Common use of Sales Commissions Clause in Contracts

Sales Commissions. Formation Loan Sales commissions are not paid directly by the Partnership out of the offering proceeds. Instead, the Partnership will loan to Redwood Mortgage, an affiliate of the General Partners, amounts to pay all sales commissions and amounts payable in connection with unsolicited orders. This loan is referred to as the Formation Loan. It is unsecured and non-interest bearing. The Formation Loan relating to the initial $15,000,000 offering totalled $1,074,840, which was 7.2% of limited partners contributions of $14,932,017 (under the limit of 9.1% relative to the initial offering). It is to be repaid, without interest, in ten annual installments of principal, which must commence on January 1, following the year the initial offering closes, which was in 1996. The Formation Loan relating to the second offering ($30,000,000) totalled $15,384 at December 31, 1996, which was 4.9% of the limited partners contributions of $310,937. Sales commissions range from 0% (units sold by General Partners) to 9% of gross proceeds. The Partnership anticipates that the sales commissions will approximate 7.6% based on the assumption that 65% of investors will reinvest earnings, thus generating 9% commissions. The principal balance of the Formation Loan will increase as additional sales of units are made each year. The amount of the annual installment payment to be made by Redwood Mortgage, during the offering stage, will be determined at annual installments of one-tenth of the principal balance of the Formation Loan as of December 31 of each year. Such payment shall be due and payable by December 31 of the following year with the first such payment to be made by December 31, 1997. Upon completion of the offering, the balance will be repaid in ten equal annual installments. The following summarizes Formation Loan transactions to December 31, 1996: Initial Subsequent Total Offering of Offering of $15,000,000 $30,000,000 --------------- --------------- --------------- Limited Partner contributions $14,932,017 $310,937 $15,242,954 =============== =============== =============== Formation Loan made $1,074,840 15,384 1,090,224 Payments to date (8,960) 0 (8,960) Early withdrawal penalties applied (7,558) 0 (7,558) --------------- --------------- --------------- Balance December 31, 1996 $1,058,322 $15,384 $1,073,706 =============== =============== =============== Percent loaned of Partners contributions 7.2% 4.9% 7.2% =============== =============== ===============

Sales Commissions. Formation Loan Sales commissions are not paid directly by the Partnership out of the offering proceeds. Instead, the Partnership will loan to Redwood Mortgage, an affiliate of the General Partners, amounts to pay all sales commissions and amounts payable in connection with unsolicited orders. This loan is referred to as the Formation Loan. It is unsecured and non-interest bearing. The Formation Loan relating to the initial $15,000,000 offering totalled $1,074,840, which was 7.2% of limited partners contributions of $14,932,017 (under the limit of 9.1% relative to the initial offering). It is to be repaid, without interest, in ten annual installments of principal, which must commence on January 1, following the year the initial offering closes, which was in 1996. The Formation Loan relating to the second offering ($30,000,000) totalled $15,384 367,937 at December 31September 30, 19961997, which was 4.97.9% of the limited partners contributions of $310,9374,676,125. Sales commissions range from 0% (units sold by General Partners) to 9% of gross proceeds. The Partnership anticipates that the sales commissions will approximate 7.6% based on the assumption that 65% of investors will reinvest earnings, thus generating 9% commissions. The principal balance of the Formation Loan will increase as additional sales of units are made each year. The amount of the annual installment payment to be made by Redwood Mortgage, during the offering stage, will be determined at annual installments of one-tenth of the principal balance of the Formation Loan as of December 31 of each year. Such payment shall be due and payable by December 31 of the following year with the first such payment to be made by December 31, 1997. Upon completion of the offering, the balance will be repaid in ten equal annual installments. The following summarizes Formation Loan transactions to December 31September 30, 19961997: Initial Subsequent Total Offering of Offering of $15,000,000 $30,000,000 $45,000,000 --------------- --------------- -------------- --------------- Limited Partner contributions $14,932,017 $310,937 4,676,125 $15,242,954 19,608,142 =============== =============== =============== Formation Loan made $1,074,840 15,384 1,090,224 367,937 1,442,777 Payments to date (8,96090,329) 0 (8,96090,329) Early withdrawal penalties applied (7,55814,455) 0 (7,55814,455) --------------- --------------- -------------- --------------- Balance December 31at September 30, 1996 1997 $1,058,322 970,056 $15,384 367,937 $1,073,706 1,337,993 =============== =============== =============== Percent loaned of Partners contributions 7.2% 4.97.9% 7.27.4% =============== =============== ================ The formation loan, which is receivable from Redwood Mortgage, an affiliate of the General Partners, has been deducted from Limited Partners Capital in the balance sheet. As amounts are collected from Redwood Mortgage, the deduction from capital will be reduced (see note 11).