This excerpt taken from the ILX 8-K filed Oct 4, 2005.
4.5.1. Timing and Amount of Distributions. Except as otherwise provided in this Agreement, distributions shall be made to the Interest Holders at such times and in such amounts as determined by the Manager in the Manager's sole discretion. Distributions shall be made as soon as possible from available cash flow, consistent however with the Managers reasonable determination of cash reserves required by the Company to meet working capital and debt service requirements.
4.5.2. Form of Distribution. In connection with any distribution, no Interest Holder shall have the right to receive Property other than cash except as may be specifically provided herein. If any assets of the Company are distributed in kind to the Interest Holders, those assets shall be valued on the basis of their fair market value, and any Interest Holder entitled to any interest in those assets shall receive that interest as a tenant-in-common with all other Interest Holders so entitled. Unless the Interest Holders otherwise agree, the fair market value of the assets shall be determined by an independent appraiser who shall be selected by the Manager.
4.5.3. Withholding. All amounts required to be withheld pursuant to Code Section 1446 or any other provision of federal, state, or local tax law shall be treated as amounts actually distributed to the affected Interest Holders for all purposes under this Agreement.
4.5.4. Varying Interests; Distributions and Allocations in Respect to Transferred Interests. Profits, Losses, and other items shall be calculated on a monthly, daily, or other basis permitted under Code Section 706 and the Regulations. If any Interest is sold, assigned, or transferred during any accounting period in compliance with the provisions of this Agreement, Profits, Losses, each item thereof, and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Code Section 706(d), using any conventions permitted by law and selected by the Manager. All distributions on or before the date of such transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee. Solely for purposes of making such allocations and distributions, the Company shall
recognize such transfer not later than the end of the calendar month during which it is given notice of such transfer, provided that if the Company does not receive a notice stating the date such Interest was transferred and such other information as it may reasonably require within thirty (30) days after the end of the Fiscal Year during which the transfer occurs, then all of such items shall be allocated, and all distributions shall be made, to the person who, according to the books and records of the Company, on the last day of the Fiscal Year during which the transfer occurs, was the owner of the Interest. Neither the Company nor any Interest Holder or Manager shall incur any liability for making allocations and distributions in accordance with the provisions of this Section, whether or not any Interest
Holder, Manager, or the Company has knowledge of any transfer of ownership of any Interest.
4.5.5. Knowledge. The Interest Holders acknowledge that they understand the economic and income tax consequences of the allocations and distributions under this Agreement and agree to be bound by the provisions of this Section IV in reporting their taxable income and loss from the Company.
4.5.6. Amendment. The Manager is hereby authorized, upon the advice of the Company's tax counsel, to amend this Section IV to comply with the Code and the Regulations promulgated under Code Section 704(b); provided, however, that no amendment shall materially affect the distributions to an Interest Holder without the Interest Holder's prior written consent.
Revenue and Expense. In determining profit, expenses shall mean and all costs, charges and expenses of any nature directly or indirectly attributable to the holding, development and sale of the Real Property, including but not
limited to product cost, sales and marketing expenses, general administrative expenses, financing costs, collection costs, closing costs exchange fees, recording fees, loan fees and other costs of development. Revenue shall include all receipts on the sale of the developments on the Property but upgrades and conversions into ILX timeshares and interest arbitrage on timeshare sales shall not be included in revenue.