InterTAN, Inc. - Page 3

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          the bank syndicate extended a revolving credit facility (revolv-            
          ing credit facility) to certain of petitioner’s operating subsid-           
          iaries and extended a $40 million term loan (term loan) to its              
          operating subsidiary ITC.  As of June 30, 1993, petitioner’s                
          operating subsidiaries were in default under the 1990 bank                  
          agreement, and fr76,000,000 (approximately $14,179,000) under the           
          revolving credit facility and $40 million under the term loan               
          were due and payable.3                                                      
               On June 25, 1992, petitioner executed a document entitled              
          “GUARANTEE AND POSTPONEMENT OF CLAIM” (guarantee and assignment             
          agreement).  The guarantee and assignment agreement provided in             
          pertinent part:                                                             
                    FOR VALUABLE CONSIDERATION, receipt hereof is                     
               hereby acknowledged, the undersigned and each of them                  
               (if more than one)[4] hereby jointly and severally                     
               guarantee(s) payment on demand to Royal Bank of Canada                 
               (hereinafter called the “Bank”) of all debts and lia-                  
               bilities, present or future, direct or indirect, abso-                 
               lute or contingent, matured or not, at any time owing                  
               by InterTAN Canada Ltd. (hereinafter called the “cus-                  
               tomer”) [ITC] to the Bank or remaining unpaid by the                   
               customer to the Bank, heretofore or hereafter incurred                 
               or arising and whether incurred by or arising from                     
               agreement or dealings between the Bank and the customer                
               or by or from agreement or dealings with any third                     
               party by which the Bank may be or become in any manner                 
               whatsoever a creditor of the customer or however other-                
               wise incurred or arising anywhere within or outside the                
               country [Canada] where this guarantee is executed and                  

               3The record does not disclose whether petitioner was liable            
          as of June 30, 1993, as guarantor under the bank agreement.                 
               4Petitioner was the only signatory to the guarantee and                

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