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compete with petitioner for 3 years in Oregon and Washington,
beginning July 1, 1988.
The redemption agreement stated that petitioner paid Grecco
$383,400 for the covenant not to compete.2 Petitioner agreed to
pay Grecco $77,400 on December 23, 1988, with the balance to
be paid in equal monthly installments of $5,100, beginning
January 23, 1989, through December 23, 1993. Grecco agreed
to pay damages equal to 25 percent of the total payments under
the agreement if she breached the covenant not to compete.
The parties did not negotiate the value to be allocated to
the covenant not to compete.
2 The redemption agreement provided in part:
10. In consideration of the amounts to be paid by
Corporation to Grecco and the other Agreements of the
Corporation set forth herein, Grecco covenants and
agrees that for a period of three (3) years from
July 1, 1988, within the geographic area of Oregon and
Washington, Grecco shall not, directly or indirectly,
on behalf of or in concert with any other person, firm,
proprietorship, partnership or corporation of which
Grecco is now or hereafter an employee, agent,
proprietor, partner, officer, director or shareholder,
engage in a business which sells, at wholesale or
retail, products similar to products sold by
Corporation on July 1, 1988, or proposed to be handled
by Corporation on July 1, 1988. As compensation for
this covenant not to compete, Corporation shall pay to
Grecco a total of THREE HUNDRED EIGHTY THREE THOUSAND
FOUR HUNDRED ($383,400.00) DOLLARS. * * *
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