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agreement", commenting that this "will allow us to prepay the
agreement, without impairing our ability to deduct the payments."
Mr. Hyde also suggested, among other things, that the entire
paragraph on per diem payment for consulting services be deleted,
commenting that the "inclusion of additional consulting fees,
especially at this high rate, makes the $675,000 fee look like a
sham, and endangers its deductibility."
After the above correspondence and negotiation, the parties
entered into an "Addendum to Purchase Agreement and Escrow
Instructions" (addendum). The addendum amended the purchase
agreement to provide that no portion of the purchase price would
relate to goodwill and that "All good will of the business of
Seller is not to be assigned any value." The addendum also
provided for the execution of a noncompetition and consulting
agreement (final agreement) attached to the addendum.
The final agreement provided that the buyers would pay Mr.
Wright $675,000 at closing in exchange for his covenant not to
compete for a period of 3 years. More specifically, Mr. Wright
agreed not to compete with the buyers, directly or indirectly,
either as an employer, employee, consultant, agent, officer,
director, shareholder, or owner of any entity, for a period of 3
years, in the business of retail sale or repair of Toyota, Ford,
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Last modified: May 25, 2011