EX-10 5 ex10-37.txt EX10-37.TXT Exhibit 10.37
LIMITED LIABILITY COMPANY AGREEMENT OF INOVISION-MEDCLR-NCOP-F, L.L.C.
This LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is entered into and shall be effective as of the 9th day of March, 2001 (the "Effective Date"), among INOVISION-MEDCLR-NCOP-F, L.L.C., a limited liability company organized under the laws of the State of Delaware (the "Company"), and the Initial Member (as defined below) of the Company and any other Person who becomes a Member in accordance with the terms of this Agreement. This Agreement is entered into in accordance with the Delaware Limited Liability Company Act and constitutes the "limited liability company agreement" as defined in such Act.
ARTICLE I
ORGANIZATION AND DEFINITIONS
1.01 Organization. The Company was formed through the filing with the Delaware Department of State of a Certificate of Formation. The Company shall be governed by the laws of the State of Delaware in accordance with this Agreement.
1.02 Name. Effective as of the establishment of the Business, the business and affairs of the Company shall be conducted under the name of "INOVISION-MEDCLR-NCOP-F, L.L.C.".
1.03 Principal Office; Registered Office; Registered Agent. The principal office of the Company will be at 333 Glen Street, Suite 200, Glen Falls, New York 12801 or at such other location as determined by the Board. The initial registered office of the Company will be at c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.
1.04 Term. The Company was formed on February 20, 2001, and will continue unless it is sooner terminated in accordance with Article IX of this Agreement. In the event the Exclusivity Agreement (as defined below) is terminated, the parties will work in good faith to collect the Company's receivables.
1.05 Recording of Certificates. The Company shall take all actions necessary to file its Certificate of Formation and amendments thereto properly with the Delaware Department of State. All filing fees will be paid by the Company. The Company shall take all other action necessary to perfect and maintain the Company as a limited liability company under the laws of the State of Delaware and (if and to the extent required by applicable law for such purpose) to amend the Certificate of Formation from time to time.
1.06 Definitions. As used in this Agreement, the following terms have the meanings ascribed to them in this Section 1.06 and include the plural as well as the singular number:
"Act" means the Delaware Limited Liability Company Act as it may be amended, or any subsequent Delaware law that is enacted in substitution for that law.
"Additional Members" shall mean those Persons admitted as Members of the Company pursuant to the terms hereof.
1 "Adjusted Capital Account Deficit" means a deficit balance in a Member's Capital Account, determined with the following adjustments: (a) reduce such deficit balance by any amount that the Member is obligated to restore to the company or treated as obligated to restore pursuant to the Regulation Section 1.704-1(b)(2)(ii)(c), Regulation Section 1.704-2(g), and Regulation Section 1.704-2(i)(5); and (b) adjust such Member's Capital Account for items specified in subsections (4), (5), and (6) of Regulation Section 1.704-1(b)(2)(ii)(d) that, as of the end of the year, are reasonably expected to occur with respect to the Member.
"Affiliate" means, with respect to any Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with such Person, (ii) any other Person owning and controlling ten percent (10%) or more of the outstanding voting interest of such Person, (iii) any officer, director, manager or general partner of such Person, (iv) any other Person who is an officer, director, manager, general partner, trustee or holder of ten percent (10%) or more of the voting interests of any of the other Persons described in clauses (i) through (iii) of this sentence, or (v) a Family Member. For purposes of this definition, the term "controls", "is controlled by" or "is under common control with" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Limited Liability Company Agreement, as amended from time to time. Words such as "herein," "hereafter," "hereof," "hereto," and "hereunder" refer to this Agreement as a whole, unless the context otherwise requires.
"Board" means the Board of Managers of the Company, as elected by the Members in accordance with this Agreement.
"Book Gain" or "Book Loss" means gain or loss recognized by the Company for book purposes in any Fiscal Year or other period under the principles of Treasury Regulation 1.704-1(b)(2)(iv) by reason of a sale or other disposition of any Company asset. Book Gain or Book Loss shall be computed by reference to the Book Value of the asset as of the date of such sale or other disposition rather than by reference to the tax basis of the asset at such date. Every reference in this Agreement to "gain" or "loss" refers to Book Gain or Book Loss, rather than to tax gain or tax loss, unless the context manifestly otherwise requires.
2 "Book Value" of an asset means the gross fair market value of an asset (other than cash), as determined by the Company, transferred as a Capital Contribution to the Company or, as of any particular date, the value at which the asset is reflected on the books of the Company as of such date. The Book Value of all Company assets shall be adjusted to equal their respective fair market values, as determined by the Company, as of the following times: (i) the acquisition of additional Membership Interests by any new or existing Member in exchange for more than a de minimis Capital Contribution or at the time otherwise required by Section 3.03; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company property or money in exchange for all or a part of the Member's Company Interest; and (iii) at any other time required by Treasury Regulations 1.704-l(b)(2)(iv), 1.704-2 or 1.704-3. Adjustments in accordance with clauses (i) and (ii), above, shall be made only if the Company determines that such adjustments are necessary or appropriate to reflect the economic interests of the Members in the Company. In addition, the Book Value of any Company asset distributed to any Member shall be adjusted to its market value as determined on the date of distribution.
"Business" means the acquisition of defaulted or past due healthcare (including, but not limited to, physician, HMO, PPO, hospital, insurance and clinic, but excluding HCA, the Healthcare Company), bad, dishonored and/or returned checks and defaulted or overdue utility (e.g., electric, gas, water, sewer, cable, satellite and telecom) receivables, accounts and/or accounts receivable of that type.
"Capital Account" means the account maintained for each Member in the Company's books of account in the manner described in Section 3.04.
"Capital Contribution" means the total amount of cash or Net Book Value or other property contributed to the equity of the Company by each Member pursuant to this Agreement. Any reference in this Agreement to the Capital Contribution of either a Member or any assignee of a Member includes any Capital Contribution previously made by any prior Member to whose Company Interest the then existing Member or assignee succeeded.
"Certificate" means the Certificate of Formation for the Company filed with the Delaware Department of State and any amendments thereto.
"CFSC" means CFSC Capital Corp. XXXIV.
3 "Code" means the Internal Revenue Code of 1986, as it may be amended, or any subsequent federal law concerning income tax as enacted in substitution for, or that corresponds with, such Code.
"Company" means InoVision-Medclr-NCOP-F, L.L.C.
"Company Interests" includes only a Member's Capital Contribution and the right to receive its share of the Profits and Losses, distributions, and liquidation proceeds of the Company, all in accordance with the terms of this Agreement and excludes Company Rights.
"Company Minimum Gain" has the meaning set forth in Treasury Regulations 1.704-2(d) and, as provided therein, shall generally be determined by computing, for each Nonrecourse Debt of the Company, any Profit the Company would realize if it disposed of the Company assets subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separate amounts of Profit so computed for each Nonrecourse Debt.
"Company Rights" excludes the Company Interest of a Member, and includes, in addition to voting, consent and other rights provided in this Agreement, all other rights provided to limited liability company interests under this Agreement and the Act.
"Consent" means the consent of a Person, given as provided in Section 11.01, to do the act or thing for which the consent is solicited, or the act of granting such consent, as the context may require.
"Covered Person" means a Person specified in Section 6.05.
"Credit Agreement" means the Credit Agreement, dated as of the date hereof, between CFSC and the Company (or any of its subsidiaries or sister companies), as amended, restated, extended or modified from time to time.
"Depreciation" means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period for federal income tax purposes, except that if the Book Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, and except as provided in Treasury Regulations 1.704-3, Depreciation shall be that amount which bears the same relationship to the Book Value of such asset at that time as the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes bears to its adjusted tax basis at such time.
"Family Member" with respect to an individual shall mean another individual if such other individual is the spouse of that individual or is related through a common grandparent of the individual or spouse of the individual.
4 "Fiscal Year" means the period beginning on January 1 and ending on December 31.
"Initial Member" means InVision-Medclr-NCOP Ventures, L.L.C.
"Involuntary Retirement" means the occurrence of any of the following: (i) a Person is adjudged a bankrupt or insolvent, or has entered against it an order for relief in any bankruptcy or insolvency proceeding; (ii) ninety (90) days after the commencement of any proceeding against a Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, if the proceeding has not been dismissed or stayed at such time; (iii) ninety (90) days after the appointment without the Person's consent or acquiescence of a trustee, receiver or liquidator of a Person or of all or any substantial part of its properties, if the appointment is not vacated or stayed at such time; or (iv) the involuntary dissolution of a Person or any other event which is neither initiated by nor acquiesced in by a Person and is not a Voluntary Retirement.
"Majority Vote" means the affirmative vote of Members holding as of a record date established by the Board a majority of the outstanding Membership Interests. Such vote may be evidenced by a written consent signed by such Members, which may be executed in counterparts.
"Manager" means a person elected to the Board of Managers by the Members in accordance with this Agreement.
"Marlin" means IMNV Holdings, L.L.C., a 50% owner of the Initial Member.
"Member Nonrecourse Debt" means any Company liability to the extent such liability is nonrecourse to the Company for purposes of Treasury Regulations 1.1001-2 and a Member (or related person within the meaning of Treasury Regulations 1.752-4(b)) bears the economic risk of loss with respect to such liability under Treasury Regulations 1.752-2.
"Member Nonrecourse Debt Minimum Gain" has the meaning set forth in Treasury Regulations 1.704-2(i)(3) and, as provided therein, shall generally be the amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Debt.
"Member Nonrecourse Deductions" has the meaning, and shall be determined in the manner, set forth in Treasury Regulations 1.704-2(i)(2).
5 "Members" means the Persons designated in this Agreement as the Members of the Company and any Persons who become Members of the Company, pursuant to this Agreement, in the Persons' capacity as Members of the Company. The Members are the members of the Company pursuant to the Act. The Initial Members are identified on Exhibit "A" hereto.
"Membership Interests" means limited liability company interests of the Members in the Company pursuant to the Act. Membership Interests shall be not be evidenced by certificates. Each unit of Membership Interest shall have one vote in connection with decisions submitted to Members, and all Membership Interests shall be identical. The number of units of Membership Interests initially issued to each Member shall be identified on Exhibit "A". "NCOP" means NCOP/Marlin, Inc., a 50% owner of the Initial Member.
"Net Book Value" means the Book Value of the assets contributed as a Capital Contribution to the Company by a Member less the liabilities to which such assets are subject.
"Nonrecourse Debt" means any mortgage securing the Business or any other Company liability to the extent that no Member (or related person within the meaning of Treasury Regulations 1.752-4(b)) bears the economic risk of loss for such liability under Treasury Regulations 1.752-2.
"Nonrecourse Deductions" has the meaning set forth in Treasury Regulations 1.704-2(c).
"Notification" means a writing, containing the information required by this Agreement to be communicated to any Person.
"Permitted Transfer" shall mean (i) a transfer by a Member to another entity which is wholly-owned by that Member's sole owner, (ii) a transfer which is approved by all Members and (iii) any transfer to another Member.
"Person" means a natural person, corporation, trust, partnership, joint venture, association, limited liability company or other business or other legal entity.
6 "Profit" or "Loss" means, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(1) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profit or Loss shall be added to such taxable income or loss;
(2) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv) shall be subtracted from such taxable income or loss;
(3) In lieu of the depreciation, amortization or other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year;
(4) Book Gain or Book Loss shall be taken into account in lieu of any tax gain or tax loss recognized by the Company; and
(5) Items of income, gain, loss, or deduction allocated separately pursuant to Section 4.04 hereof shall be excluded from the computation of taxable income or loss.
If the Company's taxable income or loss for such Fiscal Year, as adjusted in the manner provided above, is a positive amount, such amount shall be the Company's Profit for such Fiscal Year; and if negative, such amount shall be the Company's Loss for such Fiscal Year.
"Pro Rata" means in the proportion that the item being measured for each Member bears to the total of all such items for all Members for whom a contribution, distribution, or allocation is due or being made, Membership Interest, or determined.
"Retirement" (including the verb form "Retire" and the adjective form "Retiring") means, as to a Member, the occurrence of Voluntary Retirement or Involuntary Retirement.
"Substituted Member" means any Person admitted as a Member by virtue of acquiring Membership Interests from another Member in accordance with the terms of this Agreement.
7 "Tax Matters Member" means the Initial Member, or such other person as may be designated by Majority Vote of the Members.
"Transfer" means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate or otherwise dispose of.
"Treasury Regulations" means the regulations of the United States Treasury Department pertaining to the Code, as amended, and any successor provision thereto.
"Voluntary Retirement" means the occurrence of any of the following: (i) the withdrawal of a Member as a Member or the Transfer of any portion of a Membership Interest in violation of the provisions of this Agreement; (ii) a Member makes an assignment for the benefit of creditors, files a voluntary petition in bankruptcy, files a petition or answer seeking for itself any reorganization, arrangement, compensation, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature or seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of a Member or of all or any substantial part of its properties, (iii) the voluntary termination or dissolution of a Member; or (iv) any other event initiated by or with the acquiescence of a Member which could be an event of withdrawal under the Act.
8 ARTICLE II
PURPOSES AND BUSINESS OF THE COMPANY
2.01 Purposes of the Company. The Company has been formed for the purpose of acquiring and owning and contracting with others for the collection of accounts, receivables and accounts receivable, including but not limited to, those of the nature described in the definition of "Business", above, and any other lawful purpose.
2.02 Authority of the Company. To carry out its purposes, the Company, consistent with and subject to the provisions of this Agreement and all applicable laws, is empowered and authorized to do any and all acts and things incidental to, or necessary, appropriate, proper, advisable, or convenient for, the furtherance and accomplishment of its purposes.
2.03 Special Limitations. Notwithstanding the authority of the Company set forth in Section 2.02 or any other provision of this Agreement, the Company shall not:
(a) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation;
(b) fail to file its own tax returns; or
(c) fail either to hold itself out to the public as a legal entity separate and distinct from any other entity or Person or to conduct its business solely in its own name in order not to mislead others as to the identity of the entity with which such other party is transacting business; or
(d) elect under Treasury Regulationsss.301.7701-3 to be taxed as an association taxable as a corporation.
ARTICLE III
MEMBERS, CAPITAL
3.01 Members. The name, address, and initial Capital Contribution of each Member, and number of Membership Interests issued to each Member, are set forth in Exhibit "A" hereto, as that Exhibit "A" may be amended from time to time with the unanimous consent of the members to reflect the admission of Additional Members. Without the prior written consent of all Members, no Member shall be required to lend any funds to the Company or to make any additional Capital Contribution to the Company.
3.02 Return of Capital. A Member shall not receive from the Company or out of Company property, and shall have no right to withdraw and demand, and the Company shall not return to a Member, any part of the Capital Contribution or Capital Account of the Member except in accordance with this Agreement.
9 3.03 Company Capital.
(a) The Members have made, or agreed to make, initial Capital Contributions in amounts reflected opposite each Member's name in Exhibit "A" hereto, and such amount shall be credited to each Member's Capital Account.
(b) No Member shall be paid interest on any Capital Contribution to the Company or on such Member's Capital Account.
(c) Distributions to the Members shall be made only as expressly provided for in this Agreement.
(d) The Members may from time to time unanimously determine that additional capital (in addition to the initial Capital Contributions made pursuant to this Agreement) is required in order to achieve the purposes of the Company described in Section 2.01 above. With the unanimous consent of the Members, the Members may make additional Capital Contributions, pro rata to their Membership Interests. To the extent required by any agreement to which the Members are parties, the Members shall make additional Capital Contributions or loans to the Company in such amounts, with such terms and conditions and at such times as are required in such other agreements. In the event that the Members make additional Capital Contributions, such Capital Contributions shall also be credited to their accounts.
3.04 Capital Accounts.
(a) A separate Capital Account shall be maintained for each Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be credited such Member's Capital Contributions, such Member's distributive share of Profits, and any items thereof that are specially allocated pursuant to Article IV, and the amount of any Company liabilities that are assumed by such Member or that are secured by, or subject to, any Company property distributed to such Member.
(ii) To each Member's Capital Account there shall be debited the amount of cash and the fair market value of any Company property distributed to such Member pursuant to any provisions of this Agreement, such Member's distributive share of Losses, and any items in the nature of expenses or losses that are specially allocated pursuant to Article IV, and the amount of any liabilities of such Member that are assumed by the Company or that are secured by, or subject to, any property contributed by such Member to the Company.
10 (b) Except as provided to the contrary in this Agreement, the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations ss. 1.704-l(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event the Company shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Treasury Regulations, the Company may make such modification. The Company shall adjust the amounts debited or credited to Capital Accounts with respect to (i) any property contributed to the Company or distributed to a Member, and (ii) any liabilities that are secured by such contributed or distributed property or that are assumed by the Company or a Member, in the event the Company determines that such adjustments are necessary or appropriate pursuant to Treasury Regulations ss.1.704-l(b)(2)(iv). The Company shall also re-value Capital Accounts in accordance with Treasury Regulations ss.1.704-1(b)(2)(iv)(f) including, but not limited to, upon the admission of Additional Members to the Company if such a revaluation is necessary to reflect the economic arrangement of all Members. The Company also shall make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations ss.1.704-l(b).
(c) In the event of an assignment of Membership Interests in accordance with the terms of this Agreement, the portion of the Capital Accounts, rights and obligations relating to the allocations of Profits of Losses and all other items attributable to such Membership Interests shall follow such Membership Interests and be assigned to the assignee. Items attributable to a Member shall take into account items attributable to predecessor holders of Membership Interests held by the Member.
3.05 Liability of Members.
(a) Subject to Section 18-607(b) of the Act, no Member shall have any personal liability whatsoever in his capacity as a Member, whether to the Company, to any of the Members, or to the creditors of the Company, for the debts, liabilities, contracts, or any other obligations of the Company, or for any losses of the Company. Except as otherwise agreed in writing by the Members, a Member shall be liable only to make its initial Capital Contributions as expressly provided for herein and shall not be required to lend any funds to the Company or to make any further Capital Contributions to the Company or to repay to the Company, any Member, or any creditor of the Company all or any fraction of any negative amount in a Member's Capital Account.
11 (b) A Member shall not be liable for the payment or repayment of any amounts standing in the account of another Member including, but not limited to, the Capital Contributions. Any such payment or repayment, if required to be made, shall be made solely from the Company's assets. The Members acknowledge that the Company is to be taxed as a partnership for income tax purposes, and each Member shall be liable for tax liabilities on its distributive Membership Interest of Company profits.
ARTICLE IV
PROFITS AND LOSSES
4.01 Determination and Allocation of Profits and Losses. Profits and Losses of the Company shall be determined for each Fiscal Year of the Company in accordance with the method of income tax accounting adopted by the Company consistently applied and shall be allocated among the Members in the manner provided in this Article IV.
4.02 Allocation of Profits and Losses.
(a) Profits. For purposes of maintaining the Capital Accounts of the Company, all Profits shall be allocated in the following priorities:
(i) First: To the Members Pro Rata, in accordance with the negative Capital Account balances of such Members until the negative Capital Account balance of each such Member is increased to zero (0); and then
(ii) Second: To the Members until the net cumulative amount allocated pursuant to this Section 4.02(a) equals the cumulative net Losses allocated to the Members under Section 4.02(b) below as reduced by the sum of net Profit and Gain allocations under this Section 4.02(a) previously made, Pro Rata in accordance with the relative amounts of each Member's cumulative net Losses in excess of net Profit and Gain allocations previously made to each Member; and then
(iii) Third: To the Members Pro Rata in accordance with their respective Membership Interests.
(b) Losses. For purposes of maintaining the Capital Accounts of the Company, Net Losses shall be allocated in the following priorities:
(i) First: Pro Rata to the Members in accordance with each such Member's positive Capital Account balance until the positive Capital Account balance of each such Member is reduced to zero (0); and then
(ii) Second: To the Members pro rata in accordance with their respective Membership Interests.
Notwithstanding the foregoing, Net Losses allocated to a Member pursuant to this Section 4.02(b) shall not exceed the maximum amount of Net Losses that can be so allocated without causing such Member to have an Adjusted Capital Account Deficit at the end of any period. Any Loss in excess of the limitation for a Member set forth in the preceding sentence shall be allocated to the other Members Pro Rata in accordance with the amounts not in excess of such limitation for such other Members with the balance of such Loss, if any, allocated Pro Rata to all of the Members in accordance with their respective Membership Interests.
12 4.03 Tax Allocations.
(a) Except as otherwise provided in this Agreement, for federal income tax purposes, all items of Company income, gain, loss, deduction, basis, amount realized and credit, and the character and source of such items, shall be allocated among the Members in the same manner as the corresponding items of income, gain, loss, deduction or credit are allocated to Capital Accounts in accordance with Sections 4.02 or 4.04. The Company shall maintain such books, records and accounts as are necessary to make such allocations.
(b) The Company is authorized to make, for tax purposes only, allocations of income, gain, loss or deduction or adopt conventions as are necessary or appropriate to comply with the relevant Treasury Regulations or Internal Revenue Service pronouncements under Section 704(c) of the Code, and in particular, in respect of a Capital Contribution of property other than cash and adjustments to the Book Value of Company assets at the times specified in the definition of Book Value. Allocations will be made under methods selected by the Company and in a manner consistent with Treasury Regulations 1.704-3 and in conformity with Treasury Regulations 1.704-l(b)(2)(iv)(f) and 1.704-l(b)(4)(i).
4.04 Regulatory Allocations.
(a) Qualified Income Offset. If any Member receives an adjustment, allocation or distribution described in Treasury Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) or (6) in any Fiscal Year or other period, and as a result would, but for this Section 4.04(a), have a deficit balance in his Capital Account as of the last day of such Fiscal Year or other period which is in excess of the sum of (i) the amount (if any) such Member is obligated to restore (whether under this Agreement or otherwise, and including for this purpose, without limitation, such Member's exposure with respect to debt or other obligations or liabilities of the Company) and (ii) the amount of such Member's Membership Interest of Company Minimum Gain (including for this purpose such Member's Membership Interest of Member Nonrecourse Debt Minimum Gain) as of such last day, then items of income and gain of the Company (consisting of pro rata portion of each item of Company income, including gross income and gain) for such Fiscal Year or other period (and, if necessary, for subsequent Fiscal Years of periods) shall be specially allocated to such Member in the amount and in the proportions required to eliminate such excess as quickly as possible. For purposes of this Section 4.04(a), a Member's Capital Account shall be computed as of the last day of a Fiscal Year or other period in the manner provided in Section 3.04 hereof, but shall be increased by any allocation of income to such Member for such Fiscal Year or other period under Sections 4.04(b) and 4.04(c) hereof.
13 (b) Company Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any Fiscal Year or other period, each Member shall be allocated items of Company income and gain for such Fiscal Year or other period (and, if necessary, for subsequent Fiscal Years or periods) in proportion to, and to the extent of, an amount equal to such Member's Membership Interest of the net decrease in Company Minimum Gain during such Fiscal Year or other period, determined in accordance with Treasury Regulations Section 1.704-2(g). The requirement set forth in the preceding sentence shall be subject to the exceptions and limitations referred to in Treasury Regulations 1.704-2(f). This Section 4.04(b) is intended to constitute a "minimum gain chargeback" provision as described in Treasury Regulations 1.704-2(f) and shall be construed so as to meet the requirements of such Treasury Regulation.
(c) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Fiscal Year or other period, each Member shall be allocated items of Company income and gain for such Fiscal Year or other period (and, if necessary, for subsequent Fiscal Years or periods) in proportion to, and to the extent of, an amount equal to such Member's Membership Interest of the net decrease in Member Nonrecourse Debt Minimum Gain during such Fiscal Year or other period, determined in a manner consistent with the provisions of Treasury Regulations Section ss.1.704(g)(2). The requirement set forth in the preceding sentence shall be subject to the exceptions and limitations referred to in Treasury Regulations 1.704(i)(4). This Section 4.04(c) is intended to comply with the minimum gain chargeback requirement contained in Treasury Regulations 1.704-2(i)(4), and shall be construed so as to meet the requirements of said Treasury Regulation.
(d) Member Nonrecourse Deductions. If one or more Members bear the economic risk of loss (within the meaning of Section 1.752-2 of the Treasury Regulations) with respect to any Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated among such Members in accordance with the ratios in which such Members Membership Interest the economic risk of loss for such Member Nonrecourse Debt.
14 (e) Curative Allocations. The allocations set forth in Section 4.04(a) through (d) above (the "Regulatory Allocations") are intended to comply with certain requirements of Treasury Regulations 1.704-l(b) and 1.704-2. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss or make Company distributions. Accordingly, notwithstanding the other provisions of this Article IV but subject to the Regulatory Allocations, the Company is hereby directed to reallocate items of income, gain, deduction and loss among the Members so as to eliminate the effect of the Regulatory Allocations and thereby to cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Company anticipates that this will be accomplished by specially allocating other Profit and Loss (and such other items on income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero. The Company shall have discretion to accomplish this result in any reasonable manner. In addition, if in any Fiscal Year or other period there is a decrease in Company Minimum Gain, or in Member Nonrecourse Debt Minimum Gain, and application of the minimum gain chargeback requirements contained in Section 4.04(b) or Section 4.04(c) would cause a distortion in the economic arrangement among the Members, the Company may, if the Company does not expect that the Company will have sufficient other income to correct such distortion, request the Internal Revenue Service to waive either or both of such minimum gain chargeback requirements. If such request is granted, this Agreement shall be applied in such instance as if it did not contain such minimum gain chargeback requirements. The Company shall make any allocation or adjustment under this Section 4.04(e) only with the prior approval of the independent accountants for the Company.
4.05 Allocations in Event of Assignment; Prorations.
(a) Subject in all cases to applicable law, if there is an assignment of all or any part of a Member's Company Interest, for purposes of allocations of Profits and Losses and distributions of cash and property, the effective date of the assignment as to the Company will be: (i) in the case of a voluntary assignment under Article VIII, the effective date stated in the assignment instrument or such other date as the assignor and assignee agree, but not earlier than the date the Company receives notification of the assignment; or (ii) in the case of an involuntary assignment, the date of the operative event. Distributions of cash and property shall be allocated to the Person owning the Company Interest at the time of the distribution.
(b) In the event of the admission of an Additional Member, the termination of a Member's interest in the Company, or a change in the number of Membership Interests held by a Member, at any time other than the end of a Company Fiscal Year, the Additional Member's or remaining Members' Membership Interest of the Company's Profit