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 ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇▇▇ 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 Agreement and is
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binding upon the Partnership and all of the Partners, and (3) the General
Partner or its representatives were duly authorized and empowered to execute and
deliver any such instrument or document for and on behalf of the Partnership.
9.6 TAX MATTERS PARTNER. NEHC, the General Partner, is hereby designated as
a Tax Matters Partner as defined in Section 6231 of the Internal Revenue Code as
amended for so long as it shall remain a General Partner. If NEHC is removed or
resigns, then the substituted General Partner shall be designated the Tax
Matters Partner.
In the event that an audit of the Partnership occurs, and the Tax Matters
Partner does not reach a settlement agreement with the Internal Revenue Service,
the Tax Matters Partner shall in his sole discretion choose whether to file a
petition for readjustment of the Partnership items with either the Tax Court,
the District Court of the United States for the district for which the
Partnership's place of business is located, or the Court of Claims.
9.7 OBLIGATIONS NOT EXCLUSIVE. The General Partner shall be required to
devote only such time as is reasonably necessary to manage the Partnership's
business, it being understood that the General Partner has other business
activities and therefore shall not devote its time exclusively to the
Partnership. No General Partner, or any officer, director, shareholder, or other
person holding a legal or beneficial interest in any General 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 a 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.
9.8 LIABILITY OF GENERAL PARTNER TO LIMITED PARTNERS. The General Partner,
its representatives, employees, and agents shall not be liable to the
Partnership or to the Limited Partners for losses sustained or liabilities
incurred as a result of any error of judgment or mistake of law or fact,
including simple negligence, or for any act
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done or omitted to be done in good faith in conducting the Partnership business,
unless the error, mistake, act, or omission was performed or omitted
fraudulently or constituted gross negligence or willful misconduct.
9.9 INDEMNIFICATION OF GENERAL PARTNER. The General Partner and each
representative, assignee, or agent of the General Partner shall be protected,
defended, indemnified, and held harmless by the Partnership from and against any
loss, expense, damage, or injury suffered or sustained by them by reason of any
acts, omissions, or alleged acts or omissions, even if such acts or omissions
constitute simple negligence, arising out of the activities of the General
Partner on behalf of the Partnership or in furtherance of the interests of the
Partnership, including, but not limited to, any judgment, accord, settlement,
reasonable attorney's fees, and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding, or claim:
provided, however, that the General Partner shall not be entitled to
indemnification under this paragraph if the acts, omissions or alleged acts or
omission on which any actual or threatened action, proceeding, or claim is based
were: (1) performed or omitted fraudulently: (2) resulted from the gross
negligence by or willful misconduct of the General Partner or (3) resulted from
a breach by the General Partner of a material provision of this Agreement.
ARTICLE X
TRANSFERS OF PARTNERSHIP INTEREST
10.1 TRANSFER OF GENERAL PARTNER INTEREST. The General Partner may, without
the consent of any of the other Partners, transfer its Partnership Interest or
any part thereof to third partner so long as the original General Partner,
individually, maintains the ownership of a majority of its Partnership Interest.
10.2 WITHDRAWAL OR REMOVAL OF GENERAL PARTNER.
A. The General Partner may:
(1) resign or withdraw from the Partnership as General Partner
without the consent of the Limited Partners;
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(2) be removed at any time, for cause, by the affirmative vote
of a Majority In Interest of Limited Partners; provided,
however, that no removal for cause under this Section shall
be effective until a court of competent jurisdiction shall
have finally determined that cause existed. As used in this
paragraph "Cause" shall mean (i) a material violation by a
General Partner of his or her fiduciary duties, (ii) willful
misconduct, (iii) gross negligence, or (iv) a material
violation of this Agreement.
B. Immediately on withdrawal or removal of the General Partner, a
successor General Partner shall be selected by an affirmative
vote or written consent of a Majority in Interest of Limited
Partners.
C. A General Partner departing voluntarily shall continue to receive
his or her share of any Partnership distributions arising out of
his or her interest in the Partnership.
10.3 SUBSTITUTED LIMITED PARTNER. Each Limited Partner hereby consents to
the admission as a substituted Limited Partner of any person complying with
Section 10.7. When compliance with this. Agreement has been shown, the General
Partner shall cause the necessary amendments to be filed as required by law.
10.4 TRANSFER ON DEATH OF A LIMITED PARTNER. On the death of a Limited
Partner, his or her successor in interest shall succeed to the decedent's
Partnership Interest, and shall be liable for the obligations of the decedent,
but shall not become a substituted limited partner until compliance with Section
10.6 and 10.7.
10.5 WITHHOLDING OF DISTRIBUTIONS. From the date of the receipt of any
instrument relating to the transfer of a Partnership Interest, or at any time
the General Partner is in doubt as to the person entitled to receive
distributions in respect of any such Partnership Interest, the General
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Partner may withhold any such distributions until the transfer is completed or
abandoned or any dispute is resolved.
10.6 FAMILY TRANSFERS BY LIMITED PARTNERS. Subject to Section 10.7 below, a
Limited Partner may sell or otherwise transfer all or any portion of a
Partnership Interest to the spouse or any direct ascendants or descendants of
the Limited Partner or to a trust, corporation, partnership, or other entity in
which all of the beneficial interest is held by or for the Limited Partner,
spouse, ascendants, or descendants, provided the transfer would not result in a
termination of the Partnership.
10.7 CONDITIONS OF EFFECTIVE TRANSFER. A purported transfer of a
Partnership Interest by a Limited Partner shall be valid as to the Partnership
and the General Partner on the first day of the month following the month in
which (1) the General Partner have consented in writing to the transfer; and (2)
the General Partner is satisfied that the following conditions, any of which may
be waived by the General Partner, have been met:
A. The transferor and transferee have agreed to provide the
Partnership with the information in their possession required to
permit the Partnership to make any basis adjustments required by
the Internal Revenue Tax Code;
B. The transferee has delivered an instrument satisfactory to the
General Partner by which the transferee accepts and adopts the
terms and provisions of this Agreement, including the assumption
of any obligations of the transferor to the Partnership;
C. The transferor has agreed to pay a reasonable fee to reimburse
the Partnership for the costs incurred in connection with the
admission of the transferee as a substitute limited partner,
including any costs incurred or to be incurred by the Partnership
in connection with the basis adjustments and additional
accounting operations required;
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D. The transferor has delivered to the General Partner an opinion of
counsel in form and substance satisfactory to the General Partner
to the effect that neither the transfer nor any offering in
connection with the transfer violates any provision of any
federal or state securities or comparable law;
E. The General Partner has determined that the transfer would not
cause a termination of the Partnership, within the provisions of
the Internal Revenue Code;
F. The transfer is evidenced by an instrument in writing signed by
the transferor and transferee stating, among other things, that
the transferor has the right to transfer, and the transferee has
the right to acquire, the transferor's Partnership Interest, and
acknowledging that the transferee is bound by the terms of this
Agreement; and
G. The transferee has delivered a statement in form and substance
reasonably satisfactory to the General Partner making appropriate
representation and warranties with respect to the satisfaction of
applicable federal and state securities laws.
10.8 ASSIGNMENTS BY OPERATION OF LAW. if any Limited Partner shall die,
with or without leaving a will, become non compos mentis, or become bankrupt or
insolvent, or if a corporate or partnership Limited Partner dissolves during the
Partnership term, the legal representatives, heirs, and legatees, and the
spouse, if the Partnership Interest of the Limited Partner have been community
property of the Partner and the Partner's spouse, bankruptcy assignees, or
corporate or partnership distributees shall not become substitute Limited
Partners but shall have, subject to the other terms and provisions thereof, such
rights as are provided with respect to such persons under the Act; provided,
however, such legal representatives, heirs and legatees, bankruptcy assignees
and corporate or partnership distributees may become substitute Limited Partners
with the consent of the General Partner.
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10.9 RIGHT OF FIRST REFUSAL. In addition to the other limitations and
restrictions set forth in this Section 10, except as permitted by Section 10.6
hereof, no Limited Partner shall transfer all or any portion of his Partnership
Interest (the "Offered Interests") unless such Limited Partner (the "Seller")
first offers to sell the Offered Interest pursuant to the terms of this Section
10.
A. LIMITATION ON TRANSFERS. No transfer may be made under this
Section 10.9 unless the Seller has received a bona fide offer
(the "Purchase Offer") from a third party (the "Purchaser") to
purchase the Offered Interest for a purchase price (the "Offer
Price") denominated and payable in United States dollars at
closing or according to specified terms, with or without
interest, which offer shall be in writing signed by the Purchaser
and shall be irrevocable for a period ending no sooner than the
day following the end of the Offer Period, as hereinafter
defined.
B. OFFER NOTICE. Prior to making any transfer that is subject to the
terms of this Section 10.9, the Seller shall give to the
Partnership and each Limited Partner written notice (the "Offer
Notice") which shall include a copy of the Purchase Offer and an
offer (the "Firm Offer") to sell the Offered Interests to the
Limited Partners and the General Partner (the "Offerees") for the
Offer Price, payable according to the same terms as those
contained in the Purchase Offer.
C. OFFER PERIOD. The Firm Offer shall be irrevocable for a period
(the "Offer Period") ending at 11:59 PM. , local time at the
Partnership's principal place of business, on the thirtieth
(30th) day following the day of the Offer Notice.
D. ACCEPTANCE OF FIRM OFFER. At any time during the thirty (30) days
of the Offer
18
Period, any Offeree may accept the Firm Offer as to all or any
portion of the Offered Interest, by giving written notice of such
acceptance to the Seller and the General Partner which notice
shall indicate the maximum Interests that such Offeree is willing
to purchase. In the event that within the first thirty (30) days
of the Offer Period, Offerees ("Accepting Offerees"), in the
aggregate, accept the Firm Offer with respect to all of the
Offered Interests, the Firm Offer shall be deemed to be accepted
and each such Accepting Offeree shall be deemed to have accepted
that portion of the Offered Interests that corresponds to the
ratio of the Interests that such Accepting Offerees indicated a
willingness to purchase. In the event that Offerees including the
General Partner ("Accepting Offerees"), in the aggregate, accept
the Firm Offer with respect to all of the Offered Interest, the
Firm Offer shall be deemed accepted. if Offerees do not accept
the Firm Offer as to all the Offered Interest during the Offer
Period, the Firm Offer shall be deemed to be rejected in its
entirety.
E. CLOSING OF PURCHASE PURSUANT TO FIRM OFFER. In the event that the
Firm Offer is accepted, the closing of the sale of the Offered
Interest shall take place within thirty (30) days after the Firm
Offer is accepted or, if later, the date of closing set forth in
the Purchase Offer. The Seller and all Accepting Offerees shall
execute such documents and instruments as may be necessary or
appropriate of effect the sale of the Offered Interest pursuant
to the terms of the Firm Offer and this Section 10.
F. SALE PURSUANT TO PURCHASE OFFER IF FIRM OFFER REJECTED. If the
Firm Offer is not accepted in the manner herein above
19
provided., the Seller may sell the Offered Interest to the
Purchaser at any time within thirty (30) days after the last day
of the Offer Period, provided that such sale shall be made on
terms no more favorable to the Purchaser than the terms contained
in the Purchase Offer and provided further that such sale
complies with other terms, conditions, and restrictions of this
Agreement that are applicable to sales of a Partnership Interest
and are not expressly made inapplicable to sales occurring under
this Section 10.9. In the event that the Offered Interest is not
sold in accordance with the terms of the preceding sentence, the
Offered Interest shall again become subject to all of the
conditions and restrictions of this Section 10.9.
10.10 EXPENSES OF TRANSFER. The person acquiring a Partnership Interest
pursuant to any of the provisions of this Article 10 shall bear all costs and
expenses necessary to effect a transfer of that Partnership Interest including,
without limitation, reasonable attorney's fees incurred in preparing amendments
to this Agreement of Limited Partnership to reflect the transfer or acquisition
and the cost of filing the amendments with the appropriate governmental
officials.
10.11 AMENDMENT OF CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP. For
the admission to the Partnership of any Partner, the General Partner shall take
all steps necessary and appropriate to prepare and record an amendment of the
Certificate of Limited Partnership, prepare and execute an amendment of this
Agreement. For this purpose, they may exercise the powers of attorney granted
pursuant to Article 13.5. An amendment of this Agreement required to add new
Limited or General Partner need only be filed at the end of the month in which
each new Limited or General Partner is to be added.
10.12 SURVIVAL OF LIABILITIES. No sale or assignment of a Partnership
Interest, even if it results in substitution of the assignee or vendee as a
Limited Partner, shall release the assignor or vendor from those
20
liabilities to the Partnership that survive the assignment or sale as a matter
of law.
ARTICLE XI
AMENDMENTS
11.1 PROPOSA1 OF AMENDMENTS GENERALLY. Any amendments to this Agreement may
be proposed:
A. By the General Partner, which shall give notice to the Limited
Partners of (1) the text of such amendment, (2) a statement of
the purpose such amendment, (3) an opinion of counsel obtained by
such General Partner to the effect that such amendment is
permitted by the Act and this Agreement, will not impair the
limited liability of the Limited Partners and will not adversely
affect the classification of the Partnership as a partnership for
federal income tax purposes; or
B. By a Majority in Interest of Limited Partners, who shall submit
to the General Partner the text of such proposed amendment,
together with a statement of the purpose of such amendment and an
opinion of counsel obtained by them, which counsel shall not have
been disapproved of by the General Partner, to the effect that
such amendment is permitted by the Act and this Agreement, will
not impair the limited liability of the Limited Partners and will
not adversely affect the classification of the Partnership as a
partnership for federal income tax purposes.
The General Partner shall, within twenty (20} days after receipt of any
proposal under subsection) above, give written notice to all Partners of such
proposed amendment, such statement of purpose and such opinion of counsel,
together with the views, if any, of the General Partner with respect to such
proposed amendment (including with respect to whether such proposed amendment is
permitted by the Act and this Agreement, will not impair the limited
21
liability of the Limited Partners or will adversely affect the classification of
the Partnership as a partnership for federal income tax purposes).
11.2. ADOPTION OF AMENDMENTS. Amendments to this Agreement shall be adopted
only upon the affirmative vote of those Partners who at the time of the vote
have more than fifty percent (50%) of the Partnership Interest. Upon such vote,
the General Partner shall within a reasonable time after the adoption of any
amendment to this Agreement make any official filings or publications required
or desirable to reflect such amendment, including any required filing for
recordation of any certificate.
11.3 LIMITATIONS ON AMENDMENTS. No amendment to this Agreement may:
A. Add to, detract from or otherwise modify the purposes of the
Partnership without the affirmative vote of all the Partners;
B. Enlarge the obligations of any Partner under this Agreement or
convert the Partnership Interest of any Limited Partner into the
Partnership Interest of a General Partner or modify the limited
liability of any Limited Partner without the consent of such
Partner and the consent of a Majority in Interest of Limited
Partners;
C. Modify the order provided in Article IV for allocations of
profits and losses, the order provided in Article V for cash
distributions, or the order provided in Section 12.3 for
distribution of cash proceeds upon dissolution without the
written consent of each Partner adversely affected by such
modification and the written consent of a Majority in Interest of
Limited Partners;
D. Amend this Article XI or Article X, or Sections 3.3 and 5.2 of
this Agreement without the written consent of all Partners;
22
E. Adopt any amendment to this Agreement that increases the
liability of any Partner, or changes the contributions required
by any Partner or the rights of any Partner in interest in the
profits, losses, deductions, credits, revenues, or distributions
of the Partnership, rights upon dissolution, or any voting rights
specifically set forth in this Agreement, without the written
consent of that Partner.
ARTICLE XII
DISSOLUTION AND TERMINATION
12.1 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP. The Partnership shall
be dissolved upon the occurrence of any of the following:
A. The bankruptcy or insolvency of both General Partner or the
occurrence of any other event that would permit a trustee or
receiver to acquire control of the affairs of both General
Partner;
B. The withdrawal from the Partnership, death, or insanity of both
General Partner;
C. Agreement of the General Partner and a Majority In Interest of
Limited Partners to dissolve;
D. Any disposition of all of the property of the Partnership;
E. The termination of the Partnership pursuant to Section 1.6; or
F. The occurrence of any other circumstances that by law would
require the Partnership to be dissolved. The dissolution shall be
effective on the day on which the event causing dissolution
occurs, but the Partnership shall not terminate until its assets
have been distributed in accordance with the provisions of this
Agreement.
23
12.2 CONTINUATION OF BUSINESS ENTERPRISE.
A. On dissolution of the Partnership pursuant to Section 12.1 A or
B, the Partners may elect to continue the Partnership by the vote
of a Majority In Interest of Limited Partners taken within 90
days of any event of dissolution, with any election to continue
being binding on all the Partners. If they elect to continue the
Partnership, the Partners shall also by a vote of a Majority In
Interest of Limited Partners elect a new General Partner.
B. On dissolution of the Partnership after which the business
enterprise of the Partnership is not continued, the liquidating
trustee, which shall be a General Partner if the dissolution is
one described in Section 12.1 C, D or E and otherwise shall be a
person selected by a Majority In Interest of Limited Partners or
by a court having jurisdiction over the affairs of the
Partnership, shall proceed diligently to wind up the affairs of
the Partnership and distribute its assets. The liquidating
trustee shall use its best efforts to sell the equipment and
otherwise convert Partnership assets into cash as promptly as
possible but in an orderly and businesslike manner so as not to
involve undue sacrifice. No Partner shall have any right to
demand or receive property other than cash during Winding Up.
12.3 WINDING UP. The cash proceeds of the Partnership shall be applied or
distributed on the winding up of the Partnership in the following order of
priority:
A. In payment of all liabilities of the Partnership to creditors
other than Partners. If any liability is contingent or uncertain
in amount, a reserve equal to the maximum amount for which the
Partnership could be reasonably held liable shall be established.
On the satisfaction or other
24
discharge of that contingency, the amount of the reserve
remaining, if any, will be treated as income to the extent
previously treated as a deduction.
B. In payment of any loans to the Partnership by the Partners.
C. After all allocations provided for in Article 4, to each Partner
in the proportion that the balance in his or her capital account
bears to the sum of the balance of the capital accounts of all
Partners, to the extent of such balances.
D. To the Partners in proportion to their applicable interests in
profits and losses determined in accordance with Section 4.
ARTICLE XIII
MISCELLANEOUS
13.1 MEETINGS OF PARTNERS. Meetings of the Partners may be called by the
General Partner or a Majority In Interest of Limited Partners for any matters
for which the Partners may vote as set forth in this Agreement, or for a report
from the General Partner on matters pertaining to the Partnership business and
activities. A list of the names and addresses and percentage interest of all
Limited Partners shall be furnished each Limited Partner and shall be maintained
as a part of the books and records of the Partnership. Within seven (7) days
after receipt of a written request in compliance with the above terms, either in
person or by registered or certified mail, stating the purpose of the meeting,
the General Partner shall mail to all Partners written notice of the place and
purpose of such meeting to be held on a date not less than fourteen (14) nor
more than twenty-eight (28) days after receipt of the request. When a vote of
the Limited Partners is called, the Limited Partners may vote at the meeting in
person or by proxy.
13.2 ACTION WITHOUT MEETING. Any matter as to which the Limited Partners
are authorized to take action under this Agreement or by law may be taken by the
Limited Partners without a meeting and shall be as valid and
25
effective as action taken by the Limited Partners at a meeting assembled, if
written consents to the action by the Limited Partners (1) approve the action
and (2) are delivered to the General Partner.
13.3 TAX RETURNS. Each Partner hereby agrees to execute promptly, together
with acknowledgment or affidavit, if requested by a General Partner, all such
agreements, certificates, tax statements, tax returns, and other documents as
may be required of the Partnership or its Partners by the laws of the United
States of America, the State of Texas, or any other state in which the
Partnership conducts or plans to conduct business, or any political subdivision
or agency thereof.
13.4 NOTICES. All notices, offers, or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and either
delivered or deposited in the United States Mall, postage prepaid, addressed to
the respective Partners at the addresses appearing in the records of the General
Partner. Any Limited Partner may change his or her address for notice by giving
notice in writing to the General Partner stating the new address. The General
Partner may change its addresses for notice by giving written notice of the
change to the Limited Partners.
13.5 POWER OF ATTORNEY. By the execution of this Agreement, each Limited
Partner and any assignee or transferee of a Limited Partner's Partnership
Interest irrevocably constitutes and appoints each General Partner his or her
true and lawful attorney-in-fact and agent to execute, acknowledge, verify,
swear to, deliver, record, and file in that Partner's or assignee's name, place
and stead, all documents which may from time to time be required by any federal
or state law, including the execution, verification, acknowledgment, delivery,
filing and recording of this Agreement, as well as all authorized amendments to
any such document, all assumed name certificates, documents, bills of sale,
assignments, and other instruments or conveyances, leases, contracts, loan
documents and/or counterparts of any such document, and all other documents that
may be required to effect a continuation of the Partnership and that the General
Partner deem necessary or reasonably appropriate. The power of attorney granted
in this paragraph shall be deemed to be
26
coupled with an interest, shall be irrevocable and survive the death,
bankruptcy, incompetency or legal disability of a Limited Partner, and shall
extend to that Limited Partner's heirs successors and assigns. Each Limited
Partner agrees to be bound by any representations made by the General Partner
acting in good faith pursuant to the Power of Attorney, and each Limited Partner
waives any and all defenses that may be available to contest, negate, or
disaffirm any action of the General Partner taken in good faith under this Power
of Attorney.
13.6 EFFECTIVE LAW. This Agreement and the rights of the Partners shall be
governed by and interpreted in accordance with the laws of the State of Texas.
13.7 ASSIGNS. This Agreement shall be binding on and shall inure to the
benefit of the Partners and their spouses as well as their respective legal
representatives, heirs, successors and assigns.
13.8 COUNTERPART EXECUTION. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original, but all of which
shall constitute one instrument.
13.9 GENDER AND NUMBER. Whenever the context requires, the singular shall
include the plural and the masculine shall include the feminine and neuter, as
the identification of the person, corporation, or other entity may require.
13.10 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules, and regulations of the State of Texas. If any provision of
this Agreement or its application to any person or circumstances shall, for any
reason and to any extent, be held invalid or unenforceable, the remainder of
this Agreement and the application of such provision to other persons or
circumstances shall not be affected thereby, but rather shall be effective and
in force to the greatest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date and year first above written.
27
GENERAL PARTNER:
NEHC PROPERTIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇ ▇▇▇▇▇▇▇, President
Address for notice:
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
MODERN MODULAR HOME RENTAL CORP., a Texas Corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇ ▇▇▇▇▇▇▇, President
Address for notice:
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
AMERICAN HOMESTAR CORPORATION, a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Exec. Vice-President
Address for notice:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
WESTLAWN PARTNERSHIP, LTD., a Texas limited partnership,
By: Intercontinental Capital Corporation,
Its general partner,
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President
Address for notice:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
28
EXHIBIT "A"
TO
HUMBLE SPRINGS, LTD.
PARTNERSHIP AGREEMENT
GENERAL PARTNER
NAME AND ADDRESS COLUMN I
---------------- --------
Initial Capital
Contribution
NEHC Properties, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇ $1.00
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 281-260-9798
Tax Payer Identification Number: ▇▇-▇▇▇▇▇▇▇
LIMITED PARTNERS
----------------
American Homestar Corporation $49.50
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
Modern Modular Home Rental Corp. $37.00
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 281-260-9798
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
Westlawn Partnership, Ltd. $12.50
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
29
EXHIBIT "B"
TO
HUMBLE SPRINGS, LTD.
PARTNERSHIP AGREEMENT
NAME AND ADDRESS PARTNERSHIP
-------------------------------------------------------------------------
INTEREST
--------
NEHC Properties, Inc. 1%
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS
----------------
American Homestar Corporation 49.5%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Modern Modular Home Rental Corp. 37.0%
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Westlawn Partnership, Ltd. 12.5%
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
30
AGREEMENT
This Agreement (this "Agreement") is made as of the 1st day of July, 2004,
---------
by and among American Homestar Corporation, a Texas Corporation ("American
--------
Homestar"), NEHC Properties, Inc., a Texas corporation ("NEHC"), and Modern
-------- ----
Modular Home Rental Corp., a Texas corporation ("Modern Modular"). American
--------------
Homestar, NEHC, and Modern Modular are sometimes referred to herein,
individually or collectively, as the case may be, as a "Party" or the "Parties."
----- -------
RECITALS
WHEREAS, American Homestar, NEHC, Modern Modular, and Westlawn Partnership
Ltd., a Texas limited partnership ("Westlawn") are parties to that certain
Agreement of Limited Partnership of Humble Springs, Ltd., a Texas limited
partnership (the "Partnership") dated as of March 12, 2003 (the "Partnership
Agreement), which Partnership Agreement provides for, among other things, the
governance of the Partnership and the rights, ownership, and privileges of the
partners of the Partnership;
WHEREAS, during discussions and negotiations relating to the terms and
provisions of the Partnership Agreement, the Parties orally agreed that each of
the partners would be responsible for their respective proportionate share of
the net cash losses, if any, of the Partnership at the time the Partnership
winds up its affairs;
WHEREAS, the partners made additional oral agreements to the effect that
such net cash losses, if any, will include American Homestar's additional
capital contributions and earned but unpaid preferred return on the additional
capital contributions, as more fully described in the Partnership Agreement; and
WHEREAS, the Partnership Agreement does not explicitly set forth these
agreements between the partners, and the Parties wish to clarify and confirm
that such agreements were made between the Parties and were the intention and
understanding of the Parties at the time they formed the Partnership that such
net cash losses, if any, will be appropriated to the partners as set forth
above.
NOW, THEREFORE, for and in consideration of the recitals above and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed, the
Parties do covenant and agree as follows:
1. NET CASH LOSSES. The Parties acknowledge and agree and desire to clarify
---------------
their understanding and intention that each of the partners has been responsible
since the formation of the Partnership and shall continue to be responsible for
each of their respective proportionate shares of the net cash losses, if any, of
the Partnership at the time that the Partnership winds up its affairs. This
Agreement is intended to clarify the agreements made by the Parties hereto and
shall not amend or modify the Partnership Agreement, which Partnership Agreement
shall remain in full force and effect.
2. PROPORTIONATE SHARE OF WESTLAWN. In the event that Westlawn is unwilling
-------------------------------
or unable to fund its proportionate share of the net cash losses of the
Partnership, including the additional capital contributions of American Homestar
and earned but unpaid preferred return on such additional capital contributions,
then NEHC and Modern Modular hereby acknowledge and agree that they will be
jointly and severally responsible for the proportionate share of the net cash
losses of Westlawn, in addition to their respective proportionate shares, for
the benefit of American Homestar.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned on
the date set forth in the first paragraph hereof.
AMERICAN HOMESTAR CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President and Chief Executive Officer
NEHC PROPERTIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇▇▇▇▇▇▇, President
MODERN MODULAR HOME RENTAL CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-------------------------
▇▇▇ ▇▇▇▇▇▇▇, President