EXHIBIT 10.26
LIMITED PARTNERSHIP AGREEMENT
OF
APPLE SUITES REIT LIMITED PARTNERSHIP
This LIMITED PARTNERSHIP AGREEMENT (the "Partnership Agreement") is
made as of August 30, 1999, by and between Apple Suites General, Inc., a
Virginia corporation, the general partner ("General Partner"), and Apple Suites
LP, Inc., a Virginia corporation, the limited partner ("Limited Partner").
INTRODUCTION
A. The General Partner and the Limited Partner (collectively, the
"Partners") 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 State Corporation Commission of
Virginia (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 Suites REIT Limited
Partnership. The Partnership may trade or transact business under such other
names as may be selected by the General Partner.
1.2 PURPOSE. The purpose of the Partnership is to acquire, hold,
operate and in all respects act as owner of the hotel property or properties
more specifically described on Exhibit A hereto, and to engage in any and all
activities that are related or incidental thereto, or that are agreed to by the
Partners from time to time. Notwithstanding the foregoing, the Partnership's
activities shall be limited and conducted as necessary to ensure that Apple
Suites, Inc., a Virginia corporation and shareholder of each of the Partners
("Apple Suites REIT"), will qualify at all times 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 a certificate of limited
partnership with the Commission pursuant to Section 50-73.11 of the Code of
Virginia (the "Certificate").
(b) The Certificate designates 306 East Main Street, Richmond,
Virginia 23219 as the office where records of the Partnership are kept (the
"Principal Office"). The Certificate designates Martin B. Richards, Esquire, as
the registered agent at the following
registered office: c/o McGuire, Woods, Battle & Boothe LLP, One James Center,
901 East Cary Street, Richmond, Virginia 23219
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:
(a) acquire, hold, sell, maintain, encumber, improve, develop
or lease the Partnership's property, whether real or personal, and any interest
therein on such terms and conditions as the General Partner deems advisable.
(b) borrow money on behalf of the Partnership, secure any such
borrowings with assets of the Partnership, and repay the same at any time or
from time to time;
(c) establish investment accounts for the Partnership and
deposit and withdraw funds in or from such accounts;
(d) assign, compromise or release any claim of, or debt due
to, the Partnership;
(e) 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;
(f) engage and retain accountants, lawyers and other
professionals 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
(g) 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 Suites REIT (including, without limitation, Article XIII thereof), and
actions described in such Bylaws may only be undertaken in compliance with such
provisions (including, without limitation, those provisions of Article XIII
relating to consents that are required to be obtained).
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; DISTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS. Each of the Partners has contributed to the
capital of the Partnership the property set forth on Exhibit B hereto. 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 Exhibit B 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 form 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 Suites REIT to pay dividends to
shareholders so that the Apple Suites REIT will (a) meet the distribution
requirements for qualification as a REIT as set forth in Section 857(a)(i) of
the Code; and (b) 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.
ARTICLE V
INDEMNIFICATION
5.1 REQUIREMENT. The Partnership shall indemnify each Partner, and each
director and officer of a Partner (an "Indemnified Person"), against any and all
liabilities and expenses (including but not limited to reasonable legal fees and
costs) arising directly or indirectly from any action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, and
whether formal or informal, that is brought or threatened against an Indemnified
Person solely because such Indemnified Person served as a Partner or as a
director or officer of a Partner, or served at the request of the Partnership as
a fiduciary for an employee benefit plan or other plan related to the business
of the Partnership. Notwithstanding the foregoing, the Partnership shall not be
required to indemnify a Partner, or a director or officer of a Partner, against
any liabilities or expenses arising from any breach of this Partnership
Agreement, willful misconduct or knowing violation of law.
5.2 RELATED ACTIONS. The Partnership shall promptly make advances or
reimbursements for reasonable expenses (including but not limited to reasonable
legal fees and costs) incurred by a 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 prior to such determination
shall be conditioned upon the Partnership's receipt of a written undertaking by
the Partner, director or officer claiming indemnification 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:
(a) upon the election of the General Partner;
(b) at such time as there is no General Partner serving
unless, within ninety (90) days, the Limited Partner consents to continue the
business of the Partnership and appoints one or more General Partners;
(c) upon automatic cancellation of the certificate of limited
partnership for failure to pay annual registration fees, unless steps are taken
promptly to obtain reinstatement; or
(d) by judicial decree.
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:
(a) to creditors of the Partnership, including Partners who
are creditors, in the order of priority provided by law;
(b) to the creation of such reserves for contingencies as the
Liquidating Representative may deem necessary or advisable;
(c) to the Limited Partner to the extent of its contribution
to capital;
(d) to the General Partner to the extent of its contribution
to capital;
(e) 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 and such books shall be open to
examination by the Partners, the Apple Suites REIT and the authorized
representatives of each of them 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 as 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
the Limited 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.
8.4 COUNTERPARTS. This Partnership Agreement may be executed in
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
8.5 AMENDMENTS. This Partnership Agreement may be amended only with the
written 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, such as, without
limitation, creditors of the Partnership.
8.7 HEADINGS. The section headings in this Partnership Agreement are
included 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 its laws, without regard to any choice of law rules to the
contrary.
WITNESS the following signatures:
General Partner: APPLE SUITES GENERAL, INC.
By: /s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.
Secretary
Limited Partner: APPLE SUITES LP, INC.
By: /s/ Stanley J. Olander, Jr.
----------------------------
Stanley J. Olander, Jr.
Secretary
EXHIBIT A
(Description of Property)
The real and personal property currently known as the Homewood
Suites(R) Dallas - Addison, which is located on a 3.5 acre site at the following
address: 4451 Beltline Road, Addison, Texas 75244.
The real and personal property currently known as the Homewood
Suites(R) Dallas - Irving/Las Colinas, which is located on a 3.4 acre site in
the La Colinas Urban Center at the following address: 4300 Wingren, Irving,
Texas 75039.
The real and personal property currently known as the Homewood
Suites(R) Dallas - Plano, which is located on a 2.667 acre site in the Preston
Park Business Center at the following address: 4705 Old Sheppard Place, Plano,
Texas 75093.
EXHIBIT B
(Capital Contributions)
Name and Capital Partners
Business Address Contributions Percentages
---------------- ------------- -------------
GENERAL PARTNER: Apple Suites General, Inc. $1.00 1%
306 East Main Street
Richmond, Virginia 23219
LIMITED PARTNER: Apple Suites LP, Inc. $99.00 99%
306 East Main Street
Richmond, Virginia 23219