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If any Membership Interest is transferred pursuant
to the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the
extent the Capital Account is attributable to the
transferred Membership Interest. If the book value of
Company property is adjusted pursuant to Section 4.3.3.
the Capital Account of each Membership Interest Holder
shall be adjusted to reflect the aggregate adjustment
in the same manner as if the Company had recognized a
gain or loss equal to the amount of such aggregate
adjustment. It is intended that the Capital Accounts
of all Interest Holders shall be maintained in
compliance with the provisions of Regulation Section
1.704-1(b), and all provisions of this Agreement
relating to the maintenance of Capital Accounts shall
be interpreted and applied in a manner consistent with
that Regulation.
“Capital Contribution” means that total amount of
cash and the fair market value of any other assets
contributed (or deemed contributed under Regulation
Section 1.704-1(b)(2)(iv)(d)) to the Company by a
Member, net of liabilities assumed or to which the
assets are subject.
“Capital Proceeds” means the gross receipts
received by the Company from a Capital Transaction.
“Capital Transaction” means any transaction not in
the ordinary course of business which results in the
Company’s receipt of cash or other consideration other
than Capital Contributions, including, without
limitation, proceeds of sales or exchanges or other
dispositions of property not in the ordinary course of
business, financings, refinancings, condemnations,
recoveries of damage awards, and insurance proceeds.
“Cash Flow” means all cash funds derived from
operations of the Company (including interest received
on reserves), without reduction for any non-cash
charges, but less cash funds used to pay current
operating expenses and to pay or establish reasonable
reserves for future expenses, debt payments, capital
improvements or replacements as determined in the sole
discretion of the General Manager. Cash Flow shall not
include Capital Proceeds but shall be increased by the
reduction of any reserve previously established.
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Last modified: March 27, 2008