Jeffrey I. and Roberta H. Stone - Page 6

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               In the Provizer case, Packaging Industries, Inc. (PI),                 
          manufactured and sold six Sentinel EPE recyclers to ECI Corp. for           
          $981,000 each.  ECI Corp., in turn, resold the recyclers to F & G           
          Corp. for $1,162,666 each.  F & G Corp. then leased the recyclers           
          to Clearwater, which licensed the recyclers to FMEC Corp., which            
          sublicensed them back to PI.  The sales of the recyclers from PI            
          to ECI Corp. were financed with nonrecourse notes.  Approximately           
          7 percent of the sales price of the recyclers sold by ECI Corp.             
          to F & G Corp. was paid in cash with the remainder financed                 
          through notes.  These notes provided that 10 percent of the notes           
          were recourse but that the recourse portion of the notes was only           
          due after the nonrecourse portion, 90 percent, was paid in full.            
               All of the monthly payments required among the entities in             
          the above transactions offset each other.  These transactions               
          were done simultaneously.  Although the recyclers were sold and             
          leased for the above amounts under the structure of simultaneous            
          transactions, the fair market value of a Sentinel EPE recycler in           
          1981 and 1982 was not in excess of $50,000.                                 
               PI allegedly sublicensed the recyclers to entities that                
          would use them to recycle plastic scrap.  The sublicense                    
          agreements provided that the end-users would transfer to PI 100             
          percent of the recycled scrap in exchange for a payment from FMEC           
          Corp. based on the quality and amount of recycled scrap.                    

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