Common use of Priority on Liquidation Clause in Contracts

Priority on Liquidation. (a) The Liquidator shall liquidate the assets of the Company, and apply and distribute the proceeds of such liquidation, in the following order of priority, unless otherwise required by mandatory provisions of applicable Law: (i) first, to the satisfaction (whether by payment or the making of reasonable provision for payment) of the Company’s debts and obligations to its creditors, including sales commissions and other expenses incident to any sale of the assets of the Company and including the establishment of and additions to such reserves as the Liquidator may deem necessary or appropriate; and (ii) second, to the Members in the same manner as set forth in Section 9.2. (b) The reserves established pursuant to subparagraph (a) of this Section 10.3 shall be paid over by the Liquidator to a bank or other financial institution, to be held in escrow for the purpose of paying any such contingent or unforeseen liabilities or obligations and, at the expiration of such period as the Liquidator deems advisable, such reserves shall be distributed to the Members in the priorities set forth in Section 10.3(a)(ii). (c) Notwithstanding the provisions of Section 10.3(a) which require the liquidation of the assets of the Company, but subject to the order of priorities set forth in Section 10.3(a), if upon dissolution of the Company the Board determines that an immediate sale of part or all of the Company’s assets would be impractical or could cause undue harm to the Members, then the Board may, in its discretion, defer the liquidation of any assets except those necessary to satisfy Company liabilities and reserves, and may, in its discretion, distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 10.3(a)(ii), undivided interests in such Company assets as the Liquidator deems reasonable and equitable and subject to any agreements governing the operating of such properties at such time. For purposes of any such distribution, the Board will determine the Fair Market Value of any property to be distributed. After any such determination, each Member shall have the right to require the Company to retain an Independent Appraiser to determine the Fair Market Value of any property to be distributed under this Section 10.3(c); provided that if the appraised value is less than 110% of the Board’s determination of the property’s Fair Market Value, then such Member shall reimburse the Company for all costs and expenses incurred in connection with such independent appraisal. (d) A reasonable time will be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 10.3(a) in order to minimize any losses otherwise attendant upon such winding up. Distributions upon liquidation of the Company (or any Member’s interest in the Company) will be made by the end of the Fiscal Year of the liquidation (or, if later, within 90 days after the date of such liquidation). (e) The Company shall terminate when all of the assets of the Company have been distributed in accordance with this Section 10.3 and the Certificate has been canceled in the manner required by the Act.

Priority on Liquidation. (a) The Liquidator shall liquidate the assets of the Company, and apply and distribute the proceeds of such liquidation, in the following order of priority, unless otherwise required by mandatory provisions of applicable Law: (i) firstFirst, to the satisfaction (whether by payment or the making of reasonable provision for payment) of the Company’s 's debts and obligations to its creditors, including sales commissions and other expenses incident to any sale of the assets of the Company and including the establishment of and additions to such reserves as the Liquidator may deem necessary or appropriate; and (ii) secondSecond, to the Members in the same manner as set forth in Section 9.2. (b) The reserves established pursuant to subparagraph (a) of this Section 10.3 11.3 shall be paid over by the Liquidator to a bank or other financial institution, to be held in escrow for the purpose of paying any such contingent or unforeseen liabilities or obligations and, at the expiration of such period as the Liquidator deems advisable, such reserves shall be distributed to the Members in the priorities set forth in Section 10.3(a)(ii11.3(a)(ii). (c) Notwithstanding the provisions of Section 10.3(a11.3(a) which require the liquidation of the assets of the Company, but subject to the order of priorities set forth in Section 10.3(a11.3(a), if upon dissolution of the Company the Board determines that an immediate sale of part or all of the Company’s 's assets would be impractical or could cause undue harm to the Members, then the Board may, in its discretion, defer the liquidation of any assets except those necessary to satisfy Company liabilities and reserves, and may, in its discretion, distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 10.3(a)(ii11.3(a)(ii), undivided interests in such Company assets as the Liquidator deems reasonable and equitable and subject to any agreements governing the operating of such properties at such time. For purposes of any such distribution, the Board will determine the Fair Market Value of any property to be distributed. After any such determination, each Member shall have the right to require the Company to retain an Independent Appraiser to determine the Fair Market Value of any property to be distributed under this Section 10.3(c11.3(c); provided provided, that if the appraised value is less than 110% of the Board’s 's determination of the property’s 's Fair Market Value, then such Member shall reimburse the Company for all costs and expenses incurred in connection with such independent appraisal. (d) A reasonable time will be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 10.3(a11.3(a) in order to minimize any losses otherwise attendant upon such winding up. Distributions upon liquidation of the Company (or any Member’s 's interest in the Company) and related adjustments will be made by the end of the Fiscal Year of the liquidation (or, if later, within 90 days after the date of such liquidation) or as otherwise permitted by Treasury Regulation Section 1.704-1(b)(2)(ii)(b). (e) The Company shall terminate when all of the assets of the Company have been distributed in accordance with this Section 10.3 11.3 and the Certificate has been canceled in the manner required by the Act.