Common use of Exceptions Where No Gain Recognized Clause in Contracts

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (i) either (A) such indebtedness shall be repaid in full or (B) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (ii) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any a Subsidiary may dispose of any Protected Property (or any interest therein) ), and Article 4 shall not apply with respect thereto, if and to the extent that such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result (in the year of such disposition) in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) : in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of subject to Section 2.1 by the Partnershipand Article 4; and (b) and in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction restrictions set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any an interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “"partnership” " for federal income tax purposes (a “"Successor Partnership”")) that, as to each of the foregoing, does not result (in the year of such disposition or in a later year) in the recognition of any taxable income or gain to any Protected Partner (or Indirect Owners) with respect to any of the Preferred Units or OP Units; provided, however, that. In further clarification thereof: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “"related party” " within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(11031(f) (1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and; (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner Guarantor (or for which a Protected Partner (or Indirect Owner) otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners (or Indirect Owners) that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period with respect to Article 3 shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by ; and (c) in the event of a merger or consolidation involving the Partnership (or any such Protected Partner Subsidiary) and a Successor Partnership, the Successor Partnership shall equal have agreed in writing for the sum benefit of the highest federal income tax rate applicable Protected Partners (and the Indirect Owners thereof) that all of the restrictions contained in this Agreement shall continue to such apply, including but not limited to, those with respect to each Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected GainProperty.

Exceptions Where No Gain Recognized. Notwithstanding the restriction restrictions set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any an interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result (in the year of such disposition or in a later year within the Tax Protection Period) in the recognition of any taxable income or gain Protected Gain to any a Protected Partner with respect to any of the Units; provided, however, thatPartner. In further clarification thereof: (ai) in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange and within the Tax Protection Period that would cause Section 1031(f)(1) of the Code to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) of the Code) shall be considered a violation of Section 2.1 by the Partnership; and (bii) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner Guarantor (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a “pass-through” Subsidiary of the Partnership that both is more than 50100% owned, directly or indirectly, by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable)Partnership, (ia) in the Partnership’s sole discretion, either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, indebtedness and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period with respect to Article 3 shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.12(a), the Partnership Vornado OP or any Subsidiary (including SCR) may dispose of any a Protected Property (or any an interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition nonrecognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership Vornado OP (or SCR, as applicable) with or into another entity that qualifies for taxation as a “"partnership” " for federal income tax purposes (a “"Successor Partnership”")) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner SCR Unitholder with respect to any of the Protected Units; provided, however, that: (a1) in the event of a disposition under Section 1031 or Section 1033 of the Code, any property that is acquired in exchange for or as a replacement for a Protected Property shall thereafter be considered a Protected Property; (2) in the case of a Section 1031 like-kind exchange, if such exchange is with a “"related party” " within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(11031(f) (1) to apply with respect to such the Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 2(a) by the Partnership; andVornado OP; (b3) if the Protected Property is transferred to another entity in a transaction in which gain or loss is not recognized, the direct and indirect interest of Vornado OP in such entity shall thereafter be considered a Protected Property, and if the acquiring entity's disposition of the Protected Property would cause an SCR Unitholder to recognize gain or loss as a result thereof, the transferred Protected Property still shall be considered a Protected Property; (4) if Vornado OP directly or indirectly receives any property that is in whole or in part a "substituted basis property" as defined in Section 7701(a)(42) of the Code with respect to a Protected Property (including, without limitation, a Protected Property by reason of clause (3) above), such substituted basis property shall thereafter be considered a Protected Property; (5) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner an SCR Unitholder (or for which a Protected Partner an SCR Unitholder otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership Vornado OP that both is more than 50% owned, directly or indirectly, indirectly by the Partnership Vornado OP and is and will continue to be under the legal control of the Partnership Vornado OP (which shall include a partnership or limited liability company in which the Partnership Vornado OP or a wholly owned subsidiary of the Partnership Vornado OP is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership Vornado shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners SCR Unitholders that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Protected Period of the SCR Partner Guarantors with respect to such Guaranteed Debt shall not have expired, the Partnership Vornado OP shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the SCR Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 3(d), treating such events as a repayment of the Guaranteed Debt). The taxes payable by ; and (6) in the event of a merger or consolidation involving Vornado OP (or any such Protected Partner Subsidiary) and a Successor Partnership, the Successor Partnership shall equal have agreed in writing for the sum benefit of the highest federal income tax rate applicable SCR Unitholders that all of the restrictions of this Article 2 shall continue to such apply with respect to the Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected GainProperties.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any a Subsidiary may dispose of any Protected Property (or any interest therein) ), and Article 4 shall not apply with respect thereto, if and to the extent that such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result (in the year of such disposition or in a later year within the Tax Protection Period) in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of subject to Section 2.1 by the Partnershipand Article 4; and (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing memberPartner, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “"partnership” " for federal income tax purposes (a “"Successor Partnership”")) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “"related party” " within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 4 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 4.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and (b) in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (ia) either (AI) such indebtedness shall be repaid in full or (BII) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (iib) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt). The taxes payable by any such Protected Partner shall equal the sum of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income rates, if any, which such Protected Gain is subject to in the hands of such Protected Partner, times such Protected Partner’s share of such Protected Gain.in

Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose Dispose of any Protected Property (or any direct or indirect interest therein) if such disposition Disposition is (a) part of a transaction or series of transactions that qualifies as a like-kind exchange under Section 1031 of the Code, (b) part of a transaction or series of transactions that qualifies as an involuntary conversion under Section 1033 of the Code, or (c) such other transaction (transaction, or series of transactions, including, but not limited to, a contribution of property to any an entity that qualifies for the non-recognition of gain under either Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership (or a Subsidiary) with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Gain by a Protected Partner with respect to any of the Units; provided, however, that: (a) in the case of a Section 1031 like-like kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition Disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) of the Code to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) of the Code) shall be considered a violation of Section 2.1 by the Partnership; and; (b) in the event that at of a merger or consolidation involving the time Partnership, or any Subsidiary, and a Successor Partnership, the Successor Partnership shall have agreed in writing for the benefit of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liabilityand Indirect Owners) and that is not then in default and the transferee is not a Subsidiary all of the Partnership that both is more than 50% owned, directly or indirectly, by the Partnership covenants and is and will restrictions set forth in this Agreement shall continue to be under apply, including, but not limited to, those covenants and restrictions set forth in Articles 2, 3 and 6 of this Agreement; and (c) in any case, prior to the legal control of time that the Partnership (which shall include or a partnership or limited liability company Subsidiary) enters into an agreement to consummate a transaction with respect to a Protected Property that (i) may result in the realization of a Protected Gain but (ii) which the Partnership may report for federal, state, or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing memberlocal income tax purposes, as applicable), not resulting (iin whole or in part) either (A) in the recognition of such indebtedness shall be repaid in full or (B) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtednessGain, and in any case not less than thirty (ii30) if days prior to consummating such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expiredtransaction, the Partnership shall comply provide the Protected Partner with its covenants a written description of the transaction containing all relevant details and shall thereafter, as promptly as possible upon the Protected Partner’s reasonable request, and in any case not less than twenty (20) days prior to consummating such transaction, provide the Protected Partner with an opinion of counsel that (i) meets all the requirements for “covered opinions” set forth in Article 3 below with respect to such Guaranteed Debt Section 10.35(c) of IRS Circular 230, including the requirement that a covered opinion consider all significant federal tax issues, (ii) is based on a statement of facts that is not inaccurate or unreasonable in any material respect, and the Partner Guarantors (iii) concludes, at least a “more likely than not” level of comfort, that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment all or part of the Guaranteed DebtProtected Gain realized in such transaction will not be recognized for tax purposes (such an opinion, a “Qualifying Opinion”). The taxes payable by any such If the Partnership does not provide the Protected Partner shall equal the sum with a description of the highest federal income tax rate applicable to such Protected Gain based upon its characterization in the year of disposition plus the highest income ratestransaction and, if any, which such Protected Gain is subject to in reasonably requested by the hands of such Protected Partner, times a Qualifying Opinion, in a timely manner pursuant to the first sentence of this paragraph, then such proposed transaction shall be treated for purposes of this Agreement as a Disposition in violation of Section 2.1 of this Agreement. Furthermore, the Partnership shall not report any transaction as resulting (in whole or in part) in the realization, but not the recognition, of a Protected Partner’s share Gain unless either (i) the Partnership previously provided the Protected Partner with a Qualifying Opinion in a timely manner pursuant to the first sentence of this paragraph or (ii) the Partnership obtains the consent of the Protected Partner prior to taking such Protected Gainreporting position.