Shorthorn Genetic Engineering 1982-2, Ltd., Shorthorn Genetic Engineering 1982-4, Ltd., Shorthorn Genetic Engineering 1982-5, Ltd., Walter J. Hoyt III, Tax Matters Partner, et al. - Page 5

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          organized under the laws of the States of California and Nevada.            
          The limited partners obtained interests in the partnerships by              
          executing subscription agreements.                                          
               The partnerships purchased the cattle used in their breeding           
          operations from Hoyt & Sons Ranches (Ranches).  In payment for              
          the cattle purchased, the partnerships executed promissory notes            
          to Ranches.  Thereafter, the partners signed assumption of                  
          liability agreements, thereby assuming personal liability for               

          these recourse partnership liabilities.  Principal payments on              
          the notes became due starting in the sixth year after the notes             
          were executed.                                                              
               Pursuant to the settlement agreement (the agreement), the              
          numbers of cattle deemed to be held by the partnerships were                
          reduced.  Accordingly, the amount of principal on each of the               
          notes payable to Ranches was treated as reduced.  The agreement             
          provides that this new principal amount is the amount of                    
          partnership debt to be treated as personally assumed by the                 
               The agreement further provides:                                        
               Each partner's profit and loss sharing percentage is                   
               determined annually by comparing the partner's capital                 
               account to the aggregate of the capital accounts of all                
               partners in the partnership.  This determination is made               
               based on the total capital owned, not the total capital                
               originally subscribed.                                                 

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