Document:

EXHIBIT 10.12

                          LIMITED PARTNERSHIP AGREEMENT
                                       OF
                             CAC LIMITED PARTNERSHIP

         This LIMITED  PARTNERSHIP  AGREEMENT (the  "Partnership  Agreement") is
made as of  November  29,  2000 by and between  CAC  Special  General,  Inc.,  a
Virginia corporation,  the general partner ("General Partner"),  and CAC Special
Limited, Inc., a Virginia corporation, the limited partner ("Limited Partner").

                                  INTRODUCTION

         A.       The General Partner and the Limited Partner (collectively, the
"Partners") have formed a limited  partnership (the  "Partnership")  pursuant to
the provisions of the Virginia  Revised  Uniform  Limited  Partnership  Act (the
"Act"), effective November 29, 2000. The General Partner and the Limited Partner
are  each  wholly-owned  subsidiaries  of  Cornerstone  Acquisition  Company,  a
Virginia corporation ("CAC-REIT").

         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 CAC 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  Notwithstanding  any  provision  hereof  to the
contrary, the following shall govern: The nature of the Partnership's  business,
and of the purposes to be conducted and promoted by the Partnership, are limited
solely to the following activities:

                  (a)      To own, hold, sell, assign, transfer, operate, lease,
mortgage,  pledge and otherwise deal with those certain parcels of real property
listed on  Exhibit A hereto,  together  with all  improvements  located  thereon
(collectively, the "Properties");

                  (b)      To exercise all powers that are enumerated in the Act
and are necessary or  convenient to the conduct,  promotion or attainment of the
business or purposes of the Partnership as set forth herein.

<PAGE>

                  The Partnership's activities shall be limited and conducted as
necessary  to ensure that  CAC-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 State  Corporation  Commission  of  Virginia  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
McGuireWoods  LLP, One James Center,  901 East Cary Street,  Richmond,  Virginia
23219.

                                   ARTICLE II
          MANAGEMENT, PROHIBITED ACTIVITIES AND SEPARATENESS COVENANTS

         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.

<PAGE>

         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 CAC-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).

         2.3.     CERTAIN PROHIBITED  ACTIVITIES.  Notwithstanding any provision
hereof to the contrary, the following shall govern:

                  (a)      The  indebtedness  of the  Partnership  shall consist
only of a first lien mortgage on the Properties  arising from financing by First
Union National Bank (the "Mortgage"), any other indebtedness permitted under the
Mortgage,  and normal trade accounts payable in the ordinary course of business.
For so long as any obligation  secured by the Mortgage  remains  outstanding and
not paid in full,  the  Partnership  shall not incur,  assume,  or guaranty  any
indebtedness not permitted hereunder.

                  (b)      The  Partnership  shall not consolidate or merge with
or into any other  entity,  or convey or  transfer  its  properties  and  assets
substantially as an entirety to any entity, unless:

                           (i)      the   entity   that  is  formed   upon  such
consolidation,  that  survives such merger (if other than the  Partnership),  or
that  acquires  by  conveyance  or  transfer  the  properties  and assets of the
Partnership  substantially as an entirety,  shall: (A) be organized and existing
under the laws of the United  States of America or any State or the  District of
Columbia,  (B) include in its organizational  documents the same limitations set
forth in this Article II and in Section 2.4 hereof (Separateness Covenants), and
(C)  expressly  assume  the  due and  timely  performance  of the  Partnership's
obligations; and

                           (ii)     immediately  after  giving  effect  to  such
transaction,  no  default  or event of  default  will  have  occurred  under any
agreement to which the Partnership is a party.

                  (c)      For so long as any obligation secured by the Mortgage
remains  outstanding and not paid in full, the Partnership shall not voluntarily
commence a case with respect to itself, as debtor,  under the Federal Bankruptcy
Code or any similar  federal or state statute  without the unanimous  consent of
the  Partners.  For so long as any  obligation  secured by the Mortgage  remains
outstanding  and not paid in full,  no material  amendment  to this  Partnership
Agreement may be made without the prior  approval of the  mortgagee  holding the
Mortgage.

         2.4      SEPARATENESS  COVENANTS.  Notwithstanding any provision hereof
to the contrary,  the  following  shall  govern:  For so long as any  obligation
secured by the Mortgage  remains  outstanding  and not paid in full, in order to
preserve  and  ensure the  Partnership's  separate  and  distinct  identity,  in
addition to the other  provisions set forth in this Partnership  Agreement,  the
Partnership   shall  conduct  its  affairs  in  accordance  with  the  following
provisions:

<PAGE>

                  (a)      It shall  establish  and  maintain an office  through
which its  business  shall be  conducted  separate  and apart  from those of its
Partners and any  affiliate  and it shall  allocate  fairly and  reasonably  any
overhead for shared office space.

                  (b)      It  shall  maintain  separate  records  and  books of
account from those of its Partners and any affiliate.

                  (c)      All actions by the Partnership shall be authorized by
the General Partner,  who shall observe all necessary  formalities in connection
with such authorization.

                  (d)      It  shall  not  commingle  assets  with  those of its
Partners or any affiliate.

                  (e)      It shall conduct its own business in its own name.

                  (f)      It shall maintain financial  statements separate from
its Partners and any affiliate.

                  (g)      It shall pay any  liabilities  out of its own  funds,
including salaries of any employees, not funds of its Partners or any affiliate.

                  (h)      It shall maintain an arm's length  relationship  with
its Partners and any affiliate.

                  (i)      It shall not  guarantee or become  obligated  for the
debts of any other person or entity (including, without limitation, its Partners
or any  affiliate)  and shall  not hold out its  credit  as being  available  to
satisfy the obligations of others.

                  (j)      It shall use stationery, invoices and checks separate
from its Partners and any affiliate.

                  (k)      It shall not pledge its assets for the benefit of any
other  person or entity  (including,  without  limitation,  its  Partners or any
affiliate).

                  (l)      It shall hold itself out as an entity  separate  from
its Partners and any affiliate.

                  (m)      It shall not make any loans or  advances to any third
party (including, without limitation, any affiliate).

                  (n)      It  shall  comply  with  its  obligations  under  the
agreements and instruments evidencing the Mortgage.

         2.5      DEFINITIONS.  For purpose of this  Article  II, the  following
terms shall have the indicated meanings:

                  (a)      "affiliate" means, with respect to a specified person
or entity:

<PAGE>

                           (i)      any person or entity  directly or indirectly
owning,  controlling  or holding with power to vote ten percent (10%) or more of
the outstanding voting securities or interests of the specified entity;

                           (ii)     any  person or entity ten  percent  (10%) or
more of whose  outstanding  voting  securities  or  interests  are  directly  or
indirectly owned,  controlled or held with power to vote by the specified person
or entity;

                           (iii)    any person or entity  directly or indirectly
controlling,  controlled by or under common control with the specified person or
entity;

                           (iv)     any  officer,  director  or  partner  of the
specified person or entity;

                           (v)      if the  specified  person  or  entity  is an
officer,  director or partner,  any  company for which the  specified  person or
entity acts in any such capacity; and

                           (vi)     any   close   relative   or  spouse  of  the
specified person.

                  (b)      "control"   means   the   possession,   directly   or
indirectly,  of the power to direct or cause the direction of the management and
policies of a person or entity,  whether through ownership of voting securities,
by contract or otherwise.

                  (c)      "person or entity" means any individual, corporation,
partnership,  limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization,
government or any agency or political subdivision thereof.

                                   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.

<PAGE>

         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 Partnership  Agreement,  the General Partner shall cause the Partnership
to  distribute  amounts  sufficient  to  enable  CAC-REIT  to pay  dividends  to
shareholders so that CAC-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

<PAGE>

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.

         5.3      MANDATORY SUBORDINATION.  Notwithstanding any provision hereof
to the contrary,  the following shall govern: Any indemnification shall be fully
subordinated  to  any  obligations  respecting  the  Properties  and  shall  not
constitute  a claim  against  the  Partnership  in the  event  that cash flow is
insufficient to pay such obligations.

                                   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 or contract;

                  (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;

<PAGE>

                  (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,  CAC-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.

<PAGE>

WITNESS the following signatures:

GENERAL PARTNER:                            CAC Special General, Inc.
---------------

                                            By:   /s/ Stanley J. Olander, Jr.
                                                --------------------------------
                                                      Stanley J. Olander, Jr.,
                                                      Vice President

LIMITED PARTNER:                            CAC Special Limited, Inc.
---------------

                                            By:   /s/ Stanley J. Olander, Jr.
                                                --------------------------------
                                                      Stanley J. Olander, Jr.,
                                                      Vice President

<PAGE>

                                    Exhibit A
                              (List of Properties)

The Properties consist of those real properties,  together with all improvements
thereon, that are located at the following addresses:

The Arbors on Forest Ridge
2200 Forest Ridge Drive
Bedford, TX  76021

Brandywine Park (Cutter's Point)
1111 Abrams Road
Richardson, TX  75081

Eagle Crest
4013 West Northgate Drive
Irving, TX  75062

Remington Hills at Las Colinas
1201 Meadow Creek Drive
Irving, TX  75038

Sierra Ridge
1401 Patricia Drive
San Antonio, TX  78213

Timberglen
3773 Timberglen Road
Dallas, TX  75287

Toscana
17910 Kelly Boulevard
Dallas, TX  75287

<PAGE>

                                    Exhibit B
                             (Capital Contributions)

                    Name and                         Capital         Partners
                    Business Address                 Contributions   Percentages
                    ----------------                 -------------   -----------
General Partner:    CAC Special General, Inc.         $1.00           1%
                    306 East Main Street
                    Richmond, Virginia  23219

Limited Partner:    CAC Special Limited, Inc.        $99.00          99%
                    306 East Main Street
                    Richmond, Virginia  23219EXHIBIT 10.13

                          PROPERTY MANAGEMENT AGREEMENT

         This Agreement (the "Agreement") is made as of December 12, 2000 by and
between CAC Limited  Partnership,  a Virginia limited partnership (the "Owner"),
and Apple General, Inc., a Virginia corporation (the "Manager").

                                    RECITALS:

         Owner is the owner of the  apartment  communities  listed on Schedule A
hereto  (collectively,  the "Properties").  Owner has selected Manager to manage
the Properties on the terms and conditions set forth in this Agreement.

         NOW  THEREFORE,  for  good  and  valuable  consideration,  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

         1. Designation of Property Manager. Owner hereby engages Manager as the
sole and exclusive manager to rent, manage and operate the Properties,  upon the
conditions and for the term and compensation  herein set forth. All or a portion
of the services being performed by Manager may be contracted or subcontracted to
another  property  management  company,  provided  that such  company  agrees in
writing to be bound by the terms of this Agreement.

         2. Term of Agreement. This Agreement shall be valid for an initial term
of two (2) years.  In the event  Owner sells its  interest  in a Property,  this
Agreement  will  terminate as to such Property upon the date of such sale.  This
Agreement shall renew  automatically  for successive  terms of two (2) years, on
the same terms and  conditions  as set forth in this  Agreement,  unless a party
elects not to renew this  Agreement by  delivering  written  notice to the other
party at least sixty (60) calendar days before the end of any two-year term.

         3.  Acceptance of Engagement.  Manager hereby accepts its engagement as
the manager of the Properties  and agrees to perform all services  necessary for
the care,  protection,  maintenance  and  operation of the  Properties.  Without
limiting the scope of the foregoing:

             (a)  Manager  shall  collect  all rents and other  income  from the
Properties,  provided that nothing herein contained shall constitute a guarantee
by Manager of the payment of rent by tenants.

             (b) Manager shall purchase, at the expense of Owner, all equipment,
tools,   appliances,   materials,   supplies  and  uniforms  necessary  for  the
maintenance or operation of the Properties.

             (c)  Manager  shall  contract  on behalf of Owner for  water,  gas,
electricity  and other services  necessary for the operation and  maintenance of
the Properties.

<PAGE>

             (d)  Manager  shall  advertise  for  the  rental  of  units  at the
Properties, the cost of which shall be paid by Owner.

             (e) Manager shall use all reasonable efforts to keep the Properties
rented by procuring  tenants for the Properties and negotiating and executing on
behalf of Owner all leases for units at the Properties.

             (f) Manager shall hire, evaluate, supervise,  discharge and pay all
employees or  contractors  necessary  for the  management  and  operation of the
Properties.  Owner agrees that all wages and compensation (and federal and state
unemployment  insurance  and  other  required  charges)  with  respect  to  such
employees and contractors shall be paid from Owner's funds.

             (g) Manager shall prepare and file all returns and other  documents
(other than promissory  notes,  mortgages,  deeds of trust or other documents or
instruments  which would  encumber the  Properties)  required  under the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act, or any similar
federal or state legislation.  Manager also shall file returns and reports,  and
pay from  Owner's  funds,  all sums as may be required  from time to time by the
states or localities in which the Properties are located.

             (h) Manager shall  maintain  accurate and complete books of account
with entries for all receipts and expenditures,  and such books of account shall
be the  property  of Owner and shall at all times be open to the  inspection  of
Owner, or any of its employees or duly authorized agents.

             (i) Manager shall deliver to Owner of all lenders'  annual property
inspection  letters regarding repairs necessary to avoid mortgage loan defaults.
Manager  shall  deliver  a  detailed  monthly  statement  of  all  receipts  and
disbursements  on or before the 20th day of each month for the preceding  month.
Such  statement  shall show the status of  collections,  shall be  supported  by
cancelled  checks,  vouchers,   duplicate  invoices  and  similar  documentation
covering all items of income and expense,  and shall be kept in Manager's office
and shall be available for inspection by Owner's  representatives  at all times.
Manager also shall deliver a monthly operating  statement showing the income and
expense  for the  month,  for the  year-to-date  and for the  same  month of the
preceding  year.  The cost of performing the  accounting  functions  outlined in
paragraph  (h) and this  paragraph  (i) shall be paid by Owner  pursuant  to the
terms of this Agreement.

             (j) Manager  shall  deliver to Owner  annual  reports  containing a
composite financial report of the monthly statements provided in accordance with
paragraph  (i),  plus  a  statement  by  Manager  as to  the  operations  of the
Properties during the previous year and recommendations, if any, as to necessary
policy  changes or  improvements  for the  forthcoming  year,  accompanied by an
estimated budget for such items.

             (k) Manager shall deliver to Owner from time to time,  and at least
semi-annually, a tentative budget of expenses.

             (l) Manager shall deliver to Owner from time to time,  and at least
annually,  the following schedules with respect to the Properties:  (1) forecast
of rental and occupancy changes;  (2) review of lease  negotiations;  (3) annual
analysis  of leases;  and (4)  schedule  of capital  improvements  and method of
financing such improvements.

                                      -2-

<PAGE>

             (m) Manager shall deliver to Owner,  on a regular basis,  all forms
necessary  to  operate  and lease  the  Properties  and  manage  the  personnel,
including but not limited to form leases, contracts and management policies.

             (n)  During  the  initial  term of this  Agreement,  Manager  shall
supervise the transition  from the former owners of the Properties and shall, to
the extent  necessary,  implement  new  management  systems  with respect to the
operation of the Properties.

         4.  Deposits of Rent and Other  Income.  All sums  received from rents,
tenant security deposits or other deposits on units at the Properties,  deposits
on keys and other income from the Properties, shall be deposited as collected by
Manager  to the  credit of Owner in such bank or banks as may be  designated  by
Owner from time to time.  Such funds shall be disbursed only in accordance  with
the terms of each particular  lease and any applicable  federal,  state or local
laws, regulations or ordinances.

         5. Insurance.  Owner shall place all insurance policies with respect to
the Properties and their  operation.  Manager shall be included as an insured in
the  policies  covering  general   liability,   public  liability  and  workers'
compensation  insurance.  In the event  Manager is  authorized by Owner to place
insurance policies,  the companies,  the general agents, the amounts of coverage
and the risks insured shall be subject to the approval of Owner.

         6.  Indemnification.  Owner hereby agrees to indemnify Manager against,
and to  hold  Manager  harmless  from,  any  loss,  cost or  expense  (including
reasonable investigative expenses and legal fees), judgment,  award, settlement,
fine,  penalty and liability of any kind incurred by or asserted against Manager
by reason of, or in connection  with, the engagement of Manager  hereunder,  the
performance  by Manager of the services  described  herein or the  occurrence or
existence  of any event or  circumstance  which  results  or is  alleged to have
resulted in any death or injury to any person, any destruction of, or damage to,
any of the Properties,  or any suit, action or proceeding  (whether  threatened,
initiated or completed) arising from any of the foregoing.  Notwithstanding  the
preceding,  however,  no such  indemnification  of  Manager  shall be made,  and
Manager shall indemnify  Owner against,  and shall hold Owner harmless from, any
loss  that  a  court  of  competent  jurisdiction  shall  determine,   by  final
adjudication,  to have resulted  from willful  misconduct,  gross  negligence or
fraud by or on the part of Manager.

         7. Compensation of Manager for Managing the Properties. Owner shall pay
to Manager a "Property Management Fee" for management of the Properties pursuant
to this  Agreement in an amount equal to five percent (5%) of the monthly  gross
revenues  from the  Properties.  The  Property  Management  Fee shall be paid to
Manager  on or before  the 10th day of each  month  and shall be based  upon the
income from the  Properties  received by Owner (for such month) by such date. If
additional  income from the Properties is received by Owner after such date, the
sum due to Manager  with  respect  to such  additional  income  shall be paid to
Manager when Manager is paid its fees for the next succeeding month.

                                      -3-

<PAGE>

         8.  Reimbursement  of  Expenses.  Owner  shall  reimburse  Manager  for
Manager's expenses, including salaries and related overhead expenses, associated
with bookkeeping,  accounting and financial reporting services pertaining to the
Properties.

         9. Reserves for Capital Items.  Owner  acknowledges  that the budget of
expenses  prepared  by Manager,  pursuant to  paragraph  3(k),  shall  contain a
category  labeled  "Reserve for Capital  Items." Owner agrees to place rents and
other income in a bank account,  or to permit Manager to transfer  Owner's funds
to such  account,  in  sufficient  amounts to meet the needs  reflected  in such
budget.  Such  funds  shall be  placed  in the  account  on a  monthly  basis as
reflected in the budget.

         10. Cash Flow. Owner  acknowledges that the budget of expenses prepared
by Manager,  pursuant to paragraph 3(k),  shall contain a category labeled "Cash
Flow." Owner agrees, in the event that the budgeted cash flow for the Properties
is negative in any month covered by the budget,  to place  sufficient funds in a
bank account, or to permit Manager to transfer Owner's funds to such account, to
correct  the  budgeted  operating  deficit.  Such funds  shall be placed in such
account at least forty-five (45) calendar days before the budgeted deficit is to
occur.

         11. Power of Attorney.  Owner hereby  makes,  constitutes  and appoints
Manager as Owner's true and lawful attorney-in-fact,  for Owner and in its name,
place and stead and for its use and benefit,  to sign,  acknowledge and file all
documents and agreements (other than promissory notes, mortgages, deeds of trust
or other documents or instruments which would encumber the Properties) necessary
to perform or effect the duties and  obligations  of Manager  under the terms of
this  Agreement.  The foregoing power of attorney is a special power of attorney
coupled with an interest, and may only be terminated by canceling this Agreement
as provided herein.

         12.  Relationship of Parties.  The parties agree and  acknowledge  that
Manager is, and shall operate as, an independent contractor in performing duties
and services under this Agreement,  and shall not be deemed an employee or agent
of Owner.

         13.   Entire   Agreement.   This   Agreement   represents   the  entire
understanding  between  the  parties  hereto  with  regard  to the  transactions
described herein and may only be amended by a written  instrument  signed by the
party against whom enforcement is sought.

         14.  Governing  Law.  This  Agreement  shall be construed in accordance
with,  and be governed by, the laws of the  Commonwealth  of  Virginia,  without
regard to any rules or principles thereof regarding choice or conflicts of laws.

                          (next page is signature page)

                                      -4-

<PAGE>

WITNESS the following signatures:

OWNER:                              CAC Limited Partnership
                                    a Virginia limited partnership

                                    By:     CAC Special General, Inc.
                                            a Virginia corporation
                                    Title:  General Partner

                                            By:  /s/ Stanley J. Olander, Jr.
                                                 -------------------------------
                                                 Stanley J. Olander, Jr.,
                                                 Vice President

MANAGER:                            Apple General, Inc.
                                    a Virginia corporation

                                    By:     /s/ Stanley J. Olander, Jr.
                                            ------------------------------------
                                            Stanley J. Olander, Jr.,
                                            Vice President

                                      -5-

<PAGE>

                                   SCHEDULE A

                              (List of Properties)

The Properties consist of those real properties,  together with all improvements
thereon, that are located at the following addresses:

The Arbors on Forest Ridge
2200 Forest Ridge Drive
Bedford, TX  76021

Brandywine Park (Cutter's Point)
1111 Abrams Road
Richardson, TX  75081

Eagle Crest
4013 West Northgate Drive
Irving, TX  75062

Remington Hills at Las Colinas
1201 Meadow Creek Drive
Irving, TX  75038

Sierra Ridge
1401 Patricia Drive
San Antonio, TX  78213

Timberglen
3773 Timberglen Road
Dallas, TX  75287

Toscana
17910 Kelly Boulevard
Dallas, TX  75287

                                      -6-

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