Shedco, Inc. - Page 14

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          continuing through February 1992.  The note remained subject to             
          full repayment of principal and interest upon demand                        
          notwithstanding the oral agreement to amortize principal over 5             
          years.                                                                      
               Estes Co. made monthly payments of interest in accordance              
          with the terms of the note through January 1989.  On March 8 and            
          August 28, 1988, Estes Co. made payments of $250,000 each toward            
          principal, thereby reducing the principal balance to $1,750,000.            
               Problems in the real estate economy in Arizona during the              
          late 1980's resulted in declining real estate values in that                
          State.  Mr. Estes advised the Shedds during December 1988 that              
          Estes Co. was facing financial difficulties.  Estes Co. defaulted           
          on the loan when it failed to make the monthly interest payment             
          due February 25, 1989.  At the time of the default, the                     
          outstanding principal balance represented 58 percent of the                 
          plan's assets.  Following the default, Mr. Shedd concluded that             
          collection of the outstanding principal balance was in jeopardy             
          and that the note was worthless.  Consequently, for plan year               
          ended September 19, 1989, the plan wrote off on its books as a              
          worthless debt the principal balance remaining on the loan.                 
               During July 1990, partly on the basis of Mr. Shedd's                   
          efforts, Estes Co. identified a pool of assets from which                   
          payments could be made to a limited group of creditors, including           
          the plan.  Therefore, various entities in which Mr. Estes was               
          involved (the Estes companies), including Estes Co. and Estes               



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