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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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