P. David Musgrave and Barbara J. Musgrave - Page 4

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          Jeffcott died as a result of injuries sustained in an automobile            
          accident.                                                                   
               On December 21, 1987, Color Q filed a Complaint in the                 
          Common Pleas Court of Montgomery County, Ohio (Montgomery County            
          Court), Case Number 87-4055, to recover the money allegedly                 
          embezzled by Mr. Jeffcott (embezzlement suit).  In its complaint,           
          Color Q named the following defendants:  (1) Teresa L. Jeffcott             
          (the wife of William T. Jeffcott), (2) JNANA, Inc. (JNANA), a               
          corporation formed by the Jeffcotts and owned by Teresa L.                  
          Jeffcott, (3) petitioner, and (4) the S Corporation.  The Estate            
          of William Jeffcott (Estate) was subsequently added as a                    
          defendant on May 10, 1988.  Color Q sought consequential and                
          incidental losses that were allegedly sustained as a result of              
          Mr. Jeffcott's embezzlement, as well as treble damages, costs of            
          the suit, and attorney's fees pursuant to the Ohio Corrupt                  
          Activities Act.                                                             
               During December 1987, the S Corporation sent to the Estate's           
          administrator an "Affidavit in Statement of Claim" stating that             
          the S Corporation was "the owner of a claim" against the Estate             
          for the amount of $193,500 plus interest from December 16, 1987.            
          The S Corporation stated that the claim was "contingent on the              
          outcome" of the insurance suit (described below); i.e., it was              
          contingent on the S Corporation's being found to be the                     
          beneficiary of the proceeds of the Prudential life insurance                
          policy on Mr. Jeffcott's life.                                              




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