Sid Paul Ruckriegel - Page 8

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               July 10 - $1 million in the form of a revolving loan line of           
          credit arrangement with Merchants Bank (the $1 million Merchants            
          Bank loan).                                                                 
               Both the $3.6 million and the $1 million Merchants Bank                
          loans were secured by assets of both Paulan and Sidal and                   
          guaranteed by Sidal, Robert, Lovella, and petitioners.                      
               December 8 - $2 million from Merchants Bank (the $2 million            
          Merchants Bank loan), secured by life insurance policies,                   
          securities, and Paulan real and personal property, and also                 
          guaranteed by Sidal, Robert, Lovella, and petitioners.                      
               Paulan Payments                                                        
               The July 11 Payment                                                    
               On July 11, Paulan wrote a check to Sidal for $1.2 million.            
          The source of that payment was the $3.6 million Merchants Bank              
          loan.  Sidal’s adjusted trial balances for its taxable years                
          ending December 31, 1997, 1998, 1999, and 2000, reflect the $1.2            
          million payment to it as giving rise to a note payable to Paulan.           
          Correspondingly, Paulan’s adjusted trial balances for its taxable           
          years ending December 31, 1997 and 1998, reflect the $1.2 million           
          payment to Sidal as giving rise to a note receivable from Sidal.7           
          Sidal made principal and interest payments to Paulan on that note           
          of $74,328 in 1997, $178,388 in 1998, $148,657 in 1999, and                 


               7  Paulan’s adjusted trial balances for its taxable years              
          ending Dec. 31, 1999 and 2000, are not in evidence.                         





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