D. Sam Scheele - Page 4

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          construction contract) with four of its limited partners (the               
          participating limited partners) and with a contractor                       
          (S-P Construction) and an architect/engineer (collectively, the             
          S-P parties).  The participating limited partners had various               
          ownership interests in S-P Construction and the architect/                  
          Biomass Lawsuit                                                             
               In 1987, Biomass and Biomass Operating sued the S-P parties            
          for compensatory and punitive damages relating to their                     
          performance of the construction contract (the Biomass lawsuit).             
          The original complaint (the first complaint) alleges breach of              
          contract and negligence and includes claims for damages due to              
          loss of reputation and goodwill.  In March 1988, Biomass and                
          Biomass Operating filed a third amended complaint in the Biomass            
          lawsuit (the third amended complaint).  The third amended                   
          complaint adds Aetna Ins. Co. (Aetna) as a defendant and includes           
          more detailed allegations relating to the S-P parties'                      
          performance under the construction contract, but makes no claims            
          for damages due to loss of reputation or goodwill.                          
               In 1989, the Biomass lawsuit was resolved by agreement (the            
          settlement agreement).  The settlement agreement requires                   
          S-P Construction to pay Biomass funds from its insurers totaling            
          approximately $9,200,000.  The settlement agreement includes a              

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