Thomas F. and Therese Grojean - Page 4

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          Acquisition to merge with and into Schanno immediately after the             
               American agreed to lend $11 million to Schanno Acquisition              
          to finance the acquisition of Schanno if petitioner would                    
          guarantee all loans personally.  Petitioner was unwilling to                 
          undertake that risk, and the parties continued negotiations.                 
               On September 6, 1989, Schanno Acquisition executed a stock              
          purchase agreement (purchase agreement) wherein Schanno                      
          Acquisition agreed to purchase all the stock of Schanno from                 
          Transamerica for $13.9 million.  On the same date, American,                 
          Schanno Acquisition, Schanno, and petitioner entered into a                  
          comprehensive loan agreement (loan agreement) in which American              
          agreed to provide the following three loans to facilitate the                
          purchase:  (1) An $8.4-million loan to Schanno Acquisition and               
          Schanno (Schanno note), (2) a $2.6-million revolving credit loan             
          to Schanno Acquisition and Schanno (credit note), and (3) a $1.2-            
          million loan to petitioner (Grojean note).                                   
               The loan agreement provided:                                            
                    (b) As a condition to [American’s] obligations to                  
               make the initial disbursements under the loans                          
               described herein, the following conditions shall have                   
               occurred and been approved to [American’s] reasonable                   
                         *    *    *    *     *    *    *                              
                         (iii) [American] and [petitioner] have                        

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Last modified: May 25, 2011