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an officer of Cupertino National Bank as trustee for the Jorgl
Unitrust signed as “seller”. Petitioners were neither named in
nor signatories to this document.
The purchase agreement designated $650,000 as the “purchase
price of the stock and any covenant not to compete”. Paragraph
16 then contained the following language regarding a covenant not
to compete:
COVENANT NOT TO COMPETE: For a period of 5 consecutive
years from COE [closing of the agreed escrow], seller
shall not directly or indirectly carry on a similar
business within a radius of 100 miles of the business
being sold, nor assist anyone else except the
corporation and buyer to do so within these limits: nor
shall seller have any interest, directly or indirectly,
in such business, except as an employee of the business
being sold. Paragraph 19 will not prevent injunctive
relief to enforce this covenant pending arbitration.
Any part of the purchase price to be allocated to this
covenant shall be agreed upon by the parties and
submitted to escrow prior to COE.
In addition, a handwritten amendment stating “and officers” was
inserted by the Shahs’ broker after the first “seller” in the
printed paragraph.
Mr. Shah subsequently drafted a covenant not to compete for
petitioners and the Shahs to sign. When Mr. Shah then called
petitioner to inform him that the draft had been prepared,
petitioner requested that the document be sent to his attorney,
Mr. Kehl, for review. On July 29, 1993, Mr. Kehl received a fax
of a noncompetition agreement “between John Jorgl and Sharon Illi
* * * and Divyesh P. Shah and Priti D. Shah”. Mr. Kehl advised
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