Exhibit 3.10
BRIDLE RIDGE LIMITED
PARTNERSHIP AGREEMENT
This Bridle Ridge Limited
Partnership Agreement (the “Agreement”) made and
entered into by and between Kimball Hill Homes California, Inc., a
California corporation (the “General Partner”) and
David K. Hill (the “Limited Partner”) dated effective
as of November 3, 2003. The General Partner and the Limited Partner
are collectively sometimes hereinafter referred to as the
“Partners”.
ARTICLE I
FORMATION OF LIMITED
PARTNERSHIP
The parties hereby enter into a
limited partnership (the “Partnership”) under the
provisions of the Limited Partnership Act of the State of
California, and the rights and liabilities of the Partners shall be
provided in that Act except as herein otherwise expressly
provided.
ARTICLE II
NAME
The business of the Partnership
shall be conducted under the name of Bridle Ridge Limited
Partnership or such other similar name as the General Partner shall
designate.
ARTICLE III
PROPERTY AND
PURPOSES
The business of the Partnership is
to invest in, purchase, acquire, hold, maintain, operate, improve,
develop, sell, exchange, lease and otherwise use real property
(“Property”) located in the City of Oakdale, Stanislaus
County, California. The Property is under contract and is known as
Village A-1 in Phase I of the Bridle Ridge Subdivision and will
consist of 65 single-family lots and associated roadways and other
improvements for development. The Property is part of a larger
development known as the Bridle Ridge Specific Plan. The General
Partner, in its individual corporate capacity and not as General
Partner of this Partnership, has entered into a Contract for the
Property. The Property is legally described on Exhibit A attached
to and made a part of this Agreement. The Contract is attached
hereto as Exhibit B and made a part of this Agreement. As of the
effective date of this Agreement, the General Partner assigns
to
the Partnership all of its right,
title and interest in and to the Contracts as an additional capital
contribution to the Partnership.
ARTICLE IV
TERM
The term of the Partnership shall be
perpetual and shall commence on the date of filing by the General
Partner of the Certificate of Limited Partnership with the
Secretary of State of California, which date shall be subsequent to
the date of this Agreement; provided, however, that the Partnership
shall be dissolved prior to such date upon the earlier of (a) the
disposition by the Partnership of its entire interest in all of the
Property, or (b) dissolution, insolvency or bankruptcy of the
General Partner as provided herein, (c) as elsewhere expressly
provided in this Agreement, or (d) as required under the California
Limited Partnership Act notwithstanding the other provisions of
this Agreement.
ARTICLE V
OFFICES
Section 5.1
Principal Place of
Business
(a)
The principal place of the business
shall be as follows:
c/o Kimball Hill Homes California,
Inc.
10535 E. Stockton Blvd., Suite
K
Elk Grove, California
95624
(b)
The General Partner may from
time-to-time change the principal place of business, and in such
event, the General Partner shall notify the Limited Partner in
writing within 20 days of the effective date of such
change.
Section 5.2
Registered Agent and
Office
(a)
The registered agent of the
Partnership is CT Corporation System and the registered office of
the Partnership is as follows:
818 W. 7 th
Street
Los Angeles, California
90017
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(b)
The General Partner may from time-to-time change the registered
agent and the registered office of the Partnership, and in such
event the General Partner shall notify the Limited Partner in
writing 20 days prior to the effective date of such change and
shall file with the Secretary of State of California an amendment
to the certificate of limited partnership of the Partnership
reflecting any such changes.
ARTICLE VI
CAPITAL CONTRIBUTIONS AND SALE
TO PARTNERSHIP
Section 6.1
Capital Contribution of
General Partner and Sale of Property to
Partnership
(a)
The General Partner shall contribute
$50,000.00 to the Partnership upon execution of this
Agreement.
(b)
The General Partner hereby confirms
its assignment of interest in the Contract to the Partnership, as
an additional capital contribution, of all of its rights to and
obligations of the Property. The Partnership hereby confirms its
consent to and acceptance of such assignment of interest and agrees
to reimburse the General Partner for all expenses in connection
with or incidental to the purchase, development and sale of the
Property and the other Partnership purposes as set forth in Article
III of this Agreement, whether said expenses are incurred or paid
before or after the date of this Agreement, provided, however, that
all such expense must be incurred by the General Partner directly
and solely for such Partnership purposes. Accordingly, the general
office and executive salaries and similar expenses of the General
Partner shall not be paid or reimbursed by the
Partnership.
Section 6.2
Capital Contributions of
Limited Partner
(a)
Upon execution of this Agreement,
the Limited Partner shall contribute $10,000 as its initial capital
contribution to the Partnership.
(b)
No further capital contributions
shall be required of the Limited Partner, and the Limited Partner
shall not be required to make any loans to the Partnership. At the
written request of the General Partner and the consent of the
Limited Partner, the Limited Partner may make an additional capital
contribution.
(c)
The Limited Partner understands that
time is of the essence with respect to such capital contribution.
In addition to any other appropriate remedies available to the
General Partner, the Limited Partner shall not at any time be
entitled to
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any distributions from the
Partnership if it fails to make any capital contributions to the
Partnership when same are due under the terms of this
Agreement.
Section 6.3
Capital
Accounts
A capital account shall be
established for each Partner and shall be maintained in accordance
with the capital accounting rules set forth in Treasury
Regulations, Section 1.704-1(b)(2)(iv), as such rules may be
amended. In general, a Partner’s capital account shall be
credited with the cash and the fair market value of property
contributed by such Partner to the Partnership net of liabilities
secured by such contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the
Internal Revenue Code of 1986, as amended (the “Code”),
and such Partner’s distributive share of net income
(including for this purpose income exempt from tax) and gain from
capital transactions, and shall be debited with the cash and the
fair market value of property distributed to such Partner (net of
liabilities secured by such distributed property and that such
Partner is considered to assume or take subject to under Code
Section 752), such Partner’s distributive share of net loss
and losses from capital transactions, and such Partner’s
distributive share of expenditures of the Partnership described in
Code Section 705(a)(2)(B). No interest shall be paid or accrued at
any time on a Partner’s capital account or on any capital
contribution. Each Partner shall have a single capital account
regardless of the time or times and the manner in which such
interest was acquired.
ARTICLE VII
ADDITIONAL
PARTNERS
Additional Partners, either General
or Limited, may be admitted to the Partnership only upon prior
written approval and consent of both the General Partner and the
Limited Partner.
ARTICLE VIII
MANAGEMENT POWERS, DUTIES AND
RESTRICTIONS
Section 8.1
Authority of General
Partner
The General Partner shall have
exclusive authority to manage the operations and affairs of the
Partnership and to make all decisions regarding the business of the
Partnership and shall devote such time to the Partnership as shall
be reasonably required for its welfare and success. The General
Partner, without limitation on any power that may be conferred upon
it by law, and except as may be provided to the contrary elsewhere
in this Agreement, shall have full power, right and
authority:
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(a)
to deal with, purchase, sell,
mortgage, transfer, assign or otherwise dispose of any and all of
the assets of the Partnership; to borrow money on behalf of the
Partnership. The Limited Partner specifically approves and consents
to the execution and delivery by the General Partner of: (i) such
documents as are necessary to cause the Partnership to become a
borrower under a Revolving Construction Loan Agreement with Harris
Trust and Savings Bank of Chicago, Illinois, as agent, and any
other banks which are a party to such Revolving Construction Loan
Agreement providing for a $200,000,000.00 construction loan to the
Partnership and to other borrowers who are parties to such
Revolving Construction Loan Agreement, and (ii) the mortgage and
other collateral security documents that will encumber the
Partnership’s assets for all borrowers’ obligations
under such Revolving Construction Loan Agreement. The Limited
Partner also expressly acknowledges that a default by any other
borrower, even if not the Partnership, under such Revolving
Construction Loan Agreement could jeopardize or cause the loss of
some or all assets of the Partnership, including without limitation
all of the Property, even though the Partnership was not itself
under default under any of the terms of the Revolving Construction
Loan Agreement and associated mortgage and other collateral
security documents;
(b)
to borrow money on behalf of the
Partnership;
(c)
to repay in whole or in part,
refinance, recast, increase, modify or extend any loan which may
affect any of the Property owned by the Partnership;
(d)
to execute or cause to be executed
for and on behalf of the Partnership any mortgage, note, assignment
of rents, assignment of beneficial interest for collateral
purposes, and other documents, and any renewals, extensions or
modifications thereof; provided that with respect to any financing
of any property the sole security for such financing shall be
Partnership property only and none of the Partners except the
General Partner shall have any personal liability
thereon;
(e)
to make expenditures and incur
obligations in the ordinary course of business;
(f)
to acquire and enter into any
contract of insurance which it deems necessary and proper for the
protection of the Partnership, for conservation of its assets, or
for any purpose convenient or beneficial to the
Partnership;
(g)
to employ, retain or contract, from
time-to-time, with persons, firms or corporations, which may be or
include the General Partner, for the right to acquire and for the
improvement of the Property and for the operation and management of
the Partnership business and to carry out all of its purposes,
including but not limited to supervisory and managing agents,
building management agents, contractors and subcontractors,
insurance brokers, real estate brokers, loan brokers, consultants
in management and finance, attorneys and accountants, on such terms
and for such compensation as the General Partner shall
determine;
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(h)
to obtain such zoning, planned unit
development and/or other approvals as are necessary and desirable
to allow the Partnership to develop on the Property the residential
dwelling units as generally described in Article III of this
Agreement.
(i)
to compromise, arbitrate or
otherwise adjust claims in favor of or against the Partnership and
to commence or defend litigation with respect to the Partnership or
any assets of the Partnership as the General Partner may deem
advisable, all or any of the above matters being at the expense of
the Partnership;
(j)
to hold title for the Partnership to
the Property;
(k)
to perform and carry out all other powers, rights and authority
authorized under the Limited Partnership Act of the State of
California; and
(l)
to execute, acknowledge and deliver
any and all instruments to effectuate any of the foregoing
management responsibilities.
Section 8.2
General Partner Home Builder
Expense Reimbursement
In addition to any other provision
in this Agreement with respect to sharing of profits and
reimbursement and payment of expenses, the General Partner shall
receive a general contractor and nonsite-specific cost
reimbursement fee (“General Partner Home Builder Expense
Reimbursement”) from the Partnership payable at the closing
of the sale of each dwelling unit on the Property in the amount of
five percent (5%) of the total, gross sales price for such unit.
This and any other reference in this Agreement to the total, gross
sales price for each unit shall in all cases mean the amount
actually paid by the purchaser of such unit and does not include
any upgrades or other similar items which are supplied to such
purchaser at no additional cost to be paid by such purchaser. The
General Partner Home Builder Reimbursement shall constitute a
Partnership expense for all purposes and not a profit or tier
distribution to the General Partner. The General Partner Home
Builder Expense Reimbursement may commence at any time during the
term of the Partnership. If and while payments of First Tier
Distributions or Second Tier Distributions as defined and provided
for in Section 15.2 below are not current, then payments of the
General Partner Home Builder Expense Reimbursement shall be
deferred until such First and Second Tier Distributions are
current. Under all circumstances and for all purposes, the General
Partner Home Builder Expense Reimbursement shall be subordinate to
the First and Second Tier Distributions.
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Section 8.3
Limited Partner’s
Liability
The Limited Partner shall not take
part in the management of the business or transact any business for
the Partnership or have the power to sign for or to bind the
Partnership to any agreement or document. Except as and to the
extent expressly set forth in this Agreement, the Limited Partner
shall not be subject to assessment nor shall the Limited Partner be
personally liable as a Limited Partner for any of the debts of the
Partnership or for any of the losses thereof beyond the amount
contributed by it as capital to the Partnership and its share of
the undistributed profits of the Partnership, provided, however,
that the Limited Partners shall be personally liable to the General
Partner with respect to the capital contributions required of the
Limited Partner pursuant to the terms of this Agreement.
Section 8.4
Requests for Information and
Meetings
(a)
Any Partner shall be entitled upon
request, provided such request is made in good faith and for proper
purpose, to (i) review and copy the books and records of the
Partnership at reasonable times and at the location where the
records are kept, (ii) obtain the list of the names and addresses
of all of the Partners, and (iii) have an accounting of all
Partnership affairs and finances.
(b)
The General Partner shall have a
designated employee available to meet monthly with a designated
employee of the Limited Partner to discuss Partnership matters and
to provide to the Limited Partners monthly financial statements and
sales and construction status reports.
Section 8.5
No Guaranty of
Investment
The Limited Partner acknowledges
that its capital contributions are being made without any guaranty
or representation by the General Partner of any particular return
on investment or of a return of his capital contribution and that
such investment involves a high degree of risk which the Limited
Partner is willing to assume. All financial projections, proformas,
profits summary results calculations and the like delivered by the
General Partner to the Limited Partner is strictly for projection
purposes and are not guarantees of results.
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ARTICLE IX
BANKING
All funds of the Partnership are to
be deposited in such bank and/or savings and loan association
account or accounts as shall be designated by the General Partner.
Withdrawal from any such bank account or accounts may be made by
the General Partner. All such accounts shall be held in the name of
the Partnership and shall be segregated from all other accounts of
the General Partner and any other partnership or entity.
ARTICLE X
BOOKS OF ACCOUNT, RECORDS AND
REPORTS
Section 10.1
Keeping of
Books
Proper and complete records and
books of account shall be kept by the General Partner in which
shall be entered fully and accurately all transactions and other
matters relative to the Partnership’s business as are usually
entered into records and books of account maintained by persons
engaged in business of like nature. The Partnership books and
records shall be prepared on an accrual basis in accordance with
generally accepted accounting princ
