Kenneth R. and Carol L. Bauer - Page 4

                                        - 4 -4                                           

               After the initial advance was made in March 1992, John                 
          orally promised to either repay petitioners within a month or               
          else transfer to them a 15-percent interest in the Drunken                  
          Lobster.  John did not fulfill his promise.  In May or June 1992,           
          John again orally promised to repay petitioners in one of three             
          ways:  (1) Full cash repayment by May 1993; (2) the transfer of             
          an interest in the restaurant in lieu of payment; or (3) payment            
          through an installment plan of $500 per month, plus interest.               
          John never fulfilled his promise, and the Dubatos never repaid              
          petitioners for any portion of these advances.  Moreover,                   
          petitioners did not receive an equity interest in the Drunken               
          Lobster.                                                                    
               While the Drunken Lobster started out successfully, the                
          excitement of a new restaurant in the area quickly wore off.  The           
          Drunken Lobster was no longer attracting the customers it once              
          did.  Although it was consistently crowded for breakfast, the               
          lunch crowd was starting “to slack off a little bit” and the                
          dinner hour no longer had a waiting list.  Beginning in April               
          1992, Mrs. Bauer did what she could to assist the Dubatos and               
          even performed work for the Drunken Lobster when it was short               
          staffed.  She created advertisements, wrote and printed menus,              
          organized holiday events (i.e., a Mother’s Day and a July 4th               
          holiday meal), and cleared and bused tables.  Mrs. Bauer was not            
          compensated for her time or reimbursed for her expenditures.                





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