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payment on the bank loan was due on July 1, 1987, and the final
payment was due on June 1, 1990.
SPC-SC's assets (i.e., the assets acquired in the Carolina
transaction) served as security for the bank loan. Additional
security included a pledge by Mr. Spencer and Mr. Boozer of their
SPC-SC stock and certain real estate6 as well as the assignment
of certain life insurance policies7 on their lives.
Mr. Spencer and Mr. Boozer jointly and severally guaranteed
the bank loan. SCNB initially agreed to make the bank loan
directly to Mr. Spencer and Mr. Boozer in their individual
capacities. However, upon learning that they intended to resell
the acquired assets to SPC-SC, SCNB decided (1) to make the loan
directly to SPC-SC, and (2) to require personal guaranties by Mr.
Spencer and Mr. Boozer. Additionally, SCNB required that SPC-SC
pay the bank loan proceeds directly to SSI.
b. S/B Note
At closing, Mr. Spencer and Mr. Boozer paid $270,000 in cash
and issued a $900,000 promissory note (the S/B note), dated June
6 Mr. Spencer gave a third mortgage on a piece of commercial
real estate in Roswell, Georgia. That parcel of land was also
encumbered by three easements and a life estate that Mr. Spencer
conveyed to a third party on Apr. 1, 1983. Mr. Boozer gave a
second mortgage on his personal residence in Greenville, South
Carolina.
7 The insurance policy assigned by Mr. Spencer indicated that
the maximum amount SCNB could collect was $250,000.
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