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prevent a default by White Tail. In the Letter Agreement dated
December 24, 1980, it was agreed that John Hancock would modify
the 1980 credit arrangement so as to "capitalize" $793,655.23 of
the $1,587,310.46 interest due from White Tail and defer the due
date for the principal installment until January 1, 2001.11 In
the original 1980 credit arrangement, John Hancock had already
agreed to lend one-half of the interest due on January 1, 1981.
The effect of the modification was that all the interest due to
John Hancock on January 1, 1981, would be borrowed from John
Hancock.
On December 30, 1980, John Hancock wired $1,587,310.46 to
White Tail's account at American National. This increased the
amount White Tail owed John Hancock by $1,587,310.46. On
December 31, 1980, White Tail wired John Hancock $1,595,017.96,
which John Hancock reflected as a satisfaction of White Tail's
January 1, 1981, interest obligation of $1,587,310.46 plus a
principal payment of $7,707.50.12
11We construe the term "capitalize", as used in the Letter
Agreement and the minutes, to mean that the principal of the loan
would be increased by the amount of interest due on Jan. 1, 1981.
12The Letter Agreement dated Dec. 24, 1980, and the attached
minutes indicate that John Hancock was going to allow White Tail
to defer the principal payment of $7,707.50. Nevertheless, on
Dec. 29, 1980, John Hancock billed White Tail for both principal
and interest, and the wire transfer of $1,595,017.96 includes a
principal payment of $7,707.50. The record contains no
explanation for this.
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