Joseph P. and Mary B. McDonald - Page 6




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          partner of the partnership, and Eugene Pace, who was the                    
          president of what was to become the purported research and                  
          development contractor to the partnership, U.S. Agri Research &             
          Development Corp.  Mr. Trimboli had no experience in farming or             
          in research and development ventures, and he was aware that Mr.             
          Cole, the general partner, also had no experience with respect to           
          jojoba.                                                                     
               A private placement memorandum for investments in the                  
          partnership, dated December 1, 1983, was distributed to                     
          petitioners.  Prefatory material in the memorandum contained the            
          following caveats:                                                          
                    PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO CONSTRUE               
               THIS MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS AS           
               CONSTITUTING LEGAL OR TAX ADVICE. * * * INVESTORS ARE URGED            
               TO CONSULT THEIR OWN COUNSEL AS TO ALL MATTERS CONCERNING              
               THIS INVESTMENT.                                                       
                          *    *    *    *    *    *    *                             
                    NO REPRESENTATIONS OR WARRANTIES OF ANY KIND ARE                  
               INTENDED OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC            
               RETURN OR TAX ADVANTAGES WHICH MAY ACCRUE TO THE INVESTORS             
               IN THE UNITS.                                                          
                    EACH PURCHASER OF UNITS HEREIN SHOULD AND IS EXPECTED             
               TO CONSULT WITH HIS OWN TAX ADVISOR AS TO THE TAX ASPECTS.             
          In a section entitled “Use of Proceeds”, an estimation of various           
          expenditures, the memorandum stated that 90.7 to 93.0 percent of            
          the capital contributions from the partners would be allocated to           
          the research and development contract (regardless of the total              
          amount of the contributions).  The only other expenses were to be           






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