Preferred Return Allocations Clause Samples
The Preferred Return Allocations clause defines how certain investors receive priority distributions of profits before other participants in an investment. Typically, this clause specifies a set rate or percentage that must be paid to preferred investors from available profits before any remaining funds are distributed to others, such as general partners or common investors. Its core practical function is to incentivize investment by offering preferred investors a minimum return, thereby allocating risk and ensuring that their interests are protected in the profit-sharing structure.
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Preferred Return Allocations. In the event, at any time and for any reason, there arises a disproportion in the Capital Account balances of the Interest Holders, then prior to the liquidation of the Company, in accordance with Section 9 of the Operating Agreement, or at such earlier times and in such amounts as the Manager shall determine in its sole discretion, all or a portion of the remaining items of Company income or gain, if any, shall be specially allocated among the Interest Holders in such manner necessary to bring the Capital Account balances of the Interest Holders into proportion with their then existing Percentage Interests. Allocations Relating to Taxable Issuance of Interests. Any income, gain, loss or deduction realized as a direct or indirect result of the issuance of an Interest by the Company to an Interest Holder (the “Issuance Items”) shall be allocated among the Interest Holders so that, to the extent possible, the net amount of such Issuance Items, together with all other allocations under the Operating Agreement to each Interest Holder, shall be equal to the net amount that would have been allocated to each such Interest Holder if the Issuance Items had not been realized.
Preferred Return Allocations. All or a portion of the remaining items of Company income and, to the extent income is insufficient, gain shall be specially allocated to each Class A Preferred Member in an amount equal to the cumulative Class A Preferred Return Amount (with respect to which there has been no allocation under this Section 6.3.8) for any Class A Preferred Units (i) redeemed from such Member during the Allocation Period pursuant to Section 3.5.2 or 3.5.3, (ii) Transferred by such Member to PublicCo or any other Person pursuant to the Rifk▇▇ ▇▇▇tribution Agreement, the Rifk▇▇ ▇▇▇ Agreement, or this Agreement, or (iii) with respect to which liquidating distributions are made pursuant to Article IX. If, in addition to items of income, items of gain are to be allocated pursuant to the foregoing sentence and the Company has items of both short-term capital gain and long-term capital gain, all of the Company's items of short-term capital gain shall be allocated before any items of long-term capital gain are allocated.