Common use of MULTI-MEMBER Clause in Contracts

MULTI-MEMBER. (Applies ONLY if Multi-Member): The Company shall maintain a “capital account” for the Members in in line with Section 704(b) of the Internal Revenue Code and Treasury Regulation Section 1.704-1(b)(2)(iv). Member percentage interests refers to the ownership percentage as mentioned in the Company Details section of this agreement (Section 1). In every fiscal year, net profits and losses of the Company (not including capital transactions), whether loss or gain shall be credited or deducted to the capital accounts of each Member in an equal proportion to the Members’ percentage interests. Net profits gained by the Company from any capital transaction will be shared in the following order based on priority 1. To offset negative balances in the Members’ capital accounts, proportionate to the negative balance in the capital accounts of Members until negatives balances in all capital accounts have been cleared. 2. Members shall receive a proportionate amount paid to their capital accounts in proportion to the Member percentage interests Net losses of the Company shall be shared in the following order based on priority: 1. Distributed to each Member up to the amount that their capital account balance is in excess of their original capital contribution in proportion to each Member’s excess balance until said excess balance has been reduced to zero. 2. Distributed to each member in proportion to the members percentage interests. The Company’s cash receipts shall be shared in the following order based on priority 1. Any payments for interest or amortization on mortgages for Company assets, balances due on the debt or liabilities of the Company not inclusive of those due to Members of the Company, costs associated with the construction of improvements of Company assets, and Company operating expenses 2. Interest payments and the creating cash reserves that are determined to be necessary by the Members of the Company. These cash reserves may include but are not limited to reserves for the Company’s normal business operations, repairs, improvements, taxes, and any contingencies that may occur during the course of normal operations. The cash receipts of the Company, not including those produced by capital transactions then be shared to the Members, except as otherwise stated in this Agreement or otherwise stipulated by law, a proportion equal to their Member’s percentage interests. Furthermore, except as otherwise stated in this Agreement or stipulated by law, sharing cash receipts from capital transactions as a distribution shall be made with the following order of priority. 1. To Members proportionate to their capital account until the cash distribution each member has received is equal to the positive balance in their capital account, if any. 2. To Members proportionate to their Member’s percentage interests It is intended by the members that, under this Agreement, allocations made will be considered to have a “substantial economic effect” as per the meaning of Section 704 of the Internal Revenue Code and Treas. Reg. Section 1.704-1. If, at any time, the provisions contained in this Agreement conflict with or are not consistent with Section 704 of the Internal Revenue Code, then Section 704 of the Internal Revenue Code and its regulations shall take precedence over the provision in conflict. If Section 704 of the Internal Revenue Code require the operating agreements of Limited Liability Companies include provisions not contained herein, those provisions will be incorporated to this Agreement by references and will be considered part of this Agreement in the same way as if they were explicitly contained herein.