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

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					SpadacciniUltimateLLC AppA.qxp         11/10/2010     2:34 PM    Page 230




      THE ULTIMATE LLC COMPLIANCE GUIDE


                         LLC Form 5: Alternative Provision for Use in Long-Form Operating Agreements:
                                                    Appraisal 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) Selection of Appraiser. Within 10 days after the event triggering the valuation of Membership Inter-
                      ests, the Company and the selling Member shall mutually select a qualified appraiser to appraise
                      the Company and set a value on its Membership Interests. If the Company and the selling Member
                      cannot agree on a mutually acceptable appraiser, each party shall have five (5) days after the expi-
                      ration of the previous period to appoint its own qualified appraiser. If either party fails to appoint a
                      qualified appraiser within the five- (5-) day period, the other party’s appraiser, alone, shall have
                      twenty-one (21) days to appraise the value of the Company’s Membership Interests. If both parties
                      have each selected appraisers, these appraisers shall have twenty-one (21) days to appraise the
                      value of the Company’s Membership Interests. If the two appraisers cannot come to agreement on
                      the appraised value of the Interests, they shall both select another qualified appraiser, who will
                      then determine the value of the Interests.
                  (b) Considerations in Making Appraisal. The appraiser(s) shall consider the following factors in making
                      their appraisals:
                         (1) The value of comparable companies, if known.
                         (2) The fair market value, or replacement value, as appropriate, of any real property, leasehold
                             improvements, equipment, and furnishings and fixtures.
                         (3) The face amount of any accounts payable or other corporate liabilities.
                         (4) The face amount of any accounts receivable, with a reasonable reserve for bad debts.




      230 • APPENDIX A

				
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