Common use of Mandatory Distributions Clause in Contracts

Mandatory Distributions. Unless all of the Members (excluding Financial Rights Holders) otherwise agree, the LLC shall distribute to each Member, no later than the forty-fifth day after the end of each quarter, an amount in cash equal to the Maximum Tax Liability for such Member for such quarter. To the extent there is not sufficient Available Cash Flow to distribute cash in the amount of the Maximum Tax Liability to each Member, the amount to be so distributed to the Members shall be reduced in proportion to their Membership Percentages so as to distribute no more than the total Available Cash Flow at the time of distribution. "Maximum Tax Liability" in respect of any Member for any quarter means an amount equal to the product of (x) the LLC's Net Income (as adjusted to the extent hereinafter provided) for such quarter, (y) a percentage equal to the then prevailing income tax rate applicable to individuals in the highest tax bracket for federal income tax purposes or, in the event a Member is an Entity subject to taxation, the income tax rate applicable to such Entity, and for state income tax purposes in the state having the highest applicable state income tax of any of the states in which any of the Members are subject to state income taxes and (z) a percentage equal to such Member's Membership Percentage. If there is a difference between the prevailing income and capital gains tax rates at either the federal or the state level, the Maximum Tax Liability shall be computed separately for ordinary income and capital gains, unless each of the Members otherwise agree. Income that is exempt from taxation shall not be included in the definition of Net Income for purposes of computing the Maximum Tax Liability.