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contends that the final structure of the transaction as a sale of
Clinpath stock by Clinpath’s shareholders, and not by petitioner,
was mandated by NHL’s desire to obtain from the shareholders
valid and enforceable covenants not to compete. Therefore, a
corporate business purpose existed for the distribution of
Clinpath stock to the shareholders.
We do not agree. Even if we were to conclude that NHL’s
desire to obtain enforceable covenants not to compete qualified
as a corporate business purpose of either petitioner or Clinpath,
as section 1.355-2(b)(2), Income Tax Regs., requires, we would
still reject petitioner’s argument. Okla. Stat. Ann. tit. 15,
sec. 217 (West 1986 and Supp. 2000), provides that “Every
contract by which any one is restrained from exercising a lawful
profession, trade or business of any kind, otherwise than as
provided by Sections 218 and 219 of this title, is to that extent
void.” Oklahoma State courts interpret Okla. Stat. Ann. tit. 15,
sec. 217, to prohibit only unreasonable restraints on the
exercise of a lawful profession, trade, or business. Bayly,
Martin & Fay, Inc. v. Pickard, supra at 1172; Crown Paint Co. v.
Bankston, 640 P.2d 948, 952 (Okla. 1981); Bd. of Regents v. Natl.
Collegiate Athletic Association, 561 P.2d 499, 508 (Okla. 1977).
The majority rule is that reasonable restrictions will be
enforced. Bayly, Martin & Fay, Inc. v. Pickard, supra at 1170-
1171. Even unreasonable contracts in restraint of trade, which
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