Ronald N. and Karen M. Gross - Page 7




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          a second payment of $100,000 on May 15, 1994 (lump-sum payments).              
          Petitioner excluded the lump-sum payments from gross income as                 
          damages received on account of personal injuries.                              
               The Liquidation Payment                                                   
               Under paragraph 5(a) of the settlement agreement, Okabena                 
          agreed to pay petitioner $516,907 for his interests in several                 
          Okabena investment entities (liquidation payment).  Okabena made               
          the required payment in 1993.  Petitioner excluded the                         
          liquidation payment from gross income as damages received on                   
          account of personal injuries.                                                  
               The Tax Clause                                                            
               The settlement agreement also contained the following                     
          provision with respect to the tax treatment of the payments made               
          to petitioner pursuant to the settlement agreement:                            
                    7.  Payment of Taxes.  The parties expressly                         
               acknowledge that the payments to be made to Gross under                   
               subparagraph 3(b) of this Agreement [the lump-sum                         
               payments] are intended solely as compensation for                         
               claimed damages on account of alleged personal injuries                   
               arising from an occurrence within the meaning of                          
               Section 104(a)(2) of the Internal Revenue Code, the                       
               administrative regulations promulgated thereunder, and                    
               applicable case law.  No part of the payments to be                       
               made to Gross under subparagraphs 3(b) or 5(a) [the                       
               liquidation payment] is allocable to punitive damages,                    
               compensation for other claimed damages, or interest                       
               thereon.  The Company makes no representation or                          
               warranty to Gross or his attorneys regarding the tax                      
               treatment or consequences of any payment made to Gross                    
               under this Agreement by the Internal Revenue Service or                   
               any other tax authority.  Gross will be solely                            
               responsible for the payment of any and all taxes of                       
               whatever kind that may be due or payable from him in                      
               connection with any payment made to him under this                        





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