V.R. DeAngelis M.D.P.C. & R.T. Domingo M.D.P.C., V. R. DeAngelis M.D.P.C., Tax Matters Partner, et al. - Page 11

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          commissions on the sales of the life insurance policies; e.g.,              
          $605,053 in 1994.                                                           
               Drs. DeAngelis, Domingo, and Durante (collectively,                    
          participating doctors) participated in the STEP plan through                
          their PCs and VRD/RTD.  Alvin Rapp (Mr. Rapp) was an authorized             
          insurance agent of MetLife, and he recommended that all                     
          contributions to the STEP plan made on behalf of the                        
          participating doctors be invested in whole life insurance                   
          policies issued by MetLife.  That recommendation was followed.              
          Each whole life insurance policy related to a participating                 
          doctor required that a payment be made annually on December 28              
          for the policy year beginning on that date.                                 
               B.  Formation of the STEP Plan                                         
               The originator of the STEP concept was Kenneth L. Katz (Mr.            
          Katz), an insurance agent credentialed as a chartered life                  
          underwriter and a chartered financial consultant.  In 1988, Mr.             
          Katz asked his friend, Jeffrey Mamorsky (Mr. Mamorsky), to draft            
          a plan that could be marketed as a tax-beneficial welfare                   
          benefits fund that complied with section 419A(f)(6).  Mr.                   
          Mamorsky was an attorney practicing primarily in the area of                
          employee benefits and compensation.  Mr. Mamorsky later also                
          served as counsel to the STEP plan; in that capacity, Mr.                   
          Mamorsky was available and willing to discuss with covered                  
          employees (at the expense of the STEP plan) the manner in which             

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