Johann T. and Johanna Hess - Page 7

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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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