William J. Fleischaker and Donni L. Fleischaker - Page 9

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          percent.  As a result, Eastern Oklahoma had voting control of                
          Adult Living Centers.                                                        
               Phoenix Federal arranged for a $3,150,000 loan from State               
          Federal Savings & Loan Association (State Federal) to finance the            
          construction of the Van Orden project.  A tax-exempt bond                    
          facility provided funding for the loan.  Phoenix Federal also                
          arranged for a takeout commitment from State Federal.  The                   
          takeout commitment provided that, subject to certain conditions,             
          State Federal would provide funding to pay off the tax-exempt                
          bond facility in the event of a mandatory bond redemption or upon            
          final maturity of the bond issue.                                            
               At the March 17, 1983, closing of the State Federal loan, a             
          dispute arose as to whether Adult Living Centers' shareholders,              
          including petitioner, were required to guarantee the loans made              
          to Adult Living Centers.  Although petitioner stated his                     
          objections, he did sign a guaranty of collection for a                       
          proportionate amount of the $3,150,000 State Federal loan (State             
          Federal loan guaranty) and a guaranty of payment for a                       
          proportionate amount of the commitment fee required by the State             
          Federal takeout commitment (State Federal takeout guaranty).  The            
          amounts petitioner guaranteed were based on his proportionate                
          stock ownership in Adult Living Centers.                                     
               Several competing nursing home operators objected to the Van            
          Orden project and closely monitored the project.  In May 1983,               

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