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installments and, thus, maintain discretion as to when and how
many shares were to be offered to the Company at the price
dictated by the agreements at the time of purchase; second, an
executor could choose to offer to the company all of the shares
not transferred to "permitted transferees", and the Company was
obligated to buy the number of the estate's shares necessary to
provide funds equal to the amount of State inheritance and
Federal estate taxes and administration expenses.
The Company’s available cash and loan sources were strained
at decedent’s death. The Company’s total cash outlay for stock
redeemed during the fiscal year ending June 30, 1989, was
approximately $38 million. The Company also made capital
investments of approximately $62 million for expansion of
facilities during the same fiscal year. The Company anticipated
expenditures of approximately $30 million for the following
fiscal year.
On March 26, 1990, the due date for payment of decedent’s
estate's Federal estate and State death taxes, the executors
borrowed $5,522,000 from the Company in exchange for an unsecured
demand note bearing interest at 11 percent for a period of 85
days (First Company Loan), which produced an interest expense of
$143,418.61. All proceeds for the First Company Loan together
with the assets disclaimed by decedent's surviving spouse were
applied towards the payment of decedent's estate's Federal estate
tax of $5,924,933 and decedent's estate's State death taxes of
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