Richard E. and Mary Ann Hurst - Page 19

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          substantial asset (the corporations), in return for what was in             
          essence an IOU from some business associates.  Their ability to             
          enjoy retirement in financial security was fully contingent upon            
          their receiving payment on the notes, lease, and employment con-            
          tract.  As William Gedris, one of the Hursts’ advisers, credibly            
          testified, it would not have been logical for Mr. Hurst to relin-           
          quish shares in a corporation while receiving neither payment nor           
               The value of that security, however, depended upon the                 
          financial health of the company.  Repossessing worthless shares             
          as security on defaulted notes would have done little to ensure             
          the Hursts’ retirement.  The cross-default provisions were their            
          canary in the coal mine.  If at any point the company failed to             
          meet any financial obligation to the Hursts, Mr. Hurst would have           
          the option to retrieve his shares immediately, thus protecting              
          the value of his security interest instead of worrying about                
          whether this was the beginning of a downward spiral.  This is               
          perfectly consistent with a creditor’s interest, and there was              
          credible trial testimony that multiple default triggers are                 
          common in commercial lending.                                               
               We find that the cross-default provisions protected the                
          Hursts’ financial interest as creditors of HMI, for a debt on               
          which they had received practically no downpayment, and the                 
          collection of which (though not “dependent upon the earnings of             

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