- 9 -
would have to make other arrangements to buy that stock interest,
such as guaranteeing the loan that AST would have to obtain in
order to finance in part its purchase of MSSTA's assets. Mr.
Hall cautioned Mr. Scott to consult his own tax adviser about the
tax consequences to MSSTA and the Scotts as a result of the MSSTA
transaction, since Mr. Hall was not familiar with either MSSTA's
or the Scotts' tax situation.
Mr. Scott told Mr. Hall that he did not intend to pay any
taxes as a result of the MSSTA transaction. In an attempt to
accommodate Mr. Scott, Mr. Harrison and Mr. Hall told Mr. Scott
that the form of the MSSTA transaction could be changed to the
following: AST would transfer directly to MSSTA $300,000, in-
stead of $600,000, for MSSTA's assets; Mr. Carter would receive
that $300,000 from MSSTA in redemption of his MSSTA stock; and
each of the Scotts would acquire (1) a 10.5-percent stock inter-
est in AST for a nominal cash amount and (2) an additional 6-
percent stock interest in that company in exchange for a nominal
cash amount and Mr. Scott's promise to guarantee a bank loan that
AST would seek in order to finance in part its acquisition of
MSSTA's assets and to forgo for a period of several years con-
tributions by AST for Mr. Scott's benefit to its profit-sharing
plan. Mr. Hall indicated to Mr. Scott that, under the foregoing
form of the MSSTA transaction, MSSTA and the Scotts could take
the following return positions: (1) MSSTA would report the
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Last modified: May 25, 2011