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"Loss" means, for each Fiscal Year or other period, each item of loss or deduction as <br /> determined, recognized and classified for federal income tax purposes, increased by (i) expenditures <br /> described in Section 705(a)(2)(B) of the Code, (ii)expenditures contemplated by Section 709 of the Code <br /> (except for amounts with respect to which an election is properly made under Section 709(b) of the <br /> Code); and (iii) expenditures resulting in a deduction for a loss incurred in connection with the sale or <br /> exchange of Company property that is disallowed to the Company under Section 267(a)(1) or Section <br /> 707(b). <br /> "Majority in Interest" means, with respect to any referenced group of Members, a <br /> combination of any of such Members who, in the aggregate, own more than fifty percent (50%) of the <br /> Percentage Interests owned by all of such referenced group of Members. <br /> "Member" means the Persons listed on Schedule 3.1 attached hereto or any additional <br /> Person(s) admitted as a Member in accordance with the terms hereof. "Members" refers to such Persons <br /> as a group. <br /> "Net Income" or "Net Loss"means, for each Fiscal Year or other relevant period, (i)the <br /> excess of the Income for such period over the Loss for such period, or(ii)the excess of the Loss for such <br /> period over the Income for such period, respectively, as determined by the firm of certified public <br /> accountants regularly employed by the Company. <br /> "Operating Agreement" means, with respect to the Company, this Agreement, the <br /> schedules attached hereto, and any amendments thereto entered into or approved, in writing, in the <br /> manner set forth herein. <br /> "Ownership Interest"means all of an Interest Owner's rights in the Company, including <br /> without limitation,the Interest Owner's share of the profits and losses of the Company,the right to receive <br /> distributions of the Company's assets, any right to vote and any right to participate in the management of <br /> the Company as provided in the Act and this Agreement. <br /> "Percentage Interest" means, with respect to an Interest Owner, such Interest Owner's <br /> relative percentage of unit ownership, as set forth on Schedule 3.1. The Interest Owners' respective <br /> Percentage Interests shall be subject to change as otherwise agreed upon by the Interest Owners or <br /> adjusted pursuant to the terms and conditions of this Agreement. <br /> "Permitted Transferee" means any transferee of an Ownership Interest in the Company <br /> pursuant to a Permitted Transfer. <br /> "Person"means an individual, a trust, an estate, a corporation,a professional corporation, <br /> a partnership, a limited partnership, a limited liability company, an unincorporated association, or another <br /> entity. <br /> "Secretary of State"means the Secretary of State of North Carolina. <br /> "Substitute Member" means an assignee of all or any part of an Interest Owner's <br /> Ownership Interest who has been admitted to all of the rights of membership pursuant to this Agreement. <br /> "Treasury Regulations" means the Income Tax Regulations and Temporary Regulations <br /> promulgated under the Code, as such regulations may be amended from time to time (including <br /> corresponding provisions of succeeding regulations). <br /> A-3 <br />