Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 91




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              The partnership agreement stated that the partnership was               
         being organized "for the object and purpose of making investments            
         in notes, bonds, debentures, and other interest bearing                      
         instruments, owning, managing, and supervising such investments,             
         sharing the profits and losses therefrom, and engaging in such               
         activities necessarily incidental or ancillary thereto."  The                
         partnership agreement further stated that the partnership was                
         being organized to enable Brunswick and Skokie "to reduce their              
         credit risk exposure on investments while obtaining a yield in               
         excess of what they could obtain from U.S. treasury securities"              
         and to permit Bartolo "to earn a rate of return which reflects               
         the additional credit risk it may incur on Partnership                       
         investments."                                                                
              The partnership agreement provided for the payment of                   
         "preferred amounts" from partnership income.  In particular,                 
         partnership income would be allocated on a quarterly basis, first            
         to Brunswick and Skokie in an amount equal to a noncompounded per            
         annum return on the daily amounts of their unrecovered capital at            
         a rate equal to the Treasury bill rate plus 10 basis points, and             
         then to Bartolo in an amount equal to a noncompounded per annum              
         return on the daily amounts of its unrecovered capital at a rate             
         equal to LIBOR plus 5 basis points.  Any remaining partnership               
         income would be allocated to the partners in proportion to their             
         partnership percentages.                                                     





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