-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SQfxcr0jHJA9vqQrd3AtELg2DUbx3+gGraUY0lorGYmHp+I/FFWwY+9olBmlmyrv QloAXigDPchzj26C3LUx9Q== 0000950142-97-000049.txt : 19970130 0000950142-97-000049.hdr.sgml : 19970130 ACCESSION NUMBER: 0000950142-97-000049 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19970129 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP CASH PLUS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000768175 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042865878 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-48033 FILM NUMBER: 97512628 BUSINESS ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP CASH PLUS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000768175 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042865878 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 SC 14D9 1 SCHEDULE 14D-9 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 ------------------ KRUPP CASH PLUS LIMITED PARTNERSHIP (Name of Subject Company) KRUPP CASH PLUS LIMITED PARTNERSHIP (Name of Person Filing Statement) DEPOSITARY RECEIPTS (Title of Class of Securities) 501112 10 6 (CUSIP Number of Class of Securities) ------------------ Laurence Gerber The Krupp Corporation 470 Atlantic Avenue Boston, Massachusetts 02210 (617) 423-2233 (Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of the Person(s) filing Statement) COPY TO: Scott D. Spelfogel, Esq. James M. Dubin, Esq. The Berkshire Group Paul, Weiss, Rifkind, Wharton & Garrison 470 Atlantic Avenue 1285 Avenue of the Americas Boston, Massachusetts 02210 New York, New York 10019-6064 (617) 423-2233 (212) 373-3000 ================================================================================ ITEM 1. SECURITY AND SUBJECT COMPANY The name of the subject partnership is Krupp Cash Plus Limited Partnership, a Massachusetts limited partnership (the "Partnership"), and the address of its principal executive offices is c/o The Krupp Corporation, 470 Atlantic Avenue, Boston, Massachusetts 02210. The title of the class of equity securities to which this statement relates is Depositary Receipts ("Depositary Receipts") representing the Partnership's Units of Investor Limited Partnership Interests ("Units"). ITEM 2. TENDER OFFER OF THE BIDDER This statement relates to an unsolicited offer by Krescent Partners L.L.C., a Delaware limited liability company ("Krescent"), and American Holdings I, L.P., a Delaware limited partnership ("AHI" and, together with Krescent, the "Purchasers"), disclosed in a Tender Offer Statement on Schedule 14D-1 dated January 24, 1997 (the "Schedule 14D-1"), to purchase up to 994,182 of the issued and outstanding Depositary Receipts representing Units at a purchase price of $6.00 per Unit, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 24, 1997 and the related Letter of Transmittal, as each may be supplemented, modified or amended from time to time (which collectively constitute the "Krescent-AHI Offer" and are contained within the Schedule 14D-1). The address of Krescent's principal executive offices is 1301 Avenue of the Americas, 38th Floor, New York, New York 10019. The address of AHI's principal offices is 100 South Bedford Road, Mount Kisco, New York 10549. ITEM 3. IDENTITY AND BACKGROUND (a) The name and business address of the Partnership, which is the person filing this statement, are set forth in Item 1 above. (b)(i)The general partners responsible for management of the Partnership's business are The Krupp Corporation, a Massachusetts corporation (the "Corporate General Partner"), and The Krupp Company Limited Partnership - IV, a Massachusetts limited partnership (together with the Corporate General Partner, the "General Partners"). Except as described below, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interest between the General Partners or their affiliates and the Partnership, its executive officers, directors or affiliates. Pursuant to the Amended Agreement of Limited Partnership, dated as of July 12, 1985 (the "Partnership Agreement"), the General Partners are entitled to certain cash distributions in respect of their interests in the Partnership. Aggregate cash distributions paid to the General Partners in respect of such interests were $(13,174) [adjustment due to overpayment for prior year], $47,657 and $46,448, respectively, for the years ended December 31, 1994, 1995 and 1996. Pursuant to certain management agreements, an affiliate of the General Partners receives property management fees for its services as management agent for the Partnership's properties. Such agreements provide for the payment of monthly management fees payable at the rate of up to 6% of the gross receipts, net of leasing commissions from commercial properties under management. In addition, although the General Partners and their affiliates do not receive any fees from the Partnership for the partnership administration services they provide, affiliates of the General Partners are reimbursed by the Partnership for the expenses they incur in connection with providing those services, which include accounting, computer, insurance, travel, payroll, legal and the preparation and mailing of reports and other communication to the Unit holders. Property management fees and reimbursement of expenses paid to such affiliates aggregated $715,252, $579,298 and $646,980, respectively, for the three years ended December 31, 1994, 1995 and 1996. Pursuant to the Partnership Agreement, the General Partners are entitled to receive fees for managing the affairs of the Partnership equal to 5% of the Partnership's annual Cash Flow (as defined in the Partnership Agreement), but the payment thereof is subordinated to the extent necessary for the limited partners to receive an amount for such year equal to a 7.5% non-cumulative annual return on their Invested Capital (as defined in the Partnership Agreement). The General Partners also are entitled to receive an incentive fee for managing the affairs of the Partnership in an amount equal to 3% of the Partnership's annual Cash Flow, but payment of such fee is subordinated to the extent necessary for the limited partners to receive an amount for such year equal to a 9% non-cumulative annual return on their Invested Capital. No such fees were paid to the General Partners or their affiliates during the three-year period ended December 31, 1996. Pursuant to the Partnership Agreement, in connection with the disposition of any property owned by the Partnership, the General Partners are entitled to a disposition fee in an amount equal to 3% of the contract sales price of such property, subject to certain limitations. No disposition fees were paid to the General Partners or their affiliates during the three-year period ended December 31, 1996. The General Partners are subject to certain conflicts of interests in connection with the response to the Krescent-AHI Offer contained in this Schedule 14D-9. The Partnership Agreement provides that, without the concurrence of the General Partners, a majority in interest of the "Investor Limited Partners" (a person who has been admitted to the Partnership as, and has the rights afforded to, an Investor Limited Partner, as provided in the Partnership Agreement) may vote to remove the General Partners or amend the Partnership Agreement (including amending certain fees and compensation payable or authorized to be payable to the 2 General Partners or their affiliates), and the ownership of a large block of Units by any person increases the likelihood that the General Partners may be removed or that the Partnership Agreement may be amended should that person become an Investor Limited Partner or otherwise acquire the voting rights of an Investor Limited Partner. In addition, since the property management agreements between affiliates of the General Partners and the Partnership are terminable without penalty on not more than 60 days notice, the removal of the General Partners or the amendment of the Partnership Agreement could result in a reduction of management fee income from the Partnership to such affiliates. If a large number of Units were tendered pursuant to the Krescent-AHI Offer, the likelihood of such removal or amendment would increase. However, as described in Items 3(b)(ii) and 8 below, the Purchasers are subject to standstill agreements pursuant to which they have agreed, among other things, not to acquire more than 25% of the outstanding Units for the period ending 30 months after receipt from the Partnership and certain other partnerships affiliated with the General Partners of any list of its unit holders or investors. Accordingly, during such 30 month period the Purchasers will not be in a position to unilaterally remove the General Partners or amend the Partnership Agreement. (b)(ii) Except as described below, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interests between the Partnership or its affiliates and the Purchasers, their respective executive officers, directors or affiliates. The Corporate General Partner and Liquidity Financial Group, L.P., the financial advisor of Krescent ("Liquidity"), are parties to a Settlement Agreement and Release, dated as of June 27, 1996, as amended as of October 8, 1996 and as of January 6, 1997 (as so amended, the "Liquidity Standstill Agreement"), pursuant to which Liquidity and any of its affiliates are restricted from, among other things, acquiring more than 25% of the outstanding Units for the period ending 30 months after receipt from the Partnership and certain other partnerships affiliated with the General Partners of any list of its unit holders or investors. Such a list was last provided to Liquidity on November 20, 1996 and, pursuant to the Liquidity Standstill Agreement, additional lists may be requested by Liquidity through June 27, 1997. The Krescent-AHI Offer states that, pursuant to an Assumption Agreement dated November 21, 1996 between Krescent and Liquidity, Krescent agreed to be bound by the restrictions set forth in the Liquidity Standstill Agreement. On October 24, 1996, a representative of Liquidity contacted a representative of the Partnership to request, on behalf of Krescent, that the General Partners agree to admit Krescent as a "Limited Partner" (an assignee of a Unit holder who, at the discretion of the General Partners, is admitted as a Unit holder pursuant to the terms of the Partnership Agreement) or as a recognized or registered owner of Units in the event Krescent made an offer to purchase Units and Krescent accepted Units for payment pursuant to the terms of such offer. During that conversation, the Partnership's representative indicated that in order to agree to such treatment, the 3 Partnership had to be satisfied that the consummation of such offer and such treatment would not cause the Partnership to be classified as a "publicly-traded partnership" for tax purposes (a "PTP"). Later that day, the Partnership received a memorandum from counsel to Krescent concluding that such a tender offer would not cause the Partnership to be classified as a PTP and a letter agreement was sent to the Corporate General Partner requesting that Krescent be treated as a Limited Partner or a recognized or registered owner of Units upon the acceptance of Units for payment pursuant to an offer anticipated to be made by Krescent. On October 29, 1996, counsel for the Partnership, in a letter to Liquidity, responded to the memorandum prepared by Krescent's counsel. During the week of November 4th, counsel for Krescent and counsel for the Partnership continued to discuss the PTP status issue. On November 11, 1996, counsel for Krescent and counsel for the Partnership agreed on a form of opinion letter regarding the PTP issue that would be delivered upon the treatment of Krescent as a Limited Partner or recognized or registered owner of Units. On November 14, 1996, the Partnership received a request from Liquidity for a current list of Unit holders and the lists of securityholders of various entities affiliated with the Partnership, which lists were delivered to Liquidity on November 19, 1996 and November 20, 1996. Also on November 19, 1996, the Corporate General Partner executed a letter to Krescent indicating its agreement to admit Krescent, or cause Krescent to be admitted, as a Limited Partner or a recognized or registered owner of Units (i) upon Krescent's payment for Units pursuant to the Krescent-AHI Offer, (ii) upon delivery of an opinion of Krescent's counsel (in the agreed form) that the Krescent-AHI Offer would not cause the Partnership to be classified as a PTP and (iii) upon delivery, in satisfactory form, of the Partnership's standard transfer paperwork, payment of standard transfer fee and satisfaction of any other standard ministerial matter. By letter dated November 4, 1996, Longacre contacted the Partnership and requested a list of the Partnership's Unit holders and lists of securityholders of certain other limited partnerships sponsored by affiliates of the General Partners. The letter stated that the request was being made to facilitate a tender offer by an affiliate of Longacre. Counsel to the Partnership rejected Longacre's request on November 12, 1996 because Longacre had not given adequate assurance that the list would be used for a proper partnership business purpose. On or about November 22, 1996, counsel to Longacre contacted representatives of the Partnership and suggested that, in consideration for the General Partners agreeing to furnish the requested lists, Longacre would be prepared to enter into a standstill agreement relating to the Partnership and certain other limited partnerships containing terms substantially similar to those contained in the Liquidity Standstill Agreement. After further discussions, Longacre and the Corporate General Partner signed such a standstill agreement on November 26, 1996 (the "Longacre Standstill Agreement"). On November 27, 1996, the Partnership provided Longacre with lists of the Unit holders of the Partnership and certain other limited partnerships covered by the Longacre Standstill Agreement. 4 On December 10, 1996, counsel for Krescent contacted counsel for the Partnership and requested that the Liquidity Standstill Agreement be amended in order to clarify an issue relating to Krescent's ability to participate in a "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934). During the week of December 16, 1996, such issue was discussed by counsel for Krescent and counsel for the Partnership. In addition, counsel for the Partnership was advised by counsel for Krescent of a proposed agreement between Krescent and AHI pursuant to which Krescent and AHI would make the Krescent-AHI Offer. On January 6, 1997, an amendment to the Liquidity Standstill Agreement was executed which permitted Liquidity and its affiliates to participate or form a "group" if each member of such group agreed to be bound by the terms of the Liquidity Standstill Agreement. The Krescent-AHI Offer states that, pursuant to an Assumption Agreement dated January 8, 1997 between AHI and Liquidity, AHI assumed the obligations of Liquidity under the Liquidity Standstill Agreement with respect to the Partnership and certain other limited partnerships sponsored by the General Partners or their affiliates. Concurrently therewith, on January 8, 1997, the Longacre Standstill Agreement was amended to delete the Partnership and such other limited partnerships from the schedule of partnerships covered thereby. On January 17, 1997, the Partnership was notified by Krescent that Krescent and AHI planned to commence the Krescent-AHI Offer five business days after the Partnership's receipt of such notice. Also on January 17, 1997, and again on January 22, 1997, counsel for the Purchasers contacted counsel for the Partnership requesting a waiver of the five business day notice provision in the Liquidity Standstill Agreement. On January 22, 1997, counsel for the Partnership agreed to reduce the required notice period to one business day upon the Partnership's receipt of the Krescent-AHI communication to Unit holders. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a) Following receipt of the Krescent-AHI Offer, the Corporate General Partner reviewed and considered the Krescent-AHI Offer. The Corporate General Partner has determined that the Krescent-AHI Offer is inadequate and not in the best interests of the Unit holders, and recommends that the holders of Units reject the Krescent-AHI Offer and not tender their Units pursuant thereto. (b) In reaching its conclusion described in paragraph (a) above, the Corporate General Partner considered a number of factors, including the following: (i) While the value of the Units is not readily ascertainable, since there is neither an established public trading market nor a consistent historical pattern of making annual or periodic distributions in respect of the Units, the price specified in the Krescent-AHI Offer of $6.00 per Unit represents a significant discount from the Corporate 5 General Partner's estimate of the inherent value of such Units. The Corporate General Partner has estimated the net asset value of each Unit to be $9.02. Such estimate was determined based on independent third party appraisals, obtained by the Partnership in the ordinary course of its operations, of the market values of the Partnership's properties as of January 1, 1996, and taking into account the other assets and liabilities of the Partnership as reflected on the Partnership's latest publicly-filed financial statements. (Such estimate does not necessarily reflect the amount which a Unit holder would ultimately receive if the Partnership were liquidated. For example, it does not take into account transaction costs relating to the sale of the Partnership's properties, which would reduce amounts available for distribution. In addition, market conditions will affect the amounts available for distribution.) While the actual value of a Unit may be either above or below the estimate, the Corporate General Partner believes its estimate of the net asset value of a Unit is representative of current value. The Krescent-AHI Offer is only 66.5% of such estimate. The Corporate General Partner recognizes that, in exchange for receiving the certainty of a cash purchase price from the Purchasers in connection with the Krescent-AHI Offer, Unit holders may prefer to forego the opportunity to hold their Units and receive proceeds upon the potential future liquidation of the Partnership's assets in excess of the amount being offered by the Purchasers. However, the Corporate General Partner believes that the price specified in the Krescent-AHI Offer reflects too great a discount to value. (ii) The Partnership currently is paying a quarterly cash distribution of $0.1375, or $0.55 annually, per Unit. Holders who sell their Units to the Purchasers will lose their right to receive future quarterly distributions from operations that are payable in respect of Units. Furthermore, Unit holders who sell their Units to the Purchasers will lose the right to future distributions from future sales of Partnership properties. (iii) As stated by the Purchasers in the Krescent-AHI Offer, the Purchasers are making the Krescent-AHI Offer with a view to making a profit. Accordingly, there is a conflict of interest between the Purchasers' desire to purchase the Units at a low price and a Unit holder's desire to sell its Units at a high price. (iv) As stated by the Purchasers in the Krescent-AHI Offer, if the Krescent-AHI Offer is successful, the Purchasers may be in a position to influence control over the Partnership and to influence voting decisions, including the removal of the General Partners. 6 ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED Neither the Partnership nor any person acting on its behalf has employed, retained or compensated, or intends to employ, retain or compensate, any person to make solicitations or recommendations to Unit holders on its behalf concerning the Krescent-AHI Offer. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES (a) Neither the Partnership nor the General Partners have effected any transactions in the Units during the past 60 days. The General Partners are not aware of any transactions in the Units during the past 60 days by any of its executive officers, directors, affiliates or subsidiaries. (b) Neither the General Partners nor, to the knowledge of the General Partners, any of their executive officers, directors, affiliates or subsidiaries intend to tender Units owned by them to the Purchasers pursuant to the Krescent-AHI Offer. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY (a) No negotiation is being undertaken or is underway by the Partnership in response to the Krescent-AHI Offer which relates to or would result in (i) an extraordinary transaction, such as a merger or reorganization, involving the Partnership; (ii) a purchase, sale or transfer of a material amount of assets by the Partnership; (iii) a tender offer for or other acquisition of securities by or of the Partnership; or (iv) any material change in the present capitalization or dividend policy of the Partnership. The General Partners and their affiliates may explore transactions such as asset sales, a consolidation, a merger, financings of Partnership properties followed by distributions, or possibly a tender offer for Units at a price in excess of the Krescent-AHI Offer. However, no plans for, or negotiations relating to, any of these types of transactions have been made, and there can be no assurances that any such discussions or plans will be developed or that any such transactions could be successfully consummated. (b) There are no transactions, board resolutions, agreements in principle or signed contracts in response to the Krescent-AHI Offer which relate to or would result in one or more of the matters referred to in Item 7(a) above. 7 ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED The General Partners have in the past received numerous requests from third parties requesting that such parties be provided with a list of the Partnership's Unit holders. Such a list has only been provided by the General Partners to parties in cases where the General Partners have been satisfied that such list has been properly requested by a person entitled by the Partnership Agreement to receive such a list and/or the party requesting the list has demonstrated that such party has a proper partnership business purpose in connection with such request, or the General Partners have been satisfied that the Partnership and the Unit holders have obtained appropriate protections from such party with respect to the use of such list. The Corporate General Partner agreed to provide a list of the Partnership's Unit holders to Liquidity, Krescent's financial advisor, and to AHI in connection with obtaining the agreement by such parties, pursuant to the Liquidity Standstill Agreement and the Longacre Standstill Agreement, that such parties and their affiliates, among other things, would refrain from acquiring in excess of 25% of the Units for the period ending 30 months after receipt from the Partnership of any list of its Unit holders. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS (a)(i) Form of letter to Unit holders from the Partnership dated January 29, 1997. (ii) Press release of the Partnership dated January 29, 1997. (c)(i) Amended Agreement of Limited Partnership, dated as of July 12, 1985, by and among The Krupp Corporation and The Krupp Company Limited Partnership - IV, as general partners, The Krupp Depository Corporation, as the Corporate Limited Partner, and those persons who have been admitted to the Partnership as Investor Limited Partners pursuant to the terms of the Partnership Agreement. (ii) Property Management Agreement relating to Luria's Plaza, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. (iii) Property Management Agreement relating to High Point National Furniture Mart, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. (iv) Property Management Agreement relating to Tradewinds Shopping Center, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. 8 (v) Settlement Agreement and Release, dated as of June 27, 1996, between the Corporate General Partner and Liquidity Financial Group, L.P. (vi) First Amendment to Settlement Agreement and Release, dated as of October 8, 1996, between the Corporate General Partner and Liquidity Financial Group, L.P. (vii) Second Amendment to Settlement Agreement and Release, dated as of January 6, 1997, between the Corporate General Partner and Liquidity Financial Group, L.P. (viii) Agreement, dated as of November 26, 1996, between the Corporate General Partner and Longacre Corp. (xi) First Amendment to Agreement, dated as of January 8, 1997, between the Corporate General Partner and Longacre Corp. 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 29, 1997 KRUPP CASH PLUS LIMITED PARTNERSHIP By: The Krupp Corporation, a general partner By: s/Laurence Gerber ------------------------------ Name: Laurence Gerber Title:President 10 EXHIBIT INDEX Exhibit Description Page - ------- ----------- ---- 1. Form of letter to Unit holders from the Partnership dated January 29, 1997. 2. Press release of the Partnership dated January 29, 1997. 3. Amended Agreement of Limited Partnership, dated as of July 12, 1985, by and among The Krupp Corporation and The Krupp Company Limited Partnership - IV, as general partners, The Krupp Depository Corporation, as the Corporate Limited Partner, and those persons who have been admitted to the Partnership as Investor Limited Partners pursuant to the terms of the Partnership Agreement. 4. Property Management Agreement relating to Luria's Plaza, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. 5. Property Management Agreement relating to High Point National Furniture Mart, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. 6. Property Management Agreement relating to Tradewinds Shopping Center, dated as of January 1, 1996, between the Partnership and Berkshire Property Management Company. 7. Settlement Agreement and Release, dated as of June 27, 1996, between the Corporate General Partner and Liquidity Financial Group, L.P. 8. First Amendment to Settlement Agreement and Release, dated as of October 8, 1996, between the Corporate General Partner and Liquidity Financial Group, L.P. 9. Second Amendment to Settlement Agreement and Release, dated as of January 6, 1997, between the Corporate General Partner and Liquidity Financial Group, L.P. 10. Agreement, dated as of November 26, 1996, between the Corporate General Partner and Longacre Corp. 11. First Amendment to Agreement, dated as of January 8, 1997, between the Corporate General Partner and Longacre Corp. 2 EX-1 2 FORM OF LETTER TO UNIT HOLDERS Exhibit 1 KRUPP CASH PLUS LIMITED PARTNERSHIP January 29, 1997 Dear Unit Holder: As you are by now aware, Krescent Partners L.L.C., a Delaware limited liability company, and American Holdings I, L.P. a Delaware limited partnership (together, the "Purchasers"), have made an offer (the "Krescent-AHI Offer") to purchase Depositary Receipts representing limited partnership units ("Units") of Krupp Cash Plus Limited Partnership (the "Partnership") for $6.00 per Unit. THE KRUPP CORPORATION, A GENERAL PARTNER OF THE PARTNERSHIP (A "GENERAL PARTNER"), IN LIGHT OF ALL RELEVANT CIRCUMSTANCES, HAS DETERMINED THAT THE KRESCENT-AHI OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE UNIT HOLDERS. THE GENERAL PARTNER RECOMMENDS THAT THE HOLDERS OF UNITS REJECT THE KRESCENT-AHI OFFER AND NOT TENDER THEIR UNITS PURSUANT THERETO. The General Partner reached this conclusion after considering a number of factors, including, but not limited to, the following: o THE PRICE PER UNIT OFFERED BY THE PURCHASER DOES NOT REFLECT THE VALUE INHERENT IN THE UNITS. The price being offered by the Purchaser is only 66.5% of the General Partner's estimate of the Partnership's net asset value of $9.02 per Unit. Such estimate was determined based on independent third party appraisals of the Partnership's properties and taking into account the other assets and liabilities of the Partnership. (Such estimate does not necessarily reflect the amount which a Unit holder would ultimately receive if the Partnership were liquidated. For example, it does not take into account transaction costs relating to the sale of the Partnership's properties, which would reduce amounts available for distribution. In addition, market conditions will affect the amounts available for distribution.) Although Unit holders, in exchange for receiving the certainty of a cash purchase price from the Purchasers, may prefer to forego the opportunity to hold their Units and receive proceeds upon the potential future liquidation of the Partnership's assets in excess of the amount being offered by the Purchasers, the General Partner believes that the price specified in the Krescent-AHI Offer reflects too great a discount to value. o AS STATED BY THE PURCHASERS IN THE KRESCENT-AHI OFFER, THE PURCHASERS ARE MAKING THE KRESCENT-AHI OFFER WITH A VIEW TO MAKING A PROFIT. Accordingly, there is a conflict of interest between the Purchasers' desire to purchase the Units at a low price and the Unit holders' desire to sell their Units at a high price. o UNIT HOLDERS WHO ACCEPT THE KRESCENT-AHI OFFER WILL NO LONGER RECEIVE CASH DISTRIBUTIONS. The Partnership currently is paying a quarterly cash distribution of $0.1375, or $0.55 annually, per Unit. Unit holders who sell their Units to the Purchasers will lose their right to receive future quarterly distributions from operations that are payable in respect of Units. Furthermore, Unit holders who sell their Units to the Purchasers will lose their right to future distributions from future sales of Partnership properties. Enclosed is a copy of the Partnership's Statement on Schedule 14D-9 which has been filed with the Securities and Exchange Commission and sets forth the Partnership's response to the Krescent-AHI Offer. Limited partners are advised to carefully read the Schedule 14D-9. Please do not hesitate to call our Investor Communication representatives at 1-800-255-7877 for assistance in any Partnership matter. Sincerely yours, Laurence Gerber The Krupp Corporation, a General Partner 2 EX-2 3 PRESS RELEASE Exhibit 2 NEWS RELEASE GENERAL PARTNER OF KRUPP CASH PLUS LIMITED PARTNERSHIP RECOMMENDS REJECTION OF KRESCENT PARTNERS L.L.C. AND AMERICAN HOLDINGS I, L.P. OFFER BOSTON, MA -- January 29, 1997. Laurence Gerber, President of the General Partner of Krupp Cash Plus Limited Partnership, said today that, after carefully considering the unsolicited cash tender offer by Krescent Partners L.L.C. and American Holdings I, L.P. of $6.00 per depositary receipt representing a Unit of limited partnership interest in the Partnership, the General Partner has determined that the Krescent-AHI offer is inadequate and not in the best interests of the Unit holders. The General Partner recommends that the holders of Units reject the Krescent-AHI offer and not tender their Units pursuant to such offer. In a letter to Unit holders accompanying a recommendation statement on Schedule 14D-9 filed today with the Securities and Exchange Commission, Mr. Gerber said that the General Partner had recommended that holders of Units reject the offer after considering a number of factors, including, but not limited to the following: o The General Partner believes the price offered by Krescent and American Holdings is only 66.5% of the General Partner's estimate of the Partnership's net asset value of $9.02 per Unit. o Unit holders who accept the Krescent-AHI offer will no longer receive the quarterly cash distributions currently paid in respect of Units and will forego any claim to future distributions from sales of the Partnership's properties. For further information, Unit holders may contact Investor Communications of the Krupp Funds Group at 1-800-343-0989. For information on the press release contact: Maryann Merigan (617) 423-2233 EX-3 4 AMENDED AGREEMENT OF LIMITED PARTNERSHIP Exhibit 3 KRUPP CASH PLUS LIMITED PARTNERSHIP AMENDED AGREEMENT OF LIMITED PARTNERSHIP AGREEMENT dated as of the 12th day of July, 1985, by and among The Krupp Corporation, a Massachusetts corporation, and The Krupp Company Limited Partnership IV, a Massachusetts limited partnership, each as a General Partner; Krupp Depositary Corporation, as the Corporate Limited Partner; and those Persons who may hereafter be admitted to the Partnership as Investor Limited Partners. The Corporate Limited Partner and the Investor Limited Partners are collectively referred to herein as the "Limited Partners" and, together with the General Partners, as the "Partners." Certain other terms used throughout this Agreement are defined in Section 17 hereof. WHEREAS, the General Partners and the Corporate Limited Partner formed a limited partnership (the "Partnership") by filing a Certificate of Limited Partnership with the Secretary of State of The Commonwealth of Massachusetts on April 30, 1985, and a First Amendment thereto on July 3, 1985 and entered into an Amended Agreement of Limited Partnership dated as of July 3, 1985, and wish to continue the Partnership under this Amended Agreement of Limited Partnership (the "Agreement") and the provisions of the Massachusetts Uniform Limited Partnership Act; and WHEREAS, the General Partners and the Corporate Limited Partner wish to provide, among other matters, for (i) economic and other rights of investors (the "Unitholders") in the Partnership who will hold Units of Depositary Receipts evidencing such rights and who may, under certain circumstances, be admitted to the Partnership as Investor Limited Partners; (ii) the assignment to the extent permitted by Massachusetts law by the Corporate Limited Partner to the Unitholders of all of its interest in distributions, including liquidating distributions, and profits and losses of the Partnership and all of its other rights, duties and obligations in connection with the Limited Partner Interests which correspond to the Units; (iii) the obligation of the Corporate Limited Partner to exercise any and all rights, duties and obligations with respect to such Limited Partner Interests solely in favor of, in the interest of, and at the direction of the Unitholders; (iv) the continued status of the Corporate Limited Partner as a Limited Partner of the Partnership; and (v) the possible admission of Investor Limited Partners subject to the terms and conditions herein specified; NOW THEREFORE, the parties hereto agree as follows: Section 1. CONTINUATION. The parties agree to continue the Partnership pursuant to this Agreement and the provisions of the Uniform Limited Partnership Act of The Commonwealth of Massachusetts. Section 2. NAME AND OFFICE. The Partnership shall be conducted under the name and style of "Krupp Cash Plus Limited Partnership." The principal office and place of business of the Partnership shall be located at 470 Atlantic Avenue, Boston, Massachusetts 02210, or at such other place as the General Partners may from time to time determine and specify by written notice to all of the Partners. The Partnership shall at all times maintain in Massachusetts (i) an office at which shall be kept the basic Partnership documents described in Section 12.2 hereof, and (ii) an agent for service of process selected by the General Partners in accordance with any relevant provisions of the Massachusetts Uniform Limited Partnership Act as then in effect. A-1 Section 3. PURPOSES AND POWERS. 3.1 PURPOSES. The purposes of the Partnership are to acquire, invest in, maintain, operate, lease, improve, hold, encumber, sell, manage and otherwise deal with the Assets of the Partnership. 3.2 POWERS. In furtherance of the above purposes, the Partnership shall have the powers: (a) to acquire, improve, hold, sell, exchange and otherwise deal in Properties situated in any location in the United States and in any real property appurtenant thereto and in interests therein as may be necessary or desirable to carry out the operation, leasing and maintenance of such Properties; (b) to acquire, hold, sell, exchange and otherwise deal in mortgage-backed securities ("MBS") issued or originated under or in connection with federal housing programs of the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"); (c) subject to any applicable statutes and regulations, to borrow money to further the purposes of the Partnership, to issue evidences of indebtedness in respect thereof and to secure the same by mortgage or pledge or grant of lien on or other security interest in a Property or any other assets of the Partnership; and (d) to do all things, carry on any activities and enter into, perform, modify, supplement or terminate any contracts necessary to, in connection with or incidental to the furtherance of the purposes of the Partnership, all so long as such things, activities and contracts may be lawfully done, carried on or entered into by the Partnership under the laws of The Commonwealth of Massachusetts and the United States of America and under the terms of this Agreement. The Partnership shall not engage in any business not provided for in this Section 3.2 without the Consent of the holders of a majority of the Limited Partner Interests. Section 4. TERM. The term of the Partnership shall end at midnight on December 31, 2025, unless the Partnership is sooner dissolved or terminated as provided in Section 11 hereof. Section 5. CAPITAL CONTRIBUTIONS. 5.1 CONTRIBUTIONS OF GENERAL PARTNERS. The General Partners have contributed in cash in respect of their Interests an aggregate of $3,000, in the respective amounts set forth opposite their names in Schedule A hereto. Upon the dissolution and termination of the Partnership, the General Partners will contribute to the Partnership an amount equal to the lesser of (i) the deficit balances in their Capital Accounts or (ii) the excess of one and one-hundredths percent (1.01%) of the total Capital Contributions of the Limited Partners over the amount of capital previously contributed by the General Partners. 5.2 CONTRIBUTIONS OF LIMITED PARTNERS. The Corporate Limited Partner has contributed $2,000 in cash in respect of 100 Limited Partner Interests. Upon the purchase of Units by Unitholders, the Corporate Limited Partner shall contribute in cash to the Partnership the Subscription Prices paid by the Unitholders, shall receive Limited Partner Interests in return therefor, shall assign all its rights with respect to such Interests to the Unitholders to the extent permitted by Massachusetts law, shall agree to exercise any and all rights with respect to such Interests as directed by the Unitholders, shall remain a A-2 Limited Partner with respect to such Interests as permitted by the Massachusetts Uniform Limited Partnership Act, and shall within 45 days after the initial purchase of Interests by Unitholders deliver Depositary Receipts to the Unitholders evidencing their rights with respect to such Interests. Not less than 125,000 Units (not including Units purchased by the General Partners and their Affiliates) and not more than 4,000,000 Units evidenced by Depositary Receipts will be sold. 5.3 SALE OF ADDITIONAL LIMITED PARTNER INTERESTS OR UNITS. Subsequent to the final closing of the sale of not less than 125,000 Units (not including Units purchased by the General Partners and their Affiliates) and not more than 4,000,000 Units, the Partnership may not sell additional Limited Partner Interests or Units; provided, however, that this Section shall not prevent a Unitholder from exchanging Units for Limited Partner Interests pursuant to Section 7.6(i) hereof. 5.4 CAPITAL ACCOUNTS. A Capital Account shall be established and maintained for each General Partner, Limited Partner, and Unitholder. The Capital Account of each Partner shall be (a) credited with all payments made to the Partnership by such Partner on account of Capital Contributions and with allocations to such Partner of Partnership Profits for Tax Purposes and tax-exempt income, and (b) charged with allocations to such Partner of Partnership Losses for Tax Purposes, with other Partnership expenditures which are not deductible for federal income tax purposes (not including payments of indebtedness or expenditures included in the basis of any Partnership asset), and with cash distributions made to such Partner as distributions of Cash Flow or of Net Cash Proceeds of Capital Transactions and the Terminating Capital Transaction, and shall otherwise appropriately reflect transactions of the Partnership and the Partners. The Capital Account of each Unitholder shall be kept in the same manner as the Capital Account of a Partner. A Substitute General or Limited Partner shall be deemed to have made the Capital Contribution to the Partnership which was made with respect to the Interest transferred or exchanged and to have received from the Partnership the credits, allocations and charges with respect to such Interest and shall otherwise succeed to the Capital Account kept with respect to such Interest. 5.5 ADDITIONAL CAPITAL CONTRIBUTIONS; INTERPRETATION. No Partner or Unitholder shall be required to make any Capital Contribution, or be entitled to bring an action for partition against the Partnership, or to demand or receive any distribution of or with respect to his Capital Contribution except as is specifically provided under this Agreement. No loan made by a General Partner, Limited Partner or Unitholder to the Partnership shall constitute a Capital Contribution for any purpose. Section 6. GENERAL PARTNERS. 6.1 EXTENT OF POWERS AND DUTIES. (a) GENERAL. Except as expressly limited by the provisions of this Agreement, the General Partners shall have complete and exclusive discretion in the management and control of the affairs and business of the Partnership and all powers necessary, convenient or appropriate to carry out the purposes, conduct the business and exercise the powers of the Partnership. Except as so expressly limited, the General Partners shall possess and enjoy with respect to the Partnership all of the rights and powers of partners of a partnership without limited partners to the extent permitted by Massachusetts law. (b) POWERS AND DUTIES. The General Partners shall diligently and faithfully exercise their discretion to the best of their ability and use their best efforts during so much of their time as may be necessary to carry out the purposes and conduct the business of the Partnership in accordance with this A-3 Agreement and in the best interests of the Partnership and so as, consistent therewith, to protect the interests of the Investor Limited Partners and Unitholders as a group. The General Partners shall have fiduciary responsibility for the safekeeping and use of all funds and assets of the Partnership, whether or not in their immediate possession or control, and they shall not employ or permit another Person to employ such funds or assets in any manner except for the exclusive benefit of the Partnership. In particular, the General Partners, solely, shall be responsible for and shall use their best efforts and exercise discretion to the best of their ability: (i) to cause Assets to be acquired, held, and sold, exchanged or otherwise disposed of; (ii) to rent, maintain and operate the Properties; (iii) to select and supervise the activities of the real estate management agent(s) for the Partnership including, without limitation, the periodic inspection of the Properties in order to assure their proper maintenance and repair; (iv) to assure the proper application of revenues of the Partnership; (v) to maintain proper books of account for the Partnership and to prepare all reports of operations and tax returns which are to be furnished to the Partners and Unitholders pursuant to this Agreement or which are required by taxing bodies or other governmental agencies; (vi) to maintain adequate insurance with respect to the Properties and any other insurable property of the Partnership pursuant to policies of insurance in form and coverage customary for property similar to the Properties and such other insurable property; and (vii) to assure the doing of all other things which may be necessary or advisable in connection with the supervision of the affairs, business and property of the Partnership. (c) AMPLIFICATION OF POWERS AND DUTIES. As amplification, and not by way of limitation on the powers expressed herein, the General Partners shall have, subject to the provisions of this Agreement, full power and authority on behalf of the Partnership, in order to carry out and accomplish its purposes and functions: (i) to expend Partnership capital and income; (ii) to purchase, lease, sell, convey, exchange, improve, divide, combine and otherwise transact business with respect to interests in real estate and personal property, and in that connection to employ engineers, contractors, attorneys, accountants, brokers, appraisers, and such other consultants, advisors, artisans, and workmen as may be necessary or advisable for the purpose; (iii) to designate depositories of the Partnership's funds, and the terms and conditions of such deposits and drawings thereon; (iv) to borrow money or otherwise to procure extensions of credit for the Partnership, as security therefor to pledge, hypothecate, mortgage, assign, transfer, and grant security interests in the Assets, and in connection therewith to execute, seal, acknowledge and deliver promissory notes, guarantees, mortgages, security and other agreements, assignments and any other written documents; (v) to execute and deliver documents and instruments relating to real and personal property of whatever kind and description, including, but not limited to, deeds, mortgages, leases and other documents of title or conveyance, regulatory agreements with governmental bodies and agencies, powers of attorney, and other contracts, instruments and agreements of all kinds; (vi) to hold all or any portion of the Assets in the name of one or more trustees, nominees or other agents of or for the Partnership for the purpose of facilitating transactions involving said Assets; (vii) to establish reserves for normal repairs, replacements and contingencies and, in their discretion, for any other proper Partnership purpose; (viii) to invest the proceeds of the offering of Units on an interim basis as provided in Section 6.2(a) hereof for a period of up to 24 months after the date on which the offering of Units commences; (ix) to reinvest the proceeds of the sale of an MBS if such MBS is sold by the Partnership within five years after the final closing of the sale of Units; (x) to reinvest the proceeds of the sale of a Property if such Property is sold by the Partnership within two years after the final closing of the sale of Units; (xi) to offer and sell the Units to the public directly or through any licensed Affiliate of the General Partners and to employ personnel, agents and dealers for such purposes; (xii) to appoint a transfer agent with respect to the Units; (xiii) to list the Units on NASDAQ or another securities exchange or to withdraw the Units from such listing and take such actions as they deem appropriate therefor; (xiv) to take such steps as the General Partners determine are advisable or necessary and will A-4 not result in any material adverse effect on the economic position of a majority in interest of the Investor Limited Partners and the Unitholders with respect to the Partnership in order to preserve the tax status of the Partnership as a pass-through entity for federal income tax purposes, including, without limitation, removing the Depositary Receipts from public trading markets, causing the Corporate Limited Partner to cancel all Depositary Receipts and imposing restrictions on transfers of Units or Limited Partner Interests (provided such restrictions on transfers do not cause the Partnership's Assets to be deemed to be "plan assets" with respect to investors which are Qualified Plans); (xv) to take such steps as the General Partners determine are advisable or necessary and will not result in any material adverse effect on the economic position of a majority in interest of the Investor Limited Partners and the Unitholders with respect to the Partnership to restructure the Partnership and its activities to obtain a prohibited transaction exemption from the Department of Labor or to comply with any exemption in final plan asset regulations adopted by the Department of Labor, including, but not limited to, establishing a fixed percentage of Units permitted to be held by Qualified Plans or other tax-exempt investors or discontinuing sales to such entities after a given date, in the event that either the assets of the Partnership constitute "plan assets" for purposes of ERISA or the transactions contemplated hereunder constitute prohibited transactions under ERISA or the Code and an exemption for such transactions is not obtainable from the Department of Labor; (xvi) to take such steps as the General Partners determine are advisable or necessary, with the Consent of the holders of a majority of the Limited Partner Interests, to restructure the Partnership and its activities in order to enable the Partnership to qualify as a real estate investment trust for federal income tax purposes; and (xvii) in general to do all things and execute all documents the General Partners shall deem necessary or convenient to accomplish the purposes of the Partnership, or to protect and preserve the Assets, to the same extent as if they owned such Assets individually. The powers of the General Partners enumerated in subsections (xiv) and (xv) above may be carried out by them and the Corporate Limited Partner acting on behalf of the Unitholders without any canvassing of or voting by the Unitholders. (d) ACCEPTANCE OF UNITHOLDERS. The General Partners' right to accept as Unitholders prospective transferees of Depositary Receipts is more fully set forth in Section 7.2 hereof. The General Partners shall have the right to accept as initial Unitholders such Persons (including the General Partners and their Affiliates) as may acquire at least 250 Units or, in the case of tax-exempt entities 100 Units, up to an aggregate of not less than 125,000 Units (not including Units purchased by the General Partners and their Affiliates) and not more than 4,000,000 Units. Each person desiring to become an initial Unitholder shall execute and deliver to the General Partners a subscription agreement and such other documents as shall be deemed appropriate by the General Partners. Each such subscription shall be subject to acceptance by the General Partners. If subscriptions are received and accepted respecting not less than 400,000 Units (excluding Units subscribed for by residents of Texas), a closing of the sale of Units shall occur. If subscriptions are received and accepted respecting not less than 125,000 Units (excluding Units subscribed for by the General Partners and their Affiliates and by residents of Texas), a closing of the sale of Units may occur In the sole discretion of the General Partners if they commit to purchase or cause to be purchased at the termination of the offering any then unsold units necessary to reach a minimum of 400,000 Units. Any such purchases of Units by the General Partners or their Affiliates shall be net of sales commissions to selected dealers. The General Partners will accept or reject each subscription for Units within 30 days after they receive it; if rejected, all subscription payments which accompanied such rejected subscription shall be returned forthwith to the subscriber. No General Partner or Affiliate of a General Partner or any underwriter, dealer or salesman of Units shall directly or indirectly pay or award any finder's fee, commission or other compensation to any Person engaged by a potential Unitholder for investment advice as an inducement to such advisor to advise the purchase of Units; provided, however, that this provision shall not prohibit the normal sales commission payable to a A-5 registered broker-dealer or other properly licensed Person for selling Units. Within 15 days after a successful completion of the minimum offering, the Subscription Prices for such Units shall be contributed in cash to the Partnership, the Corporate Limited Partner shall receive the Limited Partner Interests corresponding to such Units, the assignment to the Unitholders and their contractual rights under Section 7.6(b) hereof with respect to such Units shall commence, the General Partners shall prepare and file an amendment to the Certificate of Limited Partnership which shall reflect the contribution to the Partnership of the Subscription Price of such Units, and the Depositary Receipts with respect to such Units shall be delivered to the Unitholders within 45 days after such closing. Thereafter, Subscription Prices will be contributed to the Partnership and Depositary Receipts will be delivered to Unitholders as described above either once or twice a month until the termination of the offering of the Units. The General Partners shall prepare and file from time to time during the offering of Units, further amendments to the Certificate of Limited Partnership to reflect the increase of the Capital Contribution of the Corporate Limited Partner on behalf of the Unitholders. Until their Subscription Prices are delivered to the Partnership at a closing, subscribers will not be Unitholders, but instead will be creditors of the Partnership entitled to a return of their respective subscription payments in the event they are not accepted as Unitholders. (e) MAINTENANCE OF NET WORTH. The General Partners shall at all times use their best efforts to maintain their combined net worth (including the net worth of the general partners of any partnership which serves as a General Partner including, without limitation, The Krupp Company Limited Partner ship-IV) at a sufficient level to meet all requirements of the Code under currently applicable rulings, regulations and policies of the Internal Revenue Service and as hereafter interpreted by the Internal Revenue Service, any agency of the federal government or the courts, to permit the Partnership to be classified for federal income tax purposes as a partnership and not as an association taxable as a corporation, and shall, irrespective of such requirements, maintain such combined net worth on a fair market basis at an amount at least equal to $1,000,000. (f) DELEGATION OF POWERS. Each General Partner, while there are more than one, may act on behalf of the Partnership in connection with any particular matter affecting the Partnership, including the authority to execute notes, deeds, mortgages and other instruments. Except as otherwise provided under this Agreement or by law, the General Partners may delegate all or any of their duties under this Agreement to any of their own respective partners, officers or employees, and in furtherance of such delegation may elect, employ, contract or deal with any Person (including any General Partner or any Affiliate of a General Partner). (g) RELIANCE BY THIRD PARTIES. No Person dealing with the Partnership, or its Assets, whether as mortgagee, assignee, purchaser, lessee, grantee or otherwise, shall be required to investigate the authority of the General Partners, or any General Partner purporting to act on behalf of the other General Partners, in selling, assigning, leasing, mortgaging, conveying or otherwise dealing with any Partnership Assets or any part thereof, nor shall any such assignee, lessee, purchaser, mortgagee, grantee or other Person entering into a contract with the Partnership be required to inquire as to whether the approval of the Partners or Unitholders for any such sale, assignment, lease, mortgage, transfer or other transaction has been first obtained. Any such Person shall be conclusively protected in relying upon a certificate of authority or any other material fact signed by any General Partner, or in accepting any instrument signed by any General Partner in the name and behalf of the Partnership or the General Partners. 6.2 LIMITATIONS ON THE EXERCISE OF POWERS OF GENERAL PARTNERS. The General Partners shall have no power to take any action prohibited by this Agreement or by the Massachusetts Uniform Limited A-6 Partnership Act. Furthermore, in their administration of the Partnership's affairs, the General Partners shall be subject to the following specific limitations: (a) INVESTMENT OBJECTIVES AND POLICIES. The Partnership's Investment in Assets shall not be less than eighty-two percent (82%) of the gross proceeds of the Partnership's offering of Units, and Front-End Fees and Expenses shall not exceed eighteen percent (18%) of such gross proceeds. The Partnership expects to invest approximately 70% of the net proceeds of the offering of Units in unleveraged Properties. The Properties to be acquired by the Partnership shall consist primarily of apartment complexes, office and light industrial buildings, and/or shopping centers. All of the Properties shall be located in the United States. The Partnership shall invest in developed Properties and may expand, rehabilitate or otherwise improve existing Properties. The Partnership shall not invest in resort or recreational properties, hotels, nursing homes, gaming facilities, or mobile home parks. No unimproved or non-income producing property shall be acquired. The General Partners shall attempt to structure any borrowings to avoid producing unrelated business taxable income at a level which would obligate a tax exempt entity holding 100 Units, which does not otherwise have unrelated business taxable income, to file a federal income tax return or to pay federal income tax as a result. The Partnership expects to invest approximately 30% of the net proceeds of the offering of Units in MBS issued by GNMA, FNMA or FHLMC. On an interim basis, the Partnership may invest its funds either in (i) United States Government securities, other United States Government guaranteed money instruments, certificates of deposit of banks located in the United States having total assets in excess of $100 million, bank repurchase agreements collateralized by securities of the United States Government or governmental agencies, bankers' acceptances, and similar money market investments, or (ii) shares of public investment companies registered with the Securities and Exchange Commission whose assets exceed $50,000,000 and are invested in the foregoing types of investments and held by an independent custodian. The General Partners shall attempt to manage the Partnership's investments in MBS and its interim investments to assure that the Partnership shall not be deemed an investment company as such term is defined in the Investment Company Act of 1940. The Partnership shall not redeem or repurchase Limited Partnership Interests or Units and shall not underwrite the securities of other issuers. (b) SALES AND LEASES OF PROPERTIES FROM OR TO THE GENERAL PARTNERS AND THEIR AFFILIATES. The Partnership shall not purchase, lease or acquire any Asset from any General Partner or any Affiliate of any General Partner or any Person in which any General Partner or Affiliate has a material interest including, without limitation, any partnership of which any General Partner or Affiliate of a General Partner is a partner. Notwithstanding the foregoing, the General Partners or their Affiliates may purchase a Property in their own name, and assume loans in connection therewith and temporarily hold title thereto for the purpose of facilitating the acquisition of such Property or the borrowing of money for the Partnership, or any other purpose related to the business of the Partnership, provided that (i) such Property is purchased by the Partnership for a Purchase Price (and related cash investment) no greater than the Purchase Price (and related cash investment) in such Property (including, without limitation, equity payments, transfer taxes, financing and closing costs) made or agreed to be made by the General Partners or their Affiliates, except for payment of Acquisition Expenses to the extent permitted by this Agreement, (ii) there is no difference in interest rates of the loans secured by the Property at the time acquired by the General Partners or their Affiliates and the time acquired by the Partnership, and (iii) no other payment directly or indirectly issuing out of such transaction is received by, nor any other benefit conferred upon, any General Partner or Affiliate thereof apart from compensation otherwise permitted by this Agreement. The General Partners or their Affiliates may lease office or other space in any Property owned by the Partnership; provided, however, that any such lease (i) shall be on terms and conditions no less favorable to the Partnership than those which would have been determined by arm's- A-7 length negotiations with a non-affiliated person for comparable space in the area where the Property is located, which determination may be made on the basis of, and shall take into account, the terms, conditions and rentals agreed to by any other tenants of the Property, (ii) shall be terminable on 60 days' prior written notice by the Partnership without penalty, and (iii) shall provide that any rentals from subleases relating thereto which are in excess of the rentals from such lease shall be paid to the Partnership and, provided further, that no more than 15% of the office space of the Partnership Properties shall be leased to the General Partners or their Affiliates. Except as otherwise provided herein, the Partnership shall not sell or lease any Property to any General Partner or any Affiliate of a General Partner. (c) LOANS TO OR FROM THE GENERAL PARTNERS AND THEIR AFFILIATES. No loans may be made by the Partnership to any General Partner or any Affiliate of a General Partner. A General Partner or any Affiliate of a General Partner may loan funds to the Partnership but only with interest rates and other finance charges and fees not in excess of the amounts that are charged by unrelated banks on comparable loans for the same purpose in the locality of the Property in connection with which the loan was made, and in no event shall the annual interest rate charged on any such loan exceed by more than 2% the base rate of Bank of New England, N.A., Boston, Massachusetts. In addition, (i) to the extent that the General Partners or their Affiliates shall themselves borrow the funds which they loan to the Partnership, the interest rates and other finance charges charged to the Partnership shall not exceed the corresponding amounts paid by the General Partners or their Affiliates, and (ii) neither any General Partner nor any Affiliate of a General Partner shall make loans to the Partnership with a prepayment charge or penalty which is evidenced or secured by either a first or junior or all-inclusive note or mortgage except to the extent that such prepayment charge or penalty is attributable to an underlying encumbrance. Neither any General Partner or Affiliate of a General Partner shall provide permanent financing for the Partnership, and all payments of principal and interest on any financing provided by the General Partners or any Affiliate of a General Partner shall be due and payable within 12 months after the date of the loan. In the event the Partnership utilizes any all-inclusive (or "wrap-around") note issued by the Partnership to the General Partners or an Affiliate thereof, said note shall provide that the Partnership shall receive credit on its obligation under said note for payments made by the Partnership directly on the underlying encumbrance and that a bank, escrow company or other paying agent shall collect payments (other than amounts not to be applied to the underlying encumbrance) on the all-inclusive note and make disbursements therefrom to the holder of the underlying encumbrance prior to making any disbursement to the holder of the all-inclusive note or, in the alternative, all payments on the all-inclusive note and underlying notes shall be made directly by the Partnership. In addition, no General Partner or Affiliate of a General Partner shall receive interest on the amount of the underlying encumbrance included in any all-inclusive note in excess of that payable to the lender on that underlying encumbrance. (d) EXCHANGE OF INTERESTS FOR ASSETS. The Partnership shall not acquire any Asset in exchange for Interests in the Partnership. (e) JOINT VENTURE INVESTMENTS. The Partnership shall not make investments in the general or limited partner interests of any other program, or enter into any joint venture or partnership which owns or operates a particular Asset except for (i) any such general partnership or venture entered into to facilitate the holding of title to any Asset and in which the Partnership holds all or substantially all of the beneficial interest, or (ii) a general partnership or joint venture to acquire and hold an Asset and with respect to which each of the following conditions is satisfied. First, the Partnership shall acquire a controlling interest in any such general partnership or venture. For purposes hereof, the Partnership shall be deemed to have a "controlling interest" in such general partnership or venture if the Partnership holds A-8 an interest of not less than 50% in the capital and profits of the venture and the joint venture agreement or related documents grants to the Partnership the joint right to make basic management decisions concerning the sale, leasing, refinancing, expansion or improvement of the Asset. Second, the General Partners, in their capacity as managers of the Partnership, shall not do, or cause such joint venture to do, any act which would not be permitted under this Agreement if title to such Asset were held directly by the Partnership. Third, no such general partnership or venture shall be entered into by the Partnership which involves the payment of duplicate property management or other fees which would have the effect of circumventing any of the restrictions on and prohibition of transactions involving conflicts of interest contained in this Agreement. Fourth, in the event of a proposed sale of the Asset initiated by either joint venture partner, the Partnership must have a right of first refusal to purchase the other party's interest. Fifth, the Partnership may enter into joint ventures with a partnership subsequently sponsored by the General Partners or their Affiliates, but only if such other partnership has substantially identical investment objectives and management compensation provisions to those of the Partnership. No duplicative property management or other fees shall be permitted in any such joint ventures. In addition, each partnership must have a right of first refusal to buy out the other partnership, and the investment by each partnership must be on substantially the same terms and conditions. (f) PROPERTY APPRAISALS. No Property shall be acquired at a Purchase Price to the Partnership in excess of its value as determined by an appraisal prepared by a competent independent appraiser, which appraisals shall be maintained in the records of the Partnership for not less than five years after the date of acquisition and which shall be available for inspection and duplication by any Partner or his representative at his cost. Similar appraisals shall be made of each Property in each year. 6.3 LIABILITY FOR ACTS OR OMISSIONS AND INDEMNIFICATION. No General Partner or Affiliate of a General Partner shall be liable, responsible or accountable in damages to any of the Partners, Unitholders or the Partnership for any act or omission of any General Partner in good faith on behalf of the Partnership and in a manner reasonably believed by such General Partner to be within the scope of the authority granted to the General Partners by this Agreement and in the best interests of the Partnership, except for acts or omissions constituting negligence, misconduct or breach of fiduciary duty. The General Partners and their respective Affiliates shall be entitled to indemnity from the Partnership for any loss, damage, or claim by reason of any act or omission performed or omitted by the General Partners in good faith on behalf of the Partnership and in a manner reasonably believed by the General Partners to be within the scope of the authority granted to the General Partners by this Agreement and in the best interests of the Partnership, except that they shall not be entitled to be indemnified in respect of any loss, damage or claim incurred by reason of negligence, misconduct, or breach of fiduciary duty. Any indemnity under this Section shall be provided out of and to the extent of Partnership assets only, and no Partner shall have or incur any personal liability on account thereof. In no event shall the Partnership assume the cost of any portion of liability insurance which would insure the General Partners for any liability as to which the General Partners are prohibited from being indemnified by the Partnership. Notwithstanding the foregoing, neither the General Partners nor any officer, director, employee, agent, Affiliate or assign of the General Partners or of the Partnership shall be indemnified for liabilities arising under federal and state securities laws unless there has been a successful adjudication on the merits of each count involving securities law violations, or such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction. A-9 6.4 COMPENSATION OF THE GENERAL PARTNERS AND THEIR AFFILIATES. The General Partners and their Affiliates shall be entitled to receive from the Partnership the following amounts in addition to distribu tions made to them pursuant to Section 8 hereof: (a) The Partnership is authorized to enter into a Sales Agent Agreement with Krupp Securities Corporation under which Krupp Securities Corporation shall agree to act as managing underwriter for the offering of Units made pursuant to Section 6.1(d) hereof. Krupp Securities Corporation will in turn enter into Selected Dealer Agreements with participating selected dealers. Pursuant to the Sales Agent Agreement and the Selected Dealer Agreements, Krupp Securities Corporation or the participating selected dealers, as the case may be, shall be entitled to receive out of the gross proceeds of such offering the following compensation: (1) a sales commission of up to a maximum of $80 (8%) per $1,000 of Units sold and (2) an accountable reimbursement of due diligence expenses incurred by prospective selected dealers up to a maximum of $5 (1/2%) per $1,000 of Units sold. (b) For services rendered in connection with the acquisition of Assets by the Partnership, the Partnership shall pay to Affiliates of the General Partners an Acquisition Fee equal to 2.85% of the initial Invested Capital of the Unitholders resulting from the offering of Units. In the event that any other fee or commission is incurred in connection with the selection or purchase of any Property by the Partnership, whether designated as a real estate commission, acquisition fee, finder's fee, selection fee, development fee, construction fee, non-recurring management fee, consulting fee or any fee of similar nature however designated and however treated for tax or accounting purposes, it shall be paid by Affiliates of the General Partners out of the Acquisition Fee. In addition, the Partnership shall reimburse the General Partners and their Affiliates with respect to Acquisition Expenses incurred by them. In no event shall the aggregate of the Acquisition Expenses paid by the Partnership exceed 1% of the initial Invested Capital of the Unitholders resulting from the offering of Units. Subject to the foregoing limitations and to the additional limitations set forth in Section 12.4 hereof, the General Partners and their Affiliates shall be entitled to receive reimbursement for organizational and offering expenses, Acquisition Expenses, and other expenses incurred by them in connection with the organization and operation of the Partnership. (c) For services rendered in managing the affairs of the Partnership, the Partnership shall pay to the General Partners a Basic Management Fee equal to 5% of the Partnership's annual Cash Flow, but payment of such Fee will be subordinated to the extent necessary for the Unitholders and Investor Limited Partners to receive under Section 8.2 an amount for such year equal to a 7.5% non-cumulative annual return on their Invested Capital. (d) For services rendered in managing the affairs of the Partnership, the Partnership shall pay to the General Partners an Incentive Fee in an amount equal to 3% of the Partnership's annual Cash Flow, but payment of such Fee will be subordinated to the extent necessary for the Unitholders and Investor Limited Partners to receive under Section 8.2 an amount for such year equal to a 9% non-cumulative annual return on their Invested Capital. (e) Upon the sale of any Property, the General Partners shall receive for their actual services in connection with such sale a real estate disposition fee in an amount equal to 3% of the contract sales price of the Property, provided that in no event shall (1) any such fee exceed 50% of the competitive real estate commission in the area where the Property sold is located and, together with any other brokerage fees payable to or by any other Person, exceed 6% of the contract price for the sale of such Property, and (2) any such real estate disposition fee be paid until after all Investor Limited Partners and Unitholders A-10 shall first have received a return of their total Invested Capital and any previously unpaid Cumulative Return as determined under Section 8.3(a) or Section 8.3(b) hereof. If and when such a return has been achieved, any and all real estate disposition fees previously earned by the General Partners shall be paid by the Partnership to the General Partners prior to any other distributions to the Partners. If the General Partners participate with an independent broker on resale, the aforesaid subordination requirement shall apply only to the commission earned by the General Partners. (f) The Partnership is authorized to purchase title insurance and liability insurance from Affiliates of the General Partners at rates at least equal to the lowest rate obtainable from two unaffiliated companies independently engaged in the business of providing such services to other than Affiliates, provided at least 75% of their insurance brokerage service gross revenue is derived from other than Affiliates. (g) Commencing with the month of acquisition of any Property, the General Partners are authorized to enter into a property management agreement with respect to such Property. Under any such agreements with a General Partner or any Affiliate of the General Partners, the Partnership shall pay a monthly management fee equal to the amount customarily charged in arm's-length transactions by other firms rendering comparable services for comparable properties in the localities where such Properties are located, but in no event to exceed (i) 5% of the gross receipts from residential properties under management (including all rent-up, leasing, and re-leasing fees and bonuses, and leasing related services, paid to any Person, except for locator services performed by non-Affiliated Persons in certain geographic areas where such locator services are not traditionally included in property management services), (ii) 6% of the gross receipts from office or commercial properties under management if such property management firm provides leasing, re-leasing and leasing related services (including, without limitation, the negotiation and review of leases and renewals thereof), (iii) 3% of the gross receipts from office or commercial properties under management if such property management firm does not provide leasing, re-leasing and leasing related services, (iv) 3% of the gross receipts from industrial properties under management (inclusive of leasing, re-leasing and leasing related services provided by such property management firm), or (v) 1% of the gross receipts from industrial, office or commercial properties which are leased on a long-term (ten or more years) net (or similar) basis, except that a one-time initial leasing fee of 3% of the gross receipts on each such lease shall be permitted, such fee to be payable over the first five full years of the original term of such lease. Such fee shall include, with respect to the Property subject to such agreement, any fees paid to a non-related Person for bookkeeping or property management services, but shall exclude (except in the case of residential properties) any fees paid to real estate brokers which are not Affiliates of the General Partners in connection with the procurement of tenants in such Property. Under any such agreement, the management agent shall agree to perform services in connection with day-to-day operations of the Partnership Property subject to the Agreement including, but not limited to: (i) collection of rent payable under outstanding leases of the Partnership Property; (ii) supervision of the maintenance, repair, remodeling, and refurbishing of the Partnership Property; (iii) review of rental schedules and recommendations with respect to changes thereto; (iv) employment and supervision of on-site property managers and other property management personnel on behalf of the Partnership, together with the establishment of procedures regarding the management of the Partnership Property; (v) negotiation and review of leases with respect to the Partnership Property if the managing agent is responsible for leasing, re-leasing and leasing related services; (vi) negotiation and review of maintenance agreements; (vii) review of replacement and working capital reserves and recommendations with respect to changes thereto; (viii) preparation and review of budgets and cash flow projections for the Partnership Property; (ix) periodic physical inspections and market surveys; and (x) determination and implementation of capital improvements. Subject to the limitations set forth in Section 12.4 hereof, A-11 the General Partners are authorized to reimburse the entity or entities which manage any Property pursuant to a management agreement for proper expenditures, obligations and liabilities (including the salaries of on-site property managers and personnel) incurred by such agent in connection with the operation of such Property. 6.5 OTHER INTERESTS OF THE GENERAL PARTNERS AND THEIR AFFILIATES. Any General Partner and any Affiliate of a General Partner may engage in or possess an interest in other business ventures (uncon nected with the Partnership) of every kind and description, independently or with others including, but not limited to, serving as general partner of other partnerships and participating in the real estate business in all of its phases, which shall include, without limitation, ownership, operation, financing, construction, management, syndication and development of real property and which may include properties competitive with any Property. The General Partners will devote such time to the affairs of the Partnership and each other such partnership as they, within their sole discretion, deem necessary for the proper performance of their duties. Neither the Partnership, the Limited Partners nor the Unitholders (except for the General Partners and their Affiliates) shall have any rights in and to such independent ventures or the income or profits therefrom by reason of the General Partners' position with the Partnership. Neither the General Partners nor any Affiliate of any General Partner shall be obligated to present any particular investment opportunity to the Partnership even if such opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership, and each of the General Partners and their Affiliates shall have the right to take for its own account (individually or otherwise) or to recommend to others any such particular investment opportunity. Notwithstanding the foregoing, while the Partnership has available uncommitted funds to invest in additional Properties (other than funds of the Partnership allocated to the purchase of MBS or which became available because of a Capital Transaction or because of the failure to close on a property acquisition originally allocated to the Partnership), the General Partners shall not commit any real property for investment to their own account or to any non-specified real estate partnership subsequently sponsored by the General Partners or their Affiliates unless the General Partners determine that such property would not be a suitable investment for the Partnership or that the Partnership then has insufficient funds to make such investment. The General Partners shall make such determination on the basis of the investment policies and objectives set forth in Section 6.2(a) hereof. Subject to the other provisions of this Agreement, the Partnership may employ or transact business with any Person, notwithstanding the fact that any Partner or Unitholder or any of his Affiliates may have (or have had) an interest in or connection with such Person, and neither the Partnership, the other Partners nor the Unitholders shall have any rights by virtue of this Agreement in or to any income or profits derived therefrom. Nothing herein shall be deemed to diminish the General Partners' overriding fiduciary obligation to the Partnership or to act as a waiver of any right or remedy the Partnership or other Partners or Unitholders may have in the event of a breach by a General Partner of such obligation. 6.6 OTHER TRANSACTIONS INVOLVING THE GENERAL PARTNERS AND THEIR AFFILIATES. Except as specifically permitted by this Agreement, the General Partners are prohibited from entering into any agreements, contracts or arrangements on behalf of the Partnership with any General Partner or any Affiliate of any General Partner. Such prohibition shall include, without limitation, the following: (a) neither a General Partner nor any such Affiliate shall be given an exclusive right to sell or exclusive employment to sell Property for the Partnership, provided that the General Partners shall be entitled to perform services in connection with the sale of Partnership Properties and to receive real estate disposition fees in connection therewith as specified in Section 6.4(e) hereof; (b) neither any General Partner nor any such Affiliate shall receive directly or indirectly a commission or fee (but may receive reimbursements of expenses incurred) in connection with the reinvestment of the proceeds of the sale, exchange or refinancing of any Property; and (c) neither any General Partner nor any such Affiliate shall enter into an agreement or A-12 contract with the Partnership for the development of any Property or the construction of improvements on any Property. In addition, in connection with any property management or other agreement entered into by the Partnership with any General Partner or any Affiliate of the General Partners, no rebates or "give-ups" may be received by a General Partner or any such Affiliate, nor may the General Partner or any such Affiliate participate in any reciprocal business agreements which would have the effect of circumventing any of the provisions of this Agreement. Section 7. LIMITED PARTNERS AND UNITHOLDERS; CORPORATE LIMITED PARTNER; DEPOSITARY RECEIPTS. 7.1 CLASSES OF LIMITED PARTNERS AND UNITHOLDERS. There shall be one class of Limited Partner Interests held by the Corporate Limited Partner and, under certain circumstances, by Unitholders who become Investor Limited Partners. Subject to the provisions of Section 9 of this Agreement, a With drawn General Partner, or his estate or legal representatives, may also be treated as a Limited Partner (but not as an Investor or Corporate Limited Partner) in respect of any Interest formerly held as a General Partner in the manner specified in Section 9.3(b) hereof. 7.2 TRANSFERABILITY OF UNITS. The General Partners' right to accept initial subscribers as Unit holders is set forth in Section 6.1(d) hereof. Each prospective transferee of a Depositary Receipt may be accepted by the General Partners as a Unitholder if such transferee provides the General Partners with (i) information, including name, address, status as a tax-exempt entity or non-resident alien, such information as may be necessary or appropriate to determine suitability under applicable securities laws, and such other information as the General Partners may request, and (2) a fee of not more than $10.00 (not including related brokerage commissions) to reimburse the Partnership for its costs respecting the transfer. The General Partners will use their best efforts to accept or reject a prospective transferee as a Unitholder within the same month as they receive such information. If a prospective transferee is not accepted by the General Partners, such prospective transferee shall have no right to any distributions or allocations of the Partnership and shall have no other rights, obligations or duties with respect to the Partnership. The General Partners shall accept a prospective transferee unless a transfer restriction applies. The General Partners shall reject a prospective transferee if any of the following transfer restrictions applies: (a) The prospective transferee is not suitable under applicable federal or state securities laws; (b) The prospective transferee is a non-resident alien; (c) The transfer would cause the assets of the Partnership to be "plan assets" or the transactions contemplated hereunder to be prohibited transactions under ERISA or the Code; (d) The transfer is a transfer of less than 100 Units or would cause the prospective transferor or the prospective transferee to hold less than 250 Units (or 100 Units for Tax-Exempt Entities), except for transfer by will or intestacy upon the death of the transferor or by operation of law; or (e) The transfer would cause the Partnership to terminate under Section 708 of the Code. The General Partner may impose additional transfer restrictions in accordance with Section 6.1(c) hereof. The Depositary Receipts evidencing the Units shall be transferable after the first distribution from A-13 the Partnership of Distributable Cash Flow under Section 8.2 hereof following the termination of the offering. Transfers of Depositary Receipts shall be effective on the first day of the month following acceptance by the General Partners. 7.3 ABSENCE OF CONTROL OVER PARTNERSHIP BUSINESS. The Limited Partners and Unitholders hereby consent to the exercise by the General Partners of the powers conferred on them by this Agreement. No Limited Partner or Unitholder (except one who may also be a General Partner, and then only in his capacity as General Partner) shall participate in or have any control over the Partnership business or have any right or authority to act for or to bind the Partnership. No Limited Partner or Unitholder shall have the right to have the Partnership dissolved and liquidated or to have his Capital Contribution, returned except as provided in this Agreement. 7.4 LIMITED LIABILITY. The liability of each Limited Partner in his capacity as a Limited Partner shall be limited to the amount of his Capital Contribution, and the liability of each Unitholder in his capacity as a Unitholder shall be limited to the amount of his Subscription Price described in Section 5.2 hereof. No Limited Partner, in his capacity as Limited Partner, and no Unitholder, in his capacity as Unitholder, shall have any further obligations to the Partnership or be required to contribute any capital or loan any funds to the Partnership; provided, however, that nothing herein shall relieve the Limited Partners or Unitholders of any liability imposed under law, including but not limited to their liability under the Massachusetts Uniform Limited Partnership Act for the amount of returned Capital Contributions to the extent necessary to discharge the Partnership's liabilities to creditors who extend credit to the Partnership during the period the Capital Contribution was held by the Partnership. Each Unitholder assumes and agrees to pay or to reimburse the Corporate Limited Partner with respect to any such liability of the Corporate Limited Partner with respect to the Limited Partner Interests corresponding to his or its Units. 7.5 ADMISSION OF INVESTOR AND SUBSTITUTE LIMITED PARTNERS. The General Partners shall prepare and file from time to time after the initial offering of Units, and in any event not less frequently than quarterly, amendments to the Certificate of Limited Partnership to admit Investor Limited Partners and Substitute Limited Partners pursuant to Sections 7.6(h) and 10 hereof. 7.6 RELATIONSHIP BETWEEN CORPORATE LIMITED PARTNER AND UNITHOLDERS; DEPOSITARY RECEIPTS. (a) ISSUANCE OF DEPOSITARY RECEIPTS. Upon the contribution of the Subscription Price for a Unit to the capital of the Partnership under Sections 5.2 and 6.1(d) hereof, the Corporate Limited Partner shall receive the Limited Partner Interest corresponding to such Unit, the assignment to the Unitholder and his contractual rights under Section 7.6(b) hereof shall commence, the Units will be deemed deposited by the Unitholders with the Depositary, the Depositary Receipts will be issued by the Depositary, and a Depositary Receipt registered in the name of the Unitholder will be delivered to him. Except in the case of the Reinvestment Plan where Depositary Receipts may be issued in the name of a nominee for the Reinvestment Agent, Depositary Receipts may not be issued in the name of a nominee or agent, but may be issued only in the name of the beneficial owner. The Corporate Limited Partner shall act as Depositary with respect to all Units. By subscribing for a Unit and by the General Partners' acceptance of such subscription, a Unitholder shall be deemed to have assented to all the terms and conditions of this Agreement. (b) ASSIGNMENT AND COVENANT BY CORPORATE LIMITED PARTNER. The Corporate Limited Partner, by the execution of this Agreement, irrevocably transfers and assigns, to the extent permitted by the A-14 Massachusetts Uniform Limited Partnership Act, to the Unitholders all of the Corporate Limited Partner's rights and interest in and to the Limited Partner Interests corresponding to the Units, including the right to distributions, including liquidating distributions of the Partnership, as of the time of release to the Partnership of the Subscription Price for each such Unit. At the same time, the Corporate Limited Partner, by the execution of this Agreement, agrees and covenants that it will exercise any other rights with respect to each Limited Partner Interest solely in favor of, in the interest of, and at the direction of the Unitholder whose Unit corresponds to such Limited Partner Interest. The Corporate Limited Partner shall remain a Limited Partner of the Partnership with respect to the Limited Partner Interests corresponding to the Units, notwithstanding the assignment of its rights and interests under this Section 7.6(b). (c) CONSENT TO ASSIGNMENT AND COVENANT. The General Partners, by the execution of this Agreement, irrevocably consent to and acknowledge that (1) the foregoing assignment and covenant by the Corporate Limited Partner to the Unitholders with respect to the Corporate Limited Partner's rights and interest in the Limited Partner Interests corresponding to the Units as described above is effective and (2) the Unitholders are intended to be assignees of record and third party beneficiaries of all rights and privileges of the Corporate Limited Partner in respect of the Limited Partner Interests corresponding to their Units. The General Partners covenant and agree that, in accordance with the foregoing assignment and covenant of the Corporate Limited Partner, all the Corporate Limited Partner's rights and privileges in respect of the underlying Limited Partner Interests may be exercised by the Unitholders on an Interest-by-Interest basis or, if not permitted to be exercised by the Unitholders under Massachusetts law, then by the Corporate Limited Partner on an Interest-by-Interest basis as provided by Section 7.6(e) hereof. (d) NO LIABILITY OF CORPORATE LIMITED PARTNER. The Corporate Limited Partner shall not be liable to any Unitholder for any action or nonaction by it taken or omitted in good faith or in reliance upon advice, written notice, request or direction from a Unitholder believed by it to be genuine and to have been signed or presented by the proper person or persons. The Unitholders and Investor Limited Partners and not the Corporate Limited Partner shall be liable to the Partnership or any third party for any obligations for which limited partners are liable under this Agreement or Massachusetts law, and each Unitholder assumes and agrees to pay or to reimburse the Corporate Limited Partner with respect to any such liability applicable to his Unit. (e) VOTING. In the event that the Unitholders are not permitted to exercise any voting or similar rights in the Partnership directly, the Corporate Limited Partner shall canvass the preferences of all Unitholders on all matters submitted to a vote of the Limited Partners, and the Corporate Limited Partner shall vote each underlying Limited Partner Interest only in accordance with the directions of the Unitholder whose Unit corresponds to such Interest, with each Unit (and, therefore, each Limited Partner Interest) entitled to one vote. The Corporate Limited Partner shall only vote the Limited Partner Interests held by it in accordance with, and to the extent of, written instructions received from the Unitholders. All voting shall be conducted in accordance with Section 13 hereof. (f) CALLING MEETINGS. Unitholders, individually or collectively with Investor Limited Partners, owning directly or indirectly 10% or more of the outstanding Limited Partner Interests, may exercise the rights of Limited Partners to call a meeting by written notice to the Corporate Limited Partner and the General Partners. Within ten business days after receipt of such notice, the Corporate Limited Partner shall request a meeting in accordance with the procedures set forth in Section 13.1 hereof. A-15 (g) ALLOCATIONS AND DISTRIBUTIONS. The portion of Profits or Losses for Tax Purposes and distri butions which shall be credited to the account of the Corporate Limited Partner for the benefit of Unitholders shall be allocated and apportioned among the Unitholders in the same manner as Profits or Losses for Tax Purposes and distributions are allocated and apportioned among Limited Partners with respect to the underlying Limited Partner Interests in Section 8 of this Agreement. (h) EXCHANGE OF UNITS FOR LIMITED PARTNER LNTERESTS. Any Unitholder who desires to exchange all of his Units for Limited Partner Interests may do so by delivering to the Depositary his Depositary Receipts and transfer applications (which are available upon request from the Depositary), and the payment of a fee of $100.00 per transaction, for legal and administrative costs and filing fees. The effective date of any such exchange shall be the first day of the month following the date as of which the General Partners file an amendment to the Certificate of Limited Partnership listing the name of such Unitholder as an Investor Limited Partner. Such an amendment shall be filed no later than 15 days after the completion of any fiscal quarter of the Partnership in which a Unit is exchanged for a Limited Partner Interest. Persons who effect such conversion will receive one Limited Partner Interest for each Unit they exchange and will not be able to re-exchange Limited Partner Interests for Units. In accordance with Section 5.5 hereof, the Capital Account of the Corporate Limited Partner shall be reduced by an amount equal to the capital account of such former Unitholder, and such amount will be credited to the Unitholder's Capital Account as an Investor Limited Partner. Units which have been converted into Limited Partner Interests will be cancelled and will not be reissued. If Units shall be exchanged for Limited Partner Interests as a result of a requirement imposed by the General Partners under Section 6.1(c) hereof or by applicable law, there shall be no fee charged by the Partnership with respect to the transaction. Section 8. ALLOCATIONS AND DISTRIBUTIONS. 8.1 ALLOCATIONS OF PROFITS OR LOSSES FOR TAX PURPOSES. (a) OPERATING PROFITS OR LOSSES. Prior to the initial closing of the sale of Units, the Profits or Losses for Tax Purposes of the Partnership shall be allocated to the Corporate Limited Partner and the General Partners in proportion to their respective Capital Contributions. For purposes of this section, if the initial closing of the sale of Units occurs (1) on any of the first fifteen days of a month, then such closing shall be deemed to have occurred on the first day of such month, or (2) on any other day of a month, then such closing shall be deemed to have occurred on the first day of the following month. Commencing with the effective date of the initial closing of the sale of Units, the Profits or Losses for Tax Purposes of the Partnership, other than Profits or Losses of the Partnership arising from a Capital Transaction and the Terminating Capital Transaction, for each fiscal year (or portion thereof) shall be determined as of the end of such fiscal year, or portion thereof, and allocated ninety-eight percent (98%) to the class comprised of the Limited Partners, and two percent (2%) to the class comprised of the General Partners. (b) PROFITS FOR TAX PURPOSES FROM A CAPITAL TRANSACTION. The Profits for Tax Purposes of the Partnership arising from a Capital Transaction shall be allocated as follows: FIRST, to the class comprised of the Limited Partners to the extent of cash distributions pur suant to Section 8.3(a) FIRST attributable to the return of Invested Capital; A-16 SECOND, to the class comprised of the General Partners to the extent of cash distributions pursuant to Section 8.3(a) SECOND attributable to the return of Invested Capital; THIRD, to the class comprised of the Limited Partners to the extent of cash distributions pursuant to Section 8.3(a) THIRD; FOURTH, to the class comprised of the General Partners to the extent of cash distributions pursuant to Section 8.3(a) FOURTH; and FIFTH, any remaining Profits for Tax Purposes shall be allocated eighty-five percent (85%) to the class comprised of the Limited Partners and fifteen percent (15%) to the class comprised of the General Partners. (c) PROFITS FOR TAX PURPOSES FROM THE TERMINATING CAPITAL TRANSACTION. The Profits for Tax Purposes arising from the Terminating Capital Transaction and the winding up of the affairs of the Partnership shall be allocated among the Partners (treating the classes comprised of the Limited Partners and the General Partners as separate classes for such allocation) as follows: FIRST, to each class of Partners (without preference over the other class of Partners) in the amount as to each class equal to (or if less than, in proportion to) the aggregate of the then negative balances (if any) in the Capital Accounts of the Partners of such class; SECOND, to the class comprised of the Limited Partners until the aggregate of the positive balances in the Capital Accounts of the Partners of such class is equal to its Invested Capital; THIRD, to the class comprised of the General Partners until the aggregate of the positive bal ances in the Capital Accounts of the Partners of such class is equal to its Invested Capital; FOURTH, to the class comprised of the Limited Partners until such class has been allocated an amount of Profits equal to the Cumulative Return less the sum of (i) all amounts of cash whenever distributed to such class pursuant to Section 8.2 and (ii) all amounts of cash whenever distributed to such class pursuant to Section 8.3(a) THIRD; FIFTH, to the class comprised of the General Partners until such class has been allocated the amount of Profits necessary so that the amounts whenever allocated under Section 8.1(b) THIRD and clause FOURTH of this Section 8.1(c) when compared to the amounts whenever allocated under Section 8.1(b) FOURTH and this clause FIFTH are in the ratio of 85 to 15; and SIXTH, any remaining Profits shall be allocated eighty-five percent (85%) to the class comprised of the Limited Partners and fifteen percent (15%) to the class comprised of the General Partners. (d) LOSSES FOR TAX PURPOSES FROM A CAPITAL TRANSACTION. All Losses for Tax Purposes attribut able to a Capital Transaction shall be allocated ninety-eight percent (98%) to the class comprised of the Limited Partners and two percent (2%) to the class comprised of the General Partners. (e) LOSSES FOR TAX PURPOSES FROM THE TERMINATING CAPITAL TRANSACTION. Losses for Tax Purposes attributable to the Terminating Capital Transaction and the winding-up of the affairs of the Partnership A-17 shall be allocated to the Partners to the extent of, and any excess in proportion to, the positive balances in their Capital Accounts (adjusted as though the Partnership's fiscal year ended immediately prior to the event giving rise to such Losses). (f) ONE PERCENT INTEREST OF GENERAL PARTNERS. Notwithstanding anything to the contrary that may be expressed or implied in this Agreement, the interests of all of the General Partners, taken together, in each item of Partnership income, gain, loss, deduction, or credit will be equal to at least one percent (1%) of each of those items ______ times during the existence of the Partnership. In determining the interests of the General Partners in those items, any Limited Partner Interests owned by the General Partners shall not be taken into account. 8.2 DISTRIBUTABLE CASH FLOW. Distributable Cash Flow of the Partnership shall be distributed ninety-eight percent (98%) to the class comprised of the Limited Partners and two percent (2%) to the class comprised of the General Partners. 8.3 PROCEEDS OF CAPITAL TRANSACTIONS AND THE TERMINATING CAPITAL TRANSACTION. (a) CAPITAL TRANSACTION PROCEEDS. Net Cash Proceeds of a Capital Transaction other than the Terminating Capital Transaction shall be distributed as follows: FIRST, to the class comprised of the Limited Partners until such class has received a return of its total Invested Capital; SECOND, to the class comprised of the General Partners until such class has received a return of its total Invested Capital; THIRD, to the class comprised of the Limited Partners until such class has received an amount equal to the Cumulative Return less the sum of (i) all amounts of cash whenever distributed to such class pursuant to Section 8.2, and (ii) all amounts of cash whenever distributed to such class pursuant to this Section 8.3(a) THIRD (which distributions were made due to a prior Capital Transaction); FOURTH, to the class comprised of the General Partners until such class has received the amount necessary so that the amounts whenever allocated under clauses THIRD and this clause FOURTH are in the ratio of 85 to 15; and FIFTH, any remaining Net Cash Proceeds shall be distributed eighty-five percent (85%) to the class comprised of the Limited Partners and fifteen percent (15%) to the class comprised of the General Partners. (b) TERMINATING CAPITAL TRANSACTION PROCEEDS. Net Cash Proceeds of the Terminating Capital Transaction and the winding up of the affairs of the Partnership shall be distributed as follows: FIRST, to each class of Partners in the amount as to each class equal to (or if less than, in proportion to) the aggregate of the then positive balances (if any) in the Capital Accounts of the Partners of such class; SECOND, to the class comprised of the Limited Partners until the aggregate of the positive balances in the Capital Accounts of the Partners of such class is equal to its Invested Capital; A-18 THIRD, to the class comprised of the General Partners until the aggregate of the positive bal ances in the Capital Accounts of the Partners of such class is equal to its Invested Capital; FOURTH, to the class comprised of the Limited Partners until such class has received an amount equal to the Cumulative Return less the sum of (i) all amounts of cash whenever distributed to such class pursuant to Section 8.2, and (ii) all amounts of cash whenever distributed to such class pursuant to Section 8.3(a) THIRD; FIFTH, to the class comprised of the General Partners until such class has received the amount necessary so that the amounts whenever allocated under Section 8.3(a) THIRD and clause FOURTH of this Section 8.3(b) when compared to the amounts whenever allocated under Section 8.3(a) FOURTH and this clause FIFTH are in the ratio of 85 to 15; and SIXTH, any remaining Net Cash Proceeds shall be distributed eighty-five percent (85%) to the class comprised of the Limited Partners and fifteen percent (15%) to the class comprised of the General Partners. 8.4 SPECIAL PROVISIONS FOR ALLOCATIONS AND DISTRIBUTIONS. (a) Subject to the provisions of Sections 8.4(d) and 8.4(e) hereof, and to allocation (if any) to Partners in accordance with their respective Capital Accounts of Profits and Net Cash Proceeds from the Terminating Capital Transaction pursuant to Sections 8.1(c) FIRST and 8.3(b) FIRST, all Profits or Losses for Tax Purposes of the Partnership allocated to, and distributions of cash made to, the classes of Partners consisting of the Limited Partners and the General Partners shall be allocated among the respective members of such classes as follows: (1) among the Limited Partners, in proportion to their respective number of Interests, and (2) among the General Partners, in proportion to their respective Invested Capital. (b) All Profits or Losses for Tax Purposes allocated to, and distributions of cash made to, the Partners shall be credited or charged, as the case may be, to their Capital Accounts as of the date as of which such Profits or Losses for Tax Purposes are allocated and the date as of which distributions of cash are made. All distributions made to the Partners pursuant to the provisions of Section 8.2 hereof shall be treated as having been made and charged to their respective Capital Accounts prior to the allocation of Profits or Losses for Tax Purposes pursuant to Section 8.1(a); distributions under Section 8.3(a) shall be treated as having been made and charged to their respective Capital Accounts prior to the allocation of Profits for Tax Purposes pursuant to Section 8.1(b); distributions under Section 8.3(b) shall be treated as having been made and charged to their respective Capital Accounts after the allocation of Profits for Tax Purposes pursuant to Section 8.1(c) and after the allocation of Losses for Tax Purposes pursuant to Section 8.1(e); and all cash distributions pursuant to Sections 8.2(b) and 8.3(a) shall be treated as having been made and charged to their respective Capital Accounts prior to the allocation of Losses for Tax Purposes pursuant to Section 8.1(d) and Section 8.1(e). The Profits or Losses for Tax Purposes of the Partnership allocated among the Partners pursuant to Section 8.1(a) shall be credited or charged to their respective Capital Accounts prior to the allocation of Profits or Losses for Tax Purposes of the Partnership pursuant to Sections 8.1(b), (c), (d) and (e). (c) The Partnership shall make distributions of Distributable Cash Flow for each quarter commencing with the quarter in which the initial closing of the sale of Units occurs. Within 45 days after the completion of each of the first three quarters of each of the Partnership's fiscal years, the Partnership A-19 will make a distribution of Distributable Cash Flow, which distribution will be based upon an estimate by the General Partners of the Partnership's total Distributable Cash Flow for such year. Within 90 days after the end of each fiscal year, the Partnership's Distributable Cash Flow for such year will be determined and, after giving effect to the amount of Distributable Cash Flow previously distributed, the remainder will then be distributed. (d) All Profits or Losses for Tax Purposes and all distributions, if any, to the class of Limited Partners based upon transactions of the Partnership during any fiscal year in which Units are initially sold, shall be allocated among the Limited Partners as follows: FIRST, the Partnership shall close its books on an interim basis on the first day of each month; SECOND, each Unit sold during such fiscal year (1) on any of the first fifteen days of a month, shall be deemed to have been sold on the first day of such month, (2) on any other day of a month, shall be deemed to have been sold on the first day of the following month. (e) In the event that a Unit or Interest is transferred, (i) Distributable Cash Flow with respect to the fiscal quarter during which the transfer occurs shall be distributed among the Unitholders or Investor Limited Partners recognized as such under this Agreement for each month of such quarter; (ii) if Distributable Cash Flow for any fiscal year with respect to a Unit or Interest is distributed to more than one Person under this Section, then the Profit or Loss for Tax Purposes allocated under Section 8.1(a) to such Unit or Interest with respect to such fiscal year shall be divided into twelve equal portions and allocated one portion to the Person who received Distributable Cash Flow for each month without regard to whether Partnership operations during particular monthly periods of such fiscal year produced profits or losses or cash distributions; (iii) Net Cash Proceeds and Profit or Loss For Tax Purposes arising from the same Capital Transaction (or the Terminating Capital Transaction) shall be distributed and allocated, respectively, to the Unitholder or Investor Limited Partner recognized as such under this Agreement as of the date of such Capital Transaction (or the Terminating Capital Transaction); and (iv) Net Cash Proceeds and Profit or Loss for Tax Purposes not received or realized, as the case may be, upon a Capital Transaction (or the Terminating Capital Transaction), but later received or realized, as the case may be, by the Partnership as a result of an installment or other deferred payment sale, shall be distributed and allocated, respectively, to the Unitholder or Investor Limited Partner recognized as such under this Agreement as of the dates such Net Cash Proceeds and Profit or Loss are received or realized, as the case may be, by the Partnership. (f) Any allocation or distribution with respect to a Limited Partner Interest shall be made directly to the Unitholder of the Unit corresponding to such Interest, if any. (g) If an amount paid or deemed paid to the General Partners or their Affiliates as a fee or payment described in Section 6.4 is a distribution to a general partner in its capacity as a partner and not a guaranteed payment as defined in Section 707(c) of the Code or a payment to a partner not acting in his capacity as a partner under Section 707(a) of the Code, the General Partners shall be allocated an amount of Partnership gross income equal to such payment and its Capital Account shall be reduced to reflect the distribution. For purposes of Sections 8.1, 8.2 and 8.3, Profits and Losses for Tax Purposes shall be determined after making any allocation required by this Section 8.4(g). (h) All amounts paid with respect to any Unit as sales commissions shall be allocated to the particular Unit with respect to which they are paid and the Capital Account for such Unit shall be reduced to reflect such allocation. A-20 8.5 RETURN OF CAPITAL CONTRIBUTIONS. All Partners and Unitholders shall look solely to the assets of the Partnership for the return of Capital Contributions or any other distributions with respect to their Interests. If the assets remaining after payment or discharge, or provisions for payment or discharge, or its debts and liabilities are insufficient to return the Capital Contributions or to make any other distributions to the Partners and Unitholders, no Partner or Unitholder shall have any recourse against the personal assets of any other Partner or Unitholder for that purpose, except to the limited extent set forth in Section 6.3 hereof. 8.6 REINVESTMENT OF NET CASH PROCEEDS. The Partnership shall not reinvest Cash Flow in Assets. The Partnership may reinvest Net Cash Proceeds only as provided in Section 6.1(c) hereof. In the event reinvestment is permitted under Section 6.1(c) hereof, the General Partners may elect, in their sole discretion based upon real estate and MBS market conditions then in effect, either to distribute all or any portion of the cash available for such reinvestment or to reinvest such cash in Properties or MBS. Notwithstanding the foregoing, if the transaction giving rise to such cash shall create any federal or state income tax liability for Investor Limited Partners or Unitholders, no such cash shall be reinvested unless sufficient Net Cash Proceeds are distributed to enable Investor Limited Partners and Unitholders to pay such taxes (assuming the Investor Limited Partners and Unitholders are taxable at an overall rate of 40% on ordinary income and 16% on long-term capital gains). 8.7 RETURN OF UNINVESTED CAPITAL CONTRIBUTIONS. In the event that any portion of the Limited Partners' Capital Contributions is not invested or committed for investment by the Partnership within 24 months from the date on which the offering of Units commenced (except for any amounts utilized to pay expenses of the Partnership and amounts set aside for working capital reserves not in excess of 5% of such Capital Contributions), such portion of Capital Contributions shall promptly be distributed by the Partnership as a return of capital. For the purpose of this Agreement, funds will be deemed to have been committed to investment and will not be returned to the extent written agreements in principle, commitment letters, letters of intent or understanding, option agreements or any similar contracts or understandings were at any time executed by not terminated during the aforesaid 24-month period, regardless of whether any such investment is or is not ultimately consummated, and to the extent any funds have been reserved to make contingent payments in connection with any property, regardless of whether any such payments are or are not ultimately made. In the event that any Capital Contributions shall be returned pursuant to this Section, the respective Capital Contributions (and Invested Capital) of the Investor Limited Partners and Unitholders shall be reduced by the amount of such distribution. 8.8 LIMITATION ON DISTRIBUTIONS TO THE GENERAL PARTNERS. Notwithstanding anything to the contrary that may be expressed or implied in this Agreement, distributions of Net Cash Proceeds of any Capital Transactions or the Terminating Capital Transaction shall not be made to the General Partners pursuant to Section 8 hereof until 100% of the Limited Partners' Invested Capital shall have been returned and the Limited Partners shall have received an amount equal to the sum of (i) a 6% annual cumulative return on the portion of their Invested Capital invested in Property, and (ii) a 10% annual cumulative return on the portion of their Invested Capital invested in MBS; such amounts to be subject to reduction on a pro rata basis, but not below zero, by the aggregate amount of prior distributions to the Limited Partners from cash available for distributions. Section 9. WITHDRAWAL OF GENERAL PARTNERS. 9.1 VOLUNTARY WITHDRAWAL. Any General Partner may Voluntarily Withdraw as a General Partner from the Partnership at any time provided that (a) the General Partners shall have given sixty (60) days A-21 prior notice thereof to the Limited Partners, (b) the Partnership shall have received the opinion of Counsel to the Partnership to the effect that such Withdrawal will not constitute a termination of the Partnership or otherwise materially adversely affect the status of the Partnership for federal income tax purposes and (c) if the General Partner proposing to Withdraw is then the sole General Partner, or if such Voluntary Withdrawal shall require the admission of a new General Partner in order to preserve the status of the Partnership as a partnership for federal income tax purposes, a new General Partner shall have been selected who, or which, (i) shall have stated willingness to be admitted, (ii) shall satisfy the then applicable provisions of the Code and any applicable procedures, regulations, rules and rulings (including published private rulings) thereunder, including applicable net worth requirements so that the Partnership shall be classified as a partnership for tax purposes, and (iii) shall have received the specific written consent of any remaining General Partner and of Limited Partners holding not less than a majority of the Limited Partner Interests with respect to such admission. Notwithstanding the foregoing, in no event shall either The Krupp Corporation or The Krupp Company Limited Partnership-IV Voluntarily Withdraw as a General Partner from the Partnership prior to December 31, 1989. 9.2 INVOLUNTARY WITHDRAWAL. A General Partner shall be deemed to have Involuntarily Withdrawn as a General Partner from the Partnership upon the occurrence of any of the following events: (a) in the case of The Krupp Company Limited Partnership-IV or an additional or Substitute General Partner which is a partnership, upon the death, physical or mental incapacity (as determined by certificate of a licensed physician), dissolution or bankruptcy of all general partners of such partnership, (b) in the case of The Krupp Corporation or an additional or Substitute General Partner which is a corporation, the filing of a certificate of dissolution, or its equivalent, for such General Partner or the revocation of its charter, (c) the removal of the General Partner pursuant to a vote of the Limited Partners made in accordance with Section 13 of this Agreement, (d) the making of an assignment for the benefit of creditors, the filing of a voluntary petition in bankruptcy, or an adjudication of bankruptcy, or (e) any other event which constitutes an event of withdrawal under the Massachusetts Uniform Limited Partnership Act as then in effect. 9.3 CONSEQUENCES OF WITHDRAWAL. (a) Upon the Withdrawal of any General Partner, the Withdrawn General Partner or his estate or legal representatives shall be entitled to receive from the Partnership (i) any positive balance in his or its Capital Account (as adjusted to the date of such Withdrawal), (ii) any amounts due and owing to it or him by the Partnership less any amounts due and owing by it or him to the Partnership, and (iii) the remaining balance, if any, of fees payable as and when due pursuant to this Agreement or any other written agreements between the Partnership and such General Partner in his capacity as General Partner; however, the Withdrawn General Partner shall not be entitled to any such fees which had not yet been earned by him prior to his Withdrawal. The right of a General Partner, his estate or legal representatives to payment of said amounts and fees shall be subject to any claim for damages which the Partnership or any Partner may have against such General Partner, his estate or legal representative if such Withdrawal is in contravention of this Agreement. Valuation of a Withdrawn General Partner's Interest shall be in accordance with the provisions of Section 13.4 hereof. (b) Each General Partner hereby covenants and agrees, in the event of his Withdrawal, to transfer to a Substitute General Partner selected as provided in Section 9.5 hereof or to the remaining General Partner or General Partners, such portion, if any, of his General Partner Interest as may be required to assure that the Partnership will meet the minimum general partnership interest requirement for the continued treatment of the Partnership as a partnership under the then applicable provisions of the A-22 Code and any applicable procedures, regulations, rules and rulings (including published private rulings) thereunder. Any such transfer will be made in consideration of the payment by the Substitute General Partner or the remaining General Partner or Partners to the Withdrawn General Partner, his estate or legal representatives, of the fair market value of such interest. Such payments shall be in addition to any amounts payable pursuant to Section 9.3(a) hereof by the Partnership. Any portion of such Withdrawn General Partner's Interest which is not required to be transferred as aforesaid may be retained by such Withdrawn General Partner, or his estate or legal representatives as appropriate. Such Withdrawn General Partner, or his estate or legal representatives, shall be treated as a Limited Partner in the Partnership in respect to any such retained Interest. (c) If the Withdrawal of a General Partner shall occur as part of a removal and replacement of such General Partner effected in accordance with Section 13 hereof, the provisions of said Section 13 shall govern to the extent (if any) that the provisions of said Section 13 are inconsistent with the provisions of this Section 9.3. 9.4 LIABILITY OF WITHDRAWN GENERAL PARTNER. If the business of the Partnership is continued after Withdrawal of a General Partner, the Withdrawn General Partner, his estate and legal representatives shall remain liable for all obligations and liabilities incurred by him while a General Partner and for which he was liable as a General Partner, but shall be free of any obligation or liability incurred on account of or arising from the activities of the Partnership from and after the time such Withdrawal shall have become effective. 9.5 CONTINUATION OF PARTNERSHIP BUSINESS. (a) PROCEDURE IF THERE IS A REMAINING GENERAL PARTNER. Upon the Withdrawal of a General Partner, the remaining General Partner or Partners, if any, shall promptly notify the Limited Partners and Unitholders of such Withdrawal. The remaining General Partner or Partners may elect to continue the Partnership business. If at any time The Krupp Company Limited Partnership-IV or a successor General Partner with substantial net worth shall Withdraw as a General Partner, the remaining General Partners or Partner may (but shall not be obligated to) propose for admission a Substitute General Partner or General Partners, unless a Substitute General Partner shall have already been proposed by the Limited Partners pursuant to Section 13 hereof. Any such proposed Substitute General Partner shall, with the specific written consent of the other General Partners and of the Limited Partners with respect to not less than a majority of the Limited Partner Interests, become a Substitute General Partner upon his or its execution of this Agreement. (b) PROCEDURE IF THERE IS NO REMAINING GENERAL PARTNER. If, following the Withdrawal of a General Partner, there is no remaining General Partner or Substitute General Partner, any Limited Partner may notify the other Limited Partners and Unitholders of such circumstances and may propose for admission a Substitute General Partner, unless a Substitute General Partner shall have already been proposed by the Limited Partners pursuant to Section 13 hereof. Any Substitute General Partner proposed by such Limited Partner pursuant to this Section 9.5(b) or Section 13.2 hereof, shall, with the specific written consent of the Limited Partners with respect to not less than a majority of the Limited Partner Interests, become a Substitute General Partner upon his or its execution of this Agreement and may thereupon elect to continue the Partnership business. If no Substitute General Partner has received the consent of the Limited Partners with respect to not less than a majority of the Limited Partner Interests, executed this Agreement, and elected to continue the Partnership business within one hundred A-23 eighty (180) days from the date of the last remaining General Partner's Withdrawal, then the Partnership shall thereupon terminate. Section 10. ASSIGNMENT OF LIMITED PARTNER INTERESTS. 10.1 WITHDRAWAL OF A LIMITED PARTNER. Subject to compliance with this Agreement, a Limited Partner may withdraw from the Partnership only by assigning or otherwise transferring his or its Interest as specified in this Section 10. Such withdrawal of a Limited Partner shall not dissolve or terminate the Partnership. In the event of a Limited Partner's withdrawal because of death, legal incompetence, dissolution or other termination, the estate, legal representative or successor of such withdrawn Limited Partner shall be deemed to be the assignee of such withdrawn Limited Partner's Interest and may become a Substitute Limited Partner upon compliance with the provisions of Section 10.3 hereof. 10.2 ASSIGNMENT. Units of Depositary Receipts may be Assigned in accordance with Section 7.2 hereof. Limited Partner Interests of the Corporate Limited Partner which correspond to Units may be Assigned in accordance with Section 7.6(b) hereof. Other Limited Partner Interests may be Assigned only in accordance with this Section 10.2 and Section 10.4. Such Limited Partner Interests may be Assigned provided there shall be filed with the Partnership, in form satisfactory to the General Partners, a duly executed counterpart of the instrument making such Assignment and such instrument (a) evidences the written acceptance by the assignee of all of the terms and provisions of this Agreement, (b) represents that such Assignment was made in accordance with all applicable laws and regulations (including, without limitation, such minimum investment and investor suitability requirements as may then be applicable under state securities law), and (c) is accompanied by a fee of $50.00 to reimburse the Partnership for its costs respecting the Assignment. 10.3 SUBSTITUTION. An assignee of a Limited Partner Interest assigned in accordance with the provisions of Section 10.1 or 10.2 hereof shall become a Substitute Limited Partners if: (a) such assignee executes an instrument reasonably satisfactory to the General Partners accepting and adopting the terms and provisions of this Agreement; (b) in the case of Assignments other than by operation of law, the assignor states his intention in writing to have his assignee become a Substitute Limited Partner; and (c) the General Partners, in their sole discretion, consent in writing to such substitution (which consent may be withheld). If all of the conditions of Section 10.1 or 10.2 and this Section 10.3 shall have been met, the assignee of a Limited Partner Interest shall become a Substitute Limited Partner as of the first day of the month following the date as of which the General Partners consent in writing to his admission to the Partnership as a Substitute Limited Partner, which consent may be evidenced by the filing of an amendment to the Certificate of Limited Partnership listing the name of such Substitute Limited Partner. Such an amendment shall be filed no later than 15 days after the completion of any fiscal quarter of the Partnership in which a Substitute Limited Partner is admitted to the Partnership. An assignee of a Limited Partner Interest who does not become a Substitute Limited Partner in accordance with this Section 10.3 and who desires to make a further Assignment of his Interest shall be subject to all the provisions of Sections 10.2, 10.3 and 10.4 hereof, to the same extent and in the same A-24 manner as any Limited Partner desiring to make an Assignment of his Interest. Failure or refusal of the General Partners to admit an assignee of a Limited Partner Interest as a Substitute Limited Partner shall in no way affect the right of such assignee to receive the share of the Profits or Losses for Tax Purposes and distributions of Cash Flow and Net Cash Proceeds to which his predecessor in interest would have been entitled in accordance with Section 8 hereof. 10.4 PROHIBITED ASSIGNMENT. No Limited Partner Interests may be Assigned or otherwise transferred: (a) to a non-resident alien; (b) to a minor or incompetent (unless a guardian, custodian or conservator has been appointed to handle the affairs of such Person); (c) to any Person not permitted to be a transferee under law including, in particular but without limitation, applicable state securities laws which generally provide that, except in the case of a transfer by gift, inheritance, intra-family transfer, or family dissolution, each transferee of Limited Partner Interests must acquire not less than 100 Limited Partner Interests, and that following a transfer of less than all his Limited Partner Interests, each transferor must retain a sufficient number of Limited Partner Interests to satisfy the minimum investment standards applicable to his initial purchase of Limited Partner Interests; (d) to any Person if such Person would hold after such Assignment less than 100 Limited Partner Interests unless the General Partners shall give specific written consent to such Assignment; (e) to any Person if, in the opinion of Counsel to the Partnership, such transfer would result in the assets of the Partnership being "plan assets" or the transactions hereunder being prohibited transactions under ERISA or the Code; or (f) to any Person if, in the opinion of Counsel to the Partnership, such transfer would result in the termination under the Code of the Partnership's taxable year or of its status as a partnership. Any such attempted Assignment without the express written consent of the General Partners shall be void and ineffectual and shall not bind the Partnership. In the case of a proposed Assignment which is prohibited solely under clause (d) above, however, the Partnership shall be obligated to permit such Assignment to become effective if and when, in the opinion of Counsel to the Partnership, such Assignment would no longer have either of the adverse consequences under the Code which are specified in that clause. 10.5 STATUS OF AN ASSIGNING LIMITED PARTNER. Any Limited Partner (other than the Corporate Limited Partner) who shall Assign all of his Interest shall cease to be a Limited Partner of the Partnership and shall no longer have any of the rights or privileges of a Limited Partner, except that unless and until a Substitute Limited Partner is admitted in his stead, such assigning Limited Partner shall retain the statutory rights of an assignor of a limited partner interest under the Massachusetts Uniform Limited Partnership Act. A-25 Section 11. DISSOLUTION AND WINDING-UP. 11.1 EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved and its affairs wound up on the first to occur of the following: (a) the Withdrawal of any General Partner, unless the remaining General Partner or General Partners, if any, or a Substitute General Partner admitted in accordance with Section 9.5 or Section 13 hereof, agree to continue the Partnership business pursuant to Section 9.5; or (b) an election to dissolve the Partnership made in writing by the General Partners with the Consent of a majority in interest of the Limited Partner Interests, or, subject to compliance with Section 13 hereof, made by a majority in interest of the Limited Partner Interests, without action by the General Partners; or (c) the sale or other disposition of all or substantially all of the Assets unless the General Partners elect to continue the Partnership business for the purpose of the receipt and collection of a note and payments thereon or the collection of any other consideration to be received in exchange for the Assets (which activities shall be deemed to be a part of the Terminating Capital Transaction and the winding-up of the affairs of the Partnership); or (d) the expiration of the Partnership term; or (e) any other event which causes the dissolution and/or winding up of the Partnership under the Massachusetts Uniform Limited Partnership Act to the extent not otherwise provided herein. 11.2 DISTRIBUTIONS UPON DISSOLUTION. Upon the dissolution of the Partnership, the General Partners, or if there is none, such other Person required by law to wind up the Partnership's affairs, shall proceed with the liquidation of the Partnership (including, without limitation, the sale or other disposition of any remaining Assets and cancellation of the Certificate of Limited Partnership), and the net proceeds of such liquidation shall be applied and distributed in accordance with the provisions of Section 8.3(b) hereof. During the period of dissolution and winding-up of the Partnership, the General Partners or any Person performing such actions may exercise all of the powers granted to the General Partners herein, and they may adopt such plan, method or procedures as they may deem reasonable in order to effectuate an orderly winding-up. If the General Partners shall perform the foregoing functions, they shall be compensated therefore as provided in Sections 6.4 and 8 hereof, and if such functions shall be performed by Persons other than the General Partners, such Persons shall be entitled to reasonable compensation from the Partnership for their services. Section 12. FISCAL MATTERS. 12.1 TITLE TO ASSETS AND BANK ACCOUNTS. Except to the extent that trustees, nominees or others agents are utilized as specified in Section 6.1(b)(2) hereof, the Properties and other Assets of the Partnership are held in the name of the Partnership. The funds of the Partnership shall be deposited in the name of the Partnership in such bank account or accounts as shall be designated by the General Partner, and withdrawals therefrom shall be made upon the signature of any General Partner or such Person or Persons as shall be designated in writing by any General Partner. The funds of the Partnership shall not be commingled with the funds of any other Person. A-26 12.2 MAINTENANCE OF AND ACCESS TO BASIC PARTNERSHIP DOCUMENTS. The General Partners shall maintain at the Partnership's principal office in Massachusetts the following documents: (a) current lists of the full name and last known business address of each Partner and Unitholder set forth in alphabetical order, (b) a copy of the Certificate of Limited Partnership and all amendments thereto, together with executed copies of any powers of attorney pursuant to which the Certificate or any such amendment has been executed, (c) copies of the Partnership's federal, state and local income tax returns and reports, if any, for the three most recent years, and (d) copies of this Agreement as then in effect and of any financial statements of the Partnership for the three most recent years. Such documents are subject to inspection and copying at the reasonable request, and at the expense, of any Partner or Unitholder during ordinary business hours. In addition, the Partnership will furnish a list of the names and addresses of all Limited Partners and Unitholders, together with their respective Capital Contributions and Subscription Prices, to any Limited Partner or Unitholder who makes a written request therefor to the Partnership, provided such Partner or Unitholder shall pay the cost of reproducing and delivering such list. Except to the extent requested by any Limited Partner or Unitholder, the General Partners shall have no obligation to deliver or mail a copy of the Partnership's Certificate of Limited Partnership or any amendment thereto to the Limited Partners or Unitholders. Each Limited Partner shall also have the right to obtain from the General Partners from time to time upon reasonable demand: (i) true and full information regarding the status of the business and financial condition of the Partnership; (ii) promptly after becoming available, a copy of the Partnership's federal, state and local income tax returns for each year, and (iii) other information regarding the affairs of the Partnership as is just and reasonable. 12.3 FINANCIAL BOOKS AND ACCOUNTING. The General Partners shall keep or cause to be kept complete and accurate financial books with request to the Partnership's business. Such books shall be kept on an accrual basis and the Profits and Losses for Tax Purposes of the Partnership shall be determined for each fiscal year in accordance with accounting methods followed for federal income tax purposes. Except as otherwise provided herein, whenever a proportionate part of the Profits or Losses for Tax Purposes of the Partnership is credited or charged to a Partner's Capital Account, every item of income, gain, loss or deduction entering into the computation of such Profits or Losses shall be considered either credited or charged, as the case may be, and every item or credit or tax preference related to such Profits or Losses and applicable to the period during which such Profits or Losses were realized shall be allocated to such Capital Account in the same proportion. 12.4 PARTNERSHIP EXPENSES. (a) The Partnership shall reimburse the General Partners and their Affiliates for organizational and offering expenses incurred by the General Partners and such Affiliates, provided that in no event shall the amount of organizational and offering expenses paid directly or indirectly by the Partnership exceed 4% of the gross proceeds of the offering of Units, and the General Partners shall pay for any organizational and offering expenses in excess of such 4% amount. For purposes hereof, "organizational and offering expenses" shall mean those expenses incurred in connection with, and in preparing the Partnership for, qualification under the federal and state securities laws and subsequently offering and distributing the Units to the public, including certain marketing expenses but not sales commissions or reimbursement for due diligence expenses paid by the Partnership to Krupp Securities Corporation and selected dealers in connection with the offering of Units. In addition, the Partnership shall pay to prospective selected dealers through Krupp Securities Corporation an accountable expense reimbursement of up to 0.5% of the gross proceeds of the offering of Units for due diligence expenses of prospective selected dealers described in Section 6.4(a) hereof. A-27 (b) Subject to the foregoing, the Partnership shall pay all expenses (which expenses shall be billed directly to the Partnership) of the Partnership which may include but are not limited to: (i) all costs of personnel (excluding rent or depreciation, utilities, capital equipment, and other administrative items) employed full- or part-time by the Partnership and involved in the business of the Partnership and allocated pro rata to their administrative services performed on behalf of the Partnership, including Persons who may also be officers or employees of the General Partners or their Affiliates (other than Controlling Persons); (ii) all costs of borrowed money, taxes and assessments on Partnership Properties and other taxes applicable to the Partnership; (iii) legal, audit, accounting, brokerage and other fees; (iv) printing, engraving and other expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and recording of documents evidencing ownership of an Interest or Unit or in connection with the business of the Partnership; (v) fees and expenses paid to independent contractors, mortgage bankers, brokers and servicers, leasing agents, consultants, on-site property managers and other property management personnel (other than Controlling Persons and other officers of the General Partners or their Affiliates), real estate brokers, insurance brokers and other agents; (vi) expenses in connection with the disposition, replacement, alteration, repair, remodeling, refurbishment, leasing, refinancing and operation of Partnership Properties (including the costs and expenses of foreclosures, insurance premiums, real estate brokerage and leasing commissions and of maintenance of such property); (vii) expenses of organizing, revising, amending, converting, modifying, or terminating the Partnership; (viii) expenses in connection with distributions made by the Partnership to, and communications and bookkeeping and clerical work necessary in maintaining relations with Limited Partners and Unitholders, including the costs of printing and mailing to such Persons evidences of ownership of Limited Partner Interests or Units and reports of meetings of the Partnership, and of preparation of proxy statements and solicitations of proxies in connection therewith; (ix) expenses in connection with preparing and mailing reports required to be furnished to Limited Partners and Unitholders for investor, tax reporting or other purposes, or which reports the General Partners deem the furnishing thereof to Limited Partners or Unitholders to be in the best interests of the Partnership; (x) accounting, computer, statistical or bookkeeping costs necessary for the maintenance of the books and records of the Partnership; and (xi) the cost of preparation and dissemination of the information material and documentation relating to potential sale, or other disposition of Partnership Assets. Other than as specifically described above in this Section and in Section 6.4 hereof, the Partnership shall not pay the General Partners for any other items generally considered to be the General Partners' overhead and expenses. (c) Except for organizational and offering expenses, the Partnership shall not reimburse the General Partners or their Affiliates except for reimbursement of the actual cost to the General Partners or their Affiliates of goods, materials and services used for or by the Partnership and obtained from Persons unaffiliated with the General Partners and their Affiliates; provided, however, subject to the limitations stated below, the General Partners and their Affiliates may receive reimbursement for the administrative services necessary to the prudent operation of the Partnership, such as legal, accounting, computer, transfer agent and other services which could be performed directly for the Partnership by independent parties. The amounts charged to the Partnership for such administrative services will not exceed the lesser of (i) the actual costs to the General Partners or their Affiliates, or (ii) 90% of those which the Partnership would be required to pay to independent parties for comparable services in the same or comparable geographic locations. As part of the Partnership's annual report to the Limited Partners and Unitholders, an itemized breakdown will be included of such reimbursements, all of which shall be verified by the Accountants. Such verification shall at minimum provide (i) a review of the records of individual employees, the costs of whose services were reimbursed, and (ii) a review of the specific nature of the work performed by each such employee. The methods of verification shall be A-28 performed in accordance with generally accepted auditing standards and shall accordingly include such tests of the accounting records and such other auditing procedure which the Accountants consider appropriate in the circumstance. The additional costs of such verification will be itemized by the Accountants on a partnership-by-partnership basis and may be reimbursed to the General Partners and their Affiliates by the Partnership only to the extent that such reimbursement, when added to the cost for administrative services rendered, does not exceed 90% of the competitive rate for such services as determined above. (d) Any agreements, contracts and arrangements in addition to those authorized by Section 6.4 hereof may be entered into with a General Partner or an Affiliate of the General Partners subject to the following additional conditions: (A) any such agreements contracts or arrangements shall be embodied in a written contract which precisely describes the subject matter thereof and all compensation to be paid therefor; (B) neither a General Partners (in any capacity other than as General Partner) nor any such Affiliate may act as paying or purchasing agent for the Partnership and no funds of the Partnership may be paid to a General Partner or any such Affiliate by way of reimbursement for Partnership expenses except as permitted this Section 12.4; (C) any such agreements, contracts or arrangements shall be fully and promptly disclosed to all Partners in the reports provided for in Section 12.6(a) hereof (stating the compensation paid and to be paid by the Partnership); and (D) any such agreements, contracts or arrangements shall be terminable by either party, without penalty, upon 60 days' prior written notice. 12.5 FISCAL YEAR. Except as may otherwise be determined from time to time by the General Partners, the Partnership's fiscal year for federal income tax and financial reporting purposes shall end on December 31 of each year. 12.6 REPORTS, ACCOUNTING DECISIONS AND FEDERAL TAX ELECTIONS. (a) REPORTS TO LIMITED PARTNERS. (1) QUARTERLY REPORTS. Within 45 days after the end of each of the first three quarters of each fiscal year, the General Partners shall send to each Person who was a Limited Partner or Unitholder at any time during the quarter then ended (i) a balance sheet (which need not be audited), (ii) a statement of operations (which need not be audited), (iii) a Cash Flow statement (which need not be audited), (iv) a statement describing (A) any new agreement, contract or arrangement required to be reported by Section 6.1(b)(4), and (B) the amount of all fees and other compensation and distributions paid by the Partnership for such quarter to any General Partner or any Affiliate of any General Partner, (v) a report in narrative form summarizing the status of the Partnership's investments, (vi) a report of the activities of the Partnership during such fiscal quarter, (vii) a schedule of the most recent Appraised Values of the Properties and an estimate by the General Partners of the value of the Units, and (viii) if the Partnership is then required to file quarterly reports on Form 10-Q with the Securities and Exchange Commission, a copy of each such report. Until the Capital Contributions to the Partnership derived from the offering of Units shall be fully invested, except for reserves, each quarterly report (or a special report distributed A-29 prior to or concurrently with such quarterly report) will also contain a report on real property and MBS acquisitions made by the Partnership during the period covered by the report including (A) a description of the Properties or MBS purchased, (B) a description of the geographic locale of any Property and of the market upon which the success of operations is dependent, (C) the appraised value of any Property, (D) the actual purchase price and terms, (E) the cash expended from Capital Contributions to acquire each Asset, and (F) the amount of Capital Contributions which then remains unexpended, stated both in items of dollar amount and percentage of the total amount of Capital Contributions derived from the offering of Units. (2) ANNUAL REPORTS. Within 90 days after the end of each fiscal year, the General Partners shall send to each Person who was a Limited Partner or Unitholder at any time during the fiscal year then ended a report in narrative from summarizing the status of the Partnership's investments and containing (i) a balance sheet as of the end of such fiscal year and statements of operations, Partners' equity and changes in financial position for such fiscal year, all of which shall be prepared in accordance with generally accepted accounting principles and accompanied by an auditor's report containing an opinion of the Accountants, (ii) a cash flow statement (which need not be audited), (iii) a report summarizing the fees and other remuneration paid by the Partnership for such fiscal year to any General Partner or any Affiliate of any General Partner, (iv) a schedule of the most recent Appraised Values of the Properties and an estimate by the General Partners of the value of the Units, and (v) a statement (which need not be audited) showing the Distributable Cash Flow and the Net Cash Proceeds from any Capital Transaction or Terminating Capital Transaction distributed per Interest during such fiscal year. Such report shall separately identify (to the extent then applicable) distributions from (a) cash flow from operations during the period, (b) cash flow from operations during a prior period which had been held as reserves, (c) net cash proceeds arising from disposition or refinancing of property and investments, (d) lease payments on net leases with builders and sellers, and (e) reserves from the gross proceeds of the offering of Units. Until the Capital Contributions of the Partnership derived from the offering of Units shall be fully invested, the annual report shall also contain a report on real property and MBS acquisitions providing the information specified above for quarterly reports, unless such information shall have previously been or shall concurrently be provided in a quarterly or special report to the Limited Partners and Unitholders. (b) TAX RETURNS AND TAX INFORMATION. The General Partners shall: (i) have the Accountants prepare the tax returns (federal, state and local, if any) of the Partnership for each fiscal year within 75 days after the end of each calendar year in which such fiscal year was completed; and (ii) deliver to each partner and Unitholder within 75 days after the end of each calendar year the information necessary to prepare his federal income tax return, and a state tax return to the extent required in each state where the Partnership then owns a Property, for the calendar year during which such fiscal year was completed. (c) ACCOUNTING DECISIONS. All decisions as to accounting matters, except as specifically provided to the contrary herein, shall be made by the General Partners in accordance with generally accepted accounting principles and procedures applied in a consistent manner. The General Partners may rely upon the advice of the Accountants as to whether such decisions are in accordance with generally accepted accounting principles. A-30 (d) FEDERAL TAX ELECTIONS. The Partnership, in the sole discretion of the General Partners, may make elections for federal tax purposes as follows: (i) In case of a transfer of all or part of the Interest of a Partner, the Partnership, in the absolute discretion of the General Partners, may timely elect pursuant to Section 754 of the Code (or corresponding provisions of future law) and pursuant to similar provisions of applicable state or local income tax laws, to adjust the basis of the assets of the Partnership. In such event, any basis adjustment attributable to such election shall be allocated solely to the transferee. (ii) The General Partners may elect accelerated depreciation methods under the Code, or may elect straight-line depreciation over a period as long 45 years if in their judgment the determination of the percentage of tax-exempt investors becomes too cumbersome. (iii) All other elections required or permitted to be made by the Partnership under the Code shall be made by the General Partners in such manner as will, in the opinion of the Accountants, be most advantageous to a majority of the Limited Partner Interests. The Partnership shall, to the extent permitted by applicable law and regulations, elect to treat as an expense for federal income tax purposes all amounts incurred by it for real estate taxes, interest and other charges which may, in accordance with applicable law and regulations, be considered as expenses. (e) TAX MATTERS PARTNER. The Krupp Corporation is hereby designated as the "Tax Matters Partner" under Section 6231(a)(7) of the Code, to manage administrative and judicial tax proceedings conducted at the Partnership level by the Internal Revenue Service with respect to Partnership matters. Any Partner has the right to participate in such administrative or judicial proceedings relating to the determination of partnership items at the Partnership level. The Krupp Corporation as Tax Matters Partner shall inform each other Partner and each Unitholder of all administrative and judicial proceedings for an adjustment at the Partnership level of partnership items, shall forward to each other Partners and to each Unitholder within 30 days after receipt all notices received from the Internal Revenue Service regarding the commencement of a Partnership-level audit or a final Partnership administrative adjustment, and shall perform all other duties imposed by Sections 6231 and 6232 of the Code on The Krupp Corporation as Tax Matters Partner. Expenses of any such administrative or judicial proceedings undertaken by the Tax Matters partner will be paid out of Partnership assets. Each other Partner or Unitholder who elects to participate in such proceedings will be responsible for any expenses incurred by such Partner or Unitholder in connection with such participation. Further, the cost of any adjustments to a Partner or Unitholder and the cost of any resulting audits or adjustments of a Partner's or Unitholder's tax return will be borne solely by the affected partner or Unitholder. (f) REPORTS TO FEDERAL AND STATE AUTHORITIES. The General Partners shall cause to be prepared and timely filed with appropriate federal and state regulatory and administrative bodies, all reports required to be filed with such entities under then current applicable laws, rules and regulations. Such reports shall be prepared on the accounting or reporting basis required by such regulatory bodies. Any Limited partner or Unitholder shall be provided with a copy of any such report upon request without expense to him. A-31 Section 13. MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS AND UNITHOLDERS. 13.1 MEETINGS. (a) Meetings of the Limited Partners and Unitholders for any purpose may be called by the General Partners and shall be called by the General Partners upon receipt of a request in writing signed by the holders of 10% or more of the Limited Partner Interests. Notice of any such meeting shall be sent within ten days after receipt of such request. Such request shall state the purpose of the proposed meeting and the matters proposed to be acted upon at the meeting. Such meeting shall be held at the principal office of the Partnership, or at such other place as may be designated by the General Partners, or, if called upon the request of Limited Partners or Unitholders, as designated by such Limited Partners or Unitholders. In addition, upon receipt of a request in writing signed by the holders of 10% or more of the Limited partner Interests, the General Partners shall submit any matter (upon which the Limited Partners and Unitholders are entitled to act) to the Limited Partners and Unitholders for a vote by written Consent without a meeting. (b) A notice of any such meeting shall be given either personally or by mail, not less than 15 days nor more than 60 days before the date of the meeting, to each Limited Partner and Unitholder. Such notice shall state the place, date and hour of the meeting, and shall indicate that it is being issued at or by the direction of the partner or Partners calling the meeting. The notice shall state the purpose or purposes of the meeting. If a meeting is adjourned to another time or place, and if any announcement of the adjournment of time or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting. The presence in person or by proxy of a majority in interest of the Limited partner Interests shall constitute a quorum at all meetings, provided, however, that if there be no such quorum, holders of a majority in interest of such Limited partner Interests so present or so represented may adjourn the meeting from time to time without further notice, until a quorum shall have been obtained. No notice of the time, place or purpose of any meeting need be given with respect to any Limited partner Interest which is represented by proxy or by a Limited partner or Unitholder who attends in person (except when a Limited partner or Unitholder attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business on the ground that the meeting is not lawfully called or convened), or with respect to any Limited Partner Interested entitled to such notice if a waiver of such notice, in writing, has been executed and filed with the records of the meeting, either before or after the time thereof. (c) For the purpose of determining the Limited Partner Interests entitled to vote on, or to vote at, any meeting or any adjournment thereof, the General Partners, Limited partners or Unitholders requesting such meeting may fix, in advance, a date as the record date for any such determination of Interests. Such date shall not be more than 50 days not less than ten days before any such meeting. (d) A Limited Partner or Unitholder shall be entitled to cast one vote of each Limited Partner Interest or Unit which he owns: (i) at a meeting, in person, by written proxy or by a signed writing directing the manner in which he desires that his vote be cast, which writing must be received by the General Partner (or the Limited Partners or Unitholders calling the meeting) prior to such meeting, or (ii) without a meeting, by a signed writing directing the manner in which he desires that his vote be cast, which writing must be received by the General Partners (or the Limited Partners or Unitholders soliciting such vote) prior to the date upon which the votes of Limited Partners and Unitholders are to be counted. Any Limited partner or Unitholder may waiver notice of or attendance at any meeting and may attend by telephone or any other electronic communication device or may execute a signed written consent. A-32 Only the votes of Limited Partners and Unitholders of record on a record date, if established pursuant to clause (c) above, whether at a meeting or otherwise, shall be counted. The laws of The Commonwealth of Massachusetts pertaining to the validity and use of corporate proxies shall govern the validity and use of proxies given by Limited Partners and Unitholders. (e) At each meeting, the Limited Partners and Unitholders present or represented by proxy may adopt such rules for the conduct of such meeting as they shall deem appropriate, provided that such rules shall not be inconsistent with the provisions hereof. 13.2 VOTING RIGHTS OF LIMITED PARTNERS AND UNITHOLDERS. Subject to Section 13.3, a majority in interest of the Limited Partner Interests, without the concurrence of the General Partners, may (a) amend this Agreement, subject to the provisions of Section 14 hereof and to the conditions that such amendment may not in an manner allow the Limited Partners and Unitholders to take part in the control of the Partnership's business, (b) dissolve the Partnership, (c) remove any General Partner and elect a replacement therefore, or (d) approve or disapprove the sale of all or substantially all the assets of the Partnership. For purposes of exercising such rights, each Limited Partner Interest shall have one vote, provided that Limited Partner Interests held by the General Partners or their Affiliates shall not be voted and shall be deemed not to be outstanding for purposes of calculating applicable percentage requirements. 13.3 CONDITIONS TO ACTION BY LIMITED PARTNERS AND UNITHOLDERS. The rights of the Limited Partners and Unitholders pursuant to Section 13.2 hereof shall not be effective or be exercised in any manner (i) to subject the Limited Partners or Unitholders to liability as general partners under the Massachusetts Uniform Limited Partnership Act or under the laws of such other jurisdictions in which the Partnership is qualified or owns a property, or (ii) to change the Partnership's status for tax purposes. Any action taken pursuant to Section 13.2 shall be void if any partner, within 45 days after judgment from a court of competent jurisdiction or an opinion of counsel selected by a majority in interest of the Limited Partners and Unitholders on grounds that such action, if given effect, would have one or more of the prohibited effects referred to in this Section 13.3. For purposes of this Section 13.3, counsel will be deemed to have been selected by a majority in interest of the Limited Partners and Unitholders if such counsel is affirmatively approved in writing by a majority in interest of the Limited Partners and Unitholders within 45 days of the date that the holders of 10% or more of the interests of the Limited Partners and Unitholders propose counsel for this purpose. 13.4 VALUATION OF INTEREST OF GENERAL PARTNER. In the event of removal of any General partner pursuant to Section 13.2 hereof or the withdrawal of any General partner pursuant to Section 9 hereof, its Interest as a General partner in the Partnership shall be appraised by two independent appraisers, one selected by the removed or withdrawing General partner and one by the Limited Partners and Unitholders. In the event that such two appraisers are unable to agree on the value of such General partner's Interest, they shall jointly appoint a third independent appraiser whose determination shall be final and binding. The Partnership shall pay such General Partner for the value of its Interest as so determined by delivery of a promissory note bearing interest at the then base rate of Bank of New England, N.A., Boston, Massachusetts, with interest payable annually in cash and principal payable from any cash thereafter received by the Partnership from the sale of Partnership Assets and prior to any distribution being made to the Partners pursuant to Section 8.3 of this Agreement. Any amounts received pursuant to this Section 13.4 shall constitute complete and full discharge for all amounts owing to such General Partner on account of its Interest in the Partnership. For purposes of this Section 13.4, the independent appraiser selected by the Limited Partners and Unitholders shall be selected in the following manner: a list of three qualified MAI (Member of Appraisal Institute) appraisers shall be obtained (by A-33 a General Partner not being removed or withdrawn) from the Boston chapter of the American Institute of Real Estate Appraisers and one of said three appraisers shall be selected by random number and proposed by such General Partner for selection by the Limited Partners and Unitholders. Such appraiser shall be deemed selected by the Limited Partners and Unitholders unless objected to in writing by a majority in interest of the Limited Partner Interests within 45 days after notification thereof is sent in writing by such General Partner. Section 14. AMENDMENTS. (a) In addition to the right of the Limited Partners and Unitholders to amend this Agreement pursuant to Section 13 hereof, the General Partners may propose an amendment to this Agreement. The General Partners shall submit to all of the Partners in writing the text of any such proposed amendment to this Agreement and a statement by the General Partners of the purpose of any such amendment. The General Partners may include in any submission a statement of the view of the General Partners as to the proposed amendment. Upon the Consent of the General Partners and of a majority in interest of the Limited partner Interests, such amendment shall take effect, except that no amendment adopted in accordance with either Section 13 or 14 hereof shall increase the liability of any Partner or Unitholder or adversely affect any Partner's or Unitholder's share of distributions of cash or allocations of Profits or Losses for Tax Purposes of the Partnership without in each case the approval of the partner or Unitholder involved, and except that any amendment of this Section 14 must be approved by a unanimous vote with respect to all Limited partner Interests. A written approval may not be withdrawn or voided once it is filed with the General Partners. (b) In addition to any amendments otherwise authorized herein, this Agreement may be amended from time to time by the General Partners without the consent of any of the Limited Partners: (i) to add to the representations, duties or obligations of the General Partners or surrender any right or power granted to the General Partners herein, for the benefit of the Limited Partners; (ii) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement which will not be inconsistent with the provisions of this Agreement; (iii) to preserve the status of the Partnership as a "Partnership" for federal income tax purposes; (iv) to enable the Partnership to qualify as a real estate investment trust; (v) to delete or add any provision of this Agreement required to be so deleted or added by the Staff of the Securities and Exchange Commission or other federal agency or by a state "Blue Sky" commissioner or similar such official, which addition or deletion is deemed by such Commission, agency or official to be for the benefit or protection by the Limited Partners; or (vi) to permit the Units to fall within any exclusion from the definition of "plan assets" contained in Section 2550.401b-(1) of Title 29 of the Code of Federal Regulations. (c) In the event that the U.S. Treasury Department adopts final Regulations under Code section 704(b), the General Partners shall, upon the advice of counsel that the Partnership's allocations are not consistent in any material respect with the provisions of any such adopted Regulations, submit to the Limited Partners a proposed amendment to the Partnership Agreement that in the sole discretion of the General Partners will make such allocations contained in the Partnership Agreement consistent with the requirements of any such adopted Regulations, and such an amendment shall be adopted upon the consent of a majority in interest of the Limited partner Interests notwithstanding any other provisions of this Section 13 of the Partnership Agreement. A-34 Section 15. POWER OF ATTORNEY. (a) APPOINTMENT. Each of the Limited Partners hereby makes, constitutes and appoints the General Partners of the Partnership and each of them, and each person who shall hereafter become a General partner during the term of the Partnership and any continuation of the Partnership pursuant to Section 9.5 and Section 11, with full power of substitution, the true and lawful attorney-in-fact of, and in the name, place and stead of, such Limited partner, with the power from time to time to execute, acknowledge, make, swear to, verify, deliver, record and/or publish: (i) this Agreement of Limited Partnership and the Certificate of Limited Partnership under the laws of The Commonwealth of Massachusetts or any other jurisdiction, that may be required by this Agreement or by the laws of Massachusetts or any other jurisdiction, any subsequent amendment to this Agreement and the Certificate of Limited Partnership (including but not limited to, amendments reflecting the addition of any signatory hereto as a Partner, or any admission or substitution of other or any other document required from time to time to admit a Partner, to effect the substitution of a partner, or to effect the substitution of any Limited Partner's assignee as a Limited Partner; (ii) any other document required to reflect any action of the Partners duly taken in the manner provided for in this Agreement, whether or not such Limited partner voted in favor of or otherwise Consented to such action; (iii) any other instrument, certificate or document which may be required by any regulatory agency, laws of the United States, any state, or any other jurisdiction in which the Partnership is doing or intends to do business or which the General Partners deem advisable to file or record, provided such instrument, certificate or document is not inconsistent with the terms of the Agreement as then in effect; (iv) any certificate of dissolution or cancellation of the Certificate of Limited Partnership that may be necessary upon the terminator of the Partnership; and (v) any instrument or papers required to continue or terminate the business of the Partnership pursuant to Section 9.5 and 11 hereof; provided that no General Partner shall take any action as attorney-in-fact for any Limited partner which could in any way increase the liability of such Limited partner beyond the liability expressly set forth in this Agreement or alter the rights of Limited Partners under Section 8 of this Agreement, unless (in either case) the Limited partner has given a Power of Attorney to a General partner expressly for such purpose. (b) AMENDMENTS TO AGREEMENT AND CERTIFICATE. (i) Each of the Limited Partners is aware that the terms of this Agreement permit certain amendments of this Agreement to be effected and certain other actions to be taken or omitted by, or with respect to, the Partnership, in each case with the approval of less than all the Limited Partners if a specified percentage of the Partners shall have voted in favor of, or otherwise Consented to, such action. If, as, and when: A-35 (A) an amendment of this Agreement is proposed or an action is proposed to be taken or omitted by, or with respect to, the Partnership which requires, under the terms of this Agreement, the Consent of a specified percentage in interest (but less than all) of the Partners; (B) Partners holding the percentage of interests specified in this Agreement as being required for such amendment or action have Consented to such amendment to action in the manner contemplated by this Agreement; and (C) a Limited Partner has failed or refused to Consent to such amendment or action (hereinafter referred to as a "non-consenting Limited partner"), then each non-consenting Limited Partner agrees that each attorney-in-fact specified in Section 15(a) above, with full power of substitution, is hereby authorized and empowered to execute, acknowledge, make, swear to, verify, deliver, record, file and/or publish, for an in behalf of such non-consenting Limited partner, and in his name, place and stead, any and all instruments and documents which may be necessary or appropriate to permit such amendment to be lawfully made or action lawfully taken or omitted. Each consenting and non-consenting Limited partner is fully aware that he and each other Limited partner have executed this special power of attorney and that each Limited partner will rely on the effectiveness of such powers with a view to the orderly administration of the Partnership's affairs. (ii) Any amendment to this Agreement (and to the Certificate of Limited Partnership) substituting a Limited Partner, or adding a Limited or General Partner, may be signed by any General Partner and by the Person to be substituted as a Limited Partner, or added as a Limited or General Partner. Any amendment reflecting the determination of the remaining General Partner or Partners to continue the business of the Partnership upon the Withdrawal of a General Partner need be signed only by one General Partner. The execution of any such amendment on behalf of a Limited Partner or any proposed substitute or added Limited Partner may be effected by his attorney-in-fact. (c) POWER COUPLED WITH AN INTEREST. The foregoing grant of authority: (i) is a special power of attorney coupled with an interest in favor of the General Partners and as such shall be irrevocable and shall survive the death or insanity of each Limited Partner; (ii) may be exercised for each Limited partner by a signature of any General Partner of the Partnership or by listing the names of all of the Limited Partners, including such Limited partner, and executing any instrument with a single signature of any General Partner acting as attorney-in-fact for all of them; and (iii) shall survive the Assignment by any Limited partner of the whole or any portion of his Interest (including the assignment by the Corporate Limited partner to the Unitholders under Section 7.6 hereof), except that, where the assignee of the whole thereof has furnished a power of attorney and has been approved by the General Partners for admission to the Partnership as a Substitute Limited Partner, this power of attorney shall survive such Assignment with respect to the assignor for the sole purpose of enabling a General Partner to execute, acknowledge and file any instrument necessary to effect such substitution and shall thereafter terminate with respect to any partner who assigns his entire Interest. A-36 (d) POWER OF ATTORNEY BY SUBSTITUTE INVESTOR LIMITED PARTNERS. A similar power of attorney shall be one of the instruments which the General Partners shall require an assignee of a Limited Partner to execute as a condition to the admission of such assignee as a Substitute Limited Partner. Section 16. GENERAL PROVISIONS. 16.1 NOTICES, APPROVALS AND CONSENTS. All notices, approvals, Consents or other communications hereunder shall be in writing and signed by the party giving the same, and shall be deemed to have been given when the same are (a) deposited in the United States mail and sent by first class mail, postage prepaid, or (b) delivered. In each case, said mailing or delivering shall be made to the parties at the addresses set forth below or at such other addresses as such parties may designate by notice to the Partnership: (i) If to the Partnership or any General Partner, at the principal office of the Partnership; (ii) If to the Corporate Limited partner, at the address set forth in Schedule A hereto or to such other address as may be designated by notice from such partner given in the manner hereby specified; (iii) If to an Investor Limited partner, at the address set forth in Schedule A hereto or to such other address as may be designated by notice from such partner given in the manner hereby specified; and (iv) If to a Unitholder, at such address as he has most recently furnished in writing to the Partnership. 16.2 FURTHER ASSURANCES. The Partners will execute, acknowledge and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement. 16.3 CAPTIONS. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any of the provisions thereof. 16.4 BINDING EFFECT. Except to the extent required under the Massachusetts Uniform Limited Partnership Act and for fees, rights to reimbursement, and other compensation provided as such, none of the provisions of this Agreement shall be for the benefit of or be enforceable by any creditor of the Partnership; 16.5 SEPARABILITY. If one or more of the provisions of this Agreement or any application thereof shall be invalid, illegal or unenforceable fin any respect, the validity, legality and enforceability of the remaining provisions contained herein and any other application thereof shall not in any away be affected or impaired thereby, and such remaining provisions shall be interpreted consistently with the omission of such invalid, illegal or unenforceable provisions. 16.6 INTEGRATION. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior contemporaneous agreements and understandings of A-37 the parties in connection therewith which conflict with the express terms of this Agreement. No covenant, representation or condition not expressed in this Agreement shall affect or be effective to interpret, change or restrict the express provisions of this Agreement. 16.7 APPLICABLE LAW. This Agreement shall be construed and enforced in accordance with and governed by the laws of Massachusetts. 16.8 COUNTERPARTS. This Agreement may be signed by each party hereto upon a separate copy (including in the case of the Limited Partners, a separate subscription agreement or signature page executed by one or more such Partners), in which event all such copies shall constitute a single counterpart of this Agreement. However, no counterpart shall be binding unless accepted by one or more of the General Partners, which acceptance shall be evidenced by the filing of the Certificate of Limited Partnership or an appropriate amendment thereto. 16.9 CREDITORS. No creditor who makes a non-recourse loan to the Partnership shall have or acquire at any time, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Partnership other than as a secured creditor. 16.10 INTERPRETATION. Unless the context in which words are used in this Agreement otherwise indicates that such is the intent, words in the singular shall include the plural and in the masculine shall include the feminine and neuter and vice versa. Section 17. DEFINITIONS. The defined terms used in this Agreement shall have the meanings specified below: "ACCOUNTANTS" means Coopers & Lybrand, Boston, Massachusetts, or a successor thereto, or another firm of independent certified public accountants selected by the General Partners. "ACQUISITION EXPENSES" means expenses (other than the Acquisition Fee) incurred by the Partnership relating to selection and acquisition of Properties, whether or not acquired, including the fees and expenses of lawyers, appraisers, engineers, architects and accountants not affiliated with a General Partner, travel and communications expenses, costs of appraisals, non-refundable option payments on Property not acquired, accounting fees and expenses, and title insurance, but not fees and commissions paid by any Person to any Person in connection with the selection or purchase of any Property by the Partnership, whether designated as a real estate commission, acquisition fee, finder's fee, selection fee, development fee, construction fee, non-recurring management fee, consulting fee or any fee of similar nature however designated and however treated for tax or accounting purposes, not any loan fees ("points"), not development fees paid in connection with the actual development of a Property after acquisition by the Partnership, not acquisition expenses incurred in connection with the initial operation of any Property by the Partnership, and not professional or contractor fees paid in connection with the expansion, rehabilitation or other improvement of Properties following their acquisition by the Partnership. "ACQUISITION FEE" means the fee described in Section 6.4(b) hereof. "ADJUSTED NET ASSET VALUE" means the book value of all assets, including unpaid deferred interest but excluding any additional simple interest and participations payable under the terms of the MBS, minus all liabilities of the Partnership. A-38 "AFFILIATE" means, when used with reference to a specified Person, (i) any Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with the specified Person, (ii) any Person that is an officer of, partner in or trustee of, or serves in a similar capacity with respect to, the specified Person or of which the specified Person is an officer, partner or trustee, or with respect to which the specified Person serves in a similar capacity, (iii) any Person that, directly or indirectly, is the beneficial owner of 10% or more of any class of equity securities of, or otherwise has a substantial beneficial interest in, the specified Person or of which the specified Person is directly or indirectly the owner of 10% or more of any class of equity securities or in which the specified Person has a substantial beneficial interest, and (iv) any Immediate Family Member of the specified Person. A Person who is a partner in a partnership or joint venture with the Partnership shall not be deemed an Affiliate of the Partnership or a General Partner if such Person is not otherwise an Affiliate of the Partnership or such General Partner as defined in the preceding sentence. "AGREEMENT" means this Amended Agreement of Limited Partnership, as the same may hereafter be amended from time to time. "APPRAISED VALUE" shall mean, as to any Property, market value thereof based upon the expected use according to an appraisal made by an independent qualified appraiser who is a member in good standing of the American Institute of Real Estate Appraisers. "ASSETS" shall mean the Properties, MBS, or other assets acquired by the Partnership. "ASSIGN" means, with respect to an Interest or part thereof, to offer, sell, assign, transfer, give, or otherwise dispose of, whether voluntarily or involuntarily or by operation of law, except that in the case of a bona fide pledge or other hypothecation, no Assignment shall be deemed to have occurred unless and until the secured party has exercised any of his rights of foreclosure with respect thereto. "ASSIGNMENT" means any of the aforesaid transactions involving an Interest or any part thereof. "BASIC MANAGEMENT FEE" means the fee described in Section 6.4(c) hereof. "CAPITAL ACCOUNT" means the capital accounts established and maintained in accordance with Section 5.4 hereof. "CAPITAL CONTRIBUTION" means the amount of cash contributed to the Partnership by a Partner, prior to the deduction of any offering expenses or selling commissions. "CAPITAL TRANSACTION" means the repayment of principal and prepayment of MBS to the extent classified as return of capital for federal income tax purposes and the sale, exchange, condemnation, eminent domain taking, casualty or other disposition of a Property or MBS, but not including the Terminating Capital Transaction. "CASH FLOW" means, for a particular fiscal year, all Profits or Losses for Tax Purposes from the operation of the Partnership for such fiscal year, including repayment of principal and prepayment of MBS to the extent classified as income or gain for federal income tax purposes but excluding Profits or Losses for Tax Purposes of such fiscal year arising from a Capital Transaction or the Terminating Capital Transaction, and shall be determined by adjusting such Profits or Losses (to the extent not otherwise adjusted) as follows: A-39 (1) Depreciation of buildings, improvements and personal property shall not be considered a deduction; (2) Amortization of any item for which there is not an associated cash payment shall not be considered a deduction; (3) Principal and interest payments on a mortgage or other loan payable by the Partnership shall be considered deductions; (4) Principal payments on all conditional sales contracts and other secured obligations shall be considered a deduction; (5) If the General Partners shall so determine, reasonable reserves shall be deducted to provide for replacements, improvements, capital improvements or any other contingency of the Partnership; (6) Any amounts paid by the Partnership for capital expenditures or replacements (and not withdrawn from a reserve fund established for such purpose) shall be considered a deduction; (7) Amounts equal to accounts payable and accrued items payable at the close of the Partnership fiscal year, to the extent not already deducted in calculating Profits or Losses for Tax Purposes, shall be considered a deduction; (8) Amounts required to maintain reasonable working capital reserves shall be considered a deduction; (9) The reimbursements and fees incurred and payable to the General Partners hereunder (other than the Basic Management Fee and the Incentive Fee) shall be considered a deduction, whether or not currently paid to the General Partners; (10) Property management fees and reimbursements paid to property managers shall be considered a deduction; (11) Capital Contributions to the Partnership and the Net Cash Proceeds of any Capital Transaction or the Terminating Capital Transaction shall not be included in Cash Flow of the Partnership and payments made from such sources of funds shall be excluded in determining Cash Flow of the Partnership; and (12) Any other cash receipts from the operation of the Partnership not properly includable in Profits or Losses for Tax Purposes, any amounts released from operating reserve accounts described in this Section 8.2(a) and available for distribution, and the amount of the Basic Management Fee and the Incentive Fee payable with respect to such fiscal year, shall be included in Cash Flow of the Partnership. "CERTIFICATE OF LIMITED PARTNERSHIP" means the certificate of limited partnership filed with the Secretary of State of The Commonwealth of Massachusetts with respect to the Partnership, as the same may be amended from time to time. A-40 "CODE" means the Internal Revenue Code of 1954, as amended, or corresponding provisions of subsequent laws. "CONSENT" means either the consent given by vote at a meeting called and held in accordance with the provisions of Section 13.1 hereof or the written consent, as the case may be, of a Person to do the act or thing for which the consent is solicited or the act of granting such consent, as the context may require. "CONTROLLING PERSON" means, with respect to any General Partner or its Affiliates, any of its general partners, chairman, directors, president, secretary, treasurer, or vice presidents, or any Person holding a 5% or mor equity interest in the General Partner or such Affiliate or having the power to direct or cause the direction of the General Partner or such Affiliate, whether through the ownership of voting securities, by contract, or otherwise. "CORPORATE LIMITED PARTNER" means Krupp Depositary Corporation, or its successor, which has acquired and will hold for its own account 100 Limited Partner Interests and will acquire and hold up to 4,000,000 Limited Partner Interests on behalf of those Persons who purchase Units, on the basis of one Limited Partner Interest for each Unit, and will assign to those Persons its rights, obligations, and interests with respect to such Limited Partner Interests under Section 7.6 hereof. "COUNSEL TO THE PARTNERSHIP" means Gaston Snow & Ely Bartlett, Boston, Massachusetts, or another law firm selected by the General Partners. "CUMULATIVE RETURN" means a return equal to twelve percent (12%) per annum of the Invested Capital of the class comprised of the Limited Partners calculated from the initial closing of the sale of Units through the most recent fiscal year completed prior to the transaction giving rise to the computation. In calculating whether the Cumulative Return has been satisfied, only distributions by the Partnership of cash will be considered and no credit will be given for tax benefits allocated to the Limited Partners. "DEPOSITARY" means the Corporate Limited Partner or another Person selected by the General Partners. "DEPOSITARY RECEIPT" means a depositary receipt evidencing one or more Units. "DISTRIBUTABLE CASH FLOW" means Cash Flow less any Basic Management Fee and Incentive Fee payable for such year. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FRONT END FEES AND EXPENSES" means fees and expenses paid by any Person for any services rendered during the Partnership's organizational or acquisition phase including, without limitation, organizational and operating expenses, Acquisition Fees and Acquisition Expenses. "GENERAL PARTNER" means any Person designated as a General Partner in Schedule A of this Agreement or who becomes an additional or Substitute General Partner as provided in this Agreement, in such Person's capacity as a General Partner of the Partnership. A-41 "GENERAL PARTNERS" means every Person or Persons who serve(s) as a General Partner, whether there be one or several. "IMMEDIATE FAMILY MEMBER" means with respect to any person, his spouse, parent, parent-in-law, issue, brother, sister, brother-in-law, sister-in-law, or child-in-law. "INCENTIVE FEE" means the fee described in Section 6.4(d) hereof. "INTEREST" means, with respect to a General Partner, the entire ownership interest and, with respect to a Limited Partner, the ownership interest representing an initial Capital Contribution of Twenty Dollars ($20.00) (or a lesser amount in the event of a reduction in sales commissions with respect to a single purchaser subscribing for more than $250,000 in Units or in the event of the purchase by the General Partners or Affiliates of up to 275,000 Units net of selling commissions as described in Section 6.1(d) hereof), including the right of such Partner to any and all benefits to which a Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all the terms and provisions of this Agreement, but excluding any claims which such Partner may have against the Partnership as a creditor. "INVESTED CAPITAL" means, with respect to the General Partners, their Capital Contributions and, with respect to the Limited Partners and Unitholders $20.00 for each Limited Partner Interest or Unit, in either case reduced by any amounts of cash distributed to such Partner or Unitholder pursuant to Clauses FIRST and SECOND of Section 8.3(a) hereof. "INVESTMENT IN ASSETS" means the amount of Capital Contributions actually paid for or allocated to the purchase, development, construction, or improvement of Assets acquired by the Partnership, including amounts paid for or allocated to the purchase of Assets, working capital reserves allocable thereto (except that working capital reserves in excess of 5% of the total Capital Contributions shall not be included), and other cash payments such as interest and taxes, but excluding Front-End Fees and Expenses. "INVESTOR LIMITED PARTNER" means any Unitholder who shall be admitted to the Partnership as a Limited Partner, in the capacity of such Person as a Limited Partner. "INVOLUNTARY WITHDRAWAL" means, with respect to any General Partner, the Withdrawal of such General Partner from the Partnership pursuant to Section 9.2 hereof. "LIMITED PARTNER" means any Corporate Limited Partner, Investor Limited Partner or Substitute Limited Partner in the capacity of such Person as a Limited Partner. "MBS" has the meaning given in Section 3.2(b) hereof. "NASDAQ" means the National Association of Securities Dealers Automated Quotation system. "NET CASH PROCEEDS" of a Capital Transaction or the Terminating Capital Transaction means the cash received by the Partnership as a result of such Transaction, less (i) any amounts which are reinvested in accordance with Section 6.(c), (ii) all debts and liabilities of the Partnership required to be paid as a result of the Transaction (including, among other liabilities, any fees and expenses payable pursuant to Section 6.4 hereof, and (iii) any reserves for contingent liabilities (including fees then earned but not yet A-42 payable pursuant to Section 6.4 hereof), to the extent deemed reasonable by the General Partners provided that, at the expiration of such period as the General Partners shall deem advisable, the balance of such reserves remaining after payment of such contingencies shall be distributed in the manner provided in this Agreement for Net Cash Proceeds. In the event the Partnership takes back a mortgage note in connection with any Capital Transaction or the Terminating Capital Transaction, all payments subsequently received in cash by the Partnership with respect to such note shall be included in the Net Cash Proceeds of that Transaction, irrespective of the extent to which any portion of such payments shall be treated by the Partnership as principal or interest for tax or accounting purposes. "PARTNER" means any General Partner or Limited Partner. "PARTNERSHIP" means the limited partnership as formed in accordance with this Agreement, as said limited partnership may from time to time be constituted. "PERSON" means any individual, Partnership, corporation, trust, governmental official, body or agency, or other entity of any type. "PROFITS OR LOSSES FOR TAX PURPOSES" means profits or losses as determined by the Partnership for federal income tax purposes, and items of income, gain, loss deduction, or credit entering into the computation thereof. "PROPERTY" means any real estate, buildings, improvements, fixtures and related personal property acquired by the Partnership, and any equity interest of the Partnership therein, whether direct or indirect, through a nominee, joint venture or otherwise. "PROSPECTUS" means the Prospectus of the Partnership used in connection with its public offering of Units, as supplemented or amended. "PURCHASE PRICE OF A PROPERTY" means the price paid upon or in connection with the purchase of a particular Property, including the amount of Acquisition Fees and Acquisition Expenses and any liens and mortgages on the Property, but excluding points and prepaid interest. "QUALIFIED PLANS" means qualified pension, profit-sharing and other employee retirement benefit plans (including Keogh Plans) and trusts, and bank commingled trust funds for such plans. "REINVESTMENT AGENT" means LCS, Inc., and its successors or assigns, or any other reinvestment agent selected in accordance with the terms of the Reinvestment Plan. "REINVESTMENT PLAN" means the plan pursuant to which a Unitholder could automatically reinvest its distributions in the Units available for sale, as more fully described in the Reinvestment Plan which is Exhibit C to the Prospectus. "SALES AGENT AGREEMENT" means the Sales Agent Agreement between the Partnership and Krupp Securities Corporation entered into pursuant to Section 6.4(a) hereof. "SCHEDULE A" means Schedule A to this Agreement as amended from time to time. A-43 "SUBSCRIPTION PRICE" means the amount of cash contributed to the Partnership on behalf of a Unitholder, prior to the deduction of any offering expenses or selling commissions. "SUBSTITUTE GENERAL PARTNER" means the assignee of a General Partner Interest who is admitted to the Partnership as a General Partner pursuant to Section 9.5 or Section 13.2 of this Agreement. "SUBSTITUTE LIMITED PARTNER" means the assignee of a Limited Partner Interest who is admitted to the Partnership as a Limited Partner pursuant to Section 10.3 hereof. "TERMINATING CAPITAL TRANSACTION" means the sale, exchange, condemnation, eminent domain taking, casualty or other disposition of all or substantially all of the assets of the Partnership which results in the dissolution of the Partnership pursuant to Section 11 of this Agreement. The Terminating Capital Transaction shall also include the receipt and collection of notes, if any, and payments thereon or any other consideration received or to be received by the Partnership upon a sale or other disposition of all or substantially all of the assets of the Partnership and all activities reasonably related thereto. Such activities are deemed to be included in the winding up of Partnership affairs, and all allocations and distributions therefrom shall be governed by Sections 8.1(c) and (e) and 8.3(b) hereof. "UNIT" means the interest of a Unitholder in a Limited Partner Interest of the Partnership. Each Unit will be evidenced by a Depositary Receipt and represents (i) the assignment by the Corporate Limited Partner of its interest in the corresponding Limited Partner Interest to the extent permitted by Massachusetts law and (ii) the right to require the Corporate Limited Partner to exercise any other rights with respect to such Limited Partner Interest at the direction of the Unitholder. "UNITHOLDER" means any Person who holds Units in accordance with Section 6.1(d) or Section 7.2 hereof as reflected in the records of the Partnership and the Depositary. "VOLUNTARY WITHDRAWAL" means, with respect to a General Partner, the voluntary retirement or withdrawal of a General Partner from the Partnership, or the voluntary sale, assignment, encumbrance or other disposition of all of his General Partner Interest pursuant to Section 9.1 hereof. In the case of a General Partner which is a partnership, a Voluntary Withdrawal shall be deemed to have occurred when all general Partners of such partnership shall have voluntarily withdrawn therefrom as general partners or voluntarily sold or otherwise disposed of all of their general partner interests therein. "WITHDRAWAL" means, with respect to a General Partner, the Voluntary or Involuntary Withdrawal of such General Partner. "WITHDRAW" means to effect any such Withdrawal. "WITHDRAWN GENERAL PARTNER" means a General Partner whose Withdrawal in accordance with the provisions of this Agreement is effective. A-44 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amended Agreement of Limited Partnership as of the date first specified above. GENERAL PARTNERS CORPORATE LIMITED PARTNER THE KRUPP CORPORATION KRUPP DEPOSITARY CORPORATION By: /s/ Douglas Krupp By: /s/ Douglas Krupp ------------------------------- ---------------------------- Douglas Krupp, Co-Chairman of the Douglas Krupp, President Board of Directors THE KRUPP COMPANY LIMITED PARTNERSHIP-IV By: /s/ George Krupp ------------------------------- George Krupp, a General Partner A-45 SCHEDULE A NAMES, BUSINESS ADDRESSES AND CAPITAL CONTRIBUTIONS OF PARTNERS CAPITAL CONTRIBUTION NAME AND BUSINESS ADDRESS MADE ------------------------- ---- I. GENERAL PARTNERS ---------------- The Krupp Corporation $ 75 470 Atlantic Avenue Boston, Massachusetts 02210 The Krupp Company Limited Partnership-IV 2,925 470 Atlantic Avenue Boston, Massachusetts 02210 ______ Total $3,000 II. CORPORATE LIMITED PARTNER ------------------------- Krupp Depositary Corporation $2,000 470 Atlantic Avenue Boston, Massachusetts 02210 A-46 [THIS PAGE INTENTIONALLY LEFT BLANK] A-47 EX-4 5 PROPERTY MANAGEMENT AGREEMENT Exhibit 4 PROPERTY MANAGEMENT AGREEMENT This Agreement is made as of the 1st day of January, 1996 between the undersigned KRUPP CASH PLUS LIMITED PARTNERSHIP, a Massachusetts Limited Partnership (the "Owner") and the undersigned BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP (the "Agent"). 1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive agent for the management of the property described in Section 2 of this Agreement, and the Agent accepts the appointment, subject to the terms and conditions set forth in this Agreement. 2. DESCRIPTION OF THE PROJECT. The shopping center to be managed by the Agent under this Agreement is a shopping center consisting of the land, buildings, and other improvements located in Vero Beach, Florida and known as LURIA'S PLAZA containing 150,666 square feet (the "Shopping Center"). 3. BASIC INFORMATION. The Agent will thoroughly familiarize itself with the character, location, construction, layout, plan and operation of the Shopping Center, and especially the electrical, plumbing, air-conditioning and ventilating systems, the elevators and all other mechanical equipment. 4. MARKETING. The Agent will carry out the marketing activities designed to attract tenants as described below. 5. RENTALS. The Agent will offer for rent and will rent the dwelling units and commercial space, if any, in the Project. Incident thereto, the following provisions will apply: a. The Agent will show the Shopping Center to prospective tenants. b. A current list of prospective tenants will be maintained. c. The Agent will prepare all Shopping Center leases and, unless otherwise directed by Owner, will execute the same in its name, identifying itself thereon as agent for the Owner. Shopping Center leases will be in a form approved by the Owner. d. The Owner will furnish the Agent with rent schedules, showing contract rents for Shopping Center space, and other charges for facilities and services. The Agent will periodically review such rent schedules and make recommendations to the Owner with respect to changes thereto. e. The Agent will collect, deposit, and disburse security deposits, if required, in accordance with the terms of each tenant's lease. f. The Agent will perform periodic market surveys with respect to the market area in which the project is located. 1 6. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect, when due, all rents, charges and other amounts receivable for the Owner's account in connection with the management and operation of the Shopping Center. Such receipts will be deposited in an account, separate from all other accounts and funds, with a bank whose deposits are insured by the Federal Deposit Insurance Corporation. This account will be carried in the Owner's name and designated of record as "LURIA'S PLAZA" (the "Shopping Center Rental Account"). Subject to compliance with Section 11 hereof, the Agent is, however, hereby authorized to make deposits to and withdrawals from the Shopping Center Rental Account as agent for the Owner. 7. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each tenant with the terms of such tenant's lease. Voluntary compliance will be emphasized, but the Agent may lawfully terminate any tenancy when, in the Agent's judgement, sufficient cause (including but not limited to non-payment of rent) for such termination occurs under the terms of the tenant's lease. For this purpose, the Agent is authorized to consult with legal counsel to be designated by the Owner, to bring actions for eviction against such tenants; provided, however, the Agent shall keep the Owner informed of such actions and shall follow such instructions as the Owner may prescribe for the conduct of any such action. Subject to the Owner's approval, attorney fees and other necessary costs incurred in connection with such actions will be paid out of the Shopping Center Rental Account as Shopping Center expenses. 8. MAINTENANCE AND REPAIR. The Agent will maintain the Shopping Center in good repair and in compliance with local codes, and in a condition at all times acceptable to the Owner, including but not limited to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such other maintenance, repair, remodeling and refurbishing work as may be necessary, subject to any limitations imposed by the Owner in addition to those contained herein. The Agent will also assist the Owner with respect to determination and implementation of capital improvements to the Shopping Center. The Agent will perform such periodic physical inspections as shall be appropriate in connection therewith. Incident thereto, the following additional provisions will apply: a. Special attention will be given to preventive maintenance, and to the extent feasible, the services of regular maintenance employees will be used. b. Subject to the Owner's prior approval, the Agent will negotiate, review and sign on behalf of the Owner contracts with qualified independent contractors for the maintenance and repair of heating and air-conditioning systems and elevators, and for extraordinary repairs to such items and other assets of the Shopping Center which are beyond the capability of regular maintenance employees. c. The Agent will systematically and promptly receive and investigate all service requests from tenants, take such action thereon as may be justified, and will keep records of the same. Emergency requests will be received and serviced on a twenty-four (24) hour basis. Complaints of a serious nature will be reported to the Owner after investigation. 2 d. The Agent is authorized to purchase all materials, equipment, tools, appliances, supplies and services necessary for proper maintenance and repair of the shopping center. e. Notwithstanding any of the foregoing provisions, the prior approval of the Owner will be required for any expenditure which exceeds Five Thousand Dollars ($5,000) in any one instance for labor, materials or otherwise, in connection with the maintenance and repair of the Shopping Center, except for recurring expenses within the limits of the operating budget and emergency repairs involving manifest danger to persons or property or required to avoid suspension of any necessary service to the Shopping Center. In the latter event, the Agent will inform the Owner of the facts as promptly as possible. 9. UTILITIES AND SERVICES. In accordance with the operating budget, the Agent will make arrangements for water, electricity, gas, sewage and trash disposal, vermin extermination, decorating, and telephone service. Subject to the Owner's prior approval, the Agent will make such contracts as may be necessary to secure such utilities and services. 10. NONCUSTOMARY SERVICES. Notwithstanding any contrary provision in this Agreement, the Owner shall cause any services, in connection with the rental of the Project, that are not customarily furnished to tenants of comparable buildings in the region (including, but not limited to, the provision of maid service and the furnishing of parking facilities, other than on a complimentary, unreserved basis), to be performed by an entity qualifying as an independent contractor. 11. EMPLOYEES. Except as otherwise agreed, all on-site personnel will be employees of the Owner and not the Agent, but will be hired, paid, supervised, and discharged through the Agent, in the Agent's sole discretion, subject to the following conditions: a. The Regional Director will have duties of the type usually associated with such position. b. Compensation (including fringe benefits) of bookkeeping, clerical, and managerial personnel will be within the Agent's sole discretion, provided minimum wage standards are met. c. The Owner will reimburse the Agent for compensation (including fringe benefits) payable to the on-site management and maintenance employees, and for all local, state and federal taxes and assessments (including but not limited to Social Security taxes, unemployment insurance, and Workman's Compensation insurance) incident to the employment of such personnel. Such reimbursements will be paid out of the Shopping Center Rental Account and will be treated as Shopping Center expenses. The rental value of any dwelling unit furnished rent-free to on-site personnel will be treated as a cost of the Shopping Center. d. Compensation (including fringe benefits) payable to all bookkeeping, clerical and other managerial personnel, plus all local, state and federal taxes and assessments incident to the employment of such personnel will be charged to the Shopping Center in accordance 3 with appropriate accounting procedures, and will not be paid out of the Agent's management fee. 12. DISBURSEMENTS FROM PROJECT RENTAL ACCOUNT. a. From the funds collected and deposited by the Agent in the Shopping Center Rental Account, either the Owner or the Agent, as shall be determined from time to time by the Owner, will make the following disbursements when payable in the following order. 1. Reimbursement to the Agent for compensation payable to the employees specified in Section 10 above, and for the taxes and assessments payable to local, state and federal authorities and for any monies it has advanced or become personally liable therefor in discharging its duties hereunder. 2. All sums otherwise due and payable by the Owner as expenses of the Shopping Center authorized to be incurred by the Agent under the terms of this Agreement, including compensation payable to the Agent for its services hereunder and expenses of the Shopping Center incurred by the Agent under the terms of this Agreement. 3. Any payment required to be made monthly by the Owner to any mortgage holder respecting the Project, including the amounts due under the mortgage for principal amortization, interest, ground rents, taxes and assessments, and fire and other hazard insurance premiums. b. Except for the disbursements mentioned above, funds will be disbursed or transferred from the Shopping Center Rental Account only as the Owner may from time to time direct. c. In the event the balance in the Shopping Center Rental Account is at any time insufficient to pay disbursements due and payable under Section 11 (a) above, the Agent will inform the Owner of that fact. In no event will the Agent be required to use its own funds to pay such disbursements. 13. RECORDS AND REPORTS. The Agent will have the following responsibilities with respect to records and reports. a. The Agent will establish and maintain a comprehensive system of records, books and accounts in a manner satisfactory to the Owner acting reasonably. b. With respect to each fiscal year ending during the term of this Agreement, the Agent will furnish an annual financial report. The Agent will also prepare and review budgets and 4 cash flow projections for the Shopping Center in such manner and at such times as may be agreed with the Owner. c. The Agent will furnish such information (including occupancy reports) as may be reasonably requested by the Owner from time to time with respect to the financial, physical, or operating condition of the Shopping Center. d. By the twenty-fifth (25th) day of each month, the Agent will furnish the Owner with a statement of receipts and disbursements during the previous month, together with a schedule of accounts receivable and payable, and reconciled bank statements for the Shopping Center Rental Account as of the end of the previous month. 14. ON-SITE MANAGEMENT FACILITIES. Subject to further agreement of the Owner and the Agent as to more specific terms, the Agent may maintain a management office within the Shopping Center, and the Owner will make no rental charge for the same. 15. INSURANCE. The Owner will inform the Agent of insurance to be carried with respect to the Project and its operations, and the Agent, when authorized by the Owner, will cause such insurance to be placed and kept in effect at all times. The Agent will pay premiums out of the Shopping Center Rental Account, as an expense of the Shopping Center. All insurance will be placed with such companies, on such conditions, in such amounts, and with such beneficial interests appearing thereon as shall be acceptable to the Owner and shall be otherwise in conformity with the Mortgage related to the Shopping Center, provided that the same will include public liability coverage, with the Agent designated as one of the insureds, in amounts acceptable to the Owner, Agent and any mortgagee of the Shopping Center. The Agent will investigate and furnish the Owner with full reports as to all accidents, claims, and potential claims for damage relating to the Project, and will cooperate with the Owner's insurers in connection therewith. 16. AGENT'S COMPENSATION. The Agent will be compensated for its services under this Agreement by monthly fees to be paid out of the Shopping Center Rental Account to be treated as Shopping Center expenses. Such fees will be payable monthly. Each such monthly fee will be an amount equal to SIX PERCENT (6%) of the gross receipts (including rentals and other operating income of the Shopping Center) actually received during the applicable month. In addition, the Agent shall receive reimbursement for all proper expenditures, obligations and liabilities incurred by the Agent in connection with the operation of the Shopping Center. Such reimbursement shall be limited to the actual cost of goods, services and materials used for or by the Shopping Center, and in no event shall such cost exceed the cost of such items if supplied by persons or entities other than the Agent or its affiliates. Such reimbursement shall not include reimbursement for costs of services rendered by employees who are not employed in the operation of the Shopping Center (except that employees servicing more than one property (whether or not owned by the Owner) may have their costs prorated based upon the respective number of units or square footage in each property), or other expenses for which managing agents of real estate would not customarily receive reimbursement in addition to stated compensation. 5 17. INDEMNIFICATION BY THE OWNER. The Owner shall indemnify and hold harmless the Agent from all liability, claims, damages or loss arising out of the performance of its duties hereunder, and related expenses, including reasonable attorneys' fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance; provided, however, that the Agent shall be entitled to indemnification, under this Section 17, only if the Agent, in connection with any liability, damages, claim or loss for which it seeks indemnity, acted in a manner which would not constitute gross negligence or wilful misfeasance. 18. INDEMNIFICATION BY THE AGENT. The Agent shall indemnify and hold harmless the Owner from contract or other liability, claims, damages, losses and related expenses, including attorneys' fees, to the extent that such liability, claims, damages, losses and related expenses are not fully reimbursed by insurance and are incurred by the Owner by reason of the Agent's deliberate dishonesty or gross negligence. 19. RIGHT TO ASSIGN. The Agent may assign some or all of its rights or obligations under this Agreement provided Agent remains principally responsible hereunder, and Owner is given notice of such assignment. Owner may assign its rights and obligations under this Agreement to any successor in title to the Property, and upon such assignment, Owner shall be relieved of all liability accruing after the effective date of such assignment. 20. TERM OF AGREEMENT. This Agreement shall be in effect for a period commencing on the date hereof. This Agreement may be terminated, without penalty, by written notice of either party to the other as of the end of any calendar month, provided at least sixty (60) days advance written notice thereof is given. IN WITNESS WHEREOF, the parties hereto (by their duly authorized representatives) have executed this Agreement as of the date first above written. OWNER: AGENT: KRUPP CASH PLUS BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP LIMITED PARTNERSHIP By: The Krupp Corporation, a General Partner By: /s/ Laurence Gerber By: /s/ Tom Austin ---------------------------- ----------------------------- Laurence Gerber, Tom Austin President Vice President Operations 6 EX-5 6 PROPERTY MANAGEMENT AGREEMENT Exhibit 5 PROPERTY MANAGEMENT AGREEMENT This Agreement is made as of the 1st day of January, 1996 between the undersigned KRUPP CASH PLUS LIMITED PARTNERSHIP, a Massachusetts Limited Partnership (the "Owner") and the undersigned BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP (the "Agent"). 1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive agent for the management of the property described in Section 2 of this Agreement, and the Agent accepts the appointment, subject to the terms and conditions set forth in this Agreement. 2. DESCRIPTION OF THE PROJECT. The shopping center to be managed by the Agent under this Agreement is a shopping center consisting of the land, buildings, and other improvements located in High Point, North Carolina and known as HIGH POINT NATIONAL FURNITURE MART containing 241,650 square feet (the "Shopping Center"). 3. BASIC INFORMATION. The Agent will thoroughly familiarize itself with the character, location, construction, layout, plan and operation of the Shopping Center, and especially the electrical, plumbing, air-conditioning and ventilating systems, the elevators and all other mechanical equipment. 4. MARKETING. The Agent will carry out the marketing activities designed to attract tenants as described below. 5. RENTALS. The Agent will offer for rent and will rent the dwelling units and commercial space, if any, in the Project. Incident thereto, the following provisions will apply: a. The Agent will show the Shopping Center to prospective tenants. b. A current list of prospective tenants will be maintained. c. The Agent will prepare all Shopping Center leases and, unless otherwise directed by Owner, will execute the same in its name, identifying itself thereon as agent for the Owner. Shopping Center leases will be in a form approved by the Owner. d. The Owner will furnish the Agent with rent schedules, showing contract rents for Shopping Center space, and other charges for facilities and services. The Agent will periodically review such rent schedules and make recommendations to the Owner with respect to changes thereto. e. The Agent will collect, deposit, and disburse security deposits, if required, in accordance with the terms of each tenant's lease. f. The Agent will perform periodic market surveys with respect to the market area in which the project is located. 1 6. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect, when due, all rents, charges and other amounts receivable for the Owner's account in connection with the management and operation of the Shopping Center. Such receipts will be deposited in an account, separate from all other accounts and funds, with a bank whose deposits are insured by the Federal Deposit Insurance Corporation. This account will be carried in the Owner's name and designated of record as "HIGH POINT NATIONAL FURNITURE MART" (the "Shopping Center Rental Account"). Subject to compliance with Section 11 hereof, the Agent is, however, hereby authorized to make deposits to and withdrawals from the Shopping Center Rental Account as agent for the Owner. 7. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each tenant with the terms of such tenant's lease. Voluntary compliance will be emphasized, but the Agent may lawfully terminate any tenancy when, in the Agent's judgement, sufficient cause (including but not limited to non-payment of rent) for such termination occurs under the terms of the tenant's lease. For this purpose, the Agent is authorized to consult with legal counsel to be designated by the Owner, to bring actions for eviction against such tenants; provided, however, the Agent shall keep the Owner informed of such actions and shall follow such instructions as the Owner may prescribe for the conduct of any such action. Subject to the Owner's approval, attorney fees and other necessary costs incurred in connection with such actions will be paid out of the Shopping Center Rental Account as Shopping Center expenses. 8. MAINTENANCE AND REPAIR. The Agent will maintain the Shopping Center in good repair and in compliance with local codes, and in a condition at all times acceptable to the Owner, including but not limited to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such other maintenance, repair, remodeling and refurbishing work as may be necessary, subject to any limitations imposed by the Owner in addition to those contained herein. The Agent will also assist the Owner with respect to determination and implementation of capital improvements to the Shopping Center. The Agent will perform such periodic physical inspections as shall be appropriate in connection therewith. Incident thereto, the following additional provisions will apply: a. Special attention will be given to preventive maintenance, and to the extent feasible, the services of regular maintenance employees will be used. b. Subject to the Owner's prior approval, the Agent will negotiate, review and sign on behalf of the Owner contracts with qualified independent contractors for the maintenance and repair of heating and air-conditioning systems and elevators, and for extraordinary repairs to such items and other assets of the Shopping Center which are beyond the capability of regular maintenance employees. c. The Agent will systematically and promptly receive and investigate all service requests from tenants, take such action thereon as may be justified, and will keep records of the same. Emergency requests will be received and serviced on a twenty-four (24) hour basis. Complaints of a serious nature will be reported to the Owner after investigation. 2 d. The Agent is authorized to purchase all materials, equipment, tools, appliances, supplies and services necessary for proper maintenance and repair of the shopping center. e. Notwithstanding any of the foregoing provisions, the prior approval of the Owner will be required for any expenditure which exceeds Five Thousand Dollars ($5,000) in any one instance for labor, materials or otherwise, in connection with the maintenance and repair of the Shopping Center, except for recurring expenses within the limits of the operating budget and emergency repairs involving manifest danger to persons or property or required to avoid suspension of any necessary service to the Shopping Center. In the latter event, the Agent will inform the Owner of the facts as promptly as possible. 9. UTILITIES AND SERVICES. In accordance with the operating budget, the Agent will make arrangements for water, electricity, gas, sewage and trash disposal, vermin extermination, decorating, and telephone service. Subject to the Owner's prior approval, the Agent will make such contracts as may be necessary to secure such utilities and services. 10. NONCUSTOMARY SERVICES. Notwithstanding any contrary provision in this Agreement, the Owner shall cause any services, in connection with the rental of the Project, that are not customarily furnished to tenants of comparable buildings in the region (including, but not limited to, the provision of maid service and the furnishing of parking facilities, other than on a complimentary, unreserved basis), to be performed by an entity qualifying as an independent contractor. 11. EMPLOYEES. Except as otherwise agreed, all on-site personnel will be employees of the Owner and not the Agent, but will be hired, paid, supervised, and discharged through the Agent, in the Agent's sole discretion, subject to the following conditions: a. The Regional Director will have duties of the type usually associated with such position. b. Compensation (including fringe benefits) of bookkeeping, clerical, and managerial personnel will be within the Agent's sole discretion, provided minimum wage standards are met. c. The Owner will reimburse the Agent for compensation (including fringe benefits) payable to the on-site management and maintenance employees, and for all local, state and federal taxes and assessments (including but not limited to Social Security taxes, unemployment insurance, and Workman's Compensation insurance) incident to the employment of such personnel. Such reimbursements will be paid out of the Shopping Center Rental Account and will be treated as Shopping Center expenses. The rental value of any dwelling unit furnished rent-free to on-site personnel will be treated as a cost of the Shopping Center. d. Compensation (including fringe benefits) payable to all bookkeeping, clerical and other managerial personnel, plus all local, state and federal taxes and assessments incident to the employment of such personnel will be charged to the Shopping Center in accordance 3 with appropriate accounting procedures, and will not be paid out of the Agent's management fee. 12. DISBURSEMENTS FROM PROJECT RENTAL ACCOUNT. a. From the funds collected and deposited by the Agent in the Shopping Center Rental Account, either the Owner or the Agent, as shall be determined from time to time by the Owner, will make the following disbursements when payable in the following order. 1. Reimbursement to the Agent for compensation payable to the employees specified in Section 10 above, and for the taxes and assessments payable to local, state and federal authorities and for any monies it has advanced or become personally liable therefor in discharging its duties hereunder. 2. All sums otherwise due and payable by the Owner as expenses of the Shopping Center authorized to be incurred by the Agent under the terms of this Agreement, including compensation payable to the Agent for its services hereunder and expenses of the Shopping Center incurred by the Agent under the terms of this Agreement. 3. Any payment required to be made monthly by the Owner to any mortgage holder respecting the Project, including the amounts due under the mortgage for principal amortization, interest, ground rents, taxes and assessments, and fire and other hazard insurance premiums. b. Except for the disbursements mentioned above, funds will be disbursed or transferred from the Shopping Center Rental Account only as the Owner may from time to time direct. c. In the event the balance in the Shopping Center Rental Account is at any time insufficient to pay disbursements due and payable under Section 11 (a) above, the Agent will inform the Owner of that fact. In no event will the Agent be required to use its own funds to pay such disbursements. 13. RECORDS AND REPORTS. The Agent will have the following responsibilities with respect to records and reports. a. The Agent will establish and maintain a comprehensive system of records, books and accounts in a manner satisfactory to the Owner acting reasonably. b. With respect to each fiscal year ending during the term of this Agreement, the Agent will furnish an annual financial report. The Agent will also prepare and review budgets and 4 cash flow projections for the Shopping Center in such manner and at such times as may be agreed with the Owner. c. The Agent will furnish such information (including occupancy reports) as may be reasonably requested by the Owner from time to time with respect to the financial, physical, or operating condition of the Shopping Center. d. By the twenty-fifth (25th) day of each month, the Agent will furnish the Owner with a statement of receipts and disbursements during the previous month, together with a schedule of accounts receivable and payable, and reconciled bank statements for the Shopping Center Rental Account as of the end of the previous month. 14. ON-SITE MANAGEMENT FACILITIES. Subject to further agreement of the Owner and the Agent as to more specific terms, the Agent may maintain a management office within the Shopping Center, and the Owner will make no rental charge for the same. 15. INSURANCE. The Owner will inform the Agent of insurance to be carried with respect to the Project and its operations, and the Agent, when authorized by the Owner, will cause such insurance to be placed and kept in effect at all times. The Agent will pay premiums out of the Shopping Center Rental Account, as an expense of the Shopping Center. All insurance will be placed with such companies, on such conditions, in such amounts, and with such beneficial interests appearing thereon as shall be acceptable to the Owner and shall be otherwise in conformity with the Mortgage related to the Shopping Center, provided that the same will include public liability coverage, with the Agent designated as one of the insureds, in amounts acceptable to the Owner, Agent and any mortgagee of the Shopping Center. The Agent will investigate and furnish the Owner with full reports as to all accidents, claims, and potential claims for damage relating to the Project, and will cooperate with the Owner's insurers in connection therewith. 16. AGENT'S COMPENSATION. The Agent will be compensated for its services under this Agreement by monthly fees to be paid out of the Shopping Center Rental Account to be treated as Shopping Center expenses. Such fees will be payable monthly. Each such monthly fee will be an amount equal to SIX PERCENT (6%) of the gross receipts (including rentals and other operating income of the Shopping Center) actually received during the applicable month. In addition, the Agent shall receive reimbursement for all proper expenditures, obligations and liabilities incurred by the Agent in connection with the operation of the Shopping Center. Such reimbursement shall be limited to the actual cost of goods, services and materials used for or by the Shopping Center, and in no event shall such cost exceed the cost of such items if supplied by persons or entities other than the Agent or its affiliates. Such reimbursement shall not include reimbursement for costs of services rendered by employees who are not employed in the operation of the Shopping Center (except that employees servicing more than one property (whether or not owned by the Owner) may have their costs prorated based upon the respective number of units or square footage in each property), or other expenses for which managing agents of real estate would not customarily receive reimbursement in addition to stated compensation. 5 17. INDEMNIFICATION BY THE OWNER. The Owner shall indemnify and hold harmless the Agent from all liability, claims, damages or loss arising out of the performance of its duties hereunder, and related expenses, including reasonable attorneys' fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance; provided, however, that the Agent shall be entitled to indemnification, under this Section 17, only if the Agent, in connection with any liability, damages, claim or loss for which it seeks indemnity, acted in a manner which would not constitute gross negligence or wilful misfeasance. 18. INDEMNIFICATION BY THE AGENT. The Agent shall indemnify and hold harmless the Owner from contract or other liability, claims, damages, losses and related expenses, including attorneys' fees, to the extent that such liability, claims, damages, losses and related expenses are not fully reimbursed by insurance and are incurred by the Owner by reason of the Agent's deliberate dishonesty or gross negligence. 19. RIGHT TO ASSIGN. The Agent may assign some or all of its rights or obligations under this Agreement provided Agent remains principally responsible hereunder, and Owner is given notice of such assignment. Owner may assign its rights and obligations under this Agreement to any successor in title to the Property, and upon such assignment, Owner shall be relieved of all liability accruing after the effective date of such assignment. 20. TERM OF AGREEMENT. This Agreement shall be in effect for a period commencing on the date hereof. This Agreement may be terminated, without penalty, by written notice of either party to the other as of the end of any calendar month, provided at least sixty (60) days advance written notice thereof is given. IN WITNESS WHEREOF, the parties hereto (by their duly authorized representatives) have executed this Agreement as of the date first above written. OWNER: AGENT: KRUPP CASH PLUS BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP LIMITED PARTNERSHIP By: The Krupp Corporation a General Partner By: /s/ Laurence Gerber By: /s/ Tom Austin ------------------------ ------------------------- Laurence Gerber, Tom Austin President Vice President Operations 6 EX-6 7 PROPERTY MANAGEMENT AGREEMENT Exhibit 6 PROPERTY MANAGEMENT AGREEMENT This Agreement is made as of the 1st day of January, 1996 between the undersigned KRUPP CASH PLUS LIMITED PARTNERSHIP, a Massachusetts Limited Partnership (the "Owner") and the undersigned BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP (the "Agent"). 1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive agent for the management of the property described in Section 2 of this Agreement, and the Agent accepts the appointment, subject to the terms and conditions set forth in this Agreement. 2. DESCRIPTION OF THE PROJECT. The shopping center to be managed by the Agent under this Agreement is a shopping center consisting of the land, buildings, and other improvements located in Hanover Park, Illinois and known as TRADEWINDS SHOPPING CENTER containing 215,293 square feet (the "Shopping Center"). 3. BASIC INFORMATION. The Agent will thoroughly familiarize itself with the character, location, construction, layout, plan and operation of the Shopping Center, and especially the electrical, plumbing, air-conditioning and ventilating systems, the elevators and all other mechanical equipment. 4. MARKETING. The Agent will carry out the marketing activities designed to attract tenants as described below. 5. RENTALS. The Agent will offer for rent and will rent the dwelling units and commercial space, if any, in the Project. Incident thereto, the following provisions will apply: a. The Agent will show the Shopping Center to prospective tenants. b. A current list of prospective tenants will be maintained. c. The Agent will prepare all Shopping Center leases and, unless otherwise directed by Owner, will execute the same in its name, identifying itself thereon as agent for the Owner. Shopping Center leases will be in a form approved by the Owner. d. The Owner will furnish the Agent with rent schedules, showing contract rents for Shopping Center space, and other charges for facilities and services. The Agent will periodically review such rent schedules and make recommendations to the Owner with respect to changes thereto. e. The Agent will collect, deposit, and disburse security deposits, if required, in accordance with the terms of each tenant's lease. f. The Agent will perform periodic market surveys with respect to the market area in which the project is located. 1 6. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect, when due, all rents, charges and other amounts receivable for the Owner's account in connection with the management and operation of the Shopping Center. Such receipts will be deposited in an account, separate from all other accounts and funds, with a bank whose deposits are insured by the Federal Deposit Insurance Corporation. This account will be carried in the Owner's name and designated of record as "TRADEWINDS SHOPPING CENTER" (the "Shopping Center Rental Account"). Subject to compliance with Section 11 hereof, the Agent is, however, hereby authorized to make deposits to and withdrawals from the Shopping Center Rental Account as agent for the Owner. 7. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each tenant with the terms of such tenant's lease. Voluntary compliance will be emphasized, but the Agent may lawfully terminate any tenancy when, in the Agent's judgement, sufficient cause (including but not limited to non-payment of rent) for such termination occurs under the terms of the tenant's lease. For this purpose, the Agent is authorized to consult with legal counsel to be designated by the Owner, to bring actions for eviction against such tenants; provided, however, the Agent shall keep the Owner informed of such actions and shall follow such instructions as the Owner may prescribe for the conduct of any such action. Subject to the Owner's approval, attorney fees and other necessary costs incurred in connection with such actions will be paid out of the Shopping Center Rental Account as Shopping Center expenses. 8. MAINTENANCE AND REPAIR. The Agent will maintain the Shopping Center in good repair and in compliance with local codes, and in a condition at all times acceptable to the Owner, including but not limited to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such other maintenance, repair, remodeling and refurbishing work as may be necessary, subject to any limitations imposed by the Owner in addition to those contained herein. The Agent will also assist the Owner with respect to determination and implementation of capital improvements to the Shopping Center. The Agent will perform such periodic physical inspections as shall be appropriate in connection therewith. Incident thereto, the following additional provisions will apply: a. Special attention will be given to preventive maintenance, and to the extent feasible, the services of regular maintenance employees will be used. b. Subject to the Owner's prior approval, the Agent will negotiate, review and sign on behalf of the Owner contracts with qualified independent contractors for the maintenance and repair of heating and air-conditioning systems and elevators, and for extraordinary repairs to such items and other assets of the Shopping Center which are beyond the capability of regular maintenance employees. c. The Agent will systematically and promptly receive and investigate all service requests from tenants, take such action thereon as may be justified, and will keep records of the same. Emergency requests will be received and serviced on a twenty-four (24) hour basis. Complaints of a serious nature will be reported to the Owner after investigation. 2 d. The Agent is authorized to purchase all materials, equipment, tools, appliances, supplies and services necessary for proper maintenance and repair of the shopping center. e. Notwithstanding any of the foregoing provisions, the prior approval of the Owner will be required for any expenditure which exceeds Five Thousand Dollars ($5,000) in any one instance for labor, materials or otherwise, in connection with the maintenance and repair of the Shopping Center, except for recurring expenses within the limits of the operating budget and emergency repairs involving manifest danger to persons or property or required to avoid suspension of any necessary service to the Shopping Center. In the latter event, the Agent will inform the Owner of the facts as promptly as possible. 9. UTILITIES AND SERVICES. In accordance with the operating budget, the Agent will make arrangements for water, electricity, gas, sewage and trash disposal, vermin extermination, decorating, and telephone service. Subject to the Owner's prior approval, the Agent will make such contracts as may be necessary to secure such utilities and services. 10. NONCUSTOMARY SERVICES. Notwithstanding any contrary provision in this Agreement, the Owner shall cause any services, in connection with the rental of the Project, that are not customarily furnished to tenants of comparable buildings in the region (including, but not limited to, the provision of maid service and the furnishing of parking facilities, other than on a complimentary, unreserved basis), to be performed by an entity qualifying as an independent contractor. 11. EMPLOYEES. Except as otherwise agreed, all on-site personnel will be employees of the Owner and not the Agent, but will be hired, paid, supervised, and discharged through the Agent, in the Agent's sole discretion, subject to the following conditions: a. The Regional Director will have duties of the type usually associated with such position. b. Compensation (including fringe benefits) of bookkeeping, clerical, and managerial personnel will be within the Agent's sole discretion, provided minimum wage standards are met. c. The Owner will reimburse the Agent for compensation (including fringe benefits) payable to the on-site management and maintenance employees, and for all local, state and federal taxes and assessments (including but not limited to Social Security taxes, unemployment insurance, and Workman's Compensation insurance) incident to the employment of such personnel. Such reimbursements will be paid out of the Shopping Center Rental Account and will be treated as Shopping Center expenses. The rental value of any dwelling unit furnished rent-free to on-site personnel will be treated as a cost of the Shopping Center. d. Compensation (including fringe benefits) payable to all bookkeeping, clerical and other managerial personnel, plus all local, state and federal taxes and assessments incident to the employment of such personnel will be charged to the Shopping Center in accordance 3 with appropriate accounting procedures, and will not be paid out of the Agent's management fee. 12. DISBURSEMENTS FROM PROJECT RENTAL ACCOUNT. a. From the funds collected and deposited by the Agent in the Shopping Center Rental Account, either the Owner or the Agent, as shall be determined from time to time by the Owner, will make the following disbursements when payable in the following order. 1. Reimbursement to the Agent for compensation payable to the employees specified in Section 10 above, and for the taxes and assessments payable to local, state and federal authorities and for any monies it has advanced or become personally liable therefor in discharging its duties hereunder. 2. All sums otherwise due and payable by the Owner as expenses of the Shopping Center authorized to be incurred by the Agent under the terms of this Agreement, including compensation payable to the Agent for its services hereunder and expenses of the Shopping Center incurred by the Agent under the terms of this Agreement. 3. Any payment required to be made monthly by the Owner to any mortgage holder respecting the Project, including the amounts due under the mortgage for principal amortization, interest, ground rents, taxes and assessments, and fire and other hazard insurance premiums. b. Except for the disbursements mentioned above, funds will be disbursed or transferred from the Shopping Center Rental Account only as the Owner may from time to time direct. c. In the event the balance in the Shopping Center Rental Account is at any time insufficient to pay disbursements due and payable under Section 11(a) above, the Agent will inform the Owner of that fact. In no event will the Agent be required to use its own funds to pay such disbursements. 13. RECORDS AND REPORTS. The Agent will have the following responsibilities with respect to records and reports. a. The Agent will establish and maintain a comprehensive system of records, books and accounts in a manner satisfactory to the Owner acting reasonably. b. With respect to each fiscal year ending during the term of this Agreement, the Agent will furnish an annual financial report. The Agent will also prepare and review budgets and 4 cash flow projections for the Shopping Center in such manner and at such times as may be agreed with the Owner. c. The Agent will furnish such information (including occupancy reports) as may be reasonably requested by the Owner from time to time with respect to the financial, physical, or operating condition of the Shopping Center. d. By the twenty-fifth (25th) day of each month, the Agent will furnish the Owner with a statement of receipts and disbursements during the previous month, together with a schedule of accounts receivable and payable, and reconciled bank statements for the Shopping Center Rental Account as of the end of the previous month. 14. ON-SITE MANAGEMENT FACILITIES. Subject to further agreement of the Owner and the Agent as to more specific terms, the Agent may maintain a management office within the Shopping Center, and the Owner will make no rental charge for the same. 15. INSURANCE. The Owner will inform the Agent of insurance to be carried with respect to the Project and its operations, and the Agent, when authorized by the Owner, will cause such insurance to be placed and kept in effect at all times. The Agent will pay premiums out of the Shopping Center Rental Account, as an expense of the Shopping Center. All insurance will be placed with such companies, on such conditions, in such amounts, and with such beneficial interests appearing thereon as shall be acceptable to the Owner and shall be otherwise in conformity with the Mortgage related to the Shopping Center, provided that the same will include public liability coverage, with the Agent designated as one of the insureds, in amounts acceptable to the Owner, Agent and any mortgagee of the Shopping Center. The Agent will investigate and furnish the Owner with full reports as to all accidents, claims, and potential claims for damage relating to the Project, and will cooperate with the Owner's insurers in connection therewith. 16. AGENT'S COMPENSATION. The Agent will be compensated for its services under this Agreement by monthly fees to be paid out of the Shopping Center Rental Account to be treated as Shopping Center expenses. Such fees will be payable monthly. Each such monthly fee will be an amount equal to SIX PERCENT (6%) of the gross receipts (including rentals and other operating income of the Shopping Center) actually received during the applicable month. In addition, the Agent shall receive reimbursement for all proper expenditures, obligations and liabilities incurred by the Agent in connection with the operation of the Shopping Center. Such reimbursement shall be limited to the actual cost of goods, services and materials used for or by the Shopping Center, and in no event shall such cost exceed the cost of such items if supplied by persons or entities other than the Agent or its affiliates. Such reimbursement shall not include reimbursement for costs of services rendered by employees who are not employed in the operation of the Shopping Center (except that employees servicing more than one property (whether or not owned by the Owner) may have their costs prorated based upon the respective number of units or square footage in each property), or other expenses for which managing agents of real estate would not customarily receive reimbursement in addition to stated compensation. 5 17. INDEMNIFICATION BY THE OWNER. The Owner shall indemnify and hold harmless the Agent from all liability, claims, damages or loss arising out of the performance of its duties hereunder, and related expenses, including reasonable attorneys' fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance; provided, however, that the Agent shall be entitled to indemnification, under this Section 17, only if the Agent, in connection with any liability, damages, claim or loss for which it seeks indemnity, acted in a manner which would not constitute gross negligence or wilful misfeasance. 18. INDEMNIFICATION BY THE AGENT. The Agent shall indemnify and hold harmless the Owner from contract or other liability, claims, damages, losses and related expenses, including attorneys' fees, to the extent that such liability, claims, damages, losses and related expenses are not fully reimbursed by insurance and are incurred by the Owner by reason of the Agent's deliberate dishonesty or gross negligence. 19. RIGHT TO ASSIGN. The Agent may assign some or all of its rights or obligations under this Agreement provided Agent remains principally responsible hereunder, and Owner is given notice of such assignment. Owner may assign its rights and obligations under this Agreement to any successor in title to the Property, and upon such assignment, Owner shall be relieved of all liability accruing after the effective date of such assignment. 20. TERM OF AGREEMENT. This Agreement shall be in effect for a period commencing on the date hereof. This Agreement may be terminated, without penalty, by written notice of either party to the other as of the end of any calendar month, provided at least sixty (60) days advance written notice thereof is given. IN WITNESS WHEREOF, the parties hereto (by their duly authorized representatives) have executed this Agreement as of the date first above written. OWNER: AGENT: KRUPP CASH PLUS BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP LIMITED PARTNERSHIP By: The Krupp Corporation, a General Partner By: /s/ Laurence Gerber By: /s/ Tom Austin --------------------------- ---------------------------- Laurence Gerber, Tom Austin, President Vice President Operations 6 EX-7 8 SETTLEMENT AGREEMENT AND RELEASE Exhibit 7 SETTLEMENT AGREEMENT This Settlement Agreement and Release (this "Agreement") is made and entered into as of the 27th day of June, 1996, by and between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Liquidity Financial Group, L.P. ("Liquidity") individually and on behalf of certain Affiliates as hereinafter defined, a California limited partnership with a principal place of business at 2200 Powell Street, Suite 700, Emeryville, California 94608. W I T N E S S E T H WHEREAS, Liquidity is engaged in the business of sponsoring and managing funds which invest in, among other things, real estate limited partnerships; WHEREAS, Krupp and certain affiliates sponsored and are engaged in the business of managing, among other things, real estate limited partnerships; WHEREAS, Liquidity sponsored and manages Liquidity Fund #33 LP as well as other investment funds, and may in the future sponsor and manage and/or provide investment advice to additional investment funds (collectively, the "Liquidity Funds"), and Krupp sponsored and manages Krupp Realty Fund, Ltd.-III ("Realty III") and Krupp Realty Limited Partnership-V ("Realty-V") as well as other investment funds, and may in the future sponsor or manage additional investment funds (individually a "Krupp Fund" and collectively, the "Krupp Funds"); WHEREAS, Liquidity has, on behalf of certain of the Liquidity Funds sought to obtain from Krupp lists of the investors in certain of the Krupp Funds for the stated purpose of contacting such investors in order to attempt to acquire their units in the Krupp Funds; WHEREAS, Krupp has refused to provide lists of the investors to Liquidity, alleging that they are not entitled to obtain such lists and Liquidity has stated that, absent a satisfactory resolution, its present intention is to litigate the issue; WHEREAS, the parties have conferred through their respective counsel and are desirous of resolving and settling Liquidity's claims, upon the terms and conditions hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. DELIVERY OF LISTS: Within ten (10) business days of the date of this Agreement, Krupp will deliver to Liquidity lists of investors (containing the names, addresses and capital contributions of such investors) in Realty III and Realty V. The lists will be sorted alphabetically and delivered in both paper format and on 3.5" IBM Compatible computer diskette in ASCII format. Any additional lists delivered pursuant to paragraph 3 below will also be delivered in both paper format and on 3.5" IBM Compatible computer diskette in ASCII format. 2. PAYMENT FOR LISTS: Within ten (10) business days of the date of this Agreement, Liquidity will deliver to Krupp payment for the estimated cost of reproducing and delivering such lists in the total amount of $600.00. 3. PROVISION OF ADDITIONAL LISTS: From time to time during the twelve (12) month period commencing on the date hereof and expiring on the first anniversary date of this Agreement, Krupp will, upon written request from Liquidity, deliver to Liquidity within fifteen (15) business days of receipt of such written request, updated lists of investors in Realty III and Realty V, or, to the extent a Liquidity Fund is a Limited Partner or Shareholder (as the case may be) in any other Krupp Fund, current lists of investors in such other Krupp Fund, provided such request includes an undertaking by Liquidity to pay the cost of reproducing and delivering such lists within ten business days after receipt of such lists. 4. RESTRICTION ON ACTIVITIES: For a period commencing on the date hereof and continuing for thirty (30) months from the last date an investor list in a Krupp Fund is delivered to Liquidity in response to Liquidity's request, Liquidity and any person or entity controlling, controlled, managed or advised by Liquidity or its subsidiaries (including the Liquidity Funds) or under common control with Liquidity ("Liquidity Affiliates") shall not, without the prior written consent of Krupp, which may be granted or withheld in Krupp's sole and exclusive discretion and for any reason, or no reason: (a) vote its interests in any Krupp Fund on any issue other than in proportion to the votes of all other interest holders who vote on such issue; (b) in any manner acquire, attempt to acquire, or make a proposal to acquire, directly or indirectly, more than a 25% interest in any Krupp Fund; (c) propose, or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation or other similar transaction involving any Krupp Fund; (d) form, join or otherwise participate in a "group" within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended, with respect to any voting securities of a Krupp Fund; 2 (e) make or participate in any way, directly or indirectly, in any solicitation of "proxies" or "consents" (as such terms are used in the proxy rules of the Securities and Exchange Commission) to vote, or seek to advise or influence any person with respect to the voting of any voting securities of any Krupp Fund. (f) sell, transfer or assign any interests in any Krupp Fund to any person or entity not bound by the terms and conditions of this Agreement; (g) disclose any intention, plan or arrangement inconsistent with the terms of this Agreement; (h) loan money to, advise, assist or encourage any person in connection with any of the actions restricted or prohibited by this Agreement. 5. USE OF LISTS, PROHIBITION ON FURNISHING TO OTHERS: Any investor list obtained by Liquidity or Liquidity Affiliates relative to any Krupp Fund will be utilized only for the purpose of contacting investors to inquire as to whether they wish to sell their units in such Krupp Fund to a Liquidity Fund, and for no other purpose. The lists will not be furnished by Liquidity or Liquidity Affiliates to any other person or entity. 6. THIRD PARTIES: If at any time Liquidity or Liquidity Affiliates is approached or contacted by any third party concerning participation in a transaction involving the assets, businesses or securities of any Krupp Fund or involving any of the actions proscribed by Section 4 hereof or otherwise by this Agreement, Liquidity or Liquidity Affiliates, as the case may be, will immediately notify such party of its inability to participate in such a transaction and its obligation to notify Krupp and will thereafter promptly (and in any event, within five (5) business days) notify Krupp of the nature of such contact and the parties thereto. Krupp will indemnify, defend and hold harmless Liquidity and the Liquidity Affiliates from and against any and all claims, demands or liabilities that may arise as a result of Liquidity's or any Liquidity Affiliates' strict compliance with the terms of this paragraph. 7. COMPLIANCE WITH SECURITIES AND OTHER LAWS: Liquidity and Liquidity Affiliates acknowledge their obligations under the Securities Laws and Rules of the Securities and Exchange Commission. 8. PROVISION OF COPIES OF ALL COMMUNICATIONS: Liquidity and Liquidity Affiliates covenant and agree that they shall deliver to Krupp at least five (5) business days before mailing or otherwise distributing to investors in any Krupp Fund any communication to be given to one or more investors in any Krupp Fund. 3 9. FIDUCIARY DUTIES OF KRUPP; SAFE HARBOR PROVISION, PROTECTION OF PARTNERSHIP STATUS: Liquidity acknowledges that: (a) Krupp and its affiliates have significant fiduciary obligations to the investors in the Krupp Funds, and has stated that it is entering into this Agreement to, among other things, fulfill those fiduciary obligations; (b) Krupp may need to take certain further action to meet its fiduciary obligations, including, without limitation, suspending the acceptance of transfer paperwork in one or more Krupp Funds to avoid the termination of such Krupp Fund's status as a partnership under the Internal Revenue Code of 1986 (the "Code"), as amended; avoid the treatment of such Krupp Fund as a Publicly Traded Partnership under the Code; or cause the Krupp Fund to fall outside any so-called "Safe Harbor" provision relating to taxation or tax status, including provisions relating to Publicly Traded Partnerships; and (c) That the suspension of the acceptance of transfer paperwork by Krupp would mean that notwithstanding the presentment of valid transfer paperwork and the terms of this Agreement, transfers requested by Liquidity or a Liquidity Affiliate would not be processed nor reflected on the books and records of the Krupp Fund. Nothing herein shall be construed, however, as an acknowledgment or agreement by Liquidity that Krupp has the right under any particular circumstances to suspend the acceptance of transfer paperwork, or as a waiver of any future claims of Liquidity arising out of any such suspension or other similar action. 10. RELEASE: FOR AND IN CONSIDERATION OF THE AGREEMENTS HEREIN MADE, LIQUIDITY, INDIVIDUALLY AND ON BEHALF OF THE LIQUIDITY AFFILIATES, DOES HEREBY REMISE, RELEASE AND ACQUIT KRUPP AND ALL OF ITS PARTNERS, OFFICERS, DIRECTORS, AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS AND EACH OF THEIR PARTNERS, OFFICERS, DIRECTORS, AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, COSTS, EXPENSES, ACTIONS AND CAUSES OF ACTION WHICH LIQUIDITY AND THE LIQUIDITY AFFILIATES (INCLUDING THEIR PARTNERS, OFFICERS, DIRECTORS, AFFILIATES, SUCCESSORS AND ASSIGNS AND ALL OF THEIR PARTNERS, OFFICERS, DIRECTORS, AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS) HAD IN THE PAST, NOW HAS, OR MAY IN THE FUTURE ACQUIRE, ARISING FROM OR RELATED TO THE FAILURE OR REFUSAL OF KRUPP TO PRODUCE AN INVESTOR LIST OF ANY KRUPP FUND, EXCEPT FOR SUCH A FAILURE OR REFUSAL IN VIOLATION OF THE PROVISIONS OF THIS AGREEMENT. 11. NOTICES: Any and all notices required or permitted hereunder shall be in writing and shall be deemed given or served, as the case may be, upon actual delivery to the parties at the following addresses: 4 If to Liquidity: Liquidity Financial Group, L.P. 220 Powell Street, Suite 700 Emeryville, California 94608 Attention: Brent Donaldson With a copy to: Roger B. Mead, Esq. Folger & Levin Embarcadero Center West Tower 275 Battery Park, 23rd Floor San Francisco, California 94111 If to Krupp: The Krupp Corporation 470 Atlantic Avenue Boston, Massachusetts 02210 Attention: Laurence Gerber With a copy to: Scott D. Spelfogel, Esq. Vice President and General Counsel The Berkshire Group 470 Atlantic Avenue Boston, Massachusetts 02210 12. NO ADMISSIONS, CONFIDENTIALITY: The parties agree that this Agreement is being entered into solely to settle disputed claims, and nothing herein shall be deemed to constitute an admission of liability on the part of Krupp, all such liability being expressly contested. The parties agree that their discussions prior to entering into this Agreement, the nature, existence and terms of this Agreement, and all matters relating to the dispute and settlement shall be strictly confidential and not disclosed by either party to any individual or entity, not be admissible in court for any purpose. Notwithstanding the foregoing, should either party believe that it must produce this Agreement in response to subpoena or other lawful process, it shall first notify the other party and provide the other party with at least fifteen (15) business days in which to seek to quash or limit any such subpoena or process, before producing this Agreement. To the extent the second party does not have standing to seek to quash or limit the subpoena, the first party shall cooperate in such efforts, provided such cooperation does not result in the incurring of any costs on the part of said first party. 13. ENFORCEMENT: The parties agree that each shall be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach of the provisions of this Agreement, in addition to all other remedies available at law or in equity. In the event either party must refer this Agreement to an attorney for enforcement, the prevailing party shall be entitled to all costs of enforcement, including attorney's fees. 5 14. GOVERNING LAW; VENUE AND JURISDICTION: This Agreement shall be governed by the laws of the Commonwealth of Massachusetts without regard to principles of conflict of law thereof. The parties agree that the Federal and state courts located within the Commonwealth of Massachusetts shall have exclusive jurisdiction over disputes arising hereunder, and the parties hereby consent to such venue and submit to the jurisdiction of such courts. 15. CAPTIONS: Captions and section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 16. AMENDMENTS: This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto. 17. SEVERABILITY: In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the date first above written. LIQUIDITY FINANCIAL GROUP, L.P. By: Liquidity Financial Corporation, its general partner By: S/Brent Donaldson ---------------------------- Brent Donaldson President THE KRUPP CORPORATION By: S/Laurence Gerber ---------------------------- Laurence Gerber President 6 EX-8 9 FIRST AMENDMENT TO SETTLEMENT AGMT. AND RELEASE Exhibit 8 FIRST AMENDMENT TO SETTLEMENT AGREEMENT AND RELEASE This First Amendment to Settlement Agreement and Release (this "Amendment") is made and entered into as of the 8th day of October, 1996, by and between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 022210, and Liquidity Financial Group, L.P. ("Liquidity") individually and on behalf of certain Affiliates as defined in the Agreement (as hereinafter defined), a California limited partnership with a principal place of business at 2200 Powell Street, Suite 700, Emeryville, California 94608. WITNESSETH: WHEREAS, the parties entered into a Settlement Agreement and Release dated the 27th day of June, 1996 (the "Agreement") and desire to amend the Agreement to eliminate a possible ambiguity, as hereinafter set forth. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 4(d) of the Agreement shall be and hereby is amended by adding, at the end of said section following the semicolon, the following clause: provided, however, that Liquidity and Liquidity Affiliates shall not be deemed to be acting in a "group" in violation of this Section 4(d) solely by virtue of their voting their interests in compliance with Section 4(a) of this Agreement; 2. Except as expressly set forth above, the Agreement shall remain in full force and effect without amendment or modification. IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the date first above written. LIQUIDITY FINANCIAL GROUP, L.P. THE KRUPP CORPORATION By: Liquidity Financial Corporation, its general partner By: s/Brent Donaldson By: s/Laurence Gerber ------------------------ ------------------------ Brent Donaldson Laurence Gerber President President EX-9 10 SECOND AMENDMENT TO SETTLEMENT AGMT. AND RELEASE Exhibit 9 SECOND AMENDMENT TO SETTLEMENT AGREEMENT AND RELEASE This Second Amendment to Settlement Agreement and Release (this "Amendment") is made and entered into as of the 6th day of January 1997, by and between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Liquidity Financial Group, L.P. ("Liquidity") individually and on behalf of certain Affiliates as defined in the Agreement (as hereinafter defined), a California limited partnership with a principal place of business at 2200 Powell Street, Suite 700, Emeryville, California 94608. WITNESSETH: WHEREAS, the parties entered into a Settlement Agreement and Release, dated the 27th day of June, 1996, as amended as of October 8, 1996 (as amended, the "Agreement"), and now desire to the amend the Agreement, to eliminate a possible ambiguity and to facilitate the contemplated transactions described below, as hereinafter set forth; WHEREAS, Krescent Partners L.L.C. (i) retained Liquidity Financial Advisors, Inc., an affiliate of Liquidity, as its financial advisor, (ii) agreed to become bound by the terms of the Agreement, and (iii) commenced tender offers (the "Krescent Tender Offers") for units of Investor Limited Partnership Interests of the real estate limited partnerships listed on Schedule I attached hereto (the "Scheduled Partnerships"); WHEREAS, American Holdings I, L.P. ("AHI") desires to participate in the Krescent Tender Offers and, therefore, has agreed to become bound by the terms of the Agreement with respect to the Scheduled Partnerships; and WHEREAS, Krupp has consented to the participation of AHI in the Krescent Tender Offers upon AHI's agreement to be bound by the terms of the Agreement with respect to the Scheduled Partnerships; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 4(d) of the Agreement is hereby amended and restated in its entirety as follows: (d) form, join or otherwise participate in a "group" within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended, with respect to any voting securities of a Krupp Fund, unless each member of such group agrees in writing to be bound by the terms of this 2 Agreement; provided, however, that Liquidity and Liquidity Affiliates shall not be deemed to be acting in a "group" in violation of this Section 4(d) solely by virtue of their voting their interests in compliance with Section 4(a) of this Agreement; 2. Krupp hereby agrees that the agreement between Liquidity and AHI, attached hereto as Exhibit A, satisfies the requirements of the amended Section 4(d) of the Agreement, as set forth in Section I of this Amendment. 3. Except as expressly set forth above, the Agreement shall remain in full force and effect without amendment or modification. 4. Liquidity represents that it has not made any statements inconsistent with the terms of the Krescent Tender Offers and hereby agrees to comply with the terms of that certain letter dated December 17, 1996 from Steven L. Lichtenfeld to James Dubin, a copy of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties have executed this Agreement under sea] as of the date first above written. THE KRUPP CORPORATION By: /s/ Laurence Gerber ---------------------------------- Laurence Gerber, President LIQUIDITY FINANCIAL GROUP, L.P. By: Liquidity Financial Corporation, its general partner By: /s/ Brent Donaldson ------------------------------ Brent Donaldson, President 3 SCHEDULE I Krupp Realty Fund, Ltd. - III Krupp Realty Limited Partnership - V Krupp Realty Limited Partnership - VII Krupp Cash Plus Limited Partnership 4 Exhibit A ASSUMPTION AGREEMENT (this "Agreement"), dated as of January __, 1997, between Liquidity Financial Group, L.P., a California limited partnership ("LFG"), and American Holdings I, L.P., a Delaware limited partnership ("AHI"). W I T N E S S E T H: WHEREAS, LFG and The Krupp Corporation, a Massachusetts corporation (the "Corporation"), entered into a Letter Agreement, dated as of June 27, 1996 and amended as of October 8, 1996 and January __, 1997 (the "Letter Agreement"), pursuant to which LFG and its Affiliates (as defined therein) agreed to certain restrictions in exchange for current lists (the "Lists") of the names and addresses of the holders of the units of Investor Limited Partnership Interest (or depositary certificates representing such units) (the "Units") in various real estate limited partnerships sponsored and/or managed by The Krupp Corporation, a Massachusetts corporation ("Krupp" ); WHEREAS, Krescent Partners L.L.C. (i) retained Liquidity Financial Advisors, Inc., an affiliate of LFG, as its financial advisor and (ii) used the Lists of the real estate limited partnerships listed on Schedule I attached hereto (the "Scheduled Partnerships") to commence tender offers for Units (the "Krescent Tender Offers"); WHEREAS, AHI desires to participate in the Krescent Tender Offers and, therefore, has agreed to become bound by the terms of the Letter Agreement with respect to the Scheduled Partnerships; and WHEREAS, Longacre Corporation ("Longacre"), an affiliate of AHI, and Krupp are parties to an agreement, dated November 26, 1996 (the "Longacre Standstill Agreement"), pursuant to which Longacre has undertaken (on its own behalf and on behalf of its affiliates, including AHI) certain obligations with respect to the Scheduled Partnerships and certain other real estate limited partnerships sponsored by Krupp and, concurrently with the execution and delivery hereof, Longacre and Krupp have executed and delivered an amendment to the Longacre Standstill Agreement (the "Amendment") to delete the Scheduled Partnerships from the schedule of real estate limited partnerships covered by the Longacre Standstill Agreement; NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AHI agrees as follows: 5 1. With respect to the Scheduled Partnerships, from and after the date hereof AHI hereby agrees to become bound by the Letter Agreement to the extent LFG is so bound as if AHI had executed the Letter Agreement on the date hereof, provided, however, AHI shall only have liability with respect to its actions or inactions under the Letter Agreement and shall not be liable for any breach of any representation, warranty or covenant by LFG or any other party to the Letter Agreement (whether directly or by assumption). 2. AHI shall not be bound by the Letter Agreement to the extent that any of the obligations and liabilities of LFG under the Letter Agreement are expanded, broadened, increased or enlarged. 3. Nothing contained herein shall require AHI to pay, perform or discharge any liabilities or obligations expressly assumed hereunder so long as AHI shall in good faith contest or cause to be contested the amount or validity thereof. 4. AHI represents that it has not made any statements inconsistent with the terms of the Krescent Tender Offers and hereby agrees to comply with the terms of that certain letter dated December 17, 1996 from Steven L. Lichtenfeld to James Dubin, a copy of which is attached hereto. 6 IN WITNESS WHEREOF, LFG and AHI have caused this Agreement to be duly executed as of the date first written above. AMERICAN HOLDINGS I, L.P. By: American Holdings I-GP, Inc. its general partner By: ---------------------------------------- Name: ---------------------------------- Title: ---------------------------------- LIQUIDITY FINANCIAL GROUP, L.P. By: Liquidity Financial Corporation, its general partner By: ---------------------------------------- Name: Brent Donaldson Title: President 7 SCHEDULE I Krupp Realty Fund, Ltd. - III Krupp Realty Limited Partnership - V Krupp Realty Limited Partnership - VII Krupp Cash Plus Limited Partnership Exhibit B BATTLE FOWLER LLP LETTERHEAD December 17, 1996 VIA FACSIMILE James M. Dubin, Esq. Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Re: Krupp Realty Fund, Ltd. - III and Krupp Realty Limited Partnership - V ------------------------------------ Dear Jim: Pursuant to our discussions, I am writing to you on behalf of my client, Krescent Partners L.L.C. and its affiliates, including Apollo Advisors (collectively, the "Purchaser"), in connection with the tender offers (the "Offers") commenced for units of limited partnership interests in the referenced partnerships. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Tender Offer Documents (as defined below). This will confirm that the Purchaser has reconfirmed its instructions to the Herman Group, Inc., the information agent (the "Information Agent") in connection with the Offers, that they are not to make any recommendation or any representation in connection with the Offers that is not consistent with the disclosures made in the Offers to Purchase or in the related Letters of Transmittal dated November 21, 1996, as such documents may be amended from time to time (the "Tender Offer Documents"). In particular, the Information Agent has been instructed that they are not to make any statements (i) regarding any plan by the Purchaser to remove the general partners of the partnerships, or (ii) that are inconsistent with the Purchaser's obligations under the Standstill Agreement, including any statements inconsistent with the Purchaser's agreement that (a) it will not acquire or attempt to acquire more than a 25% interest in the referenced partnerships and (b) it will vote its interests in the Partnerships on an issue only in proportion to the votes of all other interest holders who vote on such issue. Further, the Information Agent has been instructed that it will only make statements with respect to the number of units of limited partnership interest that in fact have been tendered to the Purchaser. The Information Agent has reconfirmed to the Purchaser that they will instruct each and BATTLE FOWLER LLP PAGE 2 James M. Dubin, Esq. December 17, 1996 every person who is involved in soliciting tenders that they are to specifically comply with the instructions provided by the Purchaser, and that they will monitor such persons for this purpose on a continuing basis during the course of the Offer. This will also confirm that the Purchaser and the Information Agent are currently investigating the allegations that certain unauthorized representations may have been made to investors in the referenced partnerships during the past two weeks, including, without limitation, the allegation that an unauthorized representation was made to an investor in Krupp Realty Fund, Ltd.-III on December 12, 1996. In the event you should have any further concerns regarding, the manner in which the solicitation is being conducted, I urge you to contact me immediately. This will confirm further that the Purchaser understands that the agreement by the referenced partnerships to consider the request by affiliates of the Purchaser and American Holding I, L.P. to amend the standstill agreements to which they are subject is specifically conditioned on the Purchaser's and the Information Agent's absolute compliance with the statements and instructions set forth in this letter. Very truly yours, /s/ Steven L. Lichtenfeld Steven L. Lichtenfeld SLL/kl cc: Scott D. Spelfogel, Esq. EX-10 11 AGREEMENT Exhibit 10 AGREEMENT This Agreement (the "Agreement") is made and entered into as of the 26th day of November, 1996, by and between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Longacre Corp. ("Longacre"), a Delaware corporation with a principal place of business at Suite 980, 1 Wall Street, New York, New York, 10005. WITNESSETH: WHEREAS, Longacre is engaged in the business of investing in, among other things, real estate limited partnerships; WHEREAS, Krupp and certain of its Affiliates (as defined in Section 11) sponsored and are engaged in the business of managing, among other things, the funds listed on Schedule I hereto (individually a "Krupp Fund" and collectively, the "Krupp Funds"); WHEREAS, Longacre has sought to obtain from Krupp lists of the investors in certain of the Krupp Funds for the stated purpose of contacting such investors in order to attempt to acquire their units in the Krupp Funds; WHEREAS, Krupp has refused to provide lists of the investors to Longacre, alleging that they are not entitled to obtain such lists; WHEREAS, the parties have conferred through their respective counsel and are desirous of resolving and settling the dispute between them, upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Delivery of Lists: From time to time during the twelve month period commencing on the date hereof and expiring on the first anniversary date of this Agreement, Krupp will, upon written request from Longacre, deliver to Longacre or its designee within 15 business days of receipt of such written request, current or updated lists of investors in any Krupp Fund in which Longacre or an Affiliate of Longacre is a limited partner, unitholder, shareholder or otherwise an equity investor (as the case may be) provided such request includes an undertaking by Longacre to pay the cost of reproducing and delivering such list within ten business days after receipt of such lists. The lists will be sorted alphabetically and delivered in both paper format and on 3.5" IBM compatible computer diskette in ASCII format. 2 2. Payment for Lists: Longacre will pay Krupp $300 for each list provided pursuant to Section 1, representing the estimated cost of reproducing and delivering each such list. 3. Restrictions on Activities: (a) The provisions of this Section 3 shall apply to each Krupp Fund for which an investor list is furnished to Longacre or its designee by Krupp or an Affiliate of Krupp in accordance with the terms and provisions of this Agreement pursuant to a request by Longacre hereunder as well as to each Krupp Fund for which a request is made by Longacre or an Affiliate of Longacre pursuant to Rule 14d-5 of Regulation 14D under the Securities Exchange Act of 1934, as amended, or under any other law, rule or regulation whether such request results in an investor list being furnished to Longacre or an Affiliate of Longacre, or the mailing of materials on behalf of Longacre or an Affiliate of Longacre. For purposes of this Section 3, the date on which materials are last mailed pursuant to said Rule 14d-5 or under any other law, rule or regulation or an investor list for a Krupp Fund is last furnished to Longacre, an Affiliate of Longacre or any of their designees is referred to as the "Trigger Date" applicable to such Krupp Fund; (b) With respect to each Krupp Fund to which this Section 3 applies, without the prior written consent of Krupp, which consent may be granted or withheld in Krupp's sole and exclusive discretion and for any reason, or for no reason, for the applicable period determined in accordance with the provisions of subsection (c) of this Section 3, Longacre will not, and will not permit any of its Affiliates to: (i) in any manner acquire, attempt to acquire, or make a proposal to acquire, directly or indirectly, more that 25% of the voting securities of such Krupp Fund; (ii) vote its interest in such Krupp Fund on any issue other than in proportion to the votes of all other interest holders who vote on such issue; (iii) propose, or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation or other similar transaction involving such Krupp Fund; (iv) form, join or otherwise participate in a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, with respect to any voting securities of such Krupp Fund, unless each member of such group agrees in writing to be bound by all of the terms of this Agreement applicable to such Krupp Fund; PROVIDED, HOWEVER, that Longacre and its Affiliates shall not be deemed to be acting in a "group" in violation of this Section 3(b)(iv) solely by virtue of their voting their interest in compliance with Section 3(b)(ii) of this Agreement; 3 (v) make or participate in any way, directly or indirectly, in any solicitation of "proxies" or "consents" (as such terms are used in the proxy rules of the Securities and Exchange Commission) to vote, or seek to advise or influence any person with respect to the voting of any voting securities of such Krupp Fund; (vi) sell, transfer or assign any interests in such Krupp Fund to any person or entity other than an Affiliate of Longacre, unless such person or entity agrees in writing to be bound by all of the terms of this Agreement applicable to such Krupp Fund as if all such interests were still owned by Longacre; (vii) disclose any intention, plan or arrangement relating to such Krupp Fund which is inconsistent with the terms of this Agreement; or (viii) loan money to, advise, assist or encourage any person in connection with any of the actions restricted or prohibited by this Agreement with respect to such Krupp Fund; (c) With respect to each Krupp Fund to which this Section 3 applies, Section 3(b)(i) through Section 3(b)(viii), inclusive, will apply to Longacre and its Affiliates for the period commencing on the Trigger Date applicable to such Krupp Fund and terminating 30 months after such Trigger Date. (d) Notwithstanding the provisions of Section 3(b)(vi), nothing in this Agreements shall prohibit Longacre or its Affiliates from selling, transferring or assigning, during any consecutive six-month period, an amount of voting securities or other interest in any Krupp Fund which does not exceed two percent of the outstanding voting securities or other interest in any such Krupp Fund, PROVIDED that the purpose of such sales, transfers or assignments is not to evade or circumvent the general intent of this Agreement and provided further that such sales, transfers or assignments do not have the effect of evading or circumventing the general intent of this Agreement. 4. Use of Lists, Prohibition on Furnishing to Others: Any investor list obtained by Longacre or any Affiliate of Longacre relative to any Krupp Fund will be utilized only for the purpose of contacting investors to inquire as to whether they wish to sell their units in such Krupp Fund to Longacre or any Affiliate of Longacre, and for no other purpose. The lists will not be furnished by Longacre or any Affiliate of Longacre to any other person or entity (other than agents and representatives of and advisors to Longacre and its Affiliates) without the consent of Krupp. 5. Third Parties: If at any time Longacre or any Affiliate of Longacre is approached or contacted by any third party concerning participation in a transaction involving the assets, businesses or securities of any Krupp Fund or involving any of the actions proscribed by Section 3 hereof or otherwise by this Agreement, Longacre will immediately notify such third party of its inability to participate in such a 4 transaction and its obligation to notify Krupp and will thereafter promptly (and in any event, within five business days) notify Krupp of the nature of such contact and the party or parties making the same. Krupp will indemnify, defend and hold harmless Longacre and Longacre's Affiliates from and against any and all claims, demands or liabilities that may arise as a result of Longacre's strict compliance with the terms of this Section 5. 6. Compliance with Securities Laws: Longacre acknowledges its obligations under the securities laws and the Rules of the Securities and Exchange Commission. 7. Provision of Copies of All Communications: Longacre covenants and agrees that it will deliver to Krupp, at least five business days before mailing or otherwise disseminating to investors in any Krupp Fund any communication to be given to one or more investors in any Krupp Fund by or on behalf of Longacre or any Affiliate of Longacre. 8. Fiduciary Duties of Krupp; Safe Harbor Provision, Protection of Partnership Status: Longacre acknowledges that: (a) Krupp and its Affiliates have significant fiduciary obligations to the investors in the Krupp Funds, and has stated that it is entering into this Agreement, among other reasons, to fulfill those fiduciary obligations; (b) Krupp and its Affiliates may need to take certain further action to meet its fiduciary obligations, including, without limitation, suspending the acceptance of transfer paperwork in one or more Krupp Funds in order to (i) avoid the termination of such Krupp Fund's status as a partnership under the Internal Revenue Code of 1986, as amended (the "Code"); (ii) avoid the treatment of such Krupp Fund as a "publicly traded partnership" under the Code; or (iii) prevent such Krupp Fund from falling outside any so-called "safe harbor" provision relating to taxation or tax status, including provisions relating to publicly traded partnerships; and (c) The suspension of the acceptance of transfer paperwork by Krupp or its Affiliates would mean that notwithstanding the presentment of valid transfer paperwork and the terms of this Agreement, transfers requested by Longacre or an Affiliate of Longacre would not be processed or reflected on the books and records of the applicable Krupp Fund. PROVIDED, HOWEVER, that nothing herein shall be construed, as an acknowledgment or agreement by Longacre that Krupp or any Affiliate of Krupp has the right under any particular circumstances to suspend the acceptance of transfer paperwork, or as a waiver of any future claims of Longacre or any Affiliate of Longacre arising out of any such suspension or other similar action. 5 9. RELEASE: FOR AND IN CONSIDERATION OF THE AGREEMENTS HEREIN MADE, LONGACRE DOES HEREBY REMISE, RELEASE AND ACQUIT KRUPP AND ALL OF ITS AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS AND EACH OF THE RESPECTIVE AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS OF THE FOREGOING FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, COSTS, EXPENSES, ACTIONS AND CAUSES OF ACTION WHICH LONGACRE OR ANY AFFILIATE OF LONGACRE (INCLUDING THEIR RESPECTIVE AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS) HAD IN THE PAST, NOW HAS, OR MAY IN THE FUTURE HAVE ARISING FROM OR RELATED TO THE FAILURE OR REFUSAL OF KRUPP TO PRODUCE AN INVESTOR LIST OF ANY KRUPP FUND, EXCEPT FOR SUCH A FAILURE OR REFUSAL IN VIOLATION OF THE PROVISIONS OF THIS AGREEMENT. 10. Notices: Any and all notices required or permitted hereunder shall be in writing and shall be deemed given or served, as the case may be, upon actual delivery to the parties at the following addresses: If to Longacre: Longacre Corp. 1 Wall Street New York, New York 10005 Attention: Ed Mattner with a copy to: Jeffrey P. Cohen, Esq. Rogers & Wells 200 Park Avenue New York, New York 10166 If to Krupp: The Krupp Corporation 470 Atlantic Avenue Boston, Massachusetts 02210 Attention: Laurence Gerber with a copy to: Scott D. Spelfogel, Esq. Vice President and General Counsel The Berkshire Group 470 Atlantic Avenue Boston, Massachusetts 02210 11. Affiliates: For purposes of this Agreement, the term "Affiliate" shall mean with respect to any person or entity, (i) any other person or entity which controls, is controlled by or is under control with such person or entity (ii) the officers, directors and partners of such entity, and (iii) the immediate family members of such person or of any person described in clause (i) or (ii). 6 12. No Admissions; Confidentiality: The parties agree that this Agreement is being entered into solely to settle a dispute between them, and nothing herein shall be deemed to constitute an admission of liability on the part of Krupp, all such liability being expressly contested. All requests for investor lists made under this Agreement, and the furnishing of such lists, shall be kept strictly confidential by the parties hereto, except to the extent that disclosure of any such request or the furnishing of any such list is required by applicable law or regulation or by court order. 13. Enforcement: The parties agree that each shall be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach of the provisions of this Agreement, in addition to all other remedies available at law or in equity. In the event either party must refer this agreement to an attorney for enforcement the prevailing party shall be entitled to all costs of enforcement, including attorneys' fees. 14. Governing Law; Venue and Jurisdiction: This Agreement shall be governed by the laws of the Commonwealth of Massachusetts without regard to principles of conflict of law thereof. The parties agree that the federal and state courts located within the Commonwealth of Massachusetts shall have exclusive jurisdiction over disputes arising hereunder, and the parties hereby consent to such venue and submit to the jurisdiction of such courts. 15. Captions: Captions and section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 16. Amendments: This Agreement may be amended, changed, modified, altered or terminated only by a written instrument or written instruments signed by all of the parties hereto. 17. Severability: In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 18. Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7 IN WITNESS WHEREOF, each of the parties hereto, intending to be legally bound, has caused this Agreement to be duly executed on its behalf as of the date first above written. LONGACRE CORP. By: /s/ Ed Mattner ------------------------------ Ed Mattner President THE KRUPP CORPORATION By: /s/ Laurence Gerber ---------------------------- Laurence Gerber President 8 SCHEDULE 1 Krupp Cash Plus Limited Partnership Krupp Cash Plus-II Limited Partnership Krupp Cash Plus-V Limited Partnership Krupp Insured Plus Limited Partnership Krupp Insured Plus-II Limited Partnership Krupp Insured Plus-III Limited Partnership Krupp Insured Mortgage Limited Partnership Krupp Government Income Trust Krupp Government Income Trust II Krupp Associates 1980-1 Krupp Realty Fund, LTD-III Krupp Realty Limited Partnership-IV Krupp Realty Limited Partnership-V Krupp Realty Limited Partnership-VII Krupp Institutional Mortgage Fund Limited Partnership Woodlake/Tanglewood Associates Limited Partnership Maryland Associates Limited Partnership Turtle Creek Associates Limited Partnership Mitchell Village Associates Limited Partnership Tracewood Associates Limited Partnership EX-11 12 FIRST AMENDMENT TO AGREEMENT Exhibit 11 LONGACRE CORP. Suite 980 1 Wall Street Court New York, New York 10005 January 8, 1997 The Krupp Corporation 470 Atlantic Avenue Boston, Massachusetts 02210 Re: Amendment to Standstill Agreement --------------------------------- Ladies and Gentlemen: We refer to the Agreement, dated as of November 26, 1996 (the "Standstill Agreement"), between Longacre Corp., a Delaware corporation ("Longacre"), and The Krupp Corporation, a Massachusetts corporation ("Krupp"). As you know, Longacre's affiliate, American Holdings I, L.P., a Delaware limited partnership ("AHI"), proposes to enter into agreements (the "Krescent Agreements") with Krescent Partners, L.L.C. ("Krescent") pursuant to which AHI will participate in certain tender offers being made or proposed to be made by Krescent with respect to units of investor limited partnership interest of the following limited partnerships (collectively, the "Krescent Partnerships"): Krupp Realty Limited Partnership--V Krupp Cash Plus Limited Partnership Krupp Realty Fund, Ltd. - III Krupp Realty Limited Partnership--VII In connection with the execution and delivery of the Krescent Agreements, AHI has terminated offers to purchase up to 4.9% of the outstanding units of investor limited partnership interest of Krupp Realty Limited Partnership--V, Krupp Realty Fund, Ltd.--III and Krupp Realty Limited Partnership--VII. Concurrently herewith, AHI will enter into an Assumption Agreement, dated as of the date hereof (the "Assumption Agreement"), with Liquidity Financial Group, L.P., a California limited partnership ("LFG"), pursuant to which AHI will agree, subject to the terms and conditions set forth therein, to become bound by the Letter Agreement (as defined in the Assumption Agreement) to the extent that LFG is so bound, with respect to each of the Krescent Partnerships. A copy of the Assumption Agreement is annexed hereto as Exhibit A. 2 Inasmuch as AHI has assumed obligations with respect to the Krescent Partnerships under the Assumption Agreement that are substantially similar to the obligations with respect to those Partnerships set forth in the Standstill Agreement and in order to avoid confusion, Longacre and Krupp hereby agree to amend the Standstill Agreement to delete the Krescent Partnerships from the list of Krupp Funds (as defined in the Standstill Agreement) set forth on Schedule I thereto. Accordingly, from and after the date hereof, the obligations of Longacre and its affiliates with respect to the Krescent Partnerships will be governed solely by the Letter Agreement, to the extent assumed by AHI pursuant to the Assumption Agreement. The Standstill Agreement, as hereby amended, will continue in full force and effect in accordance with its terms. If the foregoing correctly sets forth our understanding, please so indicate by signing the enclosed copy of this letter in the space indicated below and returning it to the undersigned, whereupon it will constitute a binding agreement between us. Very truly yours, LONGACRE CORP. By: /s/ Edward Mattner ---------------------- Edward Mattner, President ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: THE KRUPP CORPORATION By: /s/ Laurence Gerber ----------------------- Laurence Gerber President 3 EXHIBIT A ASSUMPTION AGREEMENT (this "Agreement"), dated as of December , 1996, between Liquidity Financial Group, L.P., a California limited partnership ("LFG"), and American Holdings I., L.P., a Delaware limited partnership ("AHI"). W I T N E S S E T H: WHEREAS, LFG and The Krupp Corporation, a Massachusetts corporation (the "Corporation"), entered into a Letter Agreement, dated as of June 27, 1996 and amended as of October 8, 1996 and December , 1996 (the "Letter Agreement"), pursuant to which LFG and its Affiliates (as defined therein) agreed to certain restrictions in exchange for current lists (the "Lists") of the names and addresses of the holders of the units of Investor Limited Partnership Interest (or depositary certificates representing such units) (the "Units") in various real estate limited partnerships sponsored and/or managed by The Krupp Corporation, a Massachusetts corporation; WHEREAS, Krescent Partners (i) retained Liquidity Financial Advisors, Inc., an affiliate of LFG, as its financial advisor and (ii) used the Lists of the real estate limited partnerships listed on Schedule I attached hereto to commence tender offers for Units (the "Krescent Tender Offers"); and WHEREAS, AHI desires to participate in the Krescent Tender Offers and, therefore, has agreed to become bound by the terms of the Letter Agreement with respect to the real estate limited partnership listed on Schedule I attached hereto; NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AHI agrees as follows: 1. With respect to the real estate limited partnerships listed on Schedule I attached hereto, AHI hereby agrees to become bound by the Letter Agreement to the extent LFG is so bound as if AHI had executed the Letter Agreement as of June 27, 1996, and amended as of October 8, 1996 and December , 1996; provided, however, AHI shall only have liability with respect to its actions or inactions under the Letter Agreement and shall not be liable for any breach of any representation, warranty or covenant by LFG or any other party to the Letter Agreement. 4 2. AHI shall not be bound by the Letter Agreement to the extent that any of the obligations and liabilities of LFG under the Letter Agreement are expanded, broadened, increased or enlarged. 3. Nothing contained herein shall require AHI to pay, perform or discharge any liabilities or obligations expressly assumed hereunder so long as AHI shall in good faith contest or cause to be contested the amount or validity thereof. IN WITNESS WHEREOF, LFG and AHI have caused this agreement to be duly executed as of the date first written above. AMERICAN HOLDINGS I, L.P. By: American Holdings I-GP, Inc. its general partner By: --------------------------------------- Name: --------------------------------- Title: --------------------------------- LIQUIDITY FINANCIAL GROUP, L.P. By: Liquidity Financial Corporation, its general partner By: --------------------------------------- Name: Brent Donaldson Title: President 5 SCHEDULE I Krupp Realty Fund, Ltd. - III Krupp Realty Limited Partnership - V Krupp Realty Limited Partnership - VII Krupp Cash Plus Limited Partnership -----END PRIVACY-ENHANCED MESSAGE-----