Howard Pontiac-GMC, Inc. - Page 14

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               Respondent also argues that the likelihood of competition              
          from Mr. Markley is low, citing the "limited market entry" into             
          the Jeep-Eagle market in Oklahoma City area due to the limited              
          number of Jeep-Eagle franchises allowed by Chrysler in the                  
          Oklahoma City market; that Mr. Markley showed no intention of               
          competing and, in fact, left Oklahoma shortly after the sale to             
          pursue a business opportunity in Houston, Texas; and that the               
          covenant allows for significant competition since it only covers            
          the sale of new Jeep-Eagle automobiles and does not cover an                
          adjacent county.                                                            
               Respondent further argues that petitioner's method of                  
          valuing the covenant, in addition to the shortcomings mentioned             
          above, also fails to:  discount the stream of payments required             
          under the covenant to reflect the time value of money; and to               
          factor in the effect that amortizing the covenant would have on             
          after tax cash flow--the payments under the covenant being                  
          deductible and thus reducing petitioner's income tax liability.             
               Finally, respondent argues that any amount paid by                     
          petitioner in excess of $125,000 (of the disputed $490,000                  
          payment) was for Mr. Markley's agreement to terminate his Jeep-             
          Eagle franchise.  Respondent correctly points out that the sale             
          was contingent upon Chrysler's awarding petitioner Mr. Markley's            
          franchise, and petitioner could not obtain Mr. Markley's Jeep-              
          Eagle franchise unless he informed Chrysler that he wished to               
          terminate his franchise.                                                    

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