William J. Fleischaker and Donni L. Fleischaker - Page 12

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          directors of Adult Living Centers had become dissatisfied with               
          Mr. Colclazier's management of the construction projects.  Mr.               
          Colclazier wanted to leave the project and sell his Adult Living             
          Centers stock.  He also wanted to be released from his loan                  
          guaranty obligations to State Federal, which required State                  
          Federal's approval.                                                          
               The directors of Adult Living Centers arranged for the                  
          corporation to purchase Mr. Colclazier's stock.  State Federal               
          agreed to release Mr. Colclazier from the guaranty obligations               
          provided the remaining shareholders executed a substitute                    
          guaranty agreement.  On July 25, 1984, State Federal, Eastern                
          Oklahoma, petitioner, and Charles Wetz executed a release of                 
          guaranty extinguishing Mr. Colclazier's obligations to State                 
          Federal.  On July 27, 1984, Eastern Oklahoma, petitioner, and                
          Charles Wetz executed a substitute guaranty with respect to the              
          State Federal loan and the takeout commitment (State Federal                 
          substitute guaranty).                                                        
               During this time, in an attempt to meet the additional cost             
          overrun and operating deficit, Adult Living Centers obtained a               
          $600,000 loan commitment from Phoenix Federal in the summer of               
          1984.  Adult Living Centers, however, was unable to meet all the             
          requirements of the written loan commitment, and, on July 11,                
          1984, Phoenix Federal notified Adult Living Centers that it would            
          not advance any funds under the loan commitment.                             

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