Estate of Morton B. Harper - Page 3




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          decedent as original trustee and designated his children Michael            
          A. Harper (Mr. Harper) and Lynn H. Factor (Ms. Factor) as                   
          successor trustees.  The assets held by the trust consisted of              
          marketable securities and mutual funds, plus a note receivable              
          for a $450,000 loan which the decedent had made to an unrelated             
          individual (the portfolio).  Decedent reserved a life estate in             
          both the income and corpus of the trust and directed that upon              
          his death the assets should be distributed 40 percent to Mr.                
          Harper and 60 percent to Ms. Factor.                                        
               On January 1, 1994, decedent, Mr. Harper, and Ms. Factor               
          entered into an agreement entitled, Agreement for Limited                   
          Partnership for Harper Financial Co., L.P. (partnership                     
          agreement) that created a California limited partnership.  Under            
          the terms of the partnership agreement, Mr. Harper and Ms. Factor           
          became general partners with interests in the partnership of 0.4            
          percent and 0.6 percent respectively, and the trust became the              
          sole limited partner with an interest of 99 percent in the                  
          partnership.  The trust made an initial capital contribution of             
          the portfolio to the partnership.                                           
               On July 1, 1994, the parties entered into an amendment to              
          the partnership agreement that divided the trust's limited                  
          partnership interest into two classes of limited partnership                
          interests, consisting of: (1) A Class A limited partnership                 
          interest of 39 percent which the trust retained, and (2) a Class            






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