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asking price, and lists “COVENANT 5 years 100 miles” under
“TERMS”. The purchase agreement, as indicated above, has been
amended to make reference to a covenant from “officers” and sets
forth the total price of the stock and “any covenant”. The
separate covenant document identifies that it is an agreement
“regarding the sale of Little Rascals”. These three instruments,
collectively, thus cannot sustain petitioners’ burden of proving
that no part of the $300,000 allocated to “Covenant Not to
Compete” in the closing statements was intended as consideration
for petitioners’ promise.
Furthermore, the surrounding negotiations and circumstances
do not require a different conclusion. Although the prospectus
was technically erroneous, Mr. Shah testified that he understood
the document to mean that petitioner, as founder and seller, was
offering the covenant. Petitioners did nothing to correct Mr.
Shah’s understanding throughout the initial negotiations premised
on the prospectus, and the Shahs were not made aware of the
existence of the trust until the purchase agreement was drafted.
Petitioners subsequently did not object to the addition of the
“and officers” language to the purchase agreement. Their
reference to “our Purchase Agreement dated May 24, 1993, Section
15" in the letter they sent to the Shahs shortly after the sale,
however, shows that they had read the agreement and were aware of
its terms. They then complied with the Shahs’ request to execute
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