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entered into and delivered the Participation
Agreement and [petitioner] has purchased, or
will contemporaneously purchase, a portion of
[American’s] interest in the [Schanno note]
in the amount of One Million Two Hundred
Thousand ($1,200,000) Dollars.
Pursuant to the loan agreement, American disbursed to
Schanno Acquisition $8.4 million and $2.6 million under the
Schanno note and the credit note, respectively. Both Schanno
Acquisition and Schanno signed the Schanno note and the credit
note, and both notes identified Schanno Acquisition and Schanno
as the borrowers or “makers”. American was the only party
identified as the lender on the Schanno note and the credit note,
and petitioner was not a party to these notes. Both loans were
secured by all the assets of Schanno. Transamerica financed the
remainder of the purchase price, taking back a note from Schanno
Acquisition and Schanno for $2.9 million (Transamerica loan).
Also on September 6, 1989, American advanced $1.2 million
to petitioner under the Grojean note by crediting this amount to
petitioner’s checking account at American. Petitioner pledged
his stock in Schanno and Schanno Acquisition as security for the
loan. Contemporaneous with execution of the Grojean note,
petitioner and American entered into a participation agreement
wherein petitioner agreed to purchase a $1.2-million
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