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or Suzuki automobiles.2 Mr. Wright further agreed not to solicit
or otherwise encourage any present or future employee of the
buyers to perform work in auto sales or repairs for him for a
period of 3 years. The covenant not to compete covered a radius
of 50 miles around Kirkland, Washington. The final agreement
further provided that the consideration of $675,000 paid for the
covenant not to compete was not reimbursable in the event of the
death or disability of Mr. Wright.
The buyers believed that the noncompetition portion of the
final agreement was necessary for a number of reasons. First,
the buyers were concerned that Mr. Wright would recruit employees
from the Totem Lake dealerships to work in his Chevrolet-Nissan
dealership. Second, the buyers were concerned that Mr. Wright
would obtain employment from one of the 21 Ford dealerships or 19
Toyota dealerships in the Seattle, Washington, area, where he
could use his industry contacts and experience to the detriment
of the buyers.
The consulting portion of the final agreement required the
buyers to pay Mr. Wright $675,000 in three equal annual
installments of $225,000 to secure his services as a consultant
for 3 years, or the buyers could prepay this amount at any time
without penalty. Mr. Wright's obligation to consult was limited
2 Mr. Wright also owned a low-volume Chevrolet-Nissan dealership in the
Seattle metropolitan area. The terms of the Noncompetition and Consulting
Agreement did not prevent Mr. Wright from continuing to operate the Chevrolet-
Nissan dealership.
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Last modified: May 25, 2011