Common use of Allocation of Tax Items Clause in Contracts

Allocation of Tax Items. (a) Except as otherwise provided in the succeeding provisions of this Section 3.3, each Tax Item shall be allocated among the Members in the same manner as each correlative item of Profit or Loss, is allocated pursuant to the provisions of Section 3.1 hereof. (b) The Members hereby acknowledge that all Tax Items in respect of Book/Tax Disparity Property are required to be allocated among the Members in the same manner as under Section 704(c) of the Code (as specified in Sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g) of the Regulations) and that the principles of Section 704(c) of the Code require that such Tax Items must be shared among the Members so as to take account of the variation between the adjusted tax basis and Book Basis of each such Book/Tax Disparity Property. Thus, notwithstanding anything in Section 3.1 or 3.3(a) hereof to the contrary, the Members’ distributive shares of Tax Items in respect of each Book/Tax Disparity Property shall be separately determined and allocated among the Members in accordance with the principles of Section 704(c) of the Code. The method for making all Section 704(c) allocations of the Company with respect to the Initial Capital Contribution shall be mutually agreed upon by the Managing Members, and if the Managing Members cannot mutually agree, then the “traditional method” shall be used. HF agrees to provide Skechers with its adjusted tax basis in the Property (as of the Closing Date) within sixty (60) days after the Closing Date. (c) The Members agree that the contribution by HF of all property relating to the Project (including fee title to the Property and all of right, title and interest in all personal property and all plans, specifications, architectural drawings and renderings, surveys and other collateral material relating to the ownership and development of the Property) to the Company pursuant to Section 4.1.1(b) of the Agreement and the HF Loan made pursuant to Section 6.4 of the Agreement will be treated by the Company and HF on their respective tax returns as follows under the Regulations under Code Section 707: (i) Pursuant to Section 1.707-4(d) of the Regulations, the first payments of principal made under the HF Note are to be treated for all purposes as payments made to HF to reimburse HF for capital expenditures incurred by HF with respect to all property relating to the Project during the two (2) year period preceding the transfer by HF to the Company of such property, subject to the limitation contained in such Regulation that such pre-formation expenditures shall not exceed twenty percent (20%) of the fair market value of such property at the time of contribution (the “20% Limitation”) unless the fair market value of such property does not exceed one hundred twenty percent (120%) of the adjusted basis of such property at the time of contribution (in which case such 20% Limitation shall not apply); (ii) The remainder of the principal payments made under the HF Note shall be treated as payments made with respect to a sale to the Company by HF of a proportionate amount of all property relating to the Project on the date of the contribution of such property to the Company (with the portion of such property that is deemed to have been sold by HF to the Company being determined under the Regulations under Section 707 of the Code); and (iii) As required by Regulations Sections 1.707-3(c)(2) and 1.707-8, the Company shall disclose to the IRS the Company’s treatment of the HF Note payments as pre-formation expenses to the extent described in Section 3.3(c)(i) above.

Allocation of Tax Items. (a) Except as otherwise provided in the succeeding provisions of this Section 3.32.2 hereof, each Tax Item shall be allocated among the Members Partners in the same manner as each correlative item of Profit “book” income, gain, deduction or Loss, loss is allocated pursuant to the provisions of Section 3.1 2.1 hereof. (b) The Members Partners hereby acknowledge that all Tax Items in respect of Book/Tax Disparity Property are required to be allocated among the Members Partners in the same manner as under Section section 704(c) of the Code (as specified in Sections sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g) of the Regulations) and that the principles of Section section 704(c) of the Code require that such Tax Items must be shared among the Members Partners so as to take account of the variation between the adjusted tax basis and Book Basis Gross Asset Value of each such Book/Tax Disparity Property. Thus, notwithstanding anything in Section 3.1 Sections 2.1 or 3.3(a2.2(a) hereof to the contrary, the MembersPartners’ distributive shares of Tax Items in respect of each Book/Tax Disparity Property shall be separately determined and allocated among the Members Partners in accordance with the principles of section 704(c) of the Code. Any elections or decisions relating to allocations under this Section 2.2(b) will be made by the General Partner. For the avoidance of doubt, any tax items attributable to Book/Tax Disparity Property owned by Eclipse Resources shall be allocated among the Partners that takes into account the Partner’s remaining share of built-in gain or built-in loss in accordance with the rules of Section 1.704-3(a)(8) of the Regulations. (c) For purposes of determining the nature (as ordinary or capital) of any item of income, gain or Profits among the Partners for federal income tax purposes pursuant to Section 2.1 hereof, the portion of such profit required to be recognized as ordinary income pursuant to sections 1245 and/or 1250 of the Code shall be deemed to be allocated among the Partners in the manner provided in Section 1.1245-1(e) or Section 1.1250-(f), as applicable. (d) Subject to the other provisions of this Section 2.2, “Tax Gain” shall mean the excess of (i) the amount realized by the Partnership in connection with the disposition of any Partnership property (as determined under section 1001 of the Code) over the (ii) adjusted tax basis of such property at the time of disposition. (e) “Excess nonrecourse liabilities” of the Partnership, within the meaning of section 1.752-3(a)(3), shall be allocated first among the Partners in proportion to and to the extent of the amount of built-in gain that is allocable to each Partner with respect to property under Section 704(c) of the Code (or reverse Section 704(c) allocations (as such term is defined in Section 1.704-3 of the Regulations) to the extent such gain exceeds the gain described in Section 1.752-3(a)(2) of the Regulations with respect to the property and then among the Partners in proportion to their respective Distribution Percentages for the Allocation Year. For this purpose, and in accordance with Section 1.752-4(a) of the Regulations, the liabilities of Eclipse Resources allocated to the Partnership shall be treated as liabilities of the Partnership for purposes of allocating the liabilities among the Partners. (f) All tax credits shall be allocated among the Partners as determined by the General Partner, consistent with applicable laws. (g) Partners shall be bound by the provisions of this Article II in reporting their distributive shares of Partnership items of increase, gain, deduction, loss and credit. (h) Cost and percentage depletion deductions with respect to property the production from which is subject to depletion (herein sometimes called “Depletable Property”) shall be computed separately by the Partners rather than the Partnership. For purposes of such computations, the federal income tax basis of each Depletable Property shall be allocated to each Partner in accordance with such Partner’s Capital Interest Percentage as of the time such Depletable Property is acquired by the Partnership, and shall be reallocated among the Partners in accordance with the Partners’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Book Values of the Partnership’s Depletable Properties pursuant to clause (ii) of the definition of Book Value (or at the time of any material additions to the federal income tax basis of such Depletable Property); provided however, that the federal income tax basis of each Depletable Property owned by Eclipse Resources at the time of the contribution of the Class C Units to the Partnership pursuant to Section 3.1 shall be allocated among the Partners in the same amount and manner that the federal income tax basis was allocated to such Partner immediately prior to the contribution of that Partner’s Class C Units, and for the avoidance of doubt, no reallocation of federal income tax basis of Depletable Property shall be required in connection with the contribution of the Class C Units to the Partnership pursuant to Section 3.1 of the Agreement. Such allocations are intended to be applied in accordance with the “partners’ interests in partnership capital” under Section 613A(c)(7)(D) of the Code; provided that the Partners understand and agree that the General Partner may authorize special allocations of tax basis, income, gain, deduction or loss, as computed for federal income tax purposes, in order to eliminate differences between Simulated Basis and adjusted federal income tax basis with respect to Depletable Properties, in such manner as determined consistent with the principles of Section 704(c) of the Code, the Treasury Regulations thereunder and the portions of the Treasury Regulations under Section 704(b) of the Code that apply the principles of Section 704(c) of the Code. (i) For purposes of the separate computation of gain or loss by each Partner on the taxable Disposition of Depletable Property, the amount realized from such Disposition shall be allocated (i) first, to the Partners in an amount equal to the Simulated Basis in such Depletable Property and in the same proportion as their shares thereof were allocated and (ii) second, any remaining amount realized over the amount of Simulated Basis shall be allocated consistent with the allocation of Simulated Gains under Section 2.2(a), above; provided, however, that the Partners understand and agree that the General Partner may authorize special allocations of tax basis, income, gain, deduction or loss, as computed for federal income tax purposes, in order to eliminate differences between Simulated Basis and adjusted federal income tax basis with respect to Depletable Properties, in such manner as determined consistent with the principles of Section 704(c) of the Code, the Treasury Regulations thereunder and the portions of the Treasury Regulations under Section 704(b) of the Code that apply the principles of Section 704(c) of the Code. The method for making all provisions of this Section 704(c2.2(i) and the other provisions of this Agreement relating to allocations under Section 613A(c)(7)(D) of the Company Code are intended to comply with Treasury Regulation Section 1.704-1(b)(4)(v) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. (j) Each Partner shall separately keep records of its share of the adjusted tax basis in each Depletable Property, adjust such share of the adjusted tax basis for any cost or percentage depletion allowable with respect to such property and use such adjusted tax basis in the Initial Capital Contribution shall be mutually agreed upon computation of its cost depletion or in the computation of its gain or loss on the disposition of such property by the Managing MembersPartnership. Upon the request of the Partnership, and if each Partner shall within thirty (30) days of a written request by the Managing Members cannot mutually agree, then Partnership advise the “traditional method” shall be used. HF agrees to provide Skechers with Partnership of its adjusted tax basis in the Property (as of the Closing Date) within sixty (60) days after the Closing Date. (c) The Members agree that the contribution by HF of all property relating to the Project (including fee title to the each Depletable Property and all any depletion computed with respect thereto, both as computed in accordance with the provisions of rightthis subsection. The Partnership may rely on such information and, title and interest in all personal property and all plans, specifications, architectural drawings and renderings, surveys and other collateral material relating to the ownership and development of the Property) to the Company pursuant to Section 4.1.1(b) of the Agreement and the HF Loan made pursuant to Section 6.4 of the Agreement will be treated if it is not provided by the Company and HF on their respective tax returns Partner, may make such reasonable assumptions as follows under the Regulations under Code Section 707: (i) Pursuant to Section 1.707-4(d) of the Regulations, the first payments of principal made under the HF Note are to be treated for all purposes as payments made to HF to reimburse HF for capital expenditures incurred by HF it shall determine with respect to all property relating to the Project during the two (2) year period preceding the transfer by HF to the Company of such property, subject to the limitation contained in such Regulation that such pre-formation expenditures shall not exceed twenty percent (20%) of the fair market value of such property at the time of contribution (the “20% Limitation”) unless the fair market value of such property does not exceed one hundred twenty percent (120%) of the adjusted basis of such property at the time of contribution (in which case such 20% Limitation shall not apply); (ii) The remainder of the principal payments made under the HF Note shall be treated as payments made with respect to a sale to the Company by HF of a proportionate amount of all property relating to the Project on the date of the contribution of such property to the Company (with the portion of such property that is deemed to have been sold by HF to the Company being determined under the Regulations under Section 707 of the Code); and (iii) As required by Regulations Sections 1.707-3(c)(2) and 1.707-8, the Company shall disclose to the IRS the Company’s treatment of the HF Note payments as pre-formation expenses to the extent described in Section 3.3(c)(i) abovethereto.

Allocation of Tax Items. (a) Except as otherwise provided in the succeeding provisions of this Section 3.32.2 hereof, each Tax Item shall be allocated among the Members Partners in the same manner as each correlative item of Profit “book” income, gain, deduction or Loss, loss is allocated pursuant to the provisions of Section 3.1 2.1 hereof. (b) The Members Partners hereby acknowledge that all Tax Items in respect of Book/Tax Disparity Property are required to be allocated among the Members Partners in the same manner as under Section section 704(c) of the Code (as specified in Sections sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g) of the Regulations) and that the principles of Section section 704(c) of the Code require that such Tax Items must be shared among the Members Partners so as to take account of the variation between the adjusted tax basis and Book Basis Gross Asset Value of each such Book/Tax Disparity Property. Thus, notwithstanding anything in Section 3.1 Sections 2.1 or 3.3(a2.2(a) hereof to the contrary, the MembersPartners’ distributive shares of Tax Items in respect of each Book/Tax Disparity Property shall be separately determined and allocated among the Members Partners in accordance with the principles of section 704(c) of the Code. Any elections or decisions relating to allocations under this Section 2.2(b) will be made by the General Partner. For the avoidance of doubt, any tax items attributable to Book/Tax Disparity Property owned by Eclipse Resources shall be allocated among the Partners that takes into account the Partner’s remaining share of built-in gain or built-in loss in accordance with the rules of Section 1.704-3(b)(9) of the Regulations. (c) For purposes of determining the nature (as ordinary or capital) of any item of income, gain or Profits among the Partners for federal income tax purposes pursuant to Section 2.1 hereof, the portion of such profit required to be recognized as ordinary income pursuant to sections 1245 and/or 1250 of the Code shall be deemed to be allocated among the Partners in the manner provided in Section 1.1245-1(e) or Section 1.1250-(f), as applicable. (d) Subject to the other provisions of this Section 2.2, “Tax Gain” shall mean the excess of (i) the amount realized by the Partnership in connection with the disposition of any Partnership property (as determined under section 1001 of the Code) over the (ii) adjusted tax basis of such property at the time of disposition. (e) “Excess nonrecourse liabilities” of the Partnership, within the meaning of section 1.752-3(a)(3), shall be allocated first among the Partners in proportion to and to the extent of the amount of built-in gain that is allocable to each Partner with respect to property under Section 704(c) of the Code (or reverse Section 704(c) allocations (as such term is defined in Section 1.704-3 of the Regulations) to the extent such gain exceeds the gain described in Section 1.752-3(a)(2) of the Regulations with respect to the property and then among the Partners in proportion to their respective Distribution Percentages for the Allocation Year. For this purpose, and in accordance with Section 1.752-4(a) of the Regulations, the liabilities of Eclipse Resources allocated to the Partnership shall be treated as liabilities of the Partnership for purposes of allocating the liabilities among the Partners. (f) All tax credits shall be allocated among the Partners as determined by the General Partner, consistent with applicable laws. (g) Partners shall be bound by the provisions of this Article II in reporting their distributive shares of Partnership items of increase, gain, deduction, loss and credit. (h) Cost and percentage depletion deductions with respect to property the production from which is subject to depletion (herein sometimes called “Depletable Property”) shall be computed separately by the Partners rather than the Partnership. For purposes of such computations, the federal income tax basis of each Depletable Property shall be allocated to each Partner in accordance with such Partner’s Capital Interest Percentage as of the time such Depletable Property is acquired by the Partnership, and shall be reallocated among the Partners in accordance with the Partners’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Book Values of the Partnership’s Depletable Properties pursuant to clause (ii) of the definition of Book Value (or at the time of any material additions to the federal income tax basis of such Depletable Property); provided however, that the federal income tax basis of each Depletable Property owned by Eclipse Resources at the time of the contribution of the Class C Units to the Partnership pursuant to Section 3.1 shall be allocated among the Partners in the same amount and manner that the federal income tax basis was allocated to such Partner immediately prior to the contribution of that Partner’s Class C Units, and for the avoidance of doubt, no reallocation of federal income tax basis of Depletable Property shall be required in connection with the contribution of the Class C Units to the Partnership pursuant to Section 3.1 of the Agreement. Such allocations are intended to be applied in accordance with the “partners’ interests in partnership capital” under Section 613A(c)(7)(D) of the Code; provided that the Partners understand and agree that the General Partner may authorize special allocations of tax basis, income, gain, deduction or loss, as computed for federal income tax purposes, in order to eliminate differences between Simulated Basis and adjusted federal income tax basis with respect to Depletable Properties, in such manner as determined consistent with the principles of Section 704(c) of the Code, the Treasury Regulations thereunder and the portions of the Treasury Regulations under Section 704(b) of the Code that apply the principles of Section 704(c) of the Code. (i) For purposes of the separate computation of gain or loss by each Partner on the taxable Disposition of Depletable Property, the amount realized from such Disposition shall be allocated (i) first, to the Partners in an amount equal to the Simulated Basis in such Depletable Property and in the same proportion as their shares thereof were allocated and (ii) second, any remaining amount realized over the amount of Simulated Basis shall be allocated consistent with the allocation of Simulated Gains under Section 2.2(a), above; provided, however, that the Partners understand and agree that the General Partner may authorize special allocations of tax basis, income, gain, deduction or loss, as computed for federal income tax purposes, in order to eliminate differences between Simulated Basis and adjusted federal income tax basis with respect to Depletable Properties, in such manner as determined consistent with the principles of Section 704(c) of the Code, the Treasury Regulations thereunder and the portions of the Treasury Regulations under Section 704(b) of the Code that apply the principles of Section 704(c) of the Code. The method for making all provisions of this Section 704(c2.2(i) and the other provisions of this Agreement relating to allocations under Section 613A(c)(7)(D) of the Company Code are intended to comply with Treasury Regulation Section 1.704-1(b)(4)(v) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. (j) Each Partner shall separately keep records of its share of the adjusted tax basis in each Depletable Property, adjust such share of the adjusted tax basis for any cost or percentage depletion allowable with respect to such property and use such adjusted tax basis in the Initial Capital Contribution shall be mutually agreed upon computation of its cost depletion or in the computation of its gain or loss on the disposition of such property by the Managing MembersPartnership. Upon the request of the Partnership, and if each Partner shall within thirty (30) days of a written request by the Managing Members cannot mutually agree, then Partnership advise the “traditional method” shall be used. HF agrees to provide Skechers with Partnership of its adjusted tax basis in the Property (as of the Closing Date) within sixty (60) days after the Closing Date. (c) The Members agree that the contribution by HF of all property relating to the Project (including fee title to the each Depletable Property and all any depletion computed with respect thereto, both as computed in accordance with the provisions of rightthis subsection. The Partnership may rely on such information and, title and interest in all personal property and all plans, specifications, architectural drawings and renderings, surveys and other collateral material relating to the ownership and development of the Property) to the Company pursuant to Section 4.1.1(b) of the Agreement and the HF Loan made pursuant to Section 6.4 of the Agreement will be treated if it is not provided by the Company and HF on their respective tax returns Partner, may make such reasonable assumptions as follows under the Regulations under Code Section 707: (i) Pursuant to Section 1.707-4(d) of the Regulations, the first payments of principal made under the HF Note are to be treated for all purposes as payments made to HF to reimburse HF for capital expenditures incurred by HF it shall determine with respect to all property relating to the Project during the two (2) year period preceding the transfer by HF to the Company of such property, subject to the limitation contained in such Regulation that such pre-formation expenditures shall not exceed twenty percent (20%) of the fair market value of such property at the time of contribution (the “20% Limitation”) unless the fair market value of such property does not exceed one hundred twenty percent (120%) of the adjusted basis of such property at the time of contribution (in which case such 20% Limitation shall not apply); (ii) The remainder of the principal payments made under the HF Note shall be treated as payments made with respect to a sale to the Company by HF of a proportionate amount of all property relating to the Project on the date of the contribution of such property to the Company (with the portion of such property that is deemed to have been sold by HF to the Company being determined under the Regulations under Section 707 of the Code); and (iii) As required by Regulations Sections 1.707-3(c)(2) and 1.707-8, the Company shall disclose to the IRS the Company’s treatment of the HF Note payments as pre-formation expenses to the extent described in Section 3.3(c)(i) abovethereto.

Allocation of Tax Items. (a) Except as otherwise provided in the succeeding provisions of this Section 3.3, each Tax Item shall be allocated among the Members in the same manner as each correlative item of Profit or Loss, is allocated pursuant to the provisions of Section 3.1 hereof. (b) The Members hereby acknowledge that all Tax Items in respect of Book/Tax Disparity Property are required to be allocated among the Members in the same manner as under Section 704(c) of the Code (as specified in Sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g) of the Regulations) and that the principles of Section 704(c) of the Code require that such Tax Items must be shared among the Members so as to take account of the variation between the adjusted tax basis and Book Basis of each such Book/Tax Disparity Property. Thus, notwithstanding anything in Section 3.1 or 3.3(a) hereof to the contrary, the Members’ distributive shares of Tax Items in respect of each Book/Tax Disparity Property shall be separately determined and allocated among the Members in accordance with the principles of Section 704(c) of the Code. The method for making all Section 704(c) allocations of the Company with respect to the Initial Capital Contribution shall be mutually agreed upon by the Managing Members, and if the Managing Members cannot mutually agree, then the “traditional method” shall be used. HF agrees to provide Skechers with its adjusted tax basis in the Property (as of the Closing Date) within sixty (60) days after the Closing Date. (c) The Members agree that the contribution by HF of all property relating to the Project (including fee title to the Property and all of right, title and interest in all personal property and all plans, specifications, architectural drawings and renderings, surveys and other collateral material relating to the ownership and development of the Property) to the Company pursuant to Section 4.1.1(b) of the Agreement and the HF Loan made pursuant to Section 6.4 of the Agreement will be treated by the Company and HF on their respective tax returns as follows under the Regulations under Code Section 707: (i) Pursuant to Section 1.707-4(d) 4 of the Regulations, the first payments of principal made under the Note evidencing the HF Note Loan are to be treated for all purposes as payments of principal made to HF to reimburse HF for capital expenditures incurred by HF with respect to all property relating to the Project during the two (2) year period preceding the transfer by HF to the Company of such propertywith respect to the Property, subject to the limitation contained in such Regulation that such pre-formation expenditures shall not exceed twenty percent (20%) of the fair market value Forty-Four Million Dollar ($44,000,000) Agreed Value of such property the Property at the time of contribution it is contributed to the Company (the “20% Limitation”Fourteen Million Dollars ($14,000,000) unless in expenditures with respect to the fair market value Property described in Section 6.4 of such property does not exceed one hundred twenty percent the Agreement, plus the Thirty Million Dollar (120%$30,000,000) Capital Account credit for the Property described in Section 4.1.1(b) of the adjusted basis of such property at the time of contribution (in which case such 20% Limitation shall not apply)Agreement; (ii) The remainder balance of the principal payments made under the HF Note Loan shall be treated as payments made with respect to a partial sale of the Property to the Company by HF of a proportionate amount of all property relating to the Project on the date of the contribution of such property the Property to the Company (with the portion of such property the Property that is deemed to have been sold by HF to the Company being determined under the Regulations under Section 707 of the Code); and (iii) As required by Regulations Sections 1.707-3(c)(2) and 1.707-8, the Company shall disclose to the IRS the Company’s treatment of the HF Note Loan payments as pre-formation expenses to the extent described in Section 3.3(c)(i) above.