Common use of Capital Account Maintenance Clause in Contracts

Capital Account Maintenance. The Partnership shall maintain a separate Capital Account (the “Capital Account”) for each Partner. The Capital Account of each Partner shall be credited with the cash and the fair market value of any property (net of liabilities assumed by the Partnership and liabilities to which such property is subject) contributed to the Partnership by such Partner, plus all income, gain, or Profits of the Partnership allocated to such Partner pursuant to Section 7.2 of this Agreement (including for purposes of this Section income and gain exempt from tax), and shall be debited by the sum of all Losses or deductions of the Partnership allocated to such Partner pursuant to Section 7.2 of this Agreement, such Partner’s distributive share of expenditures of the Partnership described in Section 705(a)(2)(B) of the Code and expenditures treated as such pursuant to Treasury Regulations Section 1.704- l(b)(2)(iv)(i) and all cash and the fair market value of any property (net of liabilities assumed by the Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner pursuant to Sections 7.1 and 13.2 of this Agreement. The computation of the amount of the Capital Account of a Partner shall be determined in all events solely in accordance with the rules set forth in Treasury Regulations Section 1.704-l(b)(2)(iv), as it now exists and may be amended, and, in the event that the treatment called for in such regulation is inconsistent with the provisions of this Agreement, the rules of the aforementioned regulation shall control. Any reference in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. (a) The Capital Accounts of all Partners shall be adjusted at such time as the Book Values (as hereinafter defined) of Partnership properties are adjusted, the amount of such adjustment to Capital Accounts being computed as if the aggregate net adjustment to such Book Values had resulted from the recognition of gain or loss by the Partnership in an amount equal to the amount of such net adjustment. (b) The Book Value of any Partnership property shall be the adjusted basis of such property for federal income tax purposes, subject to the following modifications: (i) The Book Value of property contributed by a Partner to the Partnership shall be the gross fair market value of such property as reasonably determined by such Partner and the Partnership. (ii) The Book Values of all Partnership properties shall be adjusted so as to equal their respective gross fair market values, as reasonably determined by the General Partner, as of the following times: (A) the acquisition of an additional Interest in the Partnership by any new or existing Partner in exchange for the provision of services to or for the benefit of the Partnership or for a more than de minimis capital contribution; (B) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property in exchange for an Interest in the Partnership except that no adjustment shall be made if all Partners receive, at the same time, undivided interests in the distributed property in proportion to their interests in the Partnership; and (C) the termination of the Partnership for federal income tax purposes pursuant to Section 708(b)(1)(B) of the Code; provided, however, that the adjustments described in clauses (A) and (B) above need not be made if the General Partner determines, in its sole discretion, that they are not necessary in order to reflect the intended economic arrangement among the Partners. (iii) The Book Value of Partnership property which has been determined or adjusted pursuant to this Section shall be thereafter adjusted by “Depreciation” (as hereinafter defined) taken into account with respect to such property for purposes of computing Profit and Loss. “Depreciation” shall mean, for each fiscal or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to a property of the Partnership for such year or other period, except that, if the Book Value of any such property differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such property’s beginning Book Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period, bears to such beginning adjusted tax basis.

Capital Account Maintenance. The Partnership shall maintain a separate Capital Account (the “Capital Account”) for each Partner. The Capital Account Accounts of each Partner the Members shall be credited with the cash and the fair market value of any property (net of liabilities assumed by the Partnership and liabilities to which such property is subject) contributed to the Partnership by such Partner, plus all income, gain, or Profits of the Partnership allocated to such Partner pursuant to Section 7.2 of this Agreement (including for purposes of this Section income and gain exempt from tax), and shall be debited by the sum of all Losses or deductions of the Partnership allocated to such Partner pursuant to Section 7.2 of this Agreement, such Partner’s distributive share of expenditures of the Partnership described in Section 705(a)(2)(B) of the Code and expenditures treated as such pursuant to Treasury Regulations Section 1.704- l(b)(2)(iv)(i) and all cash and the fair market value of any property (net of liabilities assumed by the Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner pursuant to Sections 7.1 and 13.2 of this Agreement. The computation of the amount of the Capital Account of a Partner shall be determined in all events solely maintained in accordance with the rules set forth in Treasury Regulations Section 1.704-l(b)(2)(iv), as it now exists and may be amended, and, in the event that the treatment called for in such regulation is inconsistent with the provisions of this Agreement, the rules of the aforementioned regulation shall control. Any reference in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. (a) The Capital Accounts of all Partners shall be adjusted at such time as the Book Values (as hereinafter defined) of Partnership properties are adjusted, the amount of such adjustment to Capital Accounts being computed as if the aggregate net adjustment to such Book Values had resulted from the recognition of gain or loss by the Partnership in an amount equal to the amount of such net adjustment. (b) The Book Value of any Partnership property shall be the adjusted basis of such property for federal income tax purposes, subject to the following modificationsprovisions: (i) The Book Value of property contributed by a Partner to the Partnership To each Member’s Capital Account there shall be the gross fair market value of such property as reasonably determined by such Partner and the Partnership. (ii) The Book Values of all Partnership properties shall be adjusted so as to equal their respective gross fair market values, as reasonably determined by the General Partner, as of the following times: credited (A) the acquisition of an additional Interest in the Partnership by any new or existing Partner in exchange for the provision of services to or for the benefit of the Partnership or for a more than de minimis capital contribution; such Member’s Capital Contributions, (B) the distribution by the Partnership to a Partner such Member’s distributive share of more than a de minimis amount of Partnership property in exchange for an Interest Profits and any items in the Partnership except nature of income or gain that no adjustment shall be made if all Partners receiveare specially allocated pursuant to Section C1(a) or C1(b), at the same time, undivided interests in the distributed property in proportion to their interests in the Partnership; and (C) the termination amount of any Company liabilities assumed by such Member or that are secured by any Company asset distributed to such Member. The principal amount of a promissory note that is not readily traded on an established securities market and that is contributed to the Company by the maker of the Partnership for federal income tax purposes pursuant note (or a Member related to the maker of the note within the meaning of Section 708(b)(1)(B1.704-1(b)(2)(ii)(c) of the Code; provided, however, that the adjustments described in clauses (ATreasury Regulations) and (B) above need shall not be included in the Capital Account of any Member until the Company makes a taxable disposition of the note or until (and to the extent) principal payments are made if on the General Partner determinesnote, all in its sole discretion, that they are not necessary in order to reflect accordance with Section 1.704-1(b)(2)(iv)(d)(2) of the intended economic arrangement among the Partners.Treasury Regulations, (iiiii) The Book Value of Partnership property which has been determined or adjusted pursuant to this Section To each Member’s Capital Account there shall be thereafter adjusted by “Depreciation” debited (as hereinafter definedi) taken into account with respect to such property for purposes the amount of computing Profit money and Loss. “Depreciation” shall mean, for each fiscal or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to a property of the Partnership for such year or other period, except that, if the Book Value of any asset distributed to such property differs from its adjusted basis for federal income tax purposes at Member pursuant to any provision of this Agreement, (ii) such Member’s distributive share of Losses and any items in the beginning nature of expenses or losses that are specially allocated pursuant to Section C1(a) or C1(b), and (iii) the amount of any liabilities of such year Member assumed by the Company or other periodthat are secured by any property contributed by such Member to the Company, Depreciation and (iii) In determining the amount of any liability for purposes of subparagraphs (i) and (ii) above there shall be an taken into account Code Section 752(c) and any other applicable provisions of the Code and Treasury Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Treasury Regulations, and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event the Board shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or any Members), the Board may make such modification, provided that it is not likely to have a material effect on the amounts distributed to any Person pursuant to Section 6(b)(ii) hereof upon the dissolution of the Company. The Board also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount which bears of capital reflected on the same ratio Company’s balance sheet, as computed for book purposes, in accordance with Section 1.704-1(b)(2)(iv)(q) of the Treasury Regulations and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to such property’s beginning Book Value as comply with Section 1.704-1(b) of the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period, bears to such beginning adjusted tax basisTreasury Regulations.

Capital Account Maintenance. The Partnership shall maintain a A separate Capital Account capital account (the “Capital Account”) shall be maintained for each Partner. The Member in accordance with the following provisions: (a) To each Member’s Capital Account of each Partner there shall be credited with (i) the amount of cash and contributed by such Member to the Company, (ii) the fair market value of any property contributed by such Member to the Company (net of liabilities assumed by the Partnership and liabilities to which such property is subject) contributed to the Partnership secured by such Partner, plus all income, gain, contributed property that the Company is considered to assume or Profits take subject to under Section 752 of the Partnership Internal Revenue Code of 1986, as amended (the “Code”)), (iii) such Member’s share of Net Income, (iv) any items of income or gain that are specially allocated to such Partner Member pursuant to Section 7.2 of this Agreement (including for purposes of this Section income and gain exempt from tax)Sections 5.1, and (v) the amount of any Company liabilities assumed by such Member or which are secured by any Company property distributed to such Member. (b) To each Member’s Capital Account there shall be debited by (i) the sum amount of all Losses or deductions of the Partnership allocated cash distributed to such Partner pursuant Member (not including the repayment of Member loans to Section 7.2 of this Agreementthe Company and interest thereon), such Partner’s distributive share of expenditures of the Partnership described in Section 705(a)(2)(B(ii) of the Code and expenditures treated as such pursuant to Treasury Regulations Section 1.704- l(b)(2)(iv)(i) and all cash and the fair market value of any Company property distributed to such Member (net of liabilities assumed secured by such distributed property that such Member is considered to assume or take subject to under Code Section 752), after adjustment of the Partner Members’ Capital Accounts as provided in Section 6.6 hereof, (iii) such Member’s share of Net Losses of the Company, (iv) such Member’s share of Company expenditures described in Code Section 705 (a) (2) (B), and the liabilities to which such property is subject(v) distributed by the Partnership any items of deduction or loss specially allocated to such Partner Member pursuant to Sections 7.1 and 13.2 5.1. (c) In the event any interest in the Company is transferred in accordance with the terms of this Agreement. The computation of , the amount of transferee shall succeed to the Capital Account of a Partner the transferor to the extent it relates to the interest transferred. (d) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Income Tax Regulations promulgated pursuant to the Code (“Treasury Regulations”) and shall be determined interpreted and applied in all events solely in accordance a manner consistent with the rules set forth in Treasury Regulations Section 1.704-l(b)(2)(iv1(b). If the Manager determines that it is prudent to modify the manner in which the Capital Accounts are computed in order to comply with such Treasury Regulations Section 1.704-1(b), the Manager may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Article XII hereof upon dissolution of the Company. The Manager shall also make such modifications as it now exists and may be amended, and, necessary in the event that the treatment called for in such regulation is inconsistent with the provisions of this Agreement, the rules of the aforementioned regulation shall control. Any reference in any section of unanticipated events should cause this Agreement to the Capital Account of a Partner shall be deemed fail to refer to comply with such Capital Account as the same may be credited or debited from time to time as set forth aboveTreasury Regulations. (a) The Capital Accounts of all Partners shall be adjusted at such time as the Book Values (as hereinafter defined) of Partnership properties are adjusted, the amount of such adjustment to Capital Accounts being computed as if the aggregate net adjustment to such Book Values had resulted from the recognition of gain or loss by the Partnership in an amount equal to the amount of such net adjustment. (b) The Book Value of any Partnership property shall be the adjusted basis of such property for federal income tax purposes, subject to the following modifications: (i) The Book Value of property contributed by a Partner to the Partnership shall be the gross fair market value of such property as reasonably determined by such Partner and the Partnership. (ii) The Book Values of all Partnership properties shall be adjusted so as to equal their respective gross fair market values, as reasonably determined by the General Partner, as of the following times: (A) the acquisition of an additional Interest in the Partnership by any new or existing Partner in exchange for the provision of services to or for the benefit of the Partnership or for a more than de minimis capital contribution; (B) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property in exchange for an Interest in the Partnership except that no adjustment shall be made if all Partners receive, at the same time, undivided interests in the distributed property in proportion to their interests in the Partnership; and (C) the termination of the Partnership for federal income tax purposes pursuant to Section 708(b)(1)(B) of the Code; provided, however, that the adjustments described in clauses (A) and (B) above need not be made if the General Partner determines, in its sole discretion, that they are not necessary in order to reflect the intended economic arrangement among the Partners. (iii) The Book Value of Partnership property which has been determined or adjusted pursuant to this Section shall be thereafter adjusted by “Depreciation” (as hereinafter defined) taken into account with respect to such property for purposes of computing Profit and Loss. “Depreciation” shall mean, for each fiscal or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to a property of the Partnership for such year or other period, except that, if the Book Value of any such property differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such property’s beginning Book Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period, bears to such beginning adjusted tax basis.