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1. On August 31, 1995, EQ sold to Capital Asset Partners
(CAP), a Nevada limited partnership, the K-Mart and Shared end-
user lease equipment and the right to receive master lease rents
upon that equipment. CAP assumed EQ’s obligation to make related
installment payments to CFX Financial under the EQ equipment
purchase installment note (which EQ had issued in connection with
step 3 of the first lease strip deal). Conversely, EQ assigned
to CAP the right to receive from CFX Financial the master lease
rental payments relating to the K-Mart and Shared end-user lease
equipment. Those rental payments equaled and coincided with the
installments due under the EQ installment note. As a part of the
foregoing sale of the K-Mart and Shared equipment, Klein (CAP’s
1-percent managing general partner) executed and issued to EQ on
August 31, 1995, CAP’s $750,000 secured promissory note, due
November 29, 1995.
Kanawha Enterprises, LP (Kanawha), a Nevada limited
partnership, was CAP’s 99-percent limited partner. The Iowa
Tribe was the 99-percent limited partner of Kanawha, and a
company named Pending One was the .9-percent managing general
partner of Kanawha, with the remaining .1-percent interest in
Kanawha held by Z-Kelp, LP, a limited partnership. Mallin was
Pending One’s president. For purposes of the second lease strip
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