Common use of Distributions in Respect of Equity Clause in Contracts

Distributions in Respect of Equity. Borrower and its consolidated subsidiaries shall not directly or indirectly redeem any of Borrower’s shares of capital stock or declare any dividends in any year on any class of Borrower’s capital stock or make any other Restricted Payment, except that (a) Borrower may, provided that no Default or Matured Default has occurred and is continuing or would result thereby, declare and pay dividends that are not in excess of the aggregate of fifty percent (50%) of a rolling average of positive pretax income with respect to the current and prior fiscal year of Borrower, and (b) a consolidated subsidiary of Borrower may make a Restricted Payment to Borrower and its consolidated subsidiaries. “Restricted Payment” shall mean, with respect to Borrower and its consolidated subsidiaries, (a) any direct or indirect dividend or distribution (whether in cash, securities or other property), or any direct or indirect payment of any kind or character (whether in cash, securities or other property) in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any equity interest of Borrower and its consolidated subsidiaries, or any options, warrants or rights to purchase or acquire any such equity interest of Borrower and its consolidated subsidiaries, or (b) principal or interest payments (in cash, property or otherwise) on, or redemptions of, subordinated debt of Borrower and its consolidated subsidiaries; provided that the term “Restricted Payment” shall not include any dividend or distribution payable solely in equity interests of Borrower and its consolidated subsidiaries or warrants, options or other rights to purchase such equity interests.