Page 37 - New Empire Affinitas Life Senior Housing Division

adjustment, allocation or distribution causes or increases a Capital Account Deficit for such Member,
then, before any other allocations are made under this Agreement or otherwise, such Member will
be allocated items of income and gain (consisting of a pro rata portion of each item of Company
income, including gross income and gain) in an amount and manner sufficient to eliminate such
Capital Account Deficit as quickly as possible.

iii. Company Minimum Gain Charge-back. If there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member will be allocated items of
income and gain for such fiscal year (and, if necessary, for subsequent fiscal years) in proportion
to and to the extent of, an amount equal to such Member’s share of the net decrease in Company
Minimum Gain, in accordance with Treasury Regulations.

iv. Member Non-recourse Debt Minimum Gain Charge-back. If there is a
net decrease in Member Non-recourse Debt Minimum Gain attributable to a Member Non-recourse
Debt during any Company fiscal year, each Member who has a share of the Member Non-recourse
Debt Minimum Gain attributable to such Member Non-recourse Debt, determined in accordance
with Treasury Regulations, will be specially allocated items of Company income and gain for such
fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to such Member’s share of
the net decrease in Member Non-recourse Debt Minimum Gain attributable to such Member Non-
recourse Debt, determined in accordance with Treasury Regulations.
v. Member Non-recourse Deductions. Member Non-recourse Deductions
for any Company fiscal year will be specially allocated to the Member who bears the economic
risk of loss with respect to the Member Non-recourse Debt to which such Member Non-recourse
Deductions are attributable in accordance with Treasury Regulations.
5.3. Tax Allocations.
a) Except as set forth in Section 5.3 (b), allocations for tax purposes of items of income, gain, loss,
deduction and credit will be made in the same manner as allocations for book purposes.

b) In accordance with Code section 704(c) and the Treasury Regulations thereunder, income, gain,
loss and deduction with respect to any property contributed to the capital of the Company will, solely
for tax purposes, be allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes and its initial Book
Value.

c) In the event that the Book Value of Company property is adjusted, subsequent allocations of
income, gain, loss, and deduction with respect to such property will take account of any variation
between the adjusted basis of such asset for federal income tax purposes and the Book Value in the
same manner as under Code section 704(c) and the Treasury Regulations thereunder.

Re-LIFE-Ment: Reinventing Past Notions of Retirement
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