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million loan. On January 10, 1991, in order to perfect its
security interest, UNB took possession of the pledged stock.
Shortly after execution of the 1991 agreement, Scharlin sent
Mark a special warranty deed by which CHC would convey to UNB6
the Hillsboro property in lieu of UNB's instituting foreclosure
proceedings with respect to the property. On January 22, 1991,
Mark executed the deed in his capacity as president of CHC.
2. 1992 Agreement
UNB had difficulty selling the Hillsboro property, and it
became increasingly clear that UNB would sustain a loss on the
$2.6 million loan.7 As a result, Scharlin asked Mr. Friedland to
transfer outright to UNB the pledged stock. UNB and Mr.
Friedland thereafter entered into an agreement dated May 14, 1992
(the 1992 agreement). The 1992 agreement required Mr. Friedland
to relinquish all rights, claims, and interest in 6,842 shares of
the pledged stock. UNB agreed to release and return to Mr.
Friedland the remaining 15 shares of the pledged stock that
represented the minimal investment necessary for Mr. Friedland to
5(...continued)
then-outstanding balance on the $750,000 loan and the $468,750
redemption proceeds.
6 The grantee actually was a subsidiary of UNB formed for
the purpose of holding real estate.
7 UNB was not able to sell the Hillsboro property until
February 1995.
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Last modified: May 25, 2011