Daniel E. and Karen A. Harkins - Page 9

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          undertaken by Pepsi at the end of each calendar year.6  Mr.                 
          Goodson explained that only if Pepsi, after conducting the                  
          investigation, considered the theater company to be in compliance           
          with the agreement would Pepsi then pay the flex and marketing              
          funds to the theater company.  He also explained that Pepsi                 
          believed that it could recover any flex or marketing funds                  
          previously paid if Pepsi considered the theater company to have             
          breached the agreement.  We now rule on respondent's objection.             
               Under Arizona's parol evidence rule, a judge “first                    
          considers the offered evidence and, if he or she finds that the             
          contract language is ‘reasonably susceptible’ to the                        
          interpretation asserted by its proponent, the evidence is                   
          admissible to determine the meaning intended by the parties.”               
          Taylor v. State Farm Mut. Auto. Ins. Co., 854 P.2d 1134, 1140               
          (Ariz. 1993).  The judge, however, must still exclude extrinsic             
          evidence which would vary or contradict the meaning of the                  
          written agreement.  See id.                                                 
               We believe that certain parts of Mr. Goodson's testimony are           
          properly admissible for the purpose of interpreting the rights              
          and obligations of the parties under the agreement.  We also                
          believe that other parts of Mr. Goodson's testimony are                     
          inadmissible as they contradict or vary the parties' agreement as           

               6  Mr. Goodson testified that the investigation could take             
          up to 180 days.                                                             

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