Michael J. and Carrie L. Woods - Page 4

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          appealed the judgments and the trial court's denial of his motion           
          for a new trial to the Rhode Island Supreme Court.                          
          C.   The Settlement                                                         
               While the appeal was pending, Dr. Erinakes agreed to pay               
          Jacquelyn $1,858,948 and the Woodses $91,926 each for a release             
          and discharge of any and all past or future claims.  The Woodses            
          for themselves and on behalf of Jacquelyn, and Decof, signed the            
          releases on April 14, 1992.  The parties did not discuss tax                
          consequences during settlement negotiations.                                
               On April 14, 1992, the Woodses and Dr. Erinakes filed a                
          stipulation and stipulation of dismissal with the trial court.              
          On April 16, 1992, the trial court granted the parties' motion to           
          approve the settlement of Jacquelyn's personal injury claim,                
          subject to the creation of a trust fund which would provide for             
          the receipt, investment, and disbursement of the net settlement             
          proceeds paid to Jacquelyn.  The proceeds of the settlement were            
          held in escrow by Decof pending approval of the settlement by the           
          judge.  The Woodses created the Jacquelyn R. Woods Trust, which             
          the trial court approved on July 15, 1992.  Neither the judgment            
          nor the jury award was an enforceable final judgment under Rhode            
          Island law because both were voided by the parties' settlement              
          and stipulation of dismissal.                                               
               JUA issued a check for $183,852 to the Woodses and Decof on            
          July 23, 1992.  JUA issued a check for $1,858,948 payable to                
          Jacquelyn and Decof on July 23, 1992.  JUA did not issue a Form             




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