- 3 -
In October 1988, ACT sold its assets, including cable
franchise rights, to Jones Spacelink, Ltd. (JSL). The purchase
and sale agreement, executed October 27, 1988 (the purchase
agreement), states that it was made by and among JSL, as the
buyer, and ACT, Towers Development Co. of Panama City, Inc.
(Towers Development), Towers Construction Co. of Panama City,
Inc.,3 Briggs, Daniell, Gay, petitioner, and Sandra Morris, as
sellers (identified collectively in the purchase agreement and
hereinafter as the seller group). The purchase agreement states
that the assets to be conveyed to JSL “include all tangible and
intangible assets of the Seller Group”. The stated purchase
price of $1,522,080 was payable “to the Seller Group”. Of this
amount, $510,560 was payable to the seller group in cash at the
closing, $500,000 was payable to the seller group in accordance
with the terms of a covenant not to compete, and the balance of
$511,520 was payable to the seller group in accordance with the
terms of an agreement regarding additional cable subscribers.
The covenant not to compete, also executed October 27, 1988,
states that it was made and entered into by and between JSL, as
3 As discussed in Briggs v. Commissioner, supra, the nominal
shareholders of both Towers Development Co. of Panama City, Inc.
(Towers Development), and Towers Construction Co. of Panama City,
Inc., were Franklin W. Briggs (Briggs) and petitioner’s wife,
Sandra Morris, petitioner having placed his ownership interests
in his wife’s name to avoid creditors. In the instant
proceeding, the parties have stipulated that petitioner and
Briggs were the sole shareholders of Towers Development and that
they owned it equally.
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