Robert S. McDaniel, Jr. and W. Jane McDaniel - Page 8




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          the time of that assignment, Mr. McDaniel's capital account                 
          balance in Second Street was a negative balance in the amount of            
          $48,193 (negative capital account balance).  By corrective                  
          quitclaim deed dated September 9, 1993, Mr. McDaniel transferred            
          his interest in the Second Street real property to the part-                
          nership.  Although Mr. McDaniel had transferred his interest in             
          the Second Street real property and assigned his partnership                
          interest, Mr. McDaniel continued to see Mr. Palermo on a daily              
          basis throughout the years at issue.                                        
               Mr. McDaniel did not receive an oral release or a written              
          release in May 1992 with respect to any of Second Street's                  
          obligations, including the Second Street loan, when he quit-                
          claimed his interest in the Second Street real property, and                
          assigned his partnership interest, to George Palermo Architect,             
          Inc.  Nor did he receive any such release at any other time.                
               During 1992, Mr. Parker, one of Second Street's general                
          partners, commenced a bankruptcy proceeding under chapter 11 in             
          the Bankruptcy Court for the Middle District of Florida, Tampa              
          Division.  On November 20, 1992, that Court granted Mr. Palermo             
          relief "from the Automatic Stay provisions of 11 U.S.C. Section             
          362(a)".  In 1993, Mr. Palermo brought an action against Mr.                
          Parker to dissolve Second Street.                                           
               The balloon payment required by the terms of the 1989 note             
          came due on April 12, 1993.  That payment was not made, and Mr.             





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