Common use of Potential Conflicts And Risks If Partnership Invests In Mortgage Investments With General Partners Or Affiliates Clause in Contracts

Potential Conflicts And Risks If Partnership Invests In Mortgage Investments With General Partners Or Affiliates. The Partnership may invest in mortgages acquired by the General Partners or Affiliates. The Partnership's portion of the total mortgage loan may be smaller or greater than the portion of the loan made by the General Partners or Affiliates, but will generally be on terms substantially similar to the terms of the Partnership's investment. Such an investment would be made after a determination by the General Partners that the entire loan is in an amount greater than would be suitable for the Partnership to make on its own or that the Partnership will benefit through broader diversification of its Mortgage Investment portfolio. However, investors should be aware that investing with the General Partners or Affiliates could result in a conflict of interest between the Partnership and the General Partners or Affiliates in the event that the borrower defaults on the loan and both the Partnership and the General Partners or Affiliates protect their own interest in the loan and in the underlying security. In order to minimize the conflicts of interest which may arise if the Partnership invests in Mortgage Investments with the General Partners or Affiliates, the Partnership will acquire its interest in the loan on the same terms and conditions as does the General Partners or Affiliates and the terms of the loan will conform to the investment criteria established by the Partnership for the origination of Mortgage Investments. By investing in a loan on the same terms and conditions as does the General Partners or an Affiliate, the Partnership will be entitled to enforce the same rights as the General Partners or Affiliate in such loan and the General Partners and Affiliate will not have greater rights in the loan than does the Partnership. As a result, in the event of a default by the borrower, any efforts by the General Partners, an Affiliate or the Partnership to enforce the terms of the loan will benefit those persons with interests in the loan based upon their respective ownership interests. (See "CONFLICTS OF INTEREST"). INVESTMENT RISKS