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On October 31, 1979, Atlantic, European, Carena, and Funding
International executed a sale and purchase agreement regarding
other equipment which was part of the British Aerospace
transaction. The stated value of the equipment was $3,042,338.
Under this agreement, Atlantic and European transferred
Atlantic's interest in the equipment to Carena, subject to
Atlantic’s acquiring title to the equipment under the residual
agreement.
Under the residual agreement, Atlantic agreed that upon the
expiration of the initial term of the lease, it would make
payment of the balance of the purchase price and agreed to
deliver to Carena the instruments necessary to ensure ownership
of, and legal title to, the equipment. The parties agreed that
Atlantic would, upon the expiration of the initial term of the
lease, undertake the necessary steps to have the equipment
purchased at a price equal to 2 percent of its original cost.
On October 31, 1979, Carena and Funding International
executed a purchase agreement relating to this equipment.
Funding International, as purchaser/owner, issued a nonrecourse
installment promissory note to Carena, dated October 31, 1979, in
the principal sum of $1,462,793 and interest payments for the
balance of $22,132.28 and $37,392.28. The parties entered into
an agreement of lease dated October 31, 1979, leasing the
equipment back to Carena.
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