Jerry and Patricia A. Dixon, et al - Page 270




                                       - 62 -                                         

               note which you executed in favor of FEDERATED FINANCE                  
               COMPANY to facilitate the acquisition of your stock in                 
               First Savings & Loan Ass.  We will ask you to pay a                    
               pre-payment penalty on your mortgage on the house in                   
               Wahiawa.                                                               
               We will NOT arrange for you a capital gain in your                     
               BAUSPAR HOLDINGS INC. stock which I had considered--                   
               even though not due you because of premature withdrawal                
               from the Plan--and we will NOT render assistance in                    
               saving you capital gains taxes on the re-capture of                    
               basis in your stock holdings.                                          
               We will NOT provide legal assistance free of cost to                   
               you any longer in US Tax Court proceedings.  You will                  
               have to retain your own attorney to make an appearance                 
               for you on February 9/1987 in US Tax Court.                            
               By letter dated August 24, 1986, Mr. Kersting notified                 
          Mr. Seery that he expected to be in litigation with the Thompsons           
          and directed Mr. Seery not to "render any services, at our                  
          expense," to the Thompsons.                                                 
               By letter dated August 28, 1986, Mr. Huestis notified                  
          Mr. Moseley that he represented the Thompsons in connection with            
          their Kersting transactions and the pending Tax Court litigation.           
          Mr. Huestis advised Mr. Moseley to direct all future                        
          communications regarding the Thompsons to Mr. Chanin.32                     
               By letter dated September 5, 1986, Mr. Kersting again                  
          notified Mr. Seery of his dispute with the Thompsons and                    
          the likelihood of litigation.  Mr. Kersting included a copy                 
          of Mr. Huestis' August 28, 1986, letter to Mr. Moseley.                     


          32  As previously mentioned, this was around the time that                  
          Mr. Seery began the process of withdrawing as counsel for the               
          Thompsons, following Mr. Huestis' notification to Mr. Seery that            
          the Thompsons were in the process of retaining substitute                   
          counsel.                                                                    

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