Morgan L.Lucid and Mary J. Lucid - Page 9

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               The July 31, 1988, Lucid Cruising corporate minutes contain            
          a statement that petitioners, as the corporate officers, were               
          concerned over the problems with Brendan.  Petitioners believed             
          that they “have not really had the opportunity to show [the                 
          Brendan] * * * and realize some profit for the corporation.”                
               On August 31, 1988, petitioners wrote a letter to a magazine           
          that had covered the boat show and clarified that Brendan was not           
          for charter.  The letter contains the statement that petitioners            
          “are representing Kanter [Y]achts on the West Coast and believe             
          that steel and aluminum yachts are the wave of the future for the           
          safety factor”.  In August 1988, petitioners informed Kanter                
          Yachts that they had confidence that the shipyard would be able             
          to effect the repairs to Brendan, and “look[ed] forward to                  
          enjoying BRENDAN for years to come.”                                        
               In September 1988, petitioners demonstrated Brendan at a               
          boat show in Alameda, California.  Petitioners maintained a                 
          visitors log for those who viewed the yacht, and over 300 people            
          signed it.  At that time, petitioners distributed fliers                    
          advertising Kanter Yachts, as well as their own business cards.             
          Prior to the show, petitioners advertised the showing of the                
          Brendan in two boating magazines.                                           
               The total time petitioners spent cruising on Brendan from              
          1987 through 1989 was as follows:  (1) A 5-day cruise from                  
          Seattle, Washington, to the San Juan Islands in Washington State            
          in 1988; (2) a 5-day cruise from Washington State to Coyote Point           
          in Redwood City, California, in 1988; (3) a day cruise from                 


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