Dakotah Hills Offices Limited Partnership, An Arizona Limited Partnership, William M. and Dianne B. Stephens, Tax Matters Partner, et al. - Page 5

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          interest.4  This requirement was imposed, in part, to secure                
          payment of the investor notes.                                              
               In accordance with the aforementioned security agreements,             
          the partnerships negotiated, pledged, and assigned all of the               
          investor notes as collateral for loans to the partnerships from             
          financial institutions.  In turn, the partnerships acquired a               
          number of real properties with the loan proceeds.  The notes                
          issued to the lenders by the partnerships were nonrecourse to the           
          general partners, but through various additional agreements, the            
          general partners were rendered liable with respect to the                   
          partnership indebtedness.  These notes were not, by their terms,            
          recourse to the limited partners.5                                          




               4As an example, on Oct. 12, 1984, William M. and Dianne B.             
          Stephens, as investors, signed a Security Agreement, in which               
          they:                                                                       
               [acknowledged] that the investor note and this                         
               agreement, which stands as collateral therefore [sic],                 
               will be assigned by the partnership as collateral for a                
               loan to a lender, and [the Stephens] hereby expressly                  
               waives every defense, counterclaim or set-off which                    
               [the Stephens] or any of [the other investors] may now                 
               have or hereinafter may have to any action by such                     
               lender or the lender's assignee.                                       
          This Security Agreement designates "Dakotah Hills Offices Limited           
          Partnership" as the "Secured Party".                                        
               5For purposes of this opinion, the term, "recourse                     
          indebtedness" means that the debtor's assets may be reached by              
          creditors if the debt is not paid.  Conversely, "nonrecourse                
          indebtedness" means that a creditor's remedies are limited to a             
          particular collateral for the debt.  Raphan v. United States, 759           
          F.2d 879 (Fed. Cir. 1985).                                                  




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