LIMITED PARTNERSHIP AGREEMENT
OF
APPLE REIT III LIMITED PARTNERSHIP
This LIMITED PARTNERSHIP AGREEMENT (the "Partnership Agreement") is
made as of June 23, 1998, by and between Apple General, Inc., a Virginia
corporation, the general partner ("General Partner"), and Apple Limited, Inc., a
Virginia corporation, the limited partner ("Limited Partner" and together with
the General Partner, the "Partners").
INTRODUCTION
A. The General Partner and the Limited Partner have agreed to form a
limited partnership (the "Partnership") pursuant to the provisions of the
"Virginia Revised Uniform Limited Partnership Act" (the "Act"). The existence of
the Partnership shall commence upon the filing of a certificate of limited
partnership with the Virginia State Corporation Commission (the "Commission").
B. The rights, duties and obligations of the Partners shall be governed
by the Act except as otherwise provided in this Partnership Agreement. The term
"Person," as used herein, means an individual or an entity.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 NAME. The name of the Partnership is Apple REIT III Limited
Partnership. The Partnership may trade or transact business under the name
Hayden's Crossing Apartments or such other name as shall be selected by the
General Partner.
1.2 PURPOSE. The Partnership is formed to acquire, hold, operate and in
all respects act as owner of the Hayden's Crossing Apartments in Grand Prairie,
Texas (located on the property more specifically described on Exhibit A) and to
engage in any and all activities related or incidental thereto or agreed to by
the Partners from time to time provided, however, such activities shall be
limited to and conducted in such a manner as to permit Apple Residential Income
Trust, Inc. (the "Apple REIT") at all times to qualify as a real estate
investment trust ("REIT") under sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.3 FILINGS.
(a) The Partnership has filed with the Commission a
certificate of limited partnership (the "Certificate") pursuant to Va Code
Section 50-73.11.
(b) The Certificate designates ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as the principal office (the "Principal Office") of the
Partnership. It designates ▇/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its registered office (the "Registered Office") and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., at that address, as its registered agent (the "Registered
Agent").
ARTICLE II
MANAGEMENT
2.1 THE GENERAL PARTNER. The General Partner shall have the sole and
exclusive right, duty and power to manage the business of the Partnership,
including, without limitation, the right and power to:
(i) acquire, hold, sell, maintain, encumber, improve,
develop or lease Partnership property, real or personal, and any
interest therein on such terms and conditions as the General Partner
deems advisable;
(ii) borrow money on behalf of the Partnership,
secure any such borrowings with Partnership assets, and repay the same
at any time or from time to time;
(iii) establish investment accounts for the
Partnership and deposit and withdraw funds in or from such accounts;
(iv) assign, compromise or release any claim of, or
debt due, the Partnership;
(v) institute and defend actions at law or in equity
on behalf of the Partnership and consent to arbitrate any disputes or
controversies of the Partnership;
(vi) engage and retain accountants, lawyers and other
professional persons to perform services for the Partnership, and
purchase such goods and other services as may be required to conduct
the business of the Partnership; and
(vii) enter into such contracts and perform such
other acts as may be necessary to further the business of the
Partnership.
2.2 LIMITATIONS ON POWER AND AUTHORITY. Notwithstanding anything to the
contrary in this Partnership Agreement, the General Partner's rights, authority
and power are subject to and limited by certain provisions of the Bylaws of the
Apple REIT (including Article XIII therein) and actions described in such Bylaws
(including such Article) may only be undertaken in compliance with the
provisions thereof, including the obtaining of any consents referred to therein.
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ARTICLE III
LIMITED PARTNERS
3.1 PARTICIPATION IN MANAGEMENT. The Limited Partner shall not
participate in the management or control of the business of the Partnership, and
shall have no power to sign for or bind the Partnership.
ARTICLE IV
CAPITAL; PROFITS AND LOSSES; COMPENSATION; DISTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS. Each of the Partners has contributed to the
capital of the Partnership the property set forth on Schedule A. The Partners
shall not be required to make any additional capital contributions except as
required by law, but the Partners may make such additional contributions of cash
or property as they may mutually agree. No Partner shall have any right to
require the return of all or any part of its capital, or to receive interest
with respect thereto.
4.2 CAPITAL ACCOUNTS. A separate capital account ("Capital Account")
shall be maintained for each Partner. The value of each Capital Account shall be
the sum of the cash contributions to the account, the agreed upon value of
contributions of property to the account and the share of Partnership profits
allocated to the account, less all distributions made from the account and the
share of Partnership losses allocated to the account.
4.3 PROFITS AND LOSSES. The net profits and net losses of the
Partnership for any period (except for the profits and losses upon dissolution)
shall be credited or charged to the Capital Accounts of the Partners in the
percentages set forth on Schedule A under the heading "Partners' Percentages"
(as the same may be amended from time to time, the "Partners' Percentages").
4.4 DISTRIBUTIONS. Any cash which, in the opinion of the General
Partner, is not reasonably required for the operation of the business of the
Partnership or for Partnership reserves (other than amounts distributed upon
dissolution) shall be distributed to the Partners in accordance with the
Partners' Percentages not less frequently than each calendar quarter. Other
distributions of assets may be made from time to time in the same manner.
4.5 REIT DISTRIBUTIONS. Notwithstanding anything to the contrary in
this Agreement, the General Partner shall cause the Partnership to distribute
amounts sufficient to enable the Apple REIT to pay its shareholders dividends
that will allow the Apple REIT to (i) meet the distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and (ii)
avoid any federal income or excise tax liability imposed by the Code.
4.6 LOANS. A loan by a Partner to the Partnership shall not be
considered a capital contribution and shall be repaid as debt of the
Partnership.
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ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION.
(a) The Partnership shall indemnify each Partner (and each
director and officer of a Partner) who was, is or is threatened to be made a
party to any action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, and whether formal or informal (a
"Proceeding"), (i) solely by reason of being or having been a Partner or a
director or officer of a Partner or (ii) as a result of having served at the
request of the Partnership as a fiduciary for an employee benefit or other plan
related to the business of the Partnership, against any liability and reasonable
expenses (including reasonable attorney's fees), incurred as a result of such
Proceeding, except such liabilities and expenses which are incurred as a result
of a breach of this Partnership Agreement, willful misconduct or a knowing
violation of the law.
(b) The Partnership shall promptly make advances or
reimbursements for reasonable expenses (including attorney's fees) incurred by
any Partner or a director or officer of a Partner claiming indemnification under
this Article unless it has been determined that such Partner, director or
officer is not entitled to indemnification. Advances or reimbursements made in
advance of any such determination shall be conditioned upon receipt from the
Partner, director or officer claiming indemnification of a written undertaking
to repay the amount of such advances or reimbursements if it is ultimately
determined that such Partner, director or officer is not entitled to
indemnification.
ARTICLE VI
EVENTS OF DISSOLUTION
6.1 EVENTS OF DISSOLUTION. The Partnership shall only be dissolved:
(i) upon the election of the General Partner;
(ii) at such time as there is no General Partner
serving unless, within 90 days, the Limited Partner consents to
continue the business of the Partnership and appoints one or more
General Partners;
(iii) upon automatic cancellation of the certificate
of limited partnership for failure to pay annual registration fees,
unless steps to obtain reinstatement are promptly taken; or
(iv) by judicial decree.
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ARTICLE VII
DISSOLUTION, WINDING UP AND TERMINATION
7.1 GENERAL. Upon dissolution without continuation, the business of the
Partnership shall be wound up by the General Partner or, if there is no General
Partner, by a representative designated by the Limited Partner (either of which
or whom is hereinafter referred to as the "Liquidating Representative"). The
Liquidating Representative shall proceed with reasonable promptness to liquidate
the business and assets of the Partnership and may determine whether and to
which Partners properties should be distributed in kind. Partnership assets
shall be distributed in the following order:
(i) to creditors of the Partnership, including
Partners who are creditors, in the order of priority provided by law;
(ii) to the creation of such reserves for
contingencies as the Liquidating Representative may deem necessary or
advisable;
(iii) to the Limited Partner to the extent of its
contribution to capital;
(iv) to the General Partner to the extent of its
contribution to capital;
(v) to the Partners, General and Limited, according
to their Capital Account balances, after all adjustments.
ARTICLE VIII
MISCELLANEOUS
8.1 BOOKS OF ACCOUNT AND RECORDS. The Partnership shall keep complete
books of account at the Principal Office which shall be open to examination by
the Partners, the Apple REIT and their authorized representatives during normal
business hours. The books shall be kept on a cash or accrual basis, as
determined by the General Partner.
8.2 TAX COMPLIANCE. Notwithstanding anything to the contrary contained
in this Partnership Agreement, all actions taken in the conduct of the business
of the Partnership, or on its dissolution, shall comply with the provisions of
Section 704 of the Code and the Regulations thereunder. The General Partner
shall be the "Tax Matters Partner" required by the Code.
8.3 POWER OF ATTORNEY. The Limited Partner hereby appoints the General
Partner its attorney-in-fact, or agent, to execute, acknowledge, deliver and
file in its name any document required by law to be filed by the Partnership or
such Partner with any governmental body or agency. Any such appointment is a
special power, coupled with an interest, and shall remain in effect as long as
the Partner granting it has any interest in the Partnership or remains
responsible for any obligations under this Partnership Agreement.
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8.4 COUNTERPARTS. This Partnership Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.5 AMENDMENTS. This Partnership Agreement may be amended only with the
consent of the General Partner and the Limited Partner.
8.6 THIRD PARTIES; SUCCESSORS AND ASSIGNS. The agreements contained
herein are for the benefit of the parties hereto and their permitted successors
and assigns and are not for the benefit of any third parties, including, without
limitation, creditors of the Partnership.
8.7 HEADINGS. The section headings herein are for convenience only and
shall not affect the interpretation of this Partnership Agreement.
8.8 INTERPRETATION. This Partnership Agreement is executed and
delivered in the Commonwealth of Virginia and shall be construed and enforced in
accordance with the laws of such state without giving effect to its choice of
law rules.
WITNESS the following signatures.
GENERAL PARTNER
Apple General, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
LIMITED PARTNER:
Apple Limited, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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SCHEDULE A
GENERAL PARTNER
Name and Capital Partners'
Business Address Contribution Percentages
Apple General, Inc. $ 1.00 1%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNER
Name and
Business Address
Apple Limited, Inc. $99.00 99%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT A
BEING a tract of land situated in the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ SURVEY, ABSTRACT NO.
1614, and the ▇▇▇▇▇▇, ▇▇▇▇▇▇ AND ▇▇▇▇▇ SURVEY, ABSTRACT NO. 629, and being
SUNSET CROSSING III , an addition to the City of Grand Prairie as recorded in
Volume 388-165, Page 26, Plat Records, TARRANT County, Texas and being more
particularly described as follows:
BEGINNING at an iron rod found for corner in the curving East line of State
Highway 360 (variable width right-of-way), said iron rod being the Southwest
corner of said Sunset Crossing III and the Northwest corner of Sunset Crossing
as recorded in Volume 388-143, Page 26, Plat Records, TARRANT County, Texas and
also curving in a Northeasterly direction to the right with a radial bearing of
South 71 degrees 13 minutes 58 seconds East, a central angle of 04 degrees 57
minutes 30 seconds, a radius of 1889.36 feet, and a tangent distance of 81.80
feet;
THENCE along said East line of State Highway 360 and said curve to the right an
arc distance of 163.50 feet to an iron rod found for corner, said iron rod being
the point of tangency;
THENCE North 23 degrees 43 minutes 32 seconds East along said East line of State
Highway 360 a distance of 152.72 feet to an iron rod found for corner;
THENCE departing said ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇ degrees 31 minutes 34 seconds
East a distance of 230.00 feet to an iron rod found for corner;
THENCE North 44 degrees 49 minutes 30 seconds East a distance of 226.81 feet to
an iron rod found for corner;
THENCE South 89 degrees 31 minutes 34 seconds East a distance of 310.00 feet to
an iron rod found for corner situated in the curving Westerly line of Hawco
Drive (a 60 foot right-of-way);
THENCE along said Westerly line of Hawco Drive the following;
Along said curve to the left in a Southeasterly direction, having a radial
bearing of North 86 degrees 39 minutes 17 seconds East, a central angle of 14
degrees 55 minutes 51 seconds, a radius of 830.00 feet, a tangent distance of
108.76 feet, and an arc length of 216.29 feet to an iron rod found for corner;
South 18 degrees 16 minutes 34 seconds East a distance of 238.99 feet to an iron
rod found for corner, said point being the point of curvature to the right;
Along said curve to the right having a radial bearing of South 71 degrees 43
minutes 26 seconds West, a central angle of 01 degree 22 minutes 13 seconds, a
radius of 770.00 feet, a tangent distance of 9.21 feet and an arc length of
18.42 feet to an iron rod found for corner, said corner being the Southeast
corner of Sunset Crossing III and the Northeast corner of Sunset Crossing;
THENCE departing said ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇ degrees 31 minutes 34 seconds West
along the common South line of Sunset Crossing III with the North line of Sunset
Crossing a distance of 941.55 feet to the POINT OF BEGINNING and CONTAINING
7.1121 acres of land, more or less.