Johann T. and Johanna Hess - Page 35

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               In Mr. Heebink’s valuation analysis, he did not rely upon              
          the transaction involving the redemption of Mr. Kucklick’s                  
          shares.  However, Mr. Heebink prepared two additional reports and           
          a supplemental report, in which he concluded separate values for            
          Mr. Kucklick’s redeemed shares and the 8-year covenant.  Mr.                
          Heebink determined the value of the 8-year covenant using an                
          income analysis estimating the opportunity losses (focusing on              
          HEI) that would occur if Mr. Kucklick were allowed to compete.              
          The opportunity losses were projected over an 8-year period                 
          beginning after the completion of the 3-year period of the                  
          employment agreement.  Mr. Heebink applied a discount rate to               
          discount the future cashflows he determined to present value.  He           
          concluded that the value of the 8-year covenant was $2 million.             
          He allocated $2 million of the purchase price stated in the                 
          redemption agreement to the 8-year covenant, and he also                    
          allocated $100,000 to the favorable financing contained in the              
          installment note.  He determined that the redemption transaction            
          reflected a value of $104,000 per share for HII stock after                 
          applying a 15-percent minority interest discount and a 30-percent           
          marketability discount.                                                     
               We find Mr. Heebink’s attempts to quantify the value of the            
          8-year covenant flawed.  His analysis fails to consider the                 
          intentions of the parties to that agreement, and, instead, he               
          seeks to calculate the value of the covenant on the basis of                






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