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receive $2.5 million payable over fifteen years. HMI, Inc. would
continue to lease the Safety Drive property from the Hursts. The
proceeds from the sale of the corporations and the rent from the
lease would support the Hursts during their retirement. Mrs.
Hurst would continue to work at HMI as an employee, joining the
firm’s health plan to get coverage for herself and her husband.
Tuori, Dixon, and Todd Hurst would own the company, getting the
job security they would have lacked had HMI been sold.
Everything came together on July 1, 1997: HMI bought 90
percent of its 1000 outstanding shares from Mr. Hurst for a $2
million note. Richard Hurst sold the remaining 100 shares in HMI
to Todd Hurst (51 shares), Dixon (35 shares), and Tuori (14
shares). The new owners each paid $2500 a share, also secured by
promissory notes. HMI bought RHI from the Hursts for a $250,000
note.2 (All these notes, from both HMI and the new owner, had an
interest rate of eight percent and were payable in 60 quarterly
installments.) HMI also signed a new 15-year lease for the
Safety Drive property, with a rent of $8,500 a month, adjusted
for inflation. The lease gave HMI an option to buy the building
from the Hursts, and this became a point of some contention--
described below--after the sale. And, finally, HMI also signed a
2 Trial testimony amply demonstrated that an extra $25,000
loan repayment was mistakenly included in the sale price of RHI,
and the Commissioner now agrees that RHI’s price was $250,000.
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