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was entered into, Cruze was paid $16.75 million, instead of $18
million, for his stock in petitioner.
The $1.25 million was paid to Panzica, Battistella, and
Navarra in the following respective amounts:
Employee Amount
Panzica $1,000,000
Battistella 200,000
Navarra 50,000
Total $1,250,000
Of the $200,000 paid to Battistella, $51,000 ($20,000 in
principal and $31,000 in interest) in substance and in fact
related to and constituted repayments of principal and interest
on a $20,000 loan that in earlier years petitioner had received
from Battistella.
Panzica, Battistella, and Navarra were regarded by Cruze as
key employees of petitioner and, at Cruze’s suggestion, they were
requested to enter into, and they did agree to, covenants not to
compete with petitioner for a period of 3 years which period was
not to begin until they left their employment with petitioner.
No dollar amount was allocated to the covenants not to compete
that were entered into by Panzica, Battistella, and Navarra.
CC Acquisition incurred expenditures in connection with the
LBO totaling $1,342,347, for which petitioner became liable as
the successor corporation. Of these total $1,342,347 in
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