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required the partnership to pay Barnes Ranches the stated
purchase price for the sheep over a 15-year term. For the first
5 years, no principal payments on the note were required from the
partnership, but only annual interest payments at a specified
interest rate per annum. Over the next 10 years, the partnership
was to pay the note's full principal amount in 10 equal annual
installments. Barnes Ranches was further granted a security
interest in the partnership's breeding sheep, securing payment on
the partnership's promissory note. Concurrent with their entry
into the sheep sale agreement, RCR #1 and Barnes Ranches also
entered into a 15-year management agreement (whose 15-year term
coincided with the promissory note's payment period), pursuant to
which Barnes Ranches obligated itself to undertake all management
with respect to the partnership's breeding sheep, pay all
expenses, and provide stud ram services, in exchange for
receiving all lambs produced and any culls (the sharecrop
agreement). The sharecrop agreement further obligated Barnes
Ranches to replace any partnership ewe that could no longer serve
as a breeding ewe with another ewe of a specified quality. In
addition, Barnes Ranches guaranteed that there would be a net 5-
percent annual increase in the size of the partnership's breeding
flock.
Except for perhaps OGT 90, each of the other later sheep
breeding partnerships that Mr. Hoyt organized, including RCR #4
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Last modified: May 25, 2011