- 21 -                                         
               To ensure that all of G�nther’s creditors benefited from the           
          Actium sale, Flint directed G�nther to use 80 percent of the cash           
          generated by the Actium sale to pay down G�nther’s guaranteed               
          bank loans in proportion to their balances.  The remaining cash             
          was used to pay employee salaries, trade creditors, and tenant              
          improvements.  None of the sale proceeds were used to repay any             
          part of the intercompany account balance owed by G�nther to                 
          petitioner.                                                                 
               H.  Petitioner’s Efforts To Dispose of G�nther                         
               Throughout the period following discovery of the Omega                 
          transaction and dismissal of G�nther's management, petitioner               
          continued G�nther’s operations while seeking potential purchasers           
          for G�nther and its product lines.  Petitioner retained                     
          investment banks and brokers, but there was very little interest            
          in G�nther.  Before the purchase of G�nther by G�nther America,             
          Inc. (GAI), during FYE May 31, 1994, discussed infra, only one              
          offer to purchase G�nther was received.  In March 1993, Celduc,             
          one of G�nther's principal competitors, offered to purchase                 
          G�nther, if petitioner contributed cash of DM 20 million                    
          (approximately $12,050,000) and made guaranties and concessions             
          worth several million dollars more.  After unsuccessful efforts             
          to negotiate a more favorable deal, petitioner ultimately                   
               16(...continued)                                                       
          to approximately DM 8 million.                                              
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