Estate of Robert G. Kluener, Deceased, Donald E. Hathaway, Co-executor and Charlotte J. Kluener - Page 7

            advisers recommended that the horses be transferred to APECO and                              
            sold in its name so as to use APECO's NOL's to shelter any gain                               
            realized on their sale.  Had Mr. Kluener sold the horses                                      
            directly, a certain portion of any gain realized would have been                              
            taxed as ordinary income pursuant to section 1245, and the                                    
            balance would have been taxed as capital gain.  Consequently, the                             
            amount netted from the sale would have been substantially reduced                             
            by taxes.                                                                                     
                  On or about August 1, 1989, Mr. Kluener transferred to APECO                            
            title to his entire collection of 41 horses, with an estimated                                
            fair market value of $2,428,654.  A separate division, APECO                                  
            Equine, was created to handle the horse-related activities.  Only                             
            Mr. Kluener, his assistant, and his tax advisers knew of the                                  
            transfer when it occurred.  The other directors and officers of                               
            APECO, including its president, Marvin Stock (Mr. Stock), were                                
            not informed of the transfer, and Mr. Kluener and his advisers                                
            made every effort to ensure that those others did not learn of                                
            it.  Mr. Stock also was unaware of the existence of APECO Equine.                             
            The transfer was not reflected in APECO's monthly financial                                   
            statements for its year ending June 30, 1990.                                                 
                  After the horses were transferred, Mr. Kluener's assistant                              
            continued to perform the same functions with respect to the                                   
            horses as she had prior thereto, and the functions were performed                             
            at Mr. Kluener's office in Cincinnati, rather than at APECO's                                 
            office in Harrison.  Although Mr. Kluener's assistant was                                     

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