<PAGE>
EXHIBIT 10.6
FOURTH AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT (the "Fourth Amendment") is made and entered
into
on the 10th day of July, 2002, by and among the undersigned
parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited
Partnership (the "Partnership") exists pursuant to that certain
Second Amended
and Restated Agreement of Limited Partnership of GGP Limited
Partnership dated
as of April 1, 1998, as amended by that certain First Amendment
thereto dated as
of June 10, 1998, that certain Second Amendment thereto dated as of
June 29,
1998, that certain Third Amendment thereto dated as of February 15,
2002 and
that certain Amendment dated as of April 24, 2002 (such Second
Amended and
Restated Agreement of Limited Partnership, as so amended, the
"Second Restated
Partnership Agreement"), and the Delaware Revised Uniform Limited
Partnership
Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation,
is
the general partner of the Partnership (the "General Partner");
WHEREAS, upon the closing of the transactions contemplated pursuant
to
that certain Agreement and Plan of Merger dated as of March 3,
2002, among the
Partnership, the General Partner and the other parties thereto (the
"Merger
Agreement"), the parties who are designated as "New Limited
Partners" on the
signature pages hereto (collectively, the "New Limited Partners")
are to receive
Series B Preferred Units (as defined below); and
WHEREAS, the parties hereto, being the sole general partner of
the
Partnership, the holders of a Majority-in-Interest of the Common
Units (as
defined in the Second Restated Partnership Agreement) and the New
Limited
Partners, desire to amend the Second Restated Partnership Agreement
to effect
the creation and issuance of the Series B Preferred Units, to
reflect the
issuance of additional Common Units to the General Partner and a
certain
transfer of Common Units and to reflect certain other
understandings among them
as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements
herein contained and for other good and valuable consideration, the
receipt and
sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree
as follows:
1.
CAPITALIZED TERMS. Capitalized terms used but not defined
herein
(including without limitation in attached Schedule A) shall have
the definitions
assigned to such terms in the Second Restated Partnership
Agreement, as amended
hereby.
2.
ADDITIONAL DEFINITIONS. Section 1.1 of the Second Restated
Partnership Agreement is hereby amended by inserting the following
new
definitions:
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"Aggregate Protected Amount" shall mean, with respect to the
Obligated Partners, as a group, the aggregate amount of the
Protected
Amounts, if any, of the Obligated Partners, as determined on the
date
in question.
"Indirect Owner" shall mean, in the case of an Obligated
Partner
that is an entity that is classified as a partnership or
disregarded
entity for federal income tax purposes, any person owning an
equity
interest in such Obligated Partner, and, in the case of any
Indirect
Owner that itself is an entity that is classified as a partnership
or
disregarded entity for federal income tax purposes, any person
owning
an equity interest in such entity.
"Obligated Partner" shall mean that or those Limited Partners
listed as Obligated Partners on Exhibit D attached hereto and made
a
part hereof, as such Exhibit may be amended from time to time by
the
General Partner, whether by express amendment to this Agreement or
by
execution of a written instrument by and between any additional
Obligated Partner being directly affected thereby and the
General
Partner acting on behalf of the Partnership and without the
prior
consent of the Limited Partners (other than the Obligated
Partners
being affected thereby).
"Partner Nonrecourse Debt" shall mean a liability as defined in
Regulations
Section 1.704-2(b)(4).
"Protected Amount" shall mean, with respect to any Obligated
Partner, the amount set forth opposite the name of such
Obligated
Partner on Exhibit D hereto and made a part hereof, as such Exhibit
may
be amended from time to time by an amendment to the Partnership
Agreement or by execution of a written instrument by and between
any
Obligated Partners being affected thereby and the General
Partner,
acting on behalf of the Partnership and without the prior consent
of
the Limited Partners (other than the Obligated Partners being
affected
thereby); provided, however, that, in the case of an Obligated
Partner
that is an entity that is classified as a partnership or
disregarded
entity for federal income tax purposes, upon the date nine months
after
the death of any Indirect Owner in such Obligated Partner, or upon
a
fully taxable sale or exchange of all of an Indirect Owner's
equity
interest in such Obligated Partner (i.e., a sale or exchange in
which
the transferee's basis in the Indirect Owner's equity interest in
the
Obligated Partner is not determined, in whole or in part, by
reference
to the Indirect Owner's basis in the Obligated Partner), the
Protected
Amount of such Obligated Partner shall be reduced to the extent of
the
Indirect Owner's allocable share of the Obligated Partner's
Protected
Amount. The principles of the preceding sentence shall apply in
the
same manner in the case of any Indirect Owner that itself is an
entity
that is classified as a partnership or disregarded entity for
federal
income tax purposes.
"Recourse Liabilities" shall mean, as of the date of
determination, the amount of indebtedness of the Partnership on
that
date other than Nonrecourse Liabilities and Partner Nonrecourse
Debt.
3.
ESTABLISHMENT AND ISSUANCE OF SERIES B PREFERRED UNITS. A new
series of Preferred Units designated as the "8.5% Series B
Cumulative
Convertible Preferred Units" (the
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"Series B Preferred Units") is hereby established and shall have
such rights,
preferences, limitations and qualifications as are described on
Schedule A,
attached hereto and by this reference made a part hereof (in
addition to the
rights, preferences, limitations and qualifications contained in
the Second
Restated Partnership Agreement to the extent applicable). Pursuant
to the Merger
Agreement, the Partnership hereby issues to each New Limited
Partner the number
of Series B Preferred Units set forth opposite its name on Exhibit
A, attached
hereto and by this reference made a part hereof. Each New Limited
Partner is
hereby admitted as a Limited Partner in respect of the Series B
Preferred Units
issued to it, and such New Limited Partner hereby agrees to be
bound by the
provisions of the Second Restated Partnership Agreement, as the
same is amended
hereby and as the same may be amended from time to time, with
respect to such
Series B Preferred Units (including without limitation the
provisions of
Sections 8.2, 8.4, 9.1, 9.2 and 9.3 thereof).
4.
NEGATIVE CAPITAL ACCOUNTS. The following new Section 7.8 is
hereby added to the Second Restated Partnership Agreement:
"7.8 NEGATIVE CAPITAL ACCOUNTS.
(a) Except as provided in the next sentence and Section 7.8(b),
no Partner shall be liable to the Partnership or to any other
partner
for any deficit or negative balance which may exist in its
Capital
Account. Upon liquidation of any Obligated Partner's interest in
the
Partnership, whether pursuant to a liquidation of the Partnership
or by
means of a distribution to the Obligated Partner by the
Partnership, if
such Obligated Partner has a deficit balance in its Capital
Account,
after giving effect to all contributions, distributions,
allocations
and adjustments to Capital Accounts for all periods, each such
Obligated Partner shall contribute to the capital of the
Partnership an
amount equal to its respective deficit balance. Each Obligated
Partner
having such an obligation to restore a deficit Capital Account
shall
satisfy such obligation by the end of the fiscal year of
liquidation
(or, if later, within ninety (90) days following the liquidation
and
dissolution of the Partnership). Any such contribution by an
Obligated
Partner shall be used to make payments to creditors of the
Partnership
and such Obligated Partners (i) shall not be subrogated to the
rights
of any such creditor against the General Partner, the
Partnership,
another Partner, or any Person related thereto, and (ii) hereby
waive
any right to reimbursement, contribution or similar right to which
such
Obligated Partners might otherwise be entitled as a result of
the
performance of their obligations under this Agreement.
(b) Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon
the
earlier of (i) nine months after the death of such Obligated
Partner or
(ii) six months after (A) any date after the third anniversary date
of
the date hereof which is selected by the Obligated Partner as the
date
upon which such Obligated Partner's obligation hereunder shall
terminate (and for which notice of such date shall be given at
least 60
days prior to such selected date) or (B) an exchange of all of
such
Obligated Partner's remaining Units for shares of Common Stock
or
preferred stock of the General Partner (pursuant to a Rights
Agreement)
or in an otherwise taxable sale or exchange of all of such
Obligated
Partner's Units provided that at the time of, or during such
six-month
period following such event set forth in (ii)(A)
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or (B), there has not been: (X) an entry of a decree or order
for
relief in respect of the Partnership by a court having
jurisdiction
over a substantial part of the Partnership's assets, or the
appointment
of a receiver, liquidator, assignee, custodian, trustee,
sequestrator
(or other similar official) of the Partnership or of any
substantial
part of its property, or ordering the winding up or liquidation of
the
Partnership's affairs, in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other
similar
law; or (Y) the commencement against the Partnership of an
involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy,
insolvency or other similar law; or (Z) the commencement by the
Partnership of a voluntary case under the federal bankruptcy laws,
as
now or hereafter constituted, or any other applicable federal or
state
bankruptcy, insolvency or other similar law, or the consent by it
to
the entry of an order for relief in an involuntary case under any
such
law or the consent by it to the appointment of or taking possession
by
a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or
other similar official) of the Partnership or of any substantial
part
of its property, or the making by it of a general assignment for
the
benefit of creditors, or the failure of the Partnership generally
to
pay its debts as such debts become due or the taking of any action
in
furtherance of any of the foregoing. Following the passage of
the
six-month period after the event set forth in clause (ii)(A) or (B)
of
this paragraph,
an Obligated Partner shall cease to be an Obligated
Partner at the first time, if any, that all of the conditions set
forth
in (X) through (Z) above are no longer in existence."
5. NEW
EXHIBIT A. Exhibit A to the Second Restated Partnership
Agreement, identifying the Partners, the number and class or series
of Units
owned by them and their respective Percentage Interests, if any, is
hereby
deleted in its entirety and the Exhibit A in the form attached
hereto is hereby
inserted in its place and stead.
6.
ALLOCATIONS. Exhibit C of the Second Restated Partnership
Agreement, describing the allocations of the Net Income, Net Loss
and/or other
Partnership items, is hereby deleted in its entirety and the
Exhibit C in the
form attached hereto is hereby inserted in its place and stead.
7. OTHER
PROVISIONS UNAFFECTED. Except as expressly amended hereby,
the Second Restated Partnership Agreement shall remain in full
force and effect
in accordance with its terms.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Fourth
Amendment
on the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Joel
Bayer
--------------------------------------------
Joel Bayer, Senior Vice
President
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL
TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By: /s/ Marshall E. Eisenberg
----------------------------------------
Marshall E. Eisenberg, President
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<PAGE>
NEW LIMITED PARTNERS:
GGP LIMITED PARTNERSHIP, a
Delaware limited partnership, as
attorney-in-fact for each of the
following New Limited Partners:
Cache Valley Mall Partnership, Ltd.
Burke Cloward
Alan Cordano
James Cordano
Greg Curtis
Fairfax Holding, LLC
G. Rex Frazier
Michael Frei
Hall Investment Company
Kenneth Hansen
King American Hospital, Ltd.
Florence King
Warren P. King
Paul K. Mendenhall
Tom Mulkey
North Plains Development Company, Ltd.
North Plains Land Company, Ltd.
Carl E. Olson
Martin G. Peterson
Pine Ridge Land Company, Ltd.
Price Fremont Company, Ltd.
Deirdra Price
John Price
Steven Price
Red Cliffs Mall Investment Company
Taycor Ltd.
Jennifer Wallin
Keith Whatcott
Lena Wilcher, as Trustee of the Lena Wilcher
Revocable
Trust
By: GENERAL GROWTH
PROPERTIES, INC.,
a
Delaware corporation, its general partner
By:
/s/ Joel Bayer
-------------------------------------------
Joel Bayer, Executive Vice President
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<PAGE>
EXHIBIT A
PARTNERS
SEE ATTACHED
A-1
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EXHIBIT C
ALLOCATIONS
1.
Allocation of Net Income and Net Loss.
(a) Net Income.
Except as otherwise provided herein, Net Income for
any fiscal year or other applicable period shall be allocated in
the following
order and priority:
(1) First, to the General Partner to the extent the cumulative
Net Loss allocated to the General Partner pursuant to
subparagraph
(b)(5) below exceeds the cumulative Net Income allocated to the
General
Partner pursuant to this subparagraph (a)(1);
(2) Second, to each Partner in proportion to and to the extent
of
the amount by which the cumulative Net Loss allocated to such
Partner
pursuant to subparagraph (b)(4) exceeds the cumulative Net
Income
allocated to such Partner pursuant to this subparagraph (a)(2);
(3) Third, to the General Partner until the cumulative Net
Income
allocated to the General Partner pursuant to this subparagraph
(a)(3)
equals the cumulative Net Loss allocated to the General Partner
pursuant to subparagraph (b)(3);
(4) Fourth, to each holder of Preferred Units to the extent of
and in proportion to the excess of (I) the cumulative amount of
distributions made in respect of such Preferred Units, reduced by
in
the case of the Series B Preferred Units the cumulative Common
Unit
Reallocated Amounts, and increased by in the case of the Series
B
Preferred Units the cumulative Series B Preferred Unit
Reallocated
Amounts, pursuant to
the provisos below, over (II) the cumulative
amount of Net Income allocated to each holder of Preferred
Units
pursuant to this subparagraph (a)(4) and subparagraph (a)(5) for
such
period and all prior periods reduced by the cumulative amount of
Net
Loss allocated to such holder of Preferred Units pursuant to
subparagraph (b)(2) below for all prior periods; provided,
however,
that in the event the cumulative Net Income allocable to the
holders of
the Common Units pursuant to this subparagraph (a)(4) and
subparagraph
(a)(5) below for such period and all prior periods (before
application
of this proviso for such period) exceeds the cumulative
distributions
made
to the holders of Common Units with respect to such Units for
such
period and all prior periods, the Series B Preferred Unit
Reallocated
Amount shall be reallocated pro rata to the holders of Series B
Preferred Units; and
(5) Thereafter, to the holders of Common Units pro rata in
accordance with their Percentage Interests; provided, however, that
in
the event the cumulative distributions made to the holders of
Common
Units with respect to such Units for such period and all prior
periods
exceed the cumulative Net Income allocable to the holders of the
Common
Units pursuant to subparagraph (a)(4) and this subparagraph (a)(5)
for
such period and all prior periods (before application of this
proviso
for such period), the Common Unit Reallocated Amount shall be
reallocated pro rata to the holders of Common Units.
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The term "Common Unit Reallocated Amount" shall mean an amount
equal to
the difference between (I) the amount of Net Income allocable to
the
Series B Preferred Units pursuant to subparagraph (a)(4) with
respect
to such fiscal year or other period, and (II) the product obtained
by
multiplying (A) a fraction, the numerator of which is the number of
the
Common Units into which the Series B Preferred Units are
convertible
and the denominator of which is the sum of the number of Common
Units
into which the Series B Preferred Units are convertible plus the
number
of Common Units and (B) the sum of (i) the Net Income allocable to
the
Series B Preferred Units pursuant to subparagraph (a)(4) with
respect
to such fiscal year or other period and (ii) the Net Income
allocable
to the Common Units pursuant to subparagraph (a)(5) with respect
to
such fiscal year or other period. The Common Unit Reallocated
Amount
shall be calculated based on the amounts of Net Income allocable
under
subparagraphs (a)(4) and (a)(5) prior to the application of the
provisos contained in such subparagraphs with respect to such
fiscal
year or other period.
The term "Series B Preferred Unit Reallocated Amount" shall mean
the
difference between (I) the amount of Net Income allocable to the
Common
Units pursuant to subparagraph (a)(5) with respect to such fiscal
year
or other period, and (II) the product obtained by multiplying (A)
a
fraction, the numerator of which is the number of Common Units and
the
denominator of which is the sum of the number of Common Units
into
which the Series B Preferred Units are convertible plus the number
of
Common Units and (B) the sum of (i) Net Income allocable to the
Series
B Preferred Units pursuant to subparagraph (a)(4) with respect to
such
fiscal year or other period and (ii) the Net Income allocable to
the
Common Units pursuant to this subparagraph (a)(5) with respect to
such
fiscal year or other period; provided, however, that to the extent
the
allocation of the Series B Preferred Unit Reallocated Amount to
the
holders of Series B Preferred Units would cause such holders on
a
cumulative basis to have been allocated Net Income in excess of
distributions, the Series B Preferred Unit Reallocated Amount shall
be
reduced by such excess. The Series B Preferred Unit Reallocated
Amount
shall be calculated based on the amounts of Net Income
allocable
pursuant to subparagraphs (a)(4) and (a)(5) prior to the
application of
the provisos contained in such subparagraphs with respect to
such
fiscal year or other period.
It is the intention of the parties that the application of
subparagraphs (a)(4) and (a)(5) above will result in
corresponding
return of capital distributions (per Unit) to the Series B
Preferred
Units (on an as-converted basis) and Common Units on a cumulative
basis
and shall be applied and interpreted consistently therewith.
(b) Net Loss.
Except as otherwise provided herein, Net Loss of the
Partnership for each fiscal year or other applicable period shall
be allocated
as follows:
(1) First, to the holders of Common Units, in proportion to
their
respective Percentage Interests provided that the Net Loss
allocated to
a holder of Common Units pursuant to this Section (b)(1) shall
not
exceed the maximum amount of Net Loss that can be allocated
without
causing a holder of Common Units to have an Adjusted Capital
Account
Deficit (excluding for this purpose any increase to such
Adjusted
Capital Account Deficit for a holder's actual obligation to fund
a
deficit Capital Account balance,
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including the obligation of an Obligated Partner to fund a
deficit
Capital Account Balance pursuant to Section 7.8 hereof and also
excluding for this purpose the balance of such holder's Capital
Account
attributable to such holder's Preferred Units, if any);
(2) Second, to the holders of Preferred Units in proportion to
each such holder's Capital Account balance in such Preferred
Units,
provided that the Net Loss allocated to a holder of Preferred
Units
pursuant to this Section (b)(1) shall not exceed the maximum amount
of
Net Loss that can be allocated without causing any holder of
Preferred
Units to have an Adjusted Capital Account Deficit (excluding for
this
purpose any increase to such Adjusted Capital Account Deficit for
a
holder's actual obligation to fund a deficit Capital Account
balance,
including the obligation of an Obligated Partner to fund a
deficit
Capital Account Balance pursuant to Section 7.8 hereof);
(3) Third, to the General Partner, until the General Partner's
Adjusted Capital Account Deficit (excluding for this purpose
any
increase to such Adjusted Capital Account Deficit for the
obligation of
the General Partner to actually fund a deficit Capital Account
balance,
including any deemed obligation pursuant to Regulation Section
1.704-(1)(b)(2)(ii)(c)) equals the excess of (i) the amount of
Recourse
Liabilities over (ii) the Aggregate Protected Amount;
(4) Fourth, to the Obligated Partners, in proportion to their
respective Protected Amounts, until such time as the Obligated
Partners
have been allocated an aggregate amount of Net Loss pursuant to
this
subparagraph (b)(4) equal to the Aggregate Protected Amount;
and
(5) Thereafter, to the General Partner.
2.
Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit C,
the
following special allocations shall be made in the following
order:
(a) Minimum Gain
Chargeback (Nonrecourse Liabilities). If there is a
net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except
as a result of conversion or refinancing of Partnership
indebtedness, certain
capital contributions or revaluation of the Partnership property as
further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)),
each Partner
shall be specially allocated items of Partnership income and gain
for such year
(and, if necessary, subsequent years) in an amount equal to that
Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so
allocated
shall be determined in accordance with Regulation Section
1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain
chargeback requirement
in said section of the Regulations and shall be interpreted
consistently
therewith. Allocations pursuant to this paragraph (a) shall be made
in
proportion to the respective amounts required to be allocated to
each Partner
pursuant hereto.
(b) Minimum Gain
Attributable to Partner Nonrecourse Debt. If there
is a net decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt
during any fiscal year (other than due to the conversion,
refinancing or other
change in the debt instrument causing it to become partially or
wholly
nonrecourse, certain capital contributions, or certain revaluations
of
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Partnership property as further outlined in Regulation Section
1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership
income and gain
for such year (and, if necessary, subsequent years) in an amount
equal to that
Partner's share of the net decrease in the Minimum Gain
Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined
in accordance
with Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph
(b) is intended
to comply with the minimum gain chargeback requirement with respect
to Partner
Nonrecourse Debt contained in said section of the Regulations and
shall be
interpreted consistently therewith. Allocations pursuant to this
paragraph (b)
shall be made in proportion to the respective amounts required to
be allocated
to each Partner pursuant hereto.
(c) Qualified
Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such
Limited
Partner has an Adjusted Capital Account Deficit, items of
Partnership income and
gain shall be specially allocated to such Partner in an amount and
manner
sufficient to eliminate the Adjusted Capital Account Deficit as
quickly as
possible. This paragraph (c) is intended to constitute a "qualified
income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted
consistently therewith.
(d) Partner
Nonrecourse Deductions. Partner Nonrecourse Deductions
for any fiscal year or other applicable period shall be specially
allocated to
the Partner that bears the economic risk of loss for the debt
(i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse
Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4)
and (i)(1)).
(e) Allocations
With Respect to Preferred Unit Redemptions. After
giving effect to the special allocations set forth above, Net
Income of the
Partnership shall be allocated to the holders of Preferred Units,
at the time of
redemption of such Preferred Units (other than in the case of a
redemption
occurring pursuant to a final liquidation of the Partnership), in
an amount
equal to the portion of any redemption distribution that exceeds
the Liquidation
Preference Amount (other than any accrued but unpaid distribution
thereon) per
Preferred Unit established for such Preferred Unit in the
applicable Preferred
Unit designation. The character of the items of Net Income
allocated to the
holders of Preferred Units pursuant to this subparagraph (e)
shall
proportionately reflect the relative amounts of the items of
Partnership income
and gain as determined for federal income tax purposes under
Section 703(a) of
the Code.
(f) Tax
Treatment of Conversion of Preferred Units. Upon conversion
of a Preferred Unit(s) into Common Unit(s), the Company will
specially allocate
to the converting Partner any Net Income or Net Loss attributable
to an
adjustment of Gross Asset Values under subparagraph (b) of the
definition of
"Gross Asset Value" until the portion of such Partner's Capital
Account
attributable to each Common Unit received upon conversion equals
the Capital
Account attributable to a Common Unit at the time of conversion. To
the extent
that such allocation is insufficient to bring the portion of the
Capital Account
attributable to each Common Unit received upon conversion by the
converting
Partner to the Capital Account attributable to a Common Unit at the
time of
conversion, a portion of the Capital Account of the non-converting
Partners will
be shifted, pro rata in accordance with their relative Capital
Account balances,
to the converted Partner and such transaction shall be treated by
the
Partnership and the Converting Partner as a transaction defined in
Section 721
of the Code.
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(g) Curative
Allocations. The Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss, and
deduction
among the Partners so that, to the extent possible, the cumulative
net amount of
allocations of Partnership items under paragraphs 1 and 2 of this
Exhibit C
shall be equal to the net amount that would have been allocated to
each Partner
if the Regulatory Allocations had not occurred. This subparagraph
(g) is
intended to minimize to the extent possible and to the extent
necessary any
economic distortions which may result from application of the
Regulatory
Allocations and shall be interpreted in a manner consistent
therewith. For
purposes hereof, "Regulatory Allocations" shall mean the
allocations provided
under subparagraphs 2(a) through (d).
3. Tax
Allocations.
(a) Generally.
Subject to paragraphs (b) and (c) hereof, items of
income, gain, loss, deduction and credit to be allocated for income
tax purposes
(collectively, "Tax Items") shall be allocated among the Partners
on the same
basis as their respective book items.
(b) Sections
1245/1250 Recapture. If any portion of gain from the
sale of property is treated as gain which is ordinary income by
virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then
(A) such
Affected Gain shall be allocated among the Partners in the same
proportion that
the depreciation and amortization deductions giving rise to the
Affected Gain
were allocated and (B) other Tax Items of gain of the same c
