Nathan P. and Geraldine V. Morton - Page 32

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             volatile nature of Mr. Conklin's valuation model, along                  
             with the lack of objective support for his assumptions,                  
             causes us concern about the accuracy of his final                        
             calculation.                                                             
                  We are also not persuaded by petitioners' argument                  
             that the $60.98 price per share established in the                       
             original acquisition transaction and used in connection                  
             with the Share Compensation Plan supports the accuracy of                
             petitioners' expert's valuation.  In consideration for                   
             their shares in old SWI, Dubin Clark gave Messrs.                        
             Jacobson and Henochowicz $5 million in cash, the right                   
             to contingent payments of 30 percent of the company's                    
             operating profit in excess of $4 million for the next 5                  
             years, and the right to purchase approximately 27 percent                
             of the stock of new SWI for $60.98 per share.  We agree                  
             with respondent that this price per share does not                       
             accurately reflect the fair market value of the stock                    
             after the acquisition transaction.  Indeed, as mentioned                 
             above, the $60.98 price for the new SWI shares was                       
             computed by dividing paid-in capital as of January 31,                   
             1989, $439,056, by the number of shares of new SWI stock                 
             outstanding at that time, 7,200.  It bears no necessary                  
             correlation to the value of the SWI stock after the                      
             acquisition transaction.  Furthermore, there is no                       
             evidence that it was intended to reflect the value of the                




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