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Alternative Provision for Use in Long-Form Operating Agreements: Book Value Method of Valuation

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									SpadacciniUltimateLLC AppA.qxp          11/10/2010     2:34 PM    Page 228




      THE ULTIMATE LLC COMPLIANCE GUIDE


                            LLC Form 3: Alternative Provision for Use in Long-Form Operating Agreements:
                                                   Book Value Method of Valuation
             7.7. Calculation of Repurchase Price. The “Repurchase Price” shall be determined as of the date of the
                  event causing the transfer or dissolution event (the “Effective Date”). The date that the Company
                  receives notice of a Member’s intention to transfer his or her interest pursuant to this paragraph shall
                  be deemed to be the Effective Date. The Repurchase Price shall be determined as follows:
                   (a) Computation of Book Value. The book value of each percentage point of Percentage Interest shall
                       be computed by the independent certified public accountant (CPA) regularly used by the Company
                       or, if the Company has no CPA, by a CPA selected by the Company for this purpose. The book value
                       shall be determined in accordance with the regular financial statements prepared by the Company
                       and in accordance with generally accepted accounting principles, applied consistently with the
                       accounting principles previously applied by the Company, adjusted to reflect the following:
                         (i) All inventory, valued at market value.
                         (ii) All real property, leasehold improvements, equipment, and furnishings and fixtures valued at
                              the valuation appearing on the Company’s books as adjusted for depreciation or, with a useful
                              life of greater than live years, as defined for tax purposes on the Company’s books, valued at
                              their fair market value.
                         (iii) The amount of any cash surrender value of any insurance policies owned by the Company on
                               the life of any person.
                         (iv) The face amount of any accounts payable.
                         (v) The face amount of any accounts receivable, with a reasonable reserve for bad debts.
                         (vi) Any accrued taxes or assessments, deducted as liabilities.
                         (vii) All usual fiscal year-end accruals and deferrals (including depreciation), prorated over the fiscal
                               year.
                         (viii)The reasonable lair market value of any goodwill or other intangible assets.
                    To arrive at the value of each percentage point of Membership Interest, the book value computed
                    according to this Section shall be divided by one hundred (100). The Company shall provide any
                    information the CPA deems necessary or useful in determining the value of the Membership Interest.




      228 • APPENDIX A

								
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