Common use of Maintenance Rules Clause in Contracts

Maintenance Rules. The Company shall establish and maintain, in accordance with this Section 6.01(a), a separate capital account (a “Capital Account”) for each Member. Each Capital Account shall be maintained in accordance with the following provisions: (i) Such Capital Account shall be increased by the cash amount or Book Value of any property contributed by such Member to the Company, such Member’s allocable share of Profits and any items in the nature of income or gains which are specially allocated to such Member pursuant to Section 7.02 or Section 7.03, and the amount of any liabilities of the Company assumed by such Member or which are secured by any property distributed to such Member. (ii) Such Capital Account shall be decreased by the cash amount or Book Value of any property distributed to such Member by the Company, such Member’s allocable share of Losses and any items in the nature of deductions or losses which are specially allocated to such Member pursuant to Section 7.02 or Section 7.03, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. (iii) If all or any portion of a Unit is Transferred in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Unit (or portion thereof). (iv) In determining the amount of any liability for purposes of this definition of Capital Account, there shall be 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 Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. The Managing Member shall modify the manner in which the Capital Accounts are maintained if necessary to comply with such Treasury Regulations.