Transfer and Reduction. The parties hereto agree and acknowledge that, immediately following any Exchange pursuant to Article II of the Exchange Agreement, (i) the Class A Membership Interest contributed by the Investor to the Partnership shall be transferred to the Company, (ii) upon receipt thereof, such Class A Membership Interest shall be cancelled by the Company and (iii) the Incentive Distributions payable by the Partnership to the Company shall be reduced by an aggregate dollar amount (the "REDUCTION AMOUNT") equal to the aggregate dollar amount of the most recent Common Unit Quarterly Distribution prior to the Initial Exchange that would have been paid on the number of Exchange Units issued in such Exchange. The Reduction Amount shall be achieved by reducing the percentage allocation to the Company at each target level of the Incentive Distributions (the "HIGH SPLIT ALLOCATION PERCENTAGES") by the same percentage (the "STANDARD REDUCTION FACTOR"); provided, however, that in determining the Standard Reduction Factor, if any distribution is to be paid in respect of an Incentive Distribution target level, the Company shall always receive no less than 1% of such distribution (as required by the Partnership Agreement). The calculation and application of the Standard Reduction Factor is illustrated in the examples set forth in Exhibit B hereto. The new High-Split Allocation Percentages determined pursuant to this Section 2.1 shall be used to determine the Incentive Distributions payable by the Partnership to the Company for all quarterly distributions by the Partnership subsequent to any reduction pursuant to this Section 2.1. The actions described in the initial sentence of this Section 2.1 shall be deemed to occur automatically and in immediate succession. Any administrative actions required to memorialize such steps (such as transfer and cancellation of physical certificates and amendment of the Partnership Agreement) shall be completed within three business days.
Transfer and Reduction
