Common use of Partnership Termination Clause in Contracts

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will not affect a Limited Partner who sells all of his Units but will affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for tax

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will not affect a Limited Partner who sells all of his Units but will affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for taxtax purposes. The Purchaser believes that even if the maximum number of Units is purchased pursuant to the Offer, those transfers will not cause a tax termination.

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will would not affect a Limited Partner who sells all of his Units but will would affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will would also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers Purchaser believes that even if the maximum number of Units if a transferis purchased pursuant to the Offer, when considered with all other those transfers during the same applicable twelve-month period, would will not cause a tax termination of the Partnership for taxPartnership.

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will not affect a Limited Partner who sells all of his Units but will affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers Purchaser believes that even if the maximum number of Units if a transferis purchased pursuant to the Offer, when considered with all other those transfers during the same applicable twelve-month period, would will not cause a termination of the Partnership for taxtax termination.

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will not affect a Limited Partner who sells all of his Units but will affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will would also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Partnership's Limited Partnership Agreement (the "Limited Partnership Agreement") prohibits transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for taxtax purposes. The Purchaser believes that even if the maximum number of Units is purchased pursuant to the Offer, those transfers will not cause a tax termination of the Partnership.

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest interests in partnership capital and profits within a twelve-month period (although successive transfers of the same interest interests within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all made a liquidating distribution of its assets to the remaining partners and liabilities the new partners, followed by a recontribution of the assets to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contributionrecontribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions deductions, if any, over the next few years would could be substantially reduced, and the Partnership would could have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation depreciation, if any, may be required to be allocated to those Limited Partners Unitholders that have a higher tax basis, such as the Purchaser. A tax termination could also have the adverse effect on non-tendering Unitholders who subsequently dispose of their Units at a gain of requiring them to treat a greater portion of such gain as ordinary income (due to the application of Code Section 735) than would otherwise be required absent a tax termination of the Partnership. A tax termination will not affect a Limited Partner Unitholder who sells all of his Units but will affect the taxation of a Limited Partner Unitholder in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers of Units if Provided there is not a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a tax termination of the Partnership, the Purchaser does not anticipate that a Unitholder who does not tender Units will realize any material tax consequences as a result of the election not to tender. Although the Purchaser has access to certain public information compiled by Partnership Spectrum concerning assignments of Units during the period from December 31, 1995 through the September/October 1996 reporting period, such information may not be complete and, therefore, the Purchaser cannot be certain that the Partnership will not terminate for tax purposes as a result of sales pursuant to the Offer. THE PURCHASER DOES NOT REPRESENT THAT A TAX TERMINATION WILL NOT RESULT FROM THE OFFER OR FUTURE DIRECT OR INDIRECT TRANSFERS OF UNITS TO OR BY THE PURCHASER. Backup Withholding and FIRPTA Withholding. Unitholders (other than tax-exempt persons, corporations and certain foreign individuals) who tender Units may be subject to 31% backup withholding unless those Unitholders provide a taxpayer identification number ("TIN") and certify that the TIN is correct or properly certify that they are awaiting a TIN. A Unitholder may avoid backup withholding by properly completing and signing the Substitute Form W-9 included as part of the Assignment of Limited Partnership Units. If a Unitholder who is subject to backup withholding does not properly complete and sign the Substitute Form W-9, the Purchaser will withhold 31% from payments to such Unitholder.

Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). Accordingly, it is possible that transfers of Units made pursuant to the Offer, in combination with other transfers made within twelve months of the Offer, will result in a termination of the Partnership. In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, and the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis, such as the Purchaser. A tax termination will would not affect a Limited Partner who sells all of his Units but will would affect the taxation of a Limited Partner in respect of any Units retained after the date of the tax termination. A tax termination of the Partnership will would also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers Purchaser believes that even if the maximum number of Units if a transferis purchased pursuant to the Offer, when considered with all other those transfers during the same applicable twelve-month period, would will not cause a termination of the Partnership for taxtax termination.