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the aggregate sum of $3,953,642.56 (the “Redemption
Price”), payable as follows:
(a) The sum of $1,000,000 by check; and
(b) By delivery of the Corporation’s
unsecured installment note (the “Note”) in the
principal amount of $2,953,642.56. The Note shall
be in the form of Exhibit A hereto.
HII and Mr. Kucklick have consistently treated the price paid
under the redemption agreement as paid exclusively for the 12
shares of stock that were redeemed. Thus, HII has treated the
price paid as the cost of treasury stock, and Mr. Kucklick has
treated it as a capital gain.
HII’s consolidated and consolidating financial statements
for its years ended July 31, 1994, and 1995 include projections
for the years ending July 31, 1996, through 1998. HII prepares
financial projections as a normal practice to motivate its
employees. HII’s philosophy in establishing projections is to
provide goals that will take a lot of effort to achieve. The
projections typically are made on the basis of information from
the subsidiaries regarding outstanding quotations without
considering customers’ price negotiations. The projections
typically cover a period of 12 to 18 months into the future.
However, the projections that HII prepared for the years ending
July 31, 1996, and 1998 cover a period of 3 years and are not
made on the basis of input from HII’s subsidiaries. The purpose
of HII’s projections for 1996 to 1998 was to “pump up the
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