Exhibit 3.126
3/7/03
HUNTERS RIDGE FIRST LIMITED
PARTNERSHIP AGREEMENT
This Agreement of Limited
Partnership (the “Agreement”) made and entered into by
and between Kimball Hill, Inc., an Illinois corporation (the
“General Partner”) and Kimball Hill Development
Company, an Illinois corporation and (the “Limited
Partner”) dated effective as of March 7, 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 Illinois,
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 Hunters Ridge First 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 Village of Hoffman Estates,
Cook County, Illinois. The Property consists of real estate which
is under development and sale by the General Partner in its
individual corporate capacity and not as General Partner of this
Partnership. The Property is legally described, with a list of the
included lots, on Exhibit A attached to and made a
part of this Agreement. The Property includes all of the lots
described on attached Exhibit A along with all improvements
located on such lots,
including, but without limitation,
any home under construction or completed which is the subject of a
sale contract but not yet delivered to third party purchasers, and
all associated common areas included within the legal description
contained on attached Exhibit A. As of the effective date of
this Agreement, the General Partner, as the record owner of the
Property, assigns to the Partnership all of its right, title and
interest in and to the Property as an additional capital
contribution to the Partnership. The Property shall continue to be
developed, marketed, constructed and sold as high-quality
residences in accordance with the development plan and all
applicable ordinances and other requirements of the Village of
Hoffman Estates, Cook County, Illinois, as part of the Hunters
Ridge subdivision.
ARTICLE IV
TERM
The term of the Partnership shall
commence on the date of filing by the General Partner of the
Certificate of Limited Partnership with the Secretary of State of
Illinois, which date shall be subsequent to the date of this
Agreement, and shall terminate 20 years thereafter, 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
Illinois 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:
Kimball Hill, Inc.
c/o Hal H. Barber, Senior
Vice-President
5999 New Wilke Road,
Suite 504
Rolling Meadows, Illinois
60008
(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.
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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:
208 South LaSalle Street
Chicago, Illinois 60602
(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 Partners in writing 20 days prior to the
effective date of such change and shall file with the Secretary of
State of Illinois 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 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 $4,000,000 as its initial
capital contribution to the Partnership.
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(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.
(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 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.
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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:
(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 an $105,000,000.00
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;
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(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;
(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 Illinois; 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
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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.
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.
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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.
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 principles, consistently applied. The
books and records shall at all times be maintained at the principal
office of the Partnership.
Section 10.2
Audited Statements and
Accountants
The General Partner shall, after the
end of each fiscal year, prepare or cause to have prepared complete
financial statements for said year. Such statements need not be
audited by independent certified public accountants but shall
contain, among other things, a balance sheet, statement of sources
and applications of funds, statement of capital accounts and a
profit and loss statement. The Partnership books
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shall be closed and balanced at the
close of each fiscal year. All such Partnership financial
statements, books and records shall be subject to review by
accountants of the Limited Partners subject to prohibitions on
disclosure and confidentiality requirements which are normal and
customary with respect to accountants’ knowledge of their own
client’s finances.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Partnership
shall end on June 30th for financial reporting and accounting
purposes and on December 31st for income tax purposes, subject
to any change determined and made by the General
Partner.
ARTICLE XII
ASSIGNABILITY OF
PARTNER’S INTERESTS
Neither the General Partner nor the
Limited Partner shall assign any portion or all of their interests
in the Partnership unless the assigning Partner first obtains the
written consent of the other Partner. Upon such consent by the
General Partner, any assignee of the Limited Partner’s
interest shall become a substituted Limited Partner with all of the
rights and obligations under this Agreement of the original Limited
Partner.
ARTICLE XIII
LOANS OF GENERAL
PARTNER
Section 13.1
Terms of
Loan
(a)
The General Partner may, but need
not, advance monies from time to time to the Partnership to meet
any necessary cash requirements of the Partnership including, but
not limited to, operating expenses of the Partnership or the
payment of principal and interest required under any note. The
aggregate amount of such advances to the Partnership shall become
an obligation of the Partnership to the General Partner and shall
be payable out of the gross income of the Partnership together with
simple interest on a monthly basis at a rate equal to the Harris
Bank and Trust Company of Chicago’s prime rate in effect from
time-to-time plus one perce
