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Under the terms of the lease, Four A retained title to the
equipment.
During 1993, Four A and Black Mountain entered into a new
agreement concerning the equipment referred to by the parties as
a "Promissory Note and Agreement" (the agreement). According to
the terms of the agreement, Four A granted, sold, and conveyed
all of its right, title, and interest in and to the equipment to
Black Mountain. Four A retained a security interest in the
equipment as protection against nonpayment by Black Mountain.
The agreement required Black Mountain to pay a total
purchase price of $445,000 for the equipment. The purchase price
was to be paid monthly out of Black Mountain's production at a
rate of 17 cents per ton of coal produced in the preceding month.
The agreement also provided that if Black Mountain failed to
make production payments, then the entire indebtedness became
immediately due and payable. In such event, Black Mountain could
retain the equipment by paying the balance of the debt. If Black
Mountain chose not to pay the remaining balance, it was required
to return the equipment to Four A. The agreement provided that
the debt was nonrecourse. In late 1995 or early 1996, Black
Mountain ceased making production payments and surrendered the
equipment to Four A. The equipment was ultimately sold to a
third party.
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Last modified: May 25, 2011