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Commitment required that White Tail use a portion of the funds
borrowed to retire existing indebtedness to John Hancock,3 and
envisioned that additional amounts would be advanced to White
Tail up to the aggregate principal amount of $29 million.
By a promissory note dated May 2, 1980, White Tail and John
Hancock established the 1980 John Hancock credit arrangement (the
1980 credit arrangement), as contemplated by the First Mortgage
Loan Commitment.4 This promissory note required White Tail to
pay interest on its borrowings at an annual rate of 12.25
percent, payable every January 1 commencing January 1, 1981. The
promissory note also entitled John Hancock to 20 percent of White
Tail's net farm income, as well as 20 percent of White Tail's net
profits from land sales.
Pursuant to the establishment of the 1980 credit
arrangement, John Hancock made initial disbursements on May 7,
1980, totaling $19,645,000. A portion of the $19,645,000
3The First Mortgage Loan Commitment stated that White Tail's
existing indebtedness to John Hancock was $6 million.
4In connection with the execution of the May 2, 1980,
promissory note and the establishment of the 1980 credit
arrangement, White Tail executed a Deed of Trust and Security
Agreement and an Option Agreement. Moreover, each of White
Tail's partners executed a Guaranty of Note, Deed of Trust and
Mortgage. The Guaranty of Note provided that each partner
guaranteed the payment of one-third of the amount owed under the
1980 credit arrangement, up to a maximum amount of $1 million.
Brad Hill also executed a Guaranty of Note, Deed of Trust and
Mortgage. The Deed of Trust and Security Agreement was amended
by an Amendment to Deed of Trust and Security Agreement, dated
Aug. 26, 1980.
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