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committees discussed loans to SS&N, the minutes reflected the
discussion under the heading of "Salem, Saxon, & Nielsen, P.A."
When the committees were considering extending loans to
SS&N, the committees considered SS&N's (1) financial statements,
(2) profitability and strong equity position, (3) deposits
maintained with the bank, (4) proposed use of loan proceeds
(working capital, construction costs of leasehold improvements),
(5) security (furniture, fixtures, and equipment), (6) reputation
and client base, (7) hiring of additional attorneys, and (8) real
property interests. The committees also considered personal
guaranties of Mr. Salem and Mrs. Saxon and the bank's total
commitment to the firm. On one occasion, the committee
considered Mr. Salem's annual income of $250,000 and limited
debt.
The minutes of the Loan Committee meetings of October 11,
1990, August 8, 1991, and June 11, 1992, and the Officers Loan
Committee meetings of July 30, 1991, and July 28, 1992, discuss
Mr. Salem and Mrs. Saxon's guaranties of SS&N's loans, indicating
that the committees were unaware of the substitute notes.
The minutes of the Loan Committee meeting of August 13,
1992, state that "the firm [SS&N] is currently undergoing an IRS
audit, and they may have to change the borrower of the P.A. loans
to the principals." The minutes of the Officers Loan Committee
meeting of October 6, 1992, state:
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