Howard Pontiac-GMC, Inc. - Page 7

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                    Inventories              $2,000,000                               
                    Covenant not to compete    490,000                                
                    Goodwill                  10,000                                  
                    Total sales price        2,500,000                                
               Petitioner and seller signed the agreement on November 15,             
          1989.  The form of the covenant not to compete was attached as              
          schedule 1 to the agreement.  Section 10 of the agreement                   
               The Buyer [petitioner] agrees that Buyer will not use                  
               Seller's name or location in Buyer's operation.  The                   
               parties acknowledge that any goodwill to be acquired by                
               Buyer is nominal and have therefore agreed that the                    
               Buyer will pay Seller Ten Thousand Dollars ($10,000)                   
               for Seller's goodwill on the closing date.                             
               For payment of $500,000 (over and above the agreed upon sale           
          price of the tangible inventories of seller's Jeep-Eagle                    
          distributorship), petitioner received a number of benefits,                 
          including seller's agreement to terminate its Jeep-Eagle                    
          franchise, and seller's agreement to provide to petitioner all              
          sales and service records, customer lists, and other information            
          which might be useful to petitioner.                                        
               Seller's termination of its sales and service agreement with           
          Chrysler was a condition to the closing of the agreement.                   
          Approval of petitioner's application for a Jeep-Eagle franchise             
          from Chrysler was also a condition to the closing of the                    
          agreement.  Petitioner could only acquire seller's Jeep-Eagle               
          franchise if seller would agree to terminate the franchise.                 
          Chrysler's Franchise Policies                                               
               Standard Jeep-Eagle franchises are issued for an indefinite            
          term.  A Jeep-Eagle franchisee can expect to retain its franchise           

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Last modified: May 25, 2011