Saturday, June 18, 2005 9:18:55 AM
This post by knixx_99 on agora explains the arrangement.
The actual payoff arrangement is as follows:
First Expenses incurred by TPL
Next 10% of GROSS to PTSC (up to maximum of $10 M)
Next, 15% of the NET BALANCE (GROSS less expenses and 10% to PTSC) to TPL (with no restriction).
Finally, 50%/50% split of the NET BALANCE (after the PTL payment) between PTSC and PTL.
So let's say that the total gross proceeds for any given year is $110M, and expenses incurred by TPL were $5M. The distribution of the proceeds will be:
0. Original = $110M
1. Expenses (TPL)= ($5M)
2. PTSC (10% or max $10M)= (10M)
3. NET BALANCE = $95M
4. TPL (15% of Net)= ($14.25M)
5. NET BALANCE = $80.75
6. 50%/50% split = $40.375 to PTSC and to TPL.
TOTAL DISTRIBUTION TO TPL = $59.625.
TOTAL DISTRIBUTION TO PTSC = $50.375.
The numbers can be changed, but the basic principle remains the same. This is a standard application of partnership accounting where the partnership agreement specifies how the profits are to be divided.
-- Knixx_99
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