Exhibit 10.17
LIMITED PARTNERSHIP AGREEMENT
OF
APPLE REIT LIMITED PARTNERSHIP
This LIMITED PARTNERSHIP AGREEMENT (the "Partnership Agreement"), is
made as of December 10, 1997, 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 Limited
Partnership. The Partnership was originally formed under the name "Apple Limited
Partnership" and the name of the Partnership was changed to "Apple REIT Limited
Partnership" effective December 19, 1997.
1.2 PURPOSE. The Partnership is formed to hold real estate and other
assets 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 ss.
50-73.11.
(b) The Certificate designates 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000 as the principal office (the "Principal Office") of the
Partnership. It designates c/o McGuire, Woods, Battle & Xxxxxx, L.L.P., One
Xxxxx Center, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 as its registered
office (the "Registered Office") and Xxxxxx X. Xxxxxxxx, 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. 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 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 or which
of 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 Internal Revenue Code of 1986, as amended, and the
Regulations thereunder (the "Code"). 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
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effect as long as the Partner granting it has any interest in the Partnership or
remains responsible for any obligations under this Partnership Agreement.
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.
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WITNESS the following signatures.
GENERAL PARTNER
Apple General, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Title: President
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LIMITED PARTNER:
Apple Limited, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Title: President
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SCHEDULE A
GENERAL PARTNER
Name and Capital Partners'
Business Address Contribution Percentage
Apple General, Inc. One percent (1%) 1%
000 Xxxx Xxxx Xxxxxx undivided interest
Xxxxxxxx, Xxxxxxxx 00000 in the property
described on Exhibit A
LIMITED PARTNER
Name and Capital Partners'
Business Address Contribution Percentage
Apple Limited, Inc. Ninety-nine percent 99%
000 Xxxx Xxxx Xxxxxx (99%) undivided interest
Xxxxxxxx, Xxxxxxxx 00000 in the property
described on Exhibit A
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EXHIBIT A
The apartment properties (including all real and personal property
associated therewith) formerly owned by Apple Residential Income Trust, Inc. and
commonly known and described as:
Number
Name Location of Units
---- -------- --------
Brookfield ..................... Dallas, TX 000
Xxxxx Xxxxx .................... Irving, TX 484
Tahoe .......................... Arlington, TX 000
Xxxx Xxxxxxxx .................. Arlington, TX 184
Polo Run ....................... Arlington, TX 224
Wildwood ....................... Euless, TX 120
Toscana ........................ Dallas, TX 192
Arbors on Forest Ridge ......... Bedford, TX 210
Pace's Cove .................... Dallas, TX 000
Xxxxxxxxx Xxxxx ................ Irving, TX 000
Xxxxxx Xxxxxxxx ................ Xxxx Xxxxx, XX 200
All of the above properties were conveyed to the Partnership by Deeds
dated as of December 29, 1997 with Apple General, Inc. and Apple Limited, Inc.
as grantors, and Apple REIT Limited Partnership as grantee.
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