Ernst L. Meier - Page 7




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          purported revolving credit note (revolving credit note), and the            
          note reflects no maturity date.  The note makes general reference           
          to an obligation of petitioner to make a loan to Blackland.                 
          Petitioner, however, is not a signatory on this revolving credit            
          note.                                                                       
               As was the first, this second revolving credit note was                
          executed by the president of Blackland at the direction of                  
          petitioner.  No negotiations or arm’s-length discussions on                 
          behalf of Blackland occurred in connection with the terms of the            
          March 10, 1995, $2.5 million revolving credit note.  Again, no              
          separate written loan agreement or line of credit agreement to be           
          associated with this second revolving credit note is found in the           
          record.                                                                     
               Beginning in July of 1993, and in 1994 and 1995, petitioner            
          transferred funds to Blackland in the total cumulative amount of            
          $3,545,020, and Blackland transferred funds to petitioner in the            
          total cumulative amount of $724,480.                                        
               Blackland’s monthly balance sheets as of July 31 and                   
          August 31, 1993, reflect the funds received from petitioner in              
          those 2 months as “shareholder loans”, even though petitioner               
          claims not to have been a shareholder of Blackland.  Beginning in           
          September of 1993 and through 1996, the funds transferred by                
          petitioner to Blackland were classified on Blackland’s monthly              
          balance sheets as “Note Payable-Moccasin Farms”.                            






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