SUCH
TAX ALLOCATION PROVISIONS TO PRODUCE SUCH TARGET FINAL BALANCES.
NOTWITHSTANDING THE OTHER PROVISIONS OF THIS AGREEMENT, ALLOCATIONS OF INCOME,
GAIN, LOSS AND DEDUCTION (INCLUDING ITEMS OF GROSS INCOME, GAIN, LOSS AND
DEDUCTION) SHALL BE MADE PROSPECTIVELY AS NECESSARY TO PRODUCE SUCH TARGET FINAL
BALANCES (AND, TO THE EXTENT SUCH PROSPECTIVE ALLOCATIONS WOULD NOT EFFECT SUCH
RESULT, THE PRIOR TAX RETURNS OF THE COMPANY SHALL BE AMENDED TO REALLOCATE
ITEMS OF GROSS INCOME, GAIN, LOSS AND DEDUCTIONS TO PRODUCE SUCH TARGET FINAL
BALANCES).
8.7
CHANGE IN ECONOMIC ARRANGEMENT; MEMBERSHIP
INTEREST.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IF THE
MEMBERSHIP INTEREST OF ANY MEMBER IS ADJUSTED AT ANY TIME PURSUANT TO THE TERMS
OF THIS AGREEMENT, THE MEMBER WHOSE MEMBERSHIP INTEREST IS INCREASED PURSUANT TO
SUCH ADJUSTMENT SHALL HAVE THE RIGHT TO AMEND THIS AGREEMENT TO TAKE INTO
ACCOUNT THE REVISED ECONOMIC ARRANGEMENT OF THE MEMBERS, BUT ONLY TO THE EXTENT
REQUIRED TO SATISFY THE TAX ALLOCATION RULES OF SECTION 704 OF THE CODE AND THE
REGULATIONS THEREUNDER BASED ON THE OPINION OF LEGAL COUNSEL SELECTED BY SUCH
MEMBER.
8.8
CALCULATION OF INCOME, GAIN, LOSS AND
DEDUCTIONS.
FOR PURPOSES OF THIS AGREEMENT, THE INCOME, GAIN, LOSS AND
DEDUCTIONS FOR EACH COMPANY FISCAL YEAR OR OTHER PERIOD SHALL BE EQUAL TO THE
COMPANY'S TAXABLE INCOME, GAIN, LOSS AND DEDUCTIONS, AS THE CASE MAY BE, FOR
SUCH YEAR OR PERIOD, DETERMINED IN ACCORDANCE WITH SECTION 703(A) OF THE CODE,
WITH THE FOLLOWING ADJUSTMENTS:
11
(A)
ANY INCOME OF THE COMPANY
DESCRIBED IN SECTION 705(A)(1)(B) OF THE CODE THAT IS EXEMPT FROM FEDERAL INCOME
TAX AND NOT OTHERWISE TAKEN INTO ACCOUNT SHALL BE ADDED TO SUCH TAXABLE INCOME
OR SUBTRACTED FROM SUCH TAXABLE LOSS, AS THE CASE MAY BE.
(B)
ANY EXPENDITURES OF THE COMPANY
DESCRIBED IN SECTION 705(A)(2)(B) OF THE CODE OR TREATED AS SECTION 705(A)(2)(B)
EXPENDITURES PURSUANT TO SECTION 1.704-1(B)(2)(IV)(I) OF THE REGULATIONS)AND NOT
OTHERWISE TAKEN INTO ACCOUNT SHALL BE SUBTRACTED FROM TAXABLE INCOME OR ADDED TO
SUCH TAXABLE LOSS, AS THE CASE MAY BE.
(C)
IN THE EVENT THE VALUE AT WHICH
ANY COMPANY ASSET IS REFLECTED IN CAPITAL ACCOUNTS IS ADJUSTED PURSUANT TO
SECTION 1.704-1(B)(2)(IV)(F) OF THE REGULATIONS, THE AMOUNT OF SUCH ADJUSTMENT
SHALL BE TAKEN INTO ACCOUNT AS GAIN OR LOSS FROM THE DISPOSITION OF SUCH ASSET.
(D)
GAIN OR LOSS RESULTING FROM ANY
DISPOSITION OF AN ASSET WITH RESPECT TO WHICH GAIN OR LOSS IS RECOGNIZED FOR
FEDERAL INCOME TAX PURPOSES SHALL BE COMPUTED BY REFERENCE TO THE VALUE AT WHICH
THE ASSET DISPOSED OF IS PROPERLY REFLECTED IN THE CAPITAL ACCOUNTS OF THE
MEMBERS PURSUANT TO SECTION 1.704-1(B)(2)(IV) OF THE REGULATIONS.
(E)
IN LIEU OF DEPRECIATION,
AMORTIZATION AND OTHER COST RECOVERY DEDUCTIONS TAKEN INTO ACCOUNT IN COMPUTING
TAXABLE INCOME OR LOSS, THERE SHALL BE TAKEN INTO ACCOUNT DEPRECIATION, COST
RECOVERY OR AMORTIZATION COMPUTED IN ACCORDANCE WITH SECTION
1.704-1(B)(2)(IV)(G)(3) OF THE REGULATIONS.
8.9
INCOME TAX RETURNS.
THE TREASURER OF THE
COMPANY SHALL CAUSE INCOME TAX RETURNS FOR THE COMPANY TO BE PREPARED AND FILED
WITH THE