Joel and Paula Friedland - Page 5




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               In February 1989, Scharlin, Katcher, and Mr. Friedland met             
          for lunch.  The three spoke about refinancing Mark was seeking              
          from Chase Manhattan Bank.  During the lunch, Mr. Friedland                 
          reiterated that UNB would “not get hurt” on the Centrum loans.              
               During 1988 and 1989, CC and CHC consistently were unable to           
          service the Centrum loans.  By late 1990, the Centrum loans were            
          nonperforming.  At this time, CC and its subsidiaries were                  
          experiencing significant financial difficulties.  In addition to            
          the amounts owed to UNB, CC owed other creditors in excess of $60           
          million--the majority of which Mark had guaranteed.  These loans            
          were in default, and, in many cases, the properties securing the            
          loans were deeded back to the creditors in lieu of foreclosure.             
          At this time, Mark’s personal guaranty was worthless.2                      
               Around this time, Scharlin placed a call to Mr. Friedland to           
          inform him that the Centrum loans “were in trouble”.  Scharlin              
          reminded Mr. Friedland that he had stated that UNB would not lose           
          any money on the Centrum loans and asked Mr. Friedland to “take             
          care of it”.  At this time, Mr. Friedland sought advice from his            
          attorney, Aaron Podhurst,3 regarding whether his statements                 
          created any legal obligation to UNB on the $2.6 million loan.               
          Mr. Podhurst advised Mr. Friedland that they did not.                       


               2  Ultimately, in February 1995, Mark commenced a bankruptcy           
          proceeding.                                                                 
               3  Mr. Podhurst also was a member of UNB’s board of                    
          directors.                                                                  





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