Investment Research Associates - Page 422




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          which were identical to those contained in IRA's long-term note              
          to the leasing entity in each instance.  IRA did not, generally,             
          assume the leasing companies' obligations under long-term notes              
          signed by the leasing companies to lending institutions.  The                
          long-term promissory notes (also known as nonrecourse or limited             
          recourse notes) executed by IRA as the purported owner/investor              
          of the equipment in the transactions contained deferral                      
          provisions triggered by the other party's defaults.                          
               The Agreements of Lease, e.g., the leaseback by the                     
          owner/purchaser to the leasing company, contained no provisions              
          that permitted the leasing company to terminate or defer the                 
          payment of rent due to the owner/purchaser, if the leasing                   
          company did not receive payments on the long-term notes of the               
          owner/purchaser.  In each instance the leasing company retained              
          the right to receive all rentals from the end user lessees,                  
          subject to any assignment of such rentals to the lending                     
          institutions that had financed the purchase of the equipment and             
          subject to the Agreements of Lease with any intermediary.  The               
          terms of the end user leases were always shorter than the 96- or             
          108-month term of the Agreements of Lease.                                   
               The lending institutions that financed the purchase of the              
          equipment looked solely to the rent from the end user lessees for            
          the repayment of their loans.  These loans were to be paid off in            
          full at the end of the end user leases.  There is no evidence                






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Last modified: May 25, 2011