Common use of Capital Event Distributions Clause in Contracts

Capital Event Distributions. Subject to Section 7.4, all distributions of Net Financing Proceeds and Net Sales Proceeds (such distributions being referred to herein as “Capital Event Distributions”, and each transaction giving rise to such distributions, including without limitation any Liquidation/Sale Event, being referred to herein as a “Capital Event”), as determined by the Board of Directors, out of legally available funds, shall be made to the holders of Interests in the following order of priority: (i) First, 100% to the holders of Class A Interests, pro rata in accordance with their respective Percentage Interests, until each such holder has been distributed under Section 7.2 and this Section 7.3(i) an aggregate amount equal to its Capital Contributions plus a 10% Internal Rate of Return thereon; (ii) Second, (A) 20% to the holder of Class B Interests; and (B) 80% to the holders of Class A Interests, pro rata in accordance with their respective Percentage Interests, until each such holder of Class A Interests has been distributed under Section 7.2, Section 7.3(i) and this Section 7.3(ii)(B) an aggregate amount equal to its Capital Contributions plus a 12.5% Internal Rate of Return thereon; (iii) Third, 100% to the holder of Class B Interests until such holder has received, in the aggregate under this Section 7.3(iii), an amount equal to the Class B Preference Amount; and (iv) Fourth, (A) 20% to the holder of Class B Interests; and (B) 80% to the holders of Class A Interests, pro rata in accordance with their respective Percentage Interests. The amount otherwise payable under Section 7.3(ii)(A) as a result of any Capital Event shall be adjusted by deducting therefrom the aggregate amount previously paid as Operating Incentive Fees (as defined in the Asset Management Agreement) with respect to the Hotel. The calculation and priority of Capital Event Distributions is illustrated in further detail in the sample calculations attached hereto as Exhibit D. Notwithstanding anything to the contrary herein, if a Disposition has occurred hereunder prior to any Other Disposition, and Capital Event Distributions are payable to the holder of Class B Interests pursuant to this Section 7.3 as a result of such Disposition, then such Capital Event Distribution shall not be distributed to the Class B Member unless and until the Class B Member provides an affiliate guaranty, a letter of credit or similar assurance in a form reasonably acceptable to the Members in favor of RECO or the Other Holding LLC (with RECO as a third party beneficiary with unilateral enforcement rights) to secure payment of any potential Class B Overpayment that may arise under the Other Holding LLC Agreement.