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borrowed $750,000 from UNB (the $750,000 loan). As evidenced by
a promissory note dated June 1, 1987, CHC borrowed $2.6 million
from UNB (the $2.6 million loan). CHC used the proceeds of the
$2.6 million loan to acquire the Hillsboro property. To secure
its obligations under the $2.6 million loan, CHC conveyed to UNB
a purchase money mortgage on the Hillsboro property. As a result
of a cross-default agreement, the mortgage also secured the
$750,000 loan. Mark, in his individual capacity, executed a
personal guaranty with respect to the $750,000 loan and the $2.6
million loan (together, the Centrum loans).
Although Mr. Friedland was a member of UNB’s board of
directors when UNB made the Centrum loans, he did not participate
in the decision-making process with respect to the Centrum loans.
CHC’s application for the $2.6 million loan did not satisfy the
criteria necessary for the loan to be extended. After this was
brought to Scharlin’s attention, he called Mr. Friedland to
discuss the situation. The exact details of this conversation
are unclear; however, Mr. Friedland told Scharlin that UNB would
not lose money if it went forward with the $2.6 million loan.
Mr. Friedland felt comfortable stating this because Mark had been
successful in the real estate business and the Hillsboro property
was a good development site. Scharlin informed Katcher of his
conversation with Mr. Friedland, and thereafter UNB approved the
$2.6 million loan.
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