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benefit to the petitioner. But if the parties did not
intend that a purchase price be allocated to this
important and valuable covenant, that intention must be
respected. * * *
Second, BHC argues that the promissory note represented an
economic allocation of a portion of the consideration to the
covenant not to compete. This is not an accurate interpretation
of the promissory note. The promissory note contained an offset
provision whereby, if William Becker violated the covenants
contained in the redemption agreement, BHC could offset the
amount owed to William Becker by the actual damages caused to
BHC. This does not reflect the mutual intent of the parties to
allocate a portion of the consideration paid to the covenant not
to compete.
Third, BHC argues that the discussions held from the fall of
1991 through February 1992 demonstrate the parties’ mutual
intent. During those discussions, the parties contemplated
allocating a portion of the consideration to the covenant not to
compete in exchange for additional consideration. These
discussions took place at least 6 months after the transaction
and do not reflect the mutual intent of the parties at the time
the purchase documents were executed.
Fourth, BHC argues that the disclosure statement attached to
William Becker’s 1991 Federal income tax return demonstrates the
parties’ mutual intent. At the suggestion of Mr. Lynch, William
Becker took a position on that return in an attempt to avoid
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