ASA Investerings Partnership, Alliedsignal Inc., Tax Matters Partner - Page 10

                                                    - 10 -10                                                      

             focused on ABN's expected return and the venture's transaction                                       
             costs.  These negotiations culminated in various agreements,                                         
             which we refer to collectively as "the Bermuda Agreement".                                           
                    Mr. Matthews and Mr. den Baas agreed that AlliedSignal would                                  
             pay all of the partnership's expenses and that AlliedSignal would                                    
             pay ABN a return, which we refer to as ABN's "specified return",                                     
             equal to ABN's funding costs (i.e., approximately LIBOR) plus 75                                     
             b.p. on funds advanced to the partnership.  ABN's specified                                          
             return consisted of income allocations, and AlliedSignal's direct                                    
             payments, to ABN.  In essence, the direct payments would equal                                       
             the difference between the specified return and the income                                           
             allocations.  The precise amount of the specified return would                                       
             depend on the amount of ABN funds held by the partnership and the                                    
             amount of time that the partnership held such funds.                                                 
             AlliedSignal and ABN also agreed that ABN would receive partial                                      
             repayment during the partnership's existence (i.e., August 1990                                      
             and March 1991) and full repayment by May 1992.                                                      
                    Mr. den Baas wanted AlliedSignal to pay "up-front" $5                                         
             million of the specified return.  Mr. Matthews, however, wanted                                      
             to delay the payment as long as possible to ensure ABN's                                             
             adherence to the venture's scheduled steps.  Mr. den Baas and Mr.                                    
             Matthews discussed various ways to characterize and structure                                        
             AlliedSignal's direct payments to ABN.  Ultimately, they decided                                     
             to characterize some of these payments as "premiums".  They                                          





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011