Interhotel Company, LTD., Torrey Hotel Enterprises, Inc., Tax Matters Partner - Page 6

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          (the IHCL Restated Agreement).  That agreement allocated 99 percent         
          of the net losses of IHCL to Dondi and the other 1 percent to THEI          
          as the general partner.  After a period of approximately 5 years,           
          the net losses were to be allocated to the partners on a pro rata           
          basis.  The income of IHCL was allocated to the partners, Dondi and         
          THEI, in the same ratio as net losses.  The allocation was to               
          continue until such time as IHCL's cumulative income equaled IHCL's         
          cumulative losses; thereafter, IHCL's income would be allocated to          
          the partners pro rata and in proportion to earlier distributions.           
               In contrast to the allocations of income, section 5 of the             
          IHCL Restated Agreement made the following provisions for actual            
          distributions:                                                              
                    5.1   Distribution of Cash Available for                          
               Distribution.  Cash Available for Distribution, as                     
               defined in Section 17, when distributed from time to                   
               time, shall be distributed to the Partners as follows:                 
                         5.1.1.    First, upon the release of the                     
                    letters of credit by the lender as referred to                    
                    in subsection 4.3.5(a), then to the General                       
                    Partner up to the amount to which the General                     
                    Partner is entitled under Section 4.3.5(a).                       
                         5.1.2.    Second, to the repayment of any                    
                    Special Loans, pro rata, up to the full amount                    
                    of the total principal amount of such Special                     
                    Loans, plus accrued but unpaid interest                           
                    thereon.                                                          
                         5.1.3.    Thereafter, any remaining sum                      
                    shall be distributed to the Partners, pro                         
                    rata.                                                             








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