ASA Investerings Partnership, Alliedsignal Inc., Tax Matters Partner - Page 5

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          capital loss.  The tax-exempt foreign partner would be allocated            
          most of the capital gain, and AlliedSignal would realize the                
          capital loss.                                                               
               Merrill Lynch representatives further explained that the               
          proposal was a package deal.  Merrill Lynch would serve as the              
          partnership's2 financial adviser and, for a $7 million fee,                 
          recruit the foreign partner and arrange for the issuance and sale           
          of the PPNs and LIBOR notes.  To ensure a market for such                   
          issuance and sale, Merrill Lynch would structure and enter into             
          the requisite swap transactions.  Merrill Lynch would also serve            
          as the partnership's financial intermediary, earning an                     
          additional $1,060,000 to $2,130,000 on the PPN sale and $212,000            
          to $425,000 on the LIBOR note sale.  The foreign partner, for its           
          participation in the transaction, would charge AlliedSignal the             
          greater of $2,850,000 or 75 basis points (b.p.)3 on funds                   
          advanced to the partnership.  In addition, AlliedSignal would pay           
          all of the partnership's expenses.  Merrill Lynch estimated that            
          AlliedSignal's total expenses for the entire venture4 would be              


               2  We refer to ASA as a "partnership" and AlliedSignal, ABN,           
          ASIC, Barber, and Dominguito as "partners".  These terms are used           
          for convenience and are not intended to have any legal                      
          significance.                                                               
               3  One basis point is equal to 1/100th of 1 percent.                   
               4  We refer to the entire series of transactions as the                
          "venture".  This term is used for convenience and is not intended           
          to have any legal significance.                                             




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