Common use of Clawback Amount Clause in Contracts

Clawback Amount. (a) If, as of the date of liquidation, after taking into account proceeds distributed to Limited Partners pursuant to a liquidation of the Partnership (i) (A) the aggregate Carried Interest Distributions with respect to a Limited Partner exceeds (B) 20% of the sum of (but not below zero) (x) the aggregate distributions then and previously made to such Limited Partner pursuant to Section 4.2(a), (y) plus the Carried Interest Distributions with respect to such Limited Partner, and (z) less the aggregate Capital Contributions made by such Limited Partner (the excess of (A) over (B) referred to as the "Excess 20% Amount"), determined after giving effect to all transactions through the liquidation date (including distributions pursuant to Section 10.2(d)) or (ii) the distributions received by such Limited Partner are not sufficient to provide such Limited Partner with its aggregate Capital Contributions and Priority Return thereon (the "Priority Shortfall Amount"), then the General Partner shall be obligated to return promptly to the Partnership for distribution to such Limited Partner the Clawback Amount with respect to such Limited Partner. If the General Partner is required to return any Clawback Amount pursuant to Section 10.3(a) and the Clawback Amount to be returned was reduced by income tax imposed on the General Partner as to such Clawback Amount, the General Partner shall make a good faith effort to obtain a refund for the income tax actually paid with respect to such Clawback Amount and agrees to return to the Partnership for distribution to any Limited Partner referred to in Section 10.3(a) any income tax refunded to it, if any, as part of the Clawback Amount. (b) In order to secure the General Partner's performance of its obligations under clause (a) of this Section 10.3, the General Partner shall deposit into an account held by a bank as escrow agent (the "Escrow Account") 50% of all Carried Interest Distributions. The amounts deposited in such an Escrow Account shall be invested in cash equivalents and the earnings on such account shall be for the benefit of, and distributed quarterly to, the General Partner. For purposes of determining the Capital Account of the General Partner and for making allocations pursuant to Section 4.4, any amounts held in such an Escrow Account shall be considered to have been distributed to the General Partner. (c) The General Partner's shareholder's agreement or similar agreement shall provide that in the event the General Partner is obligated under Section 10.3 herein to return to the Partnership a portion of the distributions received from the Partnership, each beneficial holder, or a beneficial holder of a beneficial holder, of the General Partner shall be obligated to return its pro rata share of such distributions to the General Partner (based on amounts received therefrom relating to Carried Interest Distributions), but only to the extent the General Partner has insufficient funds to meet such obligations. In addition, the General Partner shall be obligated to require each of the Principals to execute a personal guarantee, to be several and not joint, guaranteeing such Principal's pro rata share of the Clawback Amount. The Partnership shall be a third party beneficiary of any such provision of the General Partner's shareholder's agreement, or similar agreement or any such personal guarantee, or any other agreement of any beneficial holder of a beneficial holder of the General Partner and no amendment of any such provision or guarantee shall be made without the consent of the Partnership (which may be given by the General Partner only with the approval of Two-Thirds in Interest of the Limited Partners).