Partnership except upon amendment
of this Agreement, although
substituted Limited Partners may be admitted pursuant to Section 10 below.
8.2 PARTICIPATION IN MANAGEMENT. No Limited Partner
shall have the right,
power, or authority to take any part in the control or
management of, or to
transact any business for, the Partnership, or to sign for or bind the
Partnership in any manner.
8.3 LIMITED LIABILITY. No Limited Partner shall be liable for losses,
debts, or obligations of the Partnership in
excess of his or her Initial Capital
Contribution, plus his or her undistributed share of the
Partnership profits.
8.4 PARTICIPATION IN OTHER ACTIVITIES.
No Limited Partner, or any officer,
director, shareholder, or other person
holding a legal or beneficial interest in
any Limited Partner, shall, by virtue
of the interest in the Partnership, be in
any way prohibited or restricted from
engaging in, investing in, or possessing
an interest in any business activity of any nature or
description, including
those which may be equivalent to or in
competition with the Partnership. Neither
the Partnership nor any Partner shall have
any right by virtue of this Agreement
or any relationship created by this Agreement in or to
such other ventures or
activities or to the income or proceeds derived from them.
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8.5 GENERAL RIGHTS AND LIMITATIONS OF THE LIMITED PARTNERS. A
Limited
Partner who is not also a General Partner shall not be:
A. Personally
liable because of his or her Partnership
Interest in
the Partnership
for any losses of any other Limited Partner;
B. Entitled
to be paid any salary or to have a
Partnership drawing
account;
C. Entitled
to receive any interest on his or her Initial
Capital
Contributions or
balance in his or her capital account; or
D. Entitled
to priority over any other Limited Partners.
8.6 VOTING. Each
Limited Partner shall be entitled to a vote in all matters
for which this Agreement gives Limited
Partners the right to vote, consent, or
agree. Each Limited Partner's vote shall be equal in percentage
to the ratio
that his or her Partnership Interest bears to one hundred percent (100%).
8.7 LIMITATIONS ON TRANSFERABILITY. The ownership interest in the
Partnership owned by a Limited Partner shall not be
transferable except under
the conditions set forth in Article 10 of this Agreement.
ARTICLE IX
THE GENERAL PARTNER
9.1 DUTIES. Subject to any specific
limitation contained in this Agreement
or provided by applicable law, the General Partner shall have exclusive
responsibility and authority to take all action necessary or desirable to
accomplish the purposes of the Partnership, and shall have
exclusive control
over the management and affairs of the
Partnership. The General Partner agrees
to manage and control the affairs of
the Partnership to the best of its ability
and to conduct the operations contemplated
under this Agreement in a careful and
prudent manner and in accordance with good industry practice. The General
Partner may subcontract to others all or a
portion of its duties.
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9.2 SPECIFIC LIMITATIONS. The General Partner agrees that it
shall not:
A. Commingle
the Partnership's funds or assets with those of any
other person, or employ or permit any person to employ such
funds
or assets in any manner except for the
exclusive benefit of the
Partnership;
B. Bind
or obligate the Partnership with regard to any matter
outside the
scope of the Partnership business; and
C. Use
the Partnership name, credit, or property for other than
Partnership
purposes.
9.3 SPECIFIC POWERS. The General Partner or its agents or
assigns shall
without limitation have the authority to:
A. Acquire
or dispose of real property (including any
interest in
real property)
for case, securities, other property, or any
combination of them,
on such terms and conditions as the General
Partner may,
from time to time, determine (including, in
instances where
the property is encumbered, on either an
assumption or
a "subject to" basis);
B. Finance
the Partnership's activities either with the seller
of
the property
or by borrowing money from third
parties, all on
such terms
and conditions as the General Partner deem
appropriate. In instances where money is borrowed for
Partnership
purposes, the General Partner shall be, and hereby is,
authorized
to pledge,
mortgage, encumber, and grant security interest in
Partnership properties
for the repayment of such loans.
C. Acquire,
own, hold, improve, manage, and lease the property,
either alone
or in
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conjunction with
others through partnerships, limited
partnerships, joint
ventures, or other
business associations or
entities;
D. Employ,
retain, or otherwise secure or enter into other contracts
with personnel
or firms to assist in the acquisition,
development,
improvement,
management, and
general operation of
the Partnership
properties, including,
but not limited to, real
estate brokers
or agents, supervisory, development and/or
building management
agents, attorneys, accountants, and
engineers, all
on such terms and for such
consideration as the
General Partner
deems advisable; and
E. Take
any and all other action which is
permitted under the Act
and which is customary
or reasonably related to the acquisition,
ownership,
development,
improvement,
management, leasing,
and
disposition of
real, personal, or mixed property.
9.4 RELIANCE. Persons dealing with the Partnership shall be
entitled to
rely conclusively on the authority and power of any
of the then acting General
Partner as set forth in this Agreement.
9.5 INQUIRIES. In no event shall any person dealing with the
General
Partner or any of its representatives with
respect to any business or property
of the Partnership be obligated to ascertain that the provisions of this
Agreement have been complied with or be
obligated to inquire into the necessity
or expedience of any act or action of such
persons. Every contract, agreement,
security agreement, promissory note, or
other instrument or document executed by
either a General Partner or its
representatives with respect to any business or
property of the Partnership shall be conclusive evidence in
favor of any and
every person relying on or claiming thereunder that (1) at the time of
the
execution and/or delivery of the instrument or document this
Agreement was in
full force and effect; (2) the instrument or document was duly
executed in
accordance with the terms and provisions of this Agre
