- 8 -
Agreement and Escrow Instructions" (purchase agreement). The
purchase agreement provided that "Buyer shall purchase all of
Seller's goodwill as a going concern for the total price of Two
Hundred Thousand Dollars ($200,000)", and that "Seller will
preserve for Buyer the goodwill of the Dealerships, including the
goodwill of its suppliers, customers and others having business
relations with the Dealerships". The noncompetition agreement
attached to the purchase agreement (noncompetition agreement)
provided that $1,150,000 would be paid to Mr. Wright at closing
for his agreement not to compete with the buyers for a period of
3 years. The agreement to allocate $200,000 to goodwill and
$1,150,000 to the covenant not to compete was reached by Mr.
Richardson and Mr. Wright; Mr. Turner, Mr. Blewett, Mr. Zellner,
and Mr. Hyde all testified that they did not know the basis of
these allocations, since none of them were involved in this part
of the negotiations.
Shortly after the execution of the purchase agreement, Mr.
Carpenter sent a letter, dated March 7, 1988, to Mr. Hyde. In
regard to goodwill and the covenant not to compete, the letter
read as follows:
The parties will readjust the good will/covenant not to
compete if it is determined that the manner of the
allocation (i.e. $200,000 to good will and $1,150,000 to the
covenant not to compete) is not in the best interest of Mr.
Wright. I recognize, however, that, as far as this
allocation is concerned, your client desires to have at least
$100,000 applied to good will and does not desire to have a
great deal more applied to good will.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011