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in eliminating competition; (h) the duration and geographic scope
of the covenant; (i) enforceability of the covenant not to
compete under State law; (j) the age and health of the seller;
(k) the seller's intent to reside in the same geographical area;
and (l) the existence of active negotiations over the terms and
value of the covenant not to compete. See Beaver Bolt, Inc. v.
Commissioner, supra, and cases cited therein.
In stipulating that the Noncompete Agreement had a value of
$300,000, respondent has largely conceded its economic reality,
in our view. Nevertheless, on brief respondent continues to
insist that the Noncompete Agreement lacked economic substance
because Wagner intended to retire and was constrained in any
event by his $300,000 participation in the loan financing his
buyout. We are not persuaded. Petitioner’s customers
represented a highly specialized, niche market, and Wagner was
well known to them. A prospective purchaser of petitioner in the
same year as Wagner’s buyout had insisted on noncompete
agreements from both Wagner and Forest. Regardless of whether
Wagner “intended” to retire after the buyout, he was 56, might
have second thoughts, and had received $1 million that could
finance a new venture. Indeed, if Wagner did not represent a
competitive threat, we wonder why the Bank found it necessary to
require Wagner’s participation in the loan. Respondent in effect
contends that Wagner’s loan participation made the Noncompete
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