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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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