Llc Operating Agreement (Sample) (Page 28 of 32) in pdf

Section 1. Net Profits

After giving effect to the special allocations set forth in Sections 3 and 4 of this Exhibit C, Net Profits for

any Fiscal Year shall be allocated among all of the Interest Holders on a Pro Rata Basis.

Section 2. Net Losses

After giving effect to the special allocations set forth in Sections 3 and 4 of this Exhibit C, Net Losses for

any Fiscal Year shall be allocated as set forth in Section 2(a) hereof, subject to the limitation in Section

2(b) hereof.

(a)

Net Losses for any Fiscal Year shall be allocated in the following order and priority: (i) first, to all

of the Interest Holders on a Pro Rata Basis in an amount equal to the excess, if any, of (1) the

cumulative Net Profits allocated pursuant to this Section for all prior Fiscal Years, over (2) The

cumulative Net Losses allocated pursuant to this Section for all prior Fiscal Years; and (ii) The

balance, if any, to all of the Interest Holders on a Pro Rata Basis.

The Net Losses allocated pursuant to Section 2(a) of this Exhibit C shall not exceed the maximum

amount of Net Losses that can be so allocated without causing any Interest Holder to have an Adjusted

Capital Account Deficit at the end of any Fiscal Year. In the event some but not all of the Interest

Holders would have Adjusted Capital Account Deficits as a consequence of an allocation of Net Losses

pursuant to Section 2(a) of this Exhibit C, the limitation set forth in this Section 2(b) shall be applied on

an Interest Holder by Interest Holder basis so as to allocate the maximum permissible Net Losses to each

Interest Holder under Regulations Section 1.704-l(b)(2)(ii)(d). All Net Losses in excess of the limitations

set forth in this Section 2(b) shall be allocated to all of the Interest Holders on a Pro Rata Basis.

Section 3. Special Allocations.

The following special allocations shall be made in the following order:

Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), and

notwithstanding any other provision of this Exhibit C, if there is a net decrease in LLC Minimum Gain

during any Fiscal Year, each Interest Holder shall 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 Interest

Holder’s share of the net decrease in LLC Minimum Gain, determined in accordance with Regulations

Section 1.704-2(g). The items to be so allocated shall be determined in accordance with Regulations

Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section is intended to comply with the minimum gain

chargeback requirement in Regulations Section 1.704-2(f), and shall be interpreted consistently

therewith.

Member Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-

2(i)(4), notwithstanding any other provision of this Exhibit C, if there is a net decrease in Member

Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Company

Fiscal Year, each Interest Holder who has a share of the Member Nonrecourse Debt Minimum Gain

attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section

1.704-2(i)(5), shall 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 Person’s share of the net decrease in

Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined

in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall

be made in proportion to the respective amounts required to be allocated to each Interest Holder pursuant

thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-

2(i)(4) and 1.704-2(j)(2). This Section 3(b) is intended to comply with the minimum gain chargeback

Llc Operating Agreement (Sample) Page 28