TITLE









Exhibit

10.27




 




PROMISSORY

NOTE




 




	

  $16,000,000.00


  	

  Poulsbo, Washington


  
	

   


  	

  April 29, 1992


  





 




1.             For

Value Received, POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP (“Maker”)

promises to pay to the order of JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,

(“Holder”), at its Home Office in Boston, Massachusetts, or at such other place

as Holder may from time to time designate, the principal sum of SIXTEEN MILLION

AND NO/100 DOLLARS, ($16,000,000.00) with interest to be computed from the date

hereof, at the rate of Nine and Sixty-five Hundredths percent (9.65%) per

annum, upon all principal remaining from time to time unpaid, payable in 360

monthly installments of principal and interest in the amount of $136,291.21

each, (provided that the interest portion of the first installment shall be

adjusted accordingly if this Note is dated other than June 1, 1992) the

first such installment to be paid on June 1, 1992, and a like installment

to be paid on the first day of each month thereafter with the final monthly

installment, if not sooner paid, being due on May 1, 2022, provided that

the final payment shall include all principal, interest, and advances.  Said installments shall be applied first to

interest and then any remaining amount to principal.  In all events, the entire unpaid balance of this Note, including

principal, interest, and any advances then outstanding shall be due and

payable, unless sooner accelerated, on May 1, 2022.




 




2.             In

addition to the payments hereinabove specified, should the amount of timber

harvested from the timberland collateralizing this Note (herein the “Property”)

exceed in any calendar year the lower of:




 




(a)           twice the assumed annual growth of

11,200 MBF (prorated for 1992) of the merchantable conifer timber on the

Property or




 





























 




(b)           the assumed annual growth of 11,200

MBF (prorated for 1992) of the merchantable conifer timber on the Property,

plus the allowable carryover as defined below a principal payment shall be then

due, in addition to any other principal reductions required or prepaid, 45 days

after harvest, subject to the prepayment provisions of this Note, in accordance

with the following formula:




 




$80.00 per MBF (net Scribner long–log scale

measure) for Douglas Fir;




 




$60.00 per MBF (net Scribner long–log scale

measure) for Cedar;




 




$60.00 per MFB (net Scribner long–log scale

measure) for other species.




 




Should the volume of

merchantable conifer timber harvested from the Property during any calendar

year not exceed the assumed annual growth rate (currently 11,200 MBF) for that

year (prorated for 1992) 100% of the allowed annual harvest volume not removed

in that year may be carried forward to the following year.  If such carryover volume is not removed in

the first carryover year, the unused portion of such carryover shall

expire.  Timber harvested shall be first

applied against any available carryover amount when computing any need for

reduction of principal under this Note.




 




3.             Upon

any default in the payment of principal or interest or in the performance or

observance of any of the covenants or agreements dealing with hazard insurance

or real estate taxes of any instrument now or hereafter securing this Note, the

principal then remaining unpaid shall bear interest at the rate of Twelve and

Sixty-five Hundredths percent (12.65%) per annum while such default exists, and

Holder may apply payments received on any amounts due hereunder or under the

terms of any instrument now or hereafter evidencing or securing this

indebtedness as Holder may determine.




 




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4.             If

this Note is placed in the hands of an attorney for collection, the undersigned

promises and agrees to pay, in addition to any costs and disbursements provided

by statute, all costs (including, but not limited to reasonable attorneys’

fees, including such fees in any (i) trial or appellate proceeding should

litigation be instituted or (ii) in any bankruptcy proceeding) incurred in

connection with the collection thereof. 

No extension of time for the payment of this Note or any installment hereof

made by agreement with any person now or hereafter liable for the payment of

this Note shall operate to release, discharge, modify, change, or affect the

liability under this Note of the Maker or any guarantor thereof.  Notwithstanding any provision herein or in

any instrument now or hereafter securing this Note, the total liability for

payments in the nature of interest shall not exceed the limits now imposed by

the usury law of Washington.




 




5.             This

Note is given for a loan of SIXTEEN MILLION AND NO/100 DOLLARS ($16,000,000.00)

and is secured by first Timberland Deed of Trust and Security Agreement with

Assignment of Rents (herein “Deed of Trust”) of even date herewith which covers

property in Jefferson County, Washington, and shall be construed by the laws of

said state.




 




6.             PREPAYMENT

PRIVILEGE:  Anything in this Note to the

contrary notwithstanding, within 90 days following any 12-month fiscal year in

which Maker’s net income exceeds $4,000,000, Maker may prepay, without premium,

$500,000 in principal.  This payment

will be applied to principal and will be termed “Good Year Reserve.”  Then, in any subsequent 12-month fiscal year

in which Maker’s net income is less than $2,000,000, Maker may elect to waive

its regularly scheduled principal payments, as a charge against the “Good Year

Reserve,” until such time as the “Good Year Reserve” has been depleted.  No more than $1,000,000 shall be in the

“Good Year Reserve” at any one time.




 




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7.             PREPAYMENT

PREMIUM:  Subject to giving Holder not

less than thirty (30) nor more than ninety (90) days prior written notice,

Maker may prepay the principal, in full, or in partial payments of not less

than $100,000.00, together with any and all accrued interest due hereunder and

any other sums due under the Deed of Trust, and subject to the payment to

Holder of a prepayment premium equal to: 

the net present value (if a positive number) of the payment stream

determined by calculating the difference between (a) the payments Holder

would have received on the prepaid principal amount at the basic rate provided

in this Note (9.65% per annum) and (b) the payments Holder would receive

on the prepaid principal amount at a rate equal to the rate for United States

Treasury Securities (the “Treasury Rate”) with a maturity equal to the average

life of the remaining term of this Note at the time of prepayment,

(c) discounted at the Treasury Rate. 

No prepayment shall exonerate Maker from the payment of any regular

monthly installment until such time as this Note is fully paid, except to the

extent that Section 6 of this Note shall reduce or eliminate the principal

portion of any regular monthly installment.




 




8.             Maker

and all endorsers, guarantors, sureties, accommodation parties hereof and all

other persons liable or to become liable for all or any part of this

indebtedness agree to and do hereby incorporate herein the due-on-sale

provisions contained in the Deed of Trust, which provisions provide that any

actual or purported sale, conveyance, contract for conveyance, assignment, or

transfer in any manner of the property covered by the Deed of Trust, or any

portion thereof, without the prior written consent of the Beneficiary under the

Deed of Trust, shall be deemed a default under the Deed of Trust.




 




9.             All

payments made under this Note shall be made by wired funds, if Holder shall so

specify and shall provide Maker with appropriate wiring instructions in writing

at least five




 




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(5) days prior to the due

date of the payment or payments to which such instructions apply.  Any such wiring instructions may be of a

continuing nature and may apply to the number of payments specified therein,

subject to revocation or modification as Holder may elect by written notice to

Maker.




 




10.           Maker

acknowledges that the loan evidenced by this Note was made on the basis and

assumption that Holder would receive the payments of principal and interest set

forth above for the full term of the Note. 

Therefore, whenever the maturity of this Note has been accelerated by

reason of a default under this Note or any instrument securing this Note, which

default includes a default in the payment of the installments of interest

and/or principal set forth above prior to the date on which the full amount of

the balance of principal and interest when remaining unpaid shall be due, or by

reason of sale, conveyance, further encumbrance, or other event specified in

the Deed of Trust in violation of the provisions of the Deed of Trust (which

acceleration by reason of such default, sale, conveyance, further encumbrance,

or other event shall be at Holder’s sole option but subject to Holder’s

exercise thereof reasonably and in good faith), a tender of the amount

necessary to satisfy the entire indebtedness evidenced hereby, paid at any time

following such default and prior to a foreclosure or trustee’s sale, shall be

deemed a voluntary prepayment hereunder and at Holder’s option such payment

shall include a prepayment premium as calculated under the provisions of this

Note.




 




11.           Upon

failure to make any payment as provided herein or to perform any of the

provisions of the Deed of Trust or any other instrument securing this Note, the

entire unpaid principal, interest and any other obligations due under this Note

or under the Deed of Trust or other instrument securing this Note, shall at

once become due and payable at the option of




 




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Holder, notice of such

election being hereby expressly waived, provided always that Holder must

exercise such option reasonably and in good faith.




 




12.           The

rights or remedies of Holder, as provided in this Note and in any instrument

securing this Note, shall be cumulative and concurrent, and may be pursued

singly, successively, or together against the Property described in the Deed of

Trust, and any other funds, property or security held by Holder for the payment

hereof, or otherwise, at the sole discretion of Holder, provided always that

Holder must exercise such discretion reasonably and in good faith.  The failure to exercise any such right or

remedy shall in no event be construed as a waiver or release of said rights or

remedies or of the right to exercise them at any later time.




 




13.           Except

as may be otherwise provided in the Deed of Trust, all makers, endorsers,

guarantors, sureties, accommodation parties hereof, and all other persons

liable or to become liable for all or any part of this indebtedness, without

affecting their liability, waive diligence, presentment, protest and demand,

and also notice of protest, of demand, of nonpayment, of dishonor, and of

maturity and hereby consent to any extension or alteration of the time or terms

of payment hereof, any and all renewals, extensions, or modifications of the

terms hereof, any release of all or any part of the security given for the

payment hereof, any acceptance of additional security of any kinds, and any

release of or resort to any party liable for payment hereof; any such renewals,

extensions, or modifications may be made without notice to any of said parties.




 




14.           Any

provision of this Note which is invalid, illegal, or unenforceable shall be

ineffective to the extent of such invalidity, illegality, or unenforceability,

without affecting in any way the remaining provisions hereof, and said

remaining provisions shall be enforceable in accordance with their terms as

though such ineffective provisions had not been included in this




 




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Note.  Reference in this Note to “Holder” shall

include the original holder or if all or any portion of this Note shall be

transferred by the original holder, the holder or holders of this Note at the

time in question.




 




15.           Holder

has agreed in Section 6.2 of the Deed of Trust securing this Note to make

certain subjective determinations reasonably and in good faith.  The existence of such provisions shall not

be implied to apply to any determination by Holder to accelerate the balance

due under this Note by reason of Maker’s failure to pay when due any sum owing

under this Note, but shall be deemed to apply to any other determination

hereunder by Holder.




 




16.           Section 6.11

of the Deed of Trust sets forth an exoneration of the general partners of the

Maker from personal liability for the indebtedness evidenced by this Note.




 




17.           NOTICE TO BORROWER:  This Note provides for a pre-payment premium

that will be due if payments in a specified amount are not made in advance of

the time or in excess of the amounts specified in this Note, except as may be

otherwise provided hereinabove.




 




	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED


  PARTNERSHIP, having a principal place of


  business at Poulsbo, Washington


  	 

	

   


  	

   


  	

   


  	 

	

  :


  	

  By


  	

  POPE MGP, INC., Managing General 


  
	

   


  	

  Partner


  	

   


  	 

	

   


  	

   


  	

   


  	 

	

   


  	

  /s/ G H. Folquet


  	 

	

   


  	

   


  	

  Signature


  	

   


  	 

	

   


  	

  George H. Folquet


  	 

	

   


  	

  President


  	 

	

   


  	

   


  	

   


  	 

	

   


  	

  ATTEST:


  	

  /s/

  Thomas A. Griffin


  	 

	

   


  	

   


  	

  Signature


  	 

	

   


  	

   


  	

   


  	 

	

   


  	

   


  	

  Thomas

  A. Griffin


  	 

	

   


  	

   


  	

  Treasurer


  	 

								





 




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