-6-
(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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