Walter E. Hess and Helen L. Hess - Page 10

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          nontaxable.  To satisfy the concerns of Balfour's attorney that             
          such an allocation could expose Balfour to liability,                       
          petitioner's attorney agreed to insert language in the agreement            
          stating that petitioner would indemnify Balfour for any Federal             
          income tax liability asserted against Balfour for unpaid Federal,           
          State, or local taxes owed on the settlement payment to                     
               On November 30, 1993, petitioner and Balfour signed a                  
          settlement agreement.  Paragraph 1 stated that petitioner would             
          receive $425,000 and that his attorneys would receive $125,000.             
          The agreement stated that the $425,000 payment settled                      
               claims for compensatory damages arising out of alleged                 
               wrongful discharge, * * * [and]                                        
                         *    *    *    *    *    *    *                              
               Neither this Agreement nor any action on the part of                   
               Balfour or Town & Country required by the Agreement,                   
               nor the allocation or description of the Settlement                    
               Amount as recited in paragraph 1 hereof, constitutes an                
               admission by Balfour or Town & Country of any unlawful                 
               or tortious action.                                                    
          The latter language was placed in the agreement as a caveat to              
          the statement in paragraph 1 that the settlement payment was made           
          to compensate petitioner for his claim of wrongful discharge.               
          The agreement also let petitioner represent Balfour's competitors           
          and sell non-Balfour products or services to Balfour's customers            
          in the New York City territory.                                             

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