Document:

EXHIBIT 10.12

                          LIMITED PARTNERSHIP AGREEMENT
                                       OF
                           CAC II LIMITED PARTNERSHIP

         This LIMITED  PARTNERSHIP  AGREEMENT (the  "Partnership  Agreement") is
made as of March 6, 2001 by and between CAC II Special General, Inc., a Virginia
corporation,  the  general  partner  ("General  Partner"),  and  CAC II  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 March 6, 2001. The General Partner and the Limited Partner are
each wholly-owned  subsidiaries of Cornerstone  Acquisition  Company, a Virginia
corporation.

         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 II 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>
         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.

                                       2
<PAGE>

         2.2.  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 2.3 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.

         2.3 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:

                   (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.

                                       3
<PAGE>

                   (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.

         2.4  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:

                           (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;

                                       4
<PAGE>

                           (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.

         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

                                       5
<PAGE>

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  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.

         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.

                                       6
<PAGE>

                                   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;

                   (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.

                                       7
<PAGE>

                                  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 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 Internal  Revenue Code of 1986, as amended (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.

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<PAGE>

WITNESS the following signatures:

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

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

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

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

                                       9
<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:

         Canyon Hills
         6307 Bluff Springs Road
         Austin, Texas  78744

         Park Village
         2401 L. Don Dodson Drive
         Bedford, Texas  76021

         Summer Tree
         13250 Emily Road
         Dallas, Texas  75240

         The Courts on Pear Ridge
         5050 Pear Ridge Road
         Dallas, Texas  75287

                                       10
<PAGE>

                                    Exhibit B
                             (Capital Contributions)
<TABLE>
<CAPTION>

                           Name and                           Capital                   Partners
                           Business Address                   Contributions             Percentages
                           ----------------                   -------------             -----------

<S>                        <C>                                    <C>                      <C>
General Partner:           CAC II Special General, Inc.           $1.00                      1%
                           306 East Main Street
                           Richmond, Virginia  23219

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

                          PROPERTY MANAGEMENT AGREEMENT

         This  Agreement (the  "Agreement")  is made as of March 23, 2001 by and
between  CAC  II  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
<PAGE>

(2)  review of lease  negotiations;  (3)  annual  analysis  of  leases;  and (4)
schedule of capital improvements and method of financing such improvements.

                   (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 II Limited Partnership
                                      a Virginia limited partnership

                                      By:      CAC II 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:

         Canyon Hills
         6307 Bluff Springs Road
         Austin, Texas  78744

         Park Village
         2401 L. Don Dodson Drive
         Bedford, Texas  76021

         Summer Tree
         13250 Emily Road
         Dallas, Texas  75240

         The Courts on Pear Ridge
         5050 Pear Ridge Road
         Dallas, Texas  75287

                                       6

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