Max Burton Enterprises, Inc. - Page 7

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          marketing strategy, petitioner secured national department stores           
          including J.C. Penney’s, Bloomingdale’s, the Bon Marche, Dayton             
          Hudson, Marshal Field’s, and Dillards as new customers for                  
          petitioner’s products.                                                      
               When Ms. Burton became president of petitioner, petitioner             
          had a $60,000 line of credit with the Bank of Puget Sound.  When            
          the Bank of Puget Sound refused to increase petitioner’s line of            
          credit, Ms. Burton approached other banks.  SeaFirst Bank agreed            
          to provide petitioner with a $100,000 line of credit.  From 1988            
          through 1990, Ms. Burton and Mr. Burton worked closely with                 
          Robert Drugge, a vice president of SeaFirst Bank, to increase               
          petitioner’s line of credit to finance petitioner’s expansion.              
          SeaFirst Bank began providing letters of credit that were used by           
          petitioner and issued to manufacturers of petitioner’s products.            
          On or about June 1, 1990, SeaFirst Bank increased petitioner’s              
          line of credit to $2,700,000.  During the relevant periods,                 
          Ms. Burton, Mr. Burton, and Denovan signed personal guaranties to           
          guaranty the repayment of lines of credit extended by the Bank of           
          Puget Sound and SeaFirst Bank.                                              
               Mr. Burton, as secretary and treasurer of petitioner, was              
          responsible for all accounting functions of petitioner, prepared            
          financial plans and budgets, prepared loan applications, and was            
          in charge of relations with SeaFirst Bank.  Mr. Burton studied              
          accounting and computer operations at a community college.                  

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