Common use of Distribution Policies Clause in Contracts

Distribution Policies. Upon admission to the Partnership, each Limited Partner will be required to make a one-time, irrevocable election, except as described below, either: (i) to receive monthly, quarterly or annual cash distributions of Earnings ("Periodic Cash Distributions"); or (ii) to receive distributions of Earnings in the form of additional Units. The term "Earnings" means all revenues earned by the Partnership less all expenses incurred by the Partnership. This election, once made is irrevocable for investors who elect to receive Periodic Cash Distributions. However, an investor may change whether such distributions are received on a monthly, quarterly or annual basis. If a Limited Partner initially elected to receive additional Units in lieu of Periodic Cash Distributions, he may, after three (3) years, change his election and receive Periodic Cash Distributions. Earnings from investors who elect to acquire additional Units will be used by the Partnership for making further Mortgage Investments or other proper Partnership purposes. The Earnings from these further Mortgage Investments, will be allocated among all investors, but investors who do not elect to receive Periodic Cash Distributions will receive additional Units. (See "PLAN OF DISTRIBUTION - Election to Receive Periodic Cash Distributions"). All cash flow attributable to principal reductions of Mortgage Investments will be reinvested by the Partnership in Partnership activities by the extension of additional Mortgage Investments until December 31, 2032. By not later than such date, all cash flow attributable to principal reduction will be distributed to the Limited Partners as a return of capital contributions. Upon acceptance into the Partnership, each Partner who acquires his Units through a Participating Broker Dealer will receive a capital account in the Partnership which initially will be equal to the purchase price of the Units. A Partner who acquires a Unit directly from the Partnership in an unsolicited sale will receive a capital account in the Partnership which initially will be equal to the purchase price of Units plus an amount equal to the amount of sales commissions that would otherwise have been payable had the Partner acquired his Unit through a Participating Broker Dealer assuming no Continuing Servicing Fee is paid. Capital accounts can be described simply as the "net equity" of Partners in the Partnership. The capital accounts of the Limited Partner are, under the applicable tax code provisions and regulations, increased by any other capital contributions of the Limited Partners and net income allocated to the Limited Partners. The capital account balances of the Limited Partners are decreased by the cash distributions made to the Limited Partners and by net losses allocated to the Limited Partners. Those Limited Partners who elect to receive Periodic Cash Distributions will have their capital account balances remain static while those who elect to receive additional Units will have their capital accounts increased. Accordingly, over time, Limited Partners who elect to reinvest their Earnings by electing to receive additional Units will see their capital accounts increase relative to those Limited Partners who elect to receive Periodic Cash Distributions. Accordingly, upon liquidation a Limited Partner who elected to receive additional Units in lieu of Periodic Cash Distributions will receive a larger distribution at that time than a Limited Partner electing to receive Periodic Cash Distributions.