Salina Partnership LP - Page 17




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          connection with the formation of Salina.  In addition, Pallico made         
          the following payments on behalf of FPL:                                    
                    Payee              Amount          Purpose                        
               Andrews & Kurth, LLP   $350,000         Legal fees                     
               ABN AMRO Bank         1,000,000         Fees                           
               Goldman Sachs         1,250,000         Brokerage fees                 
               Ms. Samil recalled negotiating the $1,250,000 fee paid to              
          Goldman Sachs.  None of FPL’s representatives specifically recalled         
          negotiating the fees paid to Andrews & Kurth, LLP, or ABN.  The $1          
          million amount paid to ABN represented ABN’s fee for forming the            
          Salina partnership, arranging the partnership’s investments to              
          satisfy FPL’s tax planning objectives, and allowing ABN’s                   
          affiliates to remain in the partnership so that FPL could pursue            
          its short-term investment objectives.                                       
               FPL did not deduct the fees that it paid to ABN, Goldman               
          Sachs, and Andrews & Kurth, LLP on its 1992 tax return, nor did it          
          include the amount of these fees in its Salina capital account.             
          The parties agree that FPL’s adjusted basis in Salina as of                 
          December 28, 1992, should be increased by the amount of these fees.         
               D.  Liquidation of Salina’s Original Investments                       
               On December 28, 1992, Mr. Silverstein recommended that Salina          
          liquidate its existing investments so that Mr. Silverstein could            
          reinvest the proceeds pursuant to the MAPS investment strategy.  On         
          the same day, Salina provided BEA with written authorization to             
          liquidate its investments.  On December 30, 1992, Mr. Silverstein           






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