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consisted of a credit to White Tail's prior loan account with
John Hancock for $6,480,000 to pay off the principal that White
Tail owed pursuant to the prior credit arrangement, and a credit
to White Tail's prior loan account for $227,647.22 to satisfy the
interest obligation that had accrued on the prior loan.
The 1980 credit arrangement required White Tail to make an
interest payment on January 1, 1981. The amount of interest due
was $1,587,310.46. Pursuant to the terms of the 1980 credit
arrangement, one-half of the interest could be borrowed from John
Hancock. The 1980 credit arrangement also called for a principal
payment of $7,707.50 on the same date.
White Tail needed to satisfy the requirements set forth in
the First Mortgage Loan Commitment in order to become eligible to
make additional borrowings under the 1980 credit arrangement.
These additional borrowings were characterized as "Land
Development" and "Operating Funds" borrowings. Under the terms
of the First Mortgage Loan Commitment, the 1980 disbursement for
"Operating Funds" was subject to the following provision:
If the Borrower's Net Farm Income is insufficient to
fund the interest accrued on the loan contemplated
herein from date of closing to December 31, 1980, John
Hancock shall disburse sufficient proceeds of this loan
to fund said interest shortage; provided, however, that
the amount of said Disbursement for Operating Funds
shall not exceed 50% of the actual accrued interest
during said period, and provided further that John
Hancock's said Disbursement for such interest shortage
shall not be disbursed until Borrower has advanced its
portion of the actual accrued interest.
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