Richard E. and Mary Ann Hurst - Page 18

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               None of this, though, changes the fact that her compensation           
          and fringe benefits were fixed, and again--like the notes and               
          lease--not subordinated to HMI’s general creditors, and not sub-            
          ject to any fluctuation related to HMI’s financial performance.             
          Her duties, moreover, were various administrative and clerical              
          tasks--some of the same chores she had been doing at HMI on a               
          regular basis for many years.  And there was no evidence whatso-            
          ever that Mr. Hurst used his wife in any way as a surrogate for             
          continuing to manage (or even advise) HMI’s new owners.  Cf.                
          Lynch, 801 F.2d at 1179 (former shareholder himself providing               
          post-redemption services).                                                  
               It is, however, undisputed that her employment contract had            
          much the same cross-default provisions that were part of the                
          lease and stock transfer agreements.  The Commissioner questions            
          whether, in the ordinary course of business, there was reason to            
          intertwine substantial corporate obligations with the employment            
          contract of only one of 45 employees.  He points to this special            
          provision as proof that the parties to this redemption contempla-           
          ted a continuing involvement greater than that of a mere credi-             
               In relying so heavily on the cross-default provisions of the           
          Hursts’ various agreements, though, the Commissioner ignores the            
          proof at trial that there was a legitimate creditor’s interest in           
          the Hursts’ demanding them.  They were, after all, parting with a           

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