Class A Cumulative Preferred Units Clause Samples
The 'Class A Cumulative Preferred Units' clause defines a specific class of equity units that entitle holders to receive cumulative preferred distributions before any distributions are made to holders of common units. In practice, this means that if the company is unable to pay the preferred distribution in any given period, the unpaid amount accrues and must be paid out in the future before any distributions to common unit holders. This clause ensures that investors holding these units have a priority claim on distributions, providing them with greater security and predictability of returns, and is often used to attract investment by offering enhanced protection against missed payments.
Class A Cumulative Preferred Units. The Class A Cumulative Preferred Units outstanding immediately prior to the Merger were exchanged for Class A Cumulative Preferred Units created pursuant to the Unit Designation attached as Exhibit C hereto (the “Class A Preferred Unit Designation”) and Debt Securities under the Senior Subordinated Loan Agreement pursuant to Section 2.3(d) of the Merger Agreement. The Partnership and each of the Partners acknowledge and agree to treat for federal income tax purposes (and applicable state and local income tax purposes), except to the extent otherwise required by applicable law, (i) such exchange for Debt Securities under the Senior Subordinated Loan Agreement as a promise to make future payments on the exchanged Class A Cumulative Preferred Units, (ii) any cash payments of interest made pursuant to the Senior Subordinated Loan Agreement to Partners that held such exchanged Class A Cumulative Preferred Units as guaranteed payments within the meaning of Section 707(c) of the Code made by the Partnership to such Partners with respect to such exchanged Class A Cumulative Preferred Units, and (iii) any payments, other than interest payments, made pursuant to the Senior Subordinated Loan Agreement to Partners that held such exchanged Class A Cumulative Preferred Units as a distribution made by the Partnership to such Partners with respect to such exchanged Class A Cumulative Preferred Units pursuant to Article VII.