Priority Allocation of Net Loss to Preferred Unit Holders Sample Clauses
The "Priority Allocation of Net Loss to Preferred Unit Holders" clause establishes that, in the event the company incurs net losses, these losses are first allocated to holders of preferred units before being distributed to other classes of unit holders. In practice, this means that any financial shortfall is initially absorbed by the preferred unit holders, potentially reducing their capital accounts or future distributions, while common unit holders are shielded from losses until the preferred holders' share is fully allocated. This clause serves to protect the interests of common unit holders and clarifies the order in which losses impact different investor classes, thereby managing risk and ensuring transparency in financial outcomes.
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Priority Allocation of Net Loss to Preferred Unit Holders. From and after the time, if any, at which the Preferred Unit Holders are no longer entitled to preferential distributions with respect to either Partial Capital Events pursuant to Section 6.2 or upon dissolution or liquidation of the Partnership pursuant to Section 11.2(d), if and to the extent any Common Unit Holder has a Capital Account Shortfall immediately prior to any Revaluation Event, (x) an amount of net gain in connection with such Revaluation Event, if any, shall be allocated pursuant to Section 5.1(c) (i), and (y) an amount of net loss in connection with such Revaluation Event, if any, equal to the Preferred Unit Loss Allocation will be allocated to the Preferred Unit Holders on a pro rata basis until (and only until) the Revaluation Capital Account balance in respect of each Preferred Unit Holder is equal to the aggregate Revaluation Capital Account balances of all Partnership Unit Holders multiplied by the Percentage Interest of such Preferred Unit Holder. For the avoidance of doubt, any remaining amount of net loss in connection with such Revaluation Event following the allocation in foregoing subclause (y) shall be allocated pursuant to Section 5.1(c)(ii). SC1:3479243.8