Donald R. Martin - Page 5

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                    agreement.  Jackson repaid the $50,000 loan on time and paid                                                                                           
                    Activewear 10-percent interest on the loan.                                                                                                            
                              2.        Additional Loans                                                                                                                   
                              Activewear then made more short-term loans to Jackson's                                                                                      
                    corporations.  Petitioner wrote checks payable to Jackson or his                                                                                       
                    corporations drawn on Activewear's account.  Jackson or his                                                                                            
                    corporations repaid the loans to Activewear, usually in less than                                                                                      
                    4 days with interest at 10 percent.  Petitioner did not discuss                                                                                        
                    the loans to Jackson with Waddell after the first $50,000 loan.                                                                                        
                    Petitioner wrote the checks to Jackson on the Activewear checking                                                                                      
                    account and properly recorded each loan in Activewear's account                                                                                        
                    books.  There were no written loan agreements.                                                                                                         
                              Petitioner also personally lent $100,000 to Jackson at a                                                                                     
                    time not specified in the record.  Petitioner borrowed that money                                                                                      
                    from a retired friend, Norman Hardin (Hardin).  Hardin knew that                                                                                       
                    petitioner was going to lend the money to Jackson.  As security                                                                                        
                    for that loan, in February 1991, Jackson gave petitioner a fourth                                                                                      
                    or fifth mortgage to a restaurant building.  A neon light caused                                                                                       
                    a fire in the restaurant at a date not specified in the record.                                                                                        
                              In 1989 or 1990, Jackson gave petitioner two blank                                                                                           
                    promissory notes that he had signed as security for the loans                                                                                          
                    Activewear and petitioner made to him or his corporations.  One                                                                                        
                    note was for Activewear's loans to Jackson and the other note was                                                                                      







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