Exhibit 3.32
2-14-00
KIMBALL COVE LIMITED
PARTNERSHIP AGREEMENT
This Agreement of Limited
Partnership (the “Agreement”) made and entered into by
and between Kimball Hill Homes Texas, Inc., a Texas corporation
(the “General Partner”) and Kimball Hill Development
Company, an Illinois corporation (the “Limited
Partner”) dated effective as of February 18, 2000. 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 Revised Uniform Limited Partnership Act of the
State of Texas, 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 Kimball Cove 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 Rowlett, Dallas
County, Texas. The Property is located on Liberty Grove Road and
consists of approximately 48.26 acres subdivided into 155 buildable
residential lots, fully approved and developmentally improved for
construction of quality residences. The Property is being acquired
from the General Partner. A legal description of the Property is
contained on Exhibit A attached to and made a part of this
Agreement. Kimball Hill Homes Texas, Inc., in its individual
capacity and not as the General Partner, acquired title to the
Property on or about October 1, 1999 pursuant to the terms of a
Sale of Land-Single Closing Contract of Sale (“Contract of
Sale”) with D.R. Horton-Texas, Ltd. as Seller. A copy of the
Contract of Sale, as amended, is attached to
and made a part of this Agreement as Exhibit B.
D.R. Horton-Texas, Ltd. is not related to or affiliated in any way
with the General Partner.
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
Texas, and shall terminate twenty (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 Revised Uniform Limited Partnership Act of the
State of Texas 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 Texas,
Inc.
8584 Katy Freeways, Suite 200
Houston, Texas, 77024
(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 twenty (20) days of the effective date of such
change.
Section 5.2
Registered Agent and
Office
(a)
The registered agent of the
Partnership is Rebecca Freitag, a resident of the State of Texas,
and the registered office of the Partnership is as
follows:
8584 Katy Freeway, Suite 200
Houston, TX 77024
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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 Texas 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 assigns
to the Partnership, as an additional capital contribution, all of
its rights to and obligations of the Property. The Partnership
accepts such assignment 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. The Partners agree that the
General Partner shall be reimbursed for the purchase price of the
Property in the amount of $1,653,000.00. Such amount does not
include land development costs incurred by the General Partner
prior to the effective date of this Agreement which costs shall
also be reimbursed to the General Partner.
Section 6.2
Capital Contribution of
Limited Partner
(a)
Upon execution of this Agreement,
the Limited Partner shall contribute equity of $2,500,000.00 to the
Partnership as its total 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.
(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
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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.
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
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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;
(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 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;
(h)
to obtain such additional
development, construction and utility approvals and permits 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;
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(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 Revised Uniform
Limited Partnership Act of the State of Texas; 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.
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 Partner 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.
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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 Partner 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 its 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 P
