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personally negotiated the basic terms of a transaction4 whereby:
(a) HII would redeem Mr. Kucklick’s stock; (b) Mr. Kucklick would
enter into an employment agreement; (c) Mr. Kucklick agreed to a
covenant not to compete; and (d) Mr. Kucklick would be paid $4
million.5 The price to be paid in this transaction was not
determined by, and did not involve, an appraiser, and it was not
determined by reference to the pricing formula in the
stockholders agreement.
On February 26, 1995,6 Mr. Hess and Mr. Kucklick
contemporaneously entered into three formal agreements to
memorialize the terms of their deal: (1) A redemption agreement
(the redemption agreement); (2) an employment agreement (the
employment agreement); and (3) an unsecured installment note (the
installment note).
The redemption agreement provided for the redemption of Mr.
Kucklick’s shares and included the covenant not to compete and
4Mr. Hess and Mr. Kucklick were not represented by attorneys
until the basic terms of this transaction were put into writing.
5In agreeing to pay this amount, Mr. Hess testified that he
took into consideration: (1) Mr. Kucklick’s longstanding (18
years) service, contributions, and self-sacrifice toward the
growth and success of the company; (2) Mr. Kucklick’s belief that
he had overpaid for shares relative to Mr. Hess’s investment; and
(3) Mr. Hess’s desire to make a payment that was fair to Mr.
Kucklick on which he could live comfortably and that the company
could afford.
6On Feb. 26, 1995, Mr. Hess held 80 shares, Mrs. Hess held
20 shares, and Mr. Kucklick held 12 shares of the outstanding
stock of HII.
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