Charles H. Davison and Leslie B. Davison - Page 12

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          prevent a default by White Tail.  In the Letter Agreement dated             
          December 24, 1980, it was agreed that John Hancock would modify             
          the 1980 credit arrangement so as to "capitalize" $793,655.23 of            
          the $1,587,310.46 interest due from White Tail and defer the due            
          date for the principal installment until January 1, 2001.11  In             
          the original 1980 credit arrangement, John Hancock had already              
          agreed to lend one-half of the interest due on January 1, 1981.             
          The effect of the modification was that all the interest due to             
          John Hancock on January 1, 1981, would be borrowed from John                
          Hancock.                                                                    
               On December 30, 1980, John Hancock wired $1,587,310.46 to              
          White Tail's account at American National.  This increased the              
          amount White Tail owed John Hancock by $1,587,310.46.  On                   
          December 31, 1980, White Tail wired John Hancock $1,595,017.96,             
          which John Hancock reflected as a satisfaction of White Tail's              
          January 1, 1981, interest obligation of $1,587,310.46 plus a                
          principal payment of $7,707.50.12                                           




               11We construe the term "capitalize", as used in the Letter             
          Agreement and the minutes, to mean that the principal of the loan           
          would be increased by the amount of interest due on Jan. 1, 1981.           
               12The Letter Agreement dated Dec. 24, 1980, and the attached           
          minutes indicate that John Hancock was going to allow White Tail            
          to defer the principal payment of $7,707.50.  Nevertheless, on              
          Dec. 29, 1980, John Hancock billed White Tail for both principal            
          and interest, and the wire transfer of $1,595,017.96 includes a             
          principal payment of $7,707.50.  The record contains no                     
          explanation for this.                                                       




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