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litigation be settled by petitioner's relinquishing his interests
in the various Bentley Village entities, including Life Care, to
Smith and Fowler, for an immediate payment of $500,000, a
$100,000 annual consulting fee for 5 years, and a lump-sum
payment at the end of 5 years at a price to be determined under a
mutually agreeable formula.
The litigation eventually was settled on January 12, 1989,
pursuant to an agreement entitled "Mutual Release and Settlement
Agreement" (the settlement agreement). Contrary to the terms set
forth in Mr. Reissman's June 15, 1988, letter, the settlement
agreement provides alternative options respecting the sale of the
parties' respective partnership interests. Specifically, the
settlement agreement allowed petitioner an 8-month period within
which to exercise an option to purchase Smith's and Fowler's
partnership interests in Life Care. However, during this same
8-month period, Smith and Fowler could preempt petitioner by
exercising their own options to purchase petitioner's partnership
interest in Life Care. The settlement agreement further stated
that, in the event that petitioner did not exercise his option
within the prescribed 8-month period, Smith and Fowler would be
required to pay petitioner $2,370,000 that would be allocated 50
percent to a consulting fee and 50 percent to the purchase of
petitioner's interests in the various Bentley Village entities,
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