Nathan P. and Geraldine V. Morton - Page 15

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                  Petitioner believed that leaving a secure position                  
             with Home Depot to join SWI was a risky move, and he would               
             not have joined SWI without obtaining a significant equity               
             interest in the company.  On July 13, 1989, after some                   
             negotiation concerning the amount of stock petitioner would              
             receive pursuant to the stock plan, he and Dubin Clark                   
             entered into a "Stock Purchase Agreement" (hereinafter                   
             referred to as the agreement) under which petitioner agreed              
             to purchase 500 shares of SWI stock for $60.98 per share.                
             This is the same price that Messrs. Jacobson and                         
             Henochowicz paid for their shares, and is the initial                    
             price established under the stock plan.  Neither SWI nor                 
             petitioner obtained an independent valuation of the stock                
             prior to or at the time of this purchase.  Petitioner                    
             believed that the shares were fairly valuable and would                  
             have purchased more if he had been given the opportunity.                
                  The stock petitioner purchased pursuant to the                      
             agreement was subject to certain restrictions.  Petitioner               
             could not sell, assign, transfer, pledge, or dispose of the              
             stock to any person or entity other than SWI.  In addition,              
             all of the shares were initially "unvested".  However, 20                
             percent of the shares received were to become vested on the              
             anniversary of the purchase each year, so that all of the                
             shares would be vested 5 years from the date of sale.                    
             The agreement also required SWI to repurchase all of                     

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