Sharewell, Inc. - Page 5




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          that it would require both Forest and Wagner to execute covenants           
          not to compete in connection with the acquisition of petitioner.            
          Preliminary documents prepared for this transaction proposed a              
          noncompete period of 5 years.  The contemplated purchase of                 
          petitioner by Castex fell through when Castex was unable to                 
          secure financing.                                                           
               By 1990, Wagner had become weary of the rigors of managing             
          petitioner.  He was anxious to sell out to Castex in mid-1990 and           
          was disappointed that the deal had fallen through.  After the               
          negotiations with Castex ceased, Wagner approached Forest in late           
          1990 with a proposal that he, Wagner, be bought out.  Wagner                
          offered to accept less for his one-half interest than Castex had            
          suggested it would pay, provided the purchase could be completed            
          by yearend.  Wagner was anxious to complete the transaction                 
          before the end of 1990 because he was aware that capital gains              
          tax rates would increase in 1991.  Forest indicated that he                 
          wanted to be sure that petitioner could carry the burden of                 
          buying out Wagner, and that he would require Wagner to provide a            
          covenant not to compete as part of the buyout to insure                     
          petitioner's continued viability.  Forest also consulted with               
          petitioner's banker, Lawrence G. Fraser (Fraser), chairman of               
          Texas Capital Bank (Bank), regarding financing for petitioner's             
          purchase of Wagner's interest.  Fraser told Forest that the Bank            
          would require a covenant not to compete from Wagner as a                    





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