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directors of Adult Living Centers had become dissatisfied with
Mr. Colclazier's management of the construction projects. Mr.
Colclazier wanted to leave the project and sell his Adult Living
Centers stock. He also wanted to be released from his loan
guaranty obligations to State Federal, which required State
Federal's approval.
The directors of Adult Living Centers arranged for the
corporation to purchase Mr. Colclazier's stock. State Federal
agreed to release Mr. Colclazier from the guaranty obligations
provided the remaining shareholders executed a substitute
guaranty agreement. On July 25, 1984, State Federal, Eastern
Oklahoma, petitioner, and Charles Wetz executed a release of
guaranty extinguishing Mr. Colclazier's obligations to State
Federal. On July 27, 1984, Eastern Oklahoma, petitioner, and
Charles Wetz executed a substitute guaranty with respect to the
State Federal loan and the takeout commitment (State Federal
substitute guaranty).
During this time, in an attempt to meet the additional cost
overrun and operating deficit, Adult Living Centers obtained a
$600,000 loan commitment from Phoenix Federal in the summer of
1984. Adult Living Centers, however, was unable to meet all the
requirements of the written loan commitment, and, on July 11,
1984, Phoenix Federal notified Adult Living Centers that it would
not advance any funds under the loan commitment.
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