Common use of Fees to Members Clause in Contracts

Fees to Members. Any fees or other amounts paid or accruing to the benefit of any Member pursuant to this Agreement (or any other agreement between the Company and any Member providing for the payment of such amount) in exchange for services rendered to the Company and payable to the Members without reference to or independently of their Percentage Interest or Capital Account balances shall be treated as guaranteed payments pursuant to Code Section 707(c), and shall be treated as expenses of the Company which reduce Profits or increase Losses that are to be allocated pursuant to this Article IV (such fees or payments are referred to in this Section as “Member Fees”). If any Member Fees cannot be deducted by the Company for purposes of determining taxable income allocable to the Members, or otherwise are disallowed as deductions for such purpose and are treated as distributions to the Members, then (a) the Profits or Losses, as the case may be, for the period in which such fees, interest or other amounts were paid shall be increased or decreased, respectively and as the case may be, by the amount of such fees, interest or other amounts; and (b) there shall be allocated to the Member to which such fees or other amounts inure, prior to allocations pursuant to Section 4.02, an amount of gross income for the period in which Member Fees were paid equal to the amount of such Member Fees that are not permitted as deductions to the Company for purposes of calculating taxable income allocable to the Members.