Common use of Restriction on Distributions Clause in Contracts

Restriction on Distributions. Notwithstanding any provision of this Agreement to the contrary, no distribution to any Partner shall be made (a) if such distribution would violate the Act or other applicable law or (b) if, after giving effect to the distribution, (i) the Partnership would not be able to pay its debts as they become due in the usual course of business, (ii) such Partner’s Capital Account would be negative by an amount greater than the amount such Partner would be required to restore pursuant to Section 6.5, or (iii) the Partnership’s total assets would be less than the sum of its total liabilities plus, unless this Agreement provides otherwise, the amount that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the preferential rights of other Partners, if any, upon dissolution that are superior to the rights of the Partner receiving the distribution. The General Partner may base a determination that a distribution is not prohibited pursuant to Section 6.4(b) on (x) financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances, (y) a fair valuation or (z) any other method that is reasonable under the circumstances; provided that the determination under Section 6.4(b)(ii) whether a Partner’s Capital Account will be negative shall be based on the Gross Asset Value of the Partnership’s assets. Except as provided in Section 17-607(b) of the Act, the effect of a distribution is measured as of the date the distribution is authorized if the payment occurs within 120 calendar days after the date of authorization, or the date payment is made if it occurs more than 120 calendar days after the date of authorization.