First Tier Distributions Clause Samples
The "First Tier Distributions" clause defines how initial distributions of funds or assets are allocated among parties before any subsequent distributions occur. Typically, this clause specifies the order and proportion in which investors or stakeholders receive returns, often ensuring that certain parties recoup their original investment or receive a preferred return before others participate in further profits. By establishing a clear hierarchy for initial payouts, the clause provides predictability and fairness, helping to prevent disputes over distribution priorities and ensuring that key stakeholders are compensated as agreed.
First Tier Distributions. The General Partner shall distribute to the Limited Partner from Net Cash Receipts an amount which is equal to a 19.5% rate-of-return on the current balance of the aggregate capital contributions of the Limited Partner outstanding from time-to-time (“First Tier Distributions”). Accrual of First Tier Distributions shall commence as of the date of receipt of the Limited Partner’s capital contribution to the Partnership. Accordingly, such payments of First Tier Distributions shall be payable during the term of this Agreement commencing with the effective date of this Agreement from Net Cash Receipts if and to the extent Net Cash Receipts are available for payment of First Tier Distributions.