<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001
REGISTRATION NO. 333-54011
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
POST-EFFECTIVE AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
ICON INCOME FUND EIGHT
ICON Income Fund Eight B L.P., a Delaware limited partnership
(Exact name of registrant as specified in governing instruments)
DELAWARE
(State or other jurisdiction of incorporation or organization)
7394
(Primary Standard Industrial Classification Code Number)
13-4101114
(I.R.S. Employer Identification Number)
111 CHURCH STREET, WHITE PLAINS, NEW YORK 10601
(914) 993-1700 (Address, including zip code, and
telephone number, including area
code, of registrant's principal executive offices)
LOUIS J.C. CUSANO, SENIOR VICE PRESIDENT AND COUNSEL
ICON Capital Corp.
599 Lexington Avenue
Suite 2705
New York, New York 10022
(212) 418-4705
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Joseph S. Radovsky, Esq.
Adam P. Siegman, Esq.
Greene Radovsky Maloney & Share LLP
Four Embarcadero Center, Suite 4000
San Francisco, California 94111
(counsel to registrant)
-----------
This Post-Effective Amendment to the Registration Statement shall
hereafter become effective in accordance with Section 8(c) of the Securities Act
of 1933, as amended, or on such date as the Commission, acting pursuant to said
Section 8(c), may determine.
<PAGE>
ICON INCOME FUND EIGHT B L.P.
SUPPLEMENT
DATED JANUARY 19, 2001
TO PROSPECTUS DATED
MAY 19, 2000
SUMMARY
We are providing you with this supplement, dated January 19, 2001, to
update and revise the prospectus, dated May 19, 2000. This supplement forms a
part of, and must be accompanied or preceded by, the prospectus.
The primary purposes of this supplement are to:
- Describe the current status of the offering of the Partnership and
our equipment acquisition efforts,
- Update the experts section of the prospectus, and
- Update the financial information of the Partnership and ICON Capital
Corp., the general partner of the Partnership.
YOU SHOULD THOROUGHLY REVIEW THE PROSPECTUS AND THIS SUPPLEMENT PRIOR TO
SUBSCRIBING FOR UNITS IN THE PARTNERSHIP.
<PAGE>
STATUS OF THE OFFERING AND EQUIPMENT ACQUISITION EFFORTS
As of January 16, 2001, 235,586.3706 limited partner units of the Partnership
had been sold, and limited partners had contributed capital of $23,558,637.06 to
the Partnership.
As of January 19, 2001, the total price paid for all equipment purchased by the
Partnership since its inception was $80,206,153; the sources for the funds used
to acquire the equipment consisted of $64,281,747 in debt and $15,924,406 from
the proceeds of the offering.
Our efforts in connection with the acquisition, leasing and financing of
equipment for the Partnership as of January 19, 2001 are listed below. We
describe below in greater detail transactions representing approximately ten
percent or more of the offering proceeds raised through January 16, 2001. Each
of the companies listed is a lessee of the equipment identified.
CSK AUTO CORP.
CSK Auto Corp. is the largest retailer of automotive parts and accessories in
the western United States and is among the top five after-market automotive
retailers in the nation. The Partnership acquired equipment, subject to a lease,
which is used in 44 CSK Auto Corp. retail stores. The lease matures in July of
2004. The equipment, which cost $2,071,798, consists of store furniture,
fixtures, point of sale computers, monitors, printers and various equipment
needed for the installation and running of the stores. The equipment cost per
location averages $47,000. The return conditions require CSK Auto Corp. to
return either all or none of the equipment.
REGUS BUSINESS CENTERS CORP.
Regus Business Centers Corp. ("Regus") is widely considered the global leader in
supplying fully furnished, equipped and staffed executive office space. The
Partnership acquired all furniture, fixtures, office equipment and
telecommunications equipment at four Regus Business Centers, subject to a 4-year
lease to Regus, for a cost of $5,303,090.
PETSMART INC.
PetsMart Inc. is the industry leader in pet products. The Partnership acquired
all equipment in PetsMart Inc.'s regional distribution center in Columbus, Ohio,
subject to a 4-year lease to PetsMart Inc. for a price of $3,397,802 in cash.
The equipment is comprised of conveyor systems used for fulfillment needs at the
distribution center.
SCANDINAVIAN AIRLINES SYSTEM
Scandinavian Airlines System ("SAS") is one of the world's leading airlines,
serving Sweden, Denmark and Norway. SAS operates a fleet of 177 aircraft. The
Partnership, through a joint venture with two other programs we manage, entered
into a sale-leaseback transaction in December 2000 involving a Boeing 767-300ER
model aircraft, one of 14 such aircraft that SAS operates in transcontinental
passenger service. The lease with SAS is for a 28-month term and SAS has the
option to renew the lease, upon 12 months' notice, at the fair market value of
the aircraft but in no event
<PAGE>
less than the required monthly amortization of principal and interest on the
debt incurred to acquire the aircraft. The Partnership's contribution to the
cost of the aircraft was $42,734,799, which constituted 96% of the total cost.
GENERAL ELECTRIC COMPANY
General Electric Company ("GE") holds the number one or number two market share
in a range of industries, from broadcasting to power plant parts manufacturing.
GE is a diversified company and produces aircraft engines, locomotives and other
transportation equipment, appliance (kitchen and laundry equipment), lighting,
electric distribution and control equipment, generators and turbines, nuclear
reactors, medical imaging equipment and plastics. GE has leased various machine
tools and forklifts on terms ranging from two to six years from a joint venture
between the Partnership and three other programs we manage. The machine tools
and forklifts were acquired subject to this lease. The Partnership's
contribution to the cost of these machine tools and forklift was $5,540,478,
which constituted 87.69% of the total cost.
LUCENT TECHNOLOGIES INC.
Lucent Technologies Inc. ("Lucent") is one of North America's leading makers of
telecom equipment and software. The Bell Laboratories division develops many of
Lucent's products, but the company has become a force in the broadband
networking market through acquisitions. Many of Lucent's customers are telecom
providers such as AT&T. Lucent has leased various items of manufacturing
equipment on terms ranging from one to three years from a joint venture between
the Partnership and three other programs we manage. The equipment was acquired
subject to this lease and the Partnership's contribution to the cost of this
manufacturing equipment was $3,463,621, which constituted 87.69% of the total
cost.
PERRIER GROUP OF AMERICA, INC.
Perrier Group of America, Inc. ("Perrier") is a division of the Perrier Vittel
Group, a subsidiary of Nestle SA. Perrier began in 1976 with a single brand of
bottled water and has since grown, through expansion and acquisition, to be one
of the largest bottled water producers in the world. Today, Perrier owns a
bottled water portfolio of ten regional brands and imports four international
brands. Perrier leases customized beverage trucks from a joint venture between
the Partnership and three other programs we manage with remaining lease terms
ranging from one to three years. The trucks were acquired subject to this lease
and the Partnership's contribution to the cost of the trucks was $5,950,424,
which constituted 87.69% of the total cost.
For comparative purposes, the information above is also set forth in chart form:
<TABLE>
<S> <C>
CSK AUTO CORP.
Lease Financing of: Computers and furniture
Lease Term: 4 Years
Equipment Cost: $2,071,798
Debt Specifically Incurred to Acquire Equipment: None
<PAGE>
REGUS BUSINESS CENTERS CORP.
Lease Financing of: Telecommunications equipment and furniture
Lease Term: 4 Years
Equipment Cost : $5,303,090
Debt Specifically Incurred to Acquire Equipment: None
PETSMART INC.
Lease Financing of: Conveyor systems
Lease Term: 4 Years
Equipment Cost: $3,397,802
Debt Specifically Incurred to Acquire Equipment: None
<PAGE>
SCANDINAVIAN AIRLINES SYSTEM
Lease Financing of: Aircraft
Lease Term: 28 months
Equipment Cost Contributed by Partnership: $42,734,799
Total Equipment Cost: $44,515,416
Debt Incurred by Partnership to Acquire Equipment: $40,583,083
Total Debt Incurred to Acquire Equipment: $42,274,045
GENERAL ELECTRIC COMPANY
Lease Financing of: Machine Tools & Fork Lifts
Lease Term: 2 to 6 Years
Equipment Cost Contributed by Partnership: $5,540,478
Total Equipment Cost: $6,316,815
Debt Incurred by Partnership to Acquire Equipment: $4,122,267
Total Debt Incurred to Acquire Equipment: $4,699,883
LUCENT TECHNOLOGIES INC.
Lease Financing of: Manufacturing Equipment
Lease Term: 1 to 3 Years
Equipment Cost Contributed by Partnership: $3,463,621
Total Equipment Cost: $3,948,947
Debt Incurred by Partnership to Acquire Equipment: $1,449,145
Total Debt Incurred to Acquire Equipment: $1,652,200
PERRIER GROUP OF AMERICA, INC.
Lease Financing of: Beverage Trucks
Lease Term: 1 to 3 Years
Equipment Cost Contributed by Partnership: $5,950,424
Total Equipment Cost: $6,784,202
Debt Incurred by Partnership to Acquire Equipment: $4,141,079
Total Debt Incurred to Acquire Equipment: $4,721,330
</TABLE>
In addition to the transactions described above, the Partnership, through a
joint venture with three other programs we manage, acquired miscellaneous
equipment which is leased to thirty-one lessees. The Partnership contributed
$11,744,140 to the cost of this equipment (which constituted 87.69% of the total
cost) and incurred $6,986,173 of debt.
<PAGE>
JOINT OWNERSHIP OF EQUIPMENT
The aircraft leased to SAS is owned by a joint venture in which the Partnership
has a 96% interest, ICON Cash Flow Partners, L.P., Seven has a 2% interest, and
ICON Income Fund Eight A L.P. has a 2% interest. The equipment leased to GE,
Lucent and Perrier, as well as the miscellaneous equipment described immediately
above, is owned by a joint venture in which the Partnership has a 87.69%
interest, ICON Cash Flow Partners, L.P., Six has a 1% interest, ICON Cash Flow
Partners, L.P., Seven has a 10.31% interest, and ICON Income Fund Eight A L.P.
has a 1% interest. In each of these equipment-owning joint ventures in which the
Partnership has an interest: (i) the Partnership and the joint-owner(s) have
identical investment objectives and participate on the same terms and
conditions; (ii) the compensation payable to us or our affiliates by the
Partnership and the joint-owner(s) is identical, after taking into account each
joint owner's level of ownership; and (iii) the Partnership has a right of first
refusal to purchase the equipment, on a pro-rata basis, if a joint-owner desires
to sell its interest in the equipment.
FINANCING
During November 2000, the Partnership entered into a one year Credit Agreement
with Imperial Bank that provides the Partnership the ability to borrow up to $7
million. Each borrowing under the Credit Agreement must be collateralized by
Partnership lease investments. Principal amounts outstanding are required to be
repaid as the underlying lease collateral is reduced. Borrowings under the
Credit Agreement bear interest at the rate of one percent (1.00%) per annum in
excess of the prime rate.
The Partnership drew down $7 million from its line of credit with Imperial Bank
to acquire some of the equipment described above. The aggregate amount of
non-recourse financing incurred by the Partnership in the acquisition of the
above-described equipment totaled $57,281,747. Therefore, the aggregate
indebtedness incurred by the Partnership to acquire the equipment totals
$64,281,747.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following should be considered when reviewing the financial
statements of the Partnership which follow.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary source of funds for the period June 14, 2000
to September 30, 2000 were capital contributions, net of offering expenses of
$11,424,688, and net proceeds received from borrowings of $1,325,772. Net cash
provided by operating activities was $108,801. The Partnership intends to
continue to purchase equipment and fund cash distributions utilizing funds from
capital contributions, cash from operations and additional borrowings.
Cash distributions to limited partners, which were paid monthly
commencing in July 2000, totaled $138,992.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
For the three months ended September 30, 2000, the Partnership
purchased and leased equipment with an initial cost of $5,303,088 to one
<PAGE>
lessee.
Revenues for the three months ended September 30, 2000 were $220,432,
representing finance income of $187,029 and interest income of $33,403. Expenses
for the three months ended September 30, 2000 were $123,499, representing
management fees - General Partner of $54,603, general and administrative of
$4,922, amortization of initial direct costs of $10,654, administrative expense
reimbursements - General Partner of $21,929 and interest expense of $31,391. Net
income for the three months ended September 30, 2000 was $96,933. The net income
per weighted average limited partnership unit was $1.33.
RESULTS OF OPERATIONS FROM DATE OF INCEPTION TO SEPTEMBER 30, 2000
For the period from February 7, 2000 (date of inception) to September
30, 2000, the Partnership purchased and leased equipment with an initial cost of
$7,374,886 to two lessees.
As the Partnership commenced operations on June 14, 2000, results of
operations from date of inception to September 30, 2000 do not reflect a full
nine months activity. Revenues from date of inception to September 30, 2000 were
$238,305, expenses totaled $129,626 and net income was $108,679. The net income
per weighted average limited partnership unit was $1.83.
COMPENSATION OF THE GENERAL PARTNER
In connection with the equipment acquisitions described above, Acquisition Fees
in an amount equal to 3.0% of the original equipment cost have been paid or will
be paid to us. In addition, the Underwriting Fee, Sales Commission and O & O
Expense Allowance will be paid according to the provisions of the prospectus set
forth on pages 18 through 20.
UPDATE OF THE EXPERTS SECTION
The section of the prospectus on page 84 under the heading "Experts" is updated
and replaced by the following:
EXPERTS
The audited balance sheet of the Partnership as of February 7, 2000, and the
audited financial statements of ICON Capital Corp. as of March 31, 2000, 1999
and 1998 and for each of the years then ended, have been included herein in
reliance upon the reports of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, upon the authority of said firm as experts in
accounting and auditing.
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
ICON INCOME FUND EIGHT B L.P. PAGE
----------------------------- ----
<S> <C>
Unaudited Financial Statements--September 30, 2000 8
Balance Sheet at September 30, 2000 9
Statement of Operations for the Three Months Ended
September 30, 2000 and the Period February 7, 2000 (date of inception)
to September 30, 2000 10
Statement of Changes in Partners' Equity for the Period
February 7, 2000 (date of inception) to September 30, 2000 11
Statement of Cash Flows for the Period February 7, 2000 (date of
inception)
to September 30, 2000 12
Notes to Financial Statements 13
ICON CAPITAL CORP.
------------------
Unaudited Financial Statements--September 30, 2000 14
Balance Sheets at September 30, 2000 and March 31, 2000 15
Statements of Income for the Six Months Ended September 30, 2000 and 1999 16
Statements of Changes in Stockholder's Equity for the Year Ended
March 31, 2000 and for the Six Months Ended September 30, 2000 17
Statements of Cash Flows for the Six Months Ended September 30, 2000 and 1999 18
Notes to Financial Statements 20
Audited Financial Statements--March 31, 2000 and 1999 23
Independent Auditors' Report 24
Balance Sheets at March 31, 2000 and 1999 25
Statements of Income for the Years Ended March 31, 2000 and 1999 26
Statements of Changes in Stockholder's Equity for the Years
Ended March 31, 2000 and 1999 27
Statements of Cash Flows for the Years Ended March 31, 2000 and 1999 28
Notes to Financial Statements 29
</TABLE>
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Assets
------
Cash $ 4,272,805
--------------
Investment in finance leases
Minimum rents receivable 8,175,031
Estimated unguaranteed residual values 1,002,643
Initial direct costs 209,297
Unearned income (2,379,850)
--------------
7,007,121
Accounts receivable - affiliates 650,000
--------------
Other assets 850,866
--------------
Total assets $ 12,780,792
==============
Liabilities and Partners' Equity
--------------------------------
Note payable $ 1,325,772
Accounts payable 61,976
--------------
1,387,748
Commitments and Contingencies
Partners' equity
General Partner 756
Limited Partners (132,054.19 units outstanding,
$100 per unit original issue price) 11,392,288
--------------
Total partners' equity 11,393,044
--------------
Total liabilities and partners' equity $ 12,780,792
==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period
For the Three Months February 7, 2000 to
Ended September 30, 2000 September 30, 2000
------------------------ -------------------
<S> <C> <C>
Revenues
Finance income $ 187,029 $ 204,649
Interest income 33,403 33,656
----------- -----------
Total revenues 220,432 238,305
----------- -----------
Expenses
Management fees - General Partner 54,603 57,018
General and administrative 4,922 6,373
Amortization of initial direct costs 10,654 11,949
Administrative expense reimbursements
- General Partner 21,929 22,895
Interest expense 31,391 31,391
----------- -----------
Total expenses 123,499 129,626
----------- -----------
Net income $ 96,933 $ 108,679
=========== ===========
Net Income allocable to:
Limited partners $ 95,964 $ 107,592
General Partner 969 1,087
----------- -----------
$ 96,933 $ 108,679
=========== ===========
Weighted average number of limited
partnership units outstanding 72,094 58,772
=========== ===========
Net income per weighted average
limited partnership unit $ 1.33 $ 1.83
========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CHANGES IN PARTNERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 7, 2000 (DATE OF INCEPTION)
TO SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Return of Investment Limited General
Capital Income Partners Partner Total
----------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Initial partners
capital contributions $ 1,000 $ 1,000 $ 2,000
Proceeds from issuance
----------------------
of limited partnership
units (132,054.19 units) 13,205,419 - 13,205,419
Sales and offering expenses (1,782,731) - (1,782,731)
Cash distribution $ .53 $ 1.83 (138,992) (1,331) (140,323)
Net income 107,592 1,087 108,679
--------------- ------------ ---------------
Balance at September 30, 2000 $ 11,392,288 $ 756 $ 11,393,044
=============== ============ ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 7, 2000 (DATE OF INCEPTION)
TO SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows provided from operating activities:
Net income $ 108,679
---------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of initial direct costs 11,949 Changes in operating assets
and liabilities:
Collection of principal receivables 575,331
Accounts receivable - affiliates (650,000)
Accounts payable 61,976
Other assets 866
---------------
Total adjustments 122
---------------
Net cash provided by operating activities 108,801
---------------
Cash flows from investing activities:
Equipment purchased (7,374,886)
Initial direct costs (221,247)
Other assets (850,000)
---------------
Net cash used for investing activities (8,446,133)
---------------
Cash flows provided by financing activities:
Initial partners capital contribution 2,000
Proceeds from note payable 3,977,317
Issuance of limited partnership units, net of offering expenses 11,422,688
Payment on note payable (2,651,545)
Cash distributed to partners (140,323)
---------------
Net cash provided by financing activities 12,610,137
---------------
Cash at end of period $ 4,272,805
===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. ORGANIZATION
ICON Income Fund Eight B L.P. (the "Partnership") was formed on February
7, 2000 (date of inception) as a Delaware limited partnership with an initial
capitalization of $2,000. It was formed to acquire various types of equipment,
to lease such equipment to third parties and, to a lesser degree, to enter into
secured financing transactions. The Partnership's maximum offering is
$75,000,000. The Partnership commenced business operations on its initial
closing date, June 14, 2000, with the admission of 15,815.51 limited
partnership units at $100 per unit representing $1,581,551 of capital
contributions. As of September 30, 2000, 116,238.68 additional units had been
admitted in to the partnership with aggregate gross proceeds of $11,623,868
bringing the total admission to 132,054.19 units totaling $13,205,419 in
capital contributions.
The General Partner of the Partnership is ICON Capital Corp. (the
"General Partner"), a Connecticut corporation. The General Partner manages and
controls the business affairs of the Partnership's equipment, leases and
financing transactions under a management agreement with the Partnership.
2. COMMITMENT AND CONTINGENCIES
The Partnership has not applied for an advance ruling from the Internal
Revenue Service; however, in the opinion of counsel the Partnership will be
classified as a Partnership and not as an association taxable for U.S. Federal
income tax purposes. In the absence of a ruling, there cannot be assurance that
the Partnership will not constitute an association taxable as a corporation.
3. RELATED PARTY TRANSACTIONS
Fees and expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the period ended September 30, 2000 were as
follows:
<TABLE>
<S> <C> <C>
Organization and offering expenses $ 462,190 Charged to equity
Underwriting commissions 264,108 Charged to equity
Acquisition fees 1,071,247 Capitalized
Management fees 57,018 Charged to operations
Administrative expense reimbursements 22,895 Charged to operations
------------------
$ 1,877,458
==================
</TABLE>
During the period ended September 30, 2000 the Partnership entered into
a binding purchase agreement to purchase a portfolio of lease investments. An
acquisition fee of $850,000 was paid to the General Partner in the period with
respect to this acquisition. This amount was included in the caption Other
assets on the September 30, 2000 balance sheet.
<PAGE>
ICON CAPITAL CORP.
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
ICON CAPITAL CORP.
BALANCE SHEETS
(UNAUDITED)
September 30, March 31,
2000 2000
---- ----
ASSETS
<S> <C> <C>
Cash $ 425,103 123,572
Receivables from Parent 2,144,375 3,327,769
Receivables from managed partnerships 97,418 567,715
Prepaid and other assets 570,105 322,908
Deferred charges 418,421 112,103
Loans receivable - related parties 432,265 -
Fixed assets and leasehold improvements, at cost, less
accumulated depreciation and amortization of $1,031,058
and $793,733 1,790,027 1,522,602
---------------- ----------------
Total assets $ 5,877,714 $ 5,976,669
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to managed partnership $ 600,000 $ -
Accounts payable and accrued expenses 284,149 498,328
Capital lease obligations 1,536,833 1,269,503
Loan payable 403,420 476,541
Deferred income 850,000 -
Deferred state income taxes 79,885 47,073
Deferred gain on sale of furniture and fixtures 563,804 660,456
---------------- ----------------
Total liabilities 4,318,091 2,951,901
---------------- ----------------
Commitments and contingencies
Stockholder's equity:
Common stock: no par value; $10 stated
value; authorized 3,000 shares;
issued and outstanding 1,500 shares 15,000 15,000
Additional paid-in capital 716,200 716,200
Retained earnings 828,423 3,393,568
---------------- ----------------
1,559,623 4,124,768
Note receivable from stockholder - (1,100,000)
---------------- ----------------
Total stockholder's equity 1,559,623 3,024,768
---------------- ----------------
Total liabilities and stockholder's equity $ 5,877,714 $ 5,976,669
================ ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ICON CAPITAL CORP.
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
2000 1999
---- ----
<S> <C> <C>
Revenues:
Fees - managed partnerships $ 6,235,717 $ 6,595,469
Servicing fee 148,795 131,413
Interest income 50,648 29,226
------------- -------------
Total revenues 6,435,160 6,756,108
------------- -------------
Expenses:
General and administrative fee - ICON Holdings Corp. 4,180,882 4,625,544
Selling, general and administrative 1,138,306 962,398
Amortization of deferred charges 299,864 548,694
Depreciation and amortization, net of deferred gain 140,673 151,274
Interest expense 100,789 77,636
------------- -------------
Total expenses 5,860,514 6,365,546
------------- -------------
Income before provision for income taxes 574,646 390,562
Provision for income taxes 229,858 175,753
------------- -------------
Net income $ 344,788 $ 214,809
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ICON CAPITAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED MARCH 31, 2000 AND
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
COMMON STOCK NOTE
------------ ADDITIONAL RECEIVABLE TOTAL
SHARES STATED PAID-IN RETAINED FROM STOCKHOLDER'S
OUTSTANDING VALUE CAPITAL EARNINGS STOCKHOLDER EQUITY
----------- ----------- ------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1999 1,500 $ 15,000 $ 716,200 $ 2,972,771 $ (1,100,000) $ 2,603,971
Net income - - - 420,797 - 420,797
March 31, 2000 1,500 15,000 716,200 3,393,568 (1,100,000) 3,024,768
Dividends - - - (2,909,933) 1,100,000 (1,809,933)
Net Income - - - 344,788 - 344,788
----------- ----------- ------------- -------------- --------------- ---------------
September 30, 2000 1,500 $ 15,000 $ 716,200 $ 828,423 $ - $ 1,559,623
=========== =========== ============= ============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ICON CAPITAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
2000 1999
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 344,788 $ 214,809
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 140,673 151,274
Amortization of deferred charges 299,864 548,694
Deferred state income taxes 32,812 175,753
Changes in operating assets and liabilities:
Receivables from Parent (158,345) (1,366,383)
Receivables from managed partnerships 470,297 317,194
Payable to managed partnership 600,000 -
Deferred income 850,000 -
Prepaid and other assets (247,197) (24,175)
Accounts payable and accrued expenses (214,179) (281,494)
------------- --------------
Net cash provided by (used in) operating activities 2,118,713 (264,328)
------------- --------------
Cash flows from investing activities:
Collection of loans receivable - related parties 9,474 -
Purchases of fixed assets and leasehold improvements (40,327) (20,842)
Increase in deferred charges (606,182) (268,721)
------------- --------------
Net cash (used in) investing activities (637,035) (289,563)
------------- --------------
Cash flows from financing activities:
Dividends paid (909,933) -
Repayment of loan payable (73,121) -
Principal payments on capital lease obligations (197,093) (96,973)
------------- --------------
Net cash (used in) financing activities (1,180,147) (96,973)
------------- --------------
Net increase (decrease) in cash 301,531 (650,864)
Cash, beginning of period 123,572 774,338
------------- --------------
Cash, end of period $ 425,103 $ 123,474
============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the six months ended September 30, 2000 and 1999 non-cash activities
included the following:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Dividend paid by liquidation of demand promissory
note receivable from stockholder $ 1,100,000 $ -
Note receivable from stockholder (1,100,000) -
Dividend paid by reducing receivables from Parent 900,000 -
Receivables from Parent (900,000) -
Loans receivable - related parties 441,739 -
Receivables from Parent (441,739) -
Addition to fixed assets 464,423 -
Addition to Capital lease obligations (464,423) -
--------------- ---------------
$ - $ -
=============== ===============
</TABLE>
Cash paid for interest consisted of $100,789 and $77,636 for the six month
periods ended September 30, 2000 and 1999 respectively. Cash paid for income
taxes consisted of $52,330 and $2,894 for the six month periods ended September
30, 2000 and 1999, respectively.
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(1) BASIS OF ACCOUNTING AND PRESENTATION
The accompanying financial statements of ICON Capital Corp., (the
"Company") are unaudited and reflect all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of financial position and
operating results for the interim periods. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. Management believes that the disclosures made are
adequate to prevent the information from being misleading. The
financial statements should be read in conjunction with the Company's
March 31, 2000 and 1999 audited financial statements. The results of
operations for the six months ended September 30, 2000 and 1999 are not
necessarily indicative of the results of operations for the entire
fiscal years ending March 31, 2001 and 2000.
(2) FEES - MANAGED PARTNERSHIPS
The Company is the general partner and manager of ICON Cash Flow
Partners, L.P., Series B, ICON Cash Flow Partners, L.P., Series C, ICON
Cash Flow Partners, L.P., Series D, ICON Cash Flow Partners, L.P.,
Series E, ICON Cash Flow Partners L.P. Six, ICON Cash Flow Partners
L.P. Seven, ICON Income Fund Eight A L.P. and ICON Income Fund Eight B
L.P. (collectively the "Partnerships"), which are publicly registered
equipment leasing limited partnerships. The Partnerships were formed
for the purpose of acquiring equipment and leasing such equipment to
third parties.
The Company earns fees from the Partnerships for the organization and
offering of each Partnership and for the acquisition and management of
their investments. The Company is also entitled to reimbursement from
the Partnerships for certain administrative expenses incurred by it on
behalf of the Partnerships. Organization and offering fees are earned
based on investment units sold and are recognized at each closing.
Acquisition fees are earned based on the purchase price or the
principal amount of each transaction entered into. Management fees are
earned for managing the Partnership's equipment leasing and financing
transactions and are based upon payment of rental obligations from
lease and financing transactions.
(3) RELATED PARTY TRANSACTIONS
The Company had receivables from the managed partnerships of $97,418
and $567,715 at September 30, 2000 and March 31, 2000, respectively.
These amounts represent fees that have been earned by the Company and
are immediately payable. The Company also had a payable to a managed
partnership of $600,000 at September 30, 2000, which was paid in
December 2000.
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ICON Receivables 1998-A ("!998-A"), a non consolidated affiliate of
ICON Holdings Corp. (the "Parent" or "Holdings"), was formed for the
purpose of acquiring, warehousing and securitizing a portfolio of
leases. The Company, as servicer, earns a servicing fee from 1998-A.
This servicing fee is earned monthly and is based on the discounted
lease balance of 1998-A's outstanding lease pool.
During the six month period ended September 30, 2000, the Company
declared dividends of $2,909,933 of which $1,100,000 was used by the
Parent to liquidate a $1,100,000 demand promissory note payable to the
Company. This $1,100,000 demand promissory note was reflected in the
March 31, 2000 balance sheet as a reduction of stockholders' equity.
During the six month period ended September 30, 2000, the Company
received from the Parent two notes totaling $441,739, issued by
affiliates of the Parent. These two notes were received as a partial
settlement of amounts owing the Company by the Parent. These two notes
are reflected as Loans receivable - related parties on the September
30, 2000 balance sheet and had an outstanding balance of $432,265 as of
September 30, 2000. The notes are collateralized by a pool of third
party leases and a building.
The Company has periodically made cash advances to its Parent to cover
general and administrative expenses, its allocated portion of income
taxes and for other corporate purposes. As of September 30, 2000,
receivables from Parent of $2,144,375 represented such cash advanced to
Holdings, net of general and administrative fees and federal and state
tax obligations payable to Holdings.
It is anticipated that the Company will in the future, continue to
periodically advance monies to Holdings for general and administrative
expenses, income taxes and for other corporate purposes. It is expected
that substantially all current and future receivables due from
Holdings, which result from these periodic cash advances, will be
realized by applying such amounts against future general and
administrative fees and income taxes payable by the Company to
Holdings.
(4) CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
2000 2000
---- ----
<S> <C> <C>
Various obligations under capital leases, payable
in monthly installments through June 2005 $ 1,536,833 $ 1,269,503
============== ==============
</TABLE>
During the six month period ended September 30, 2000 the Company leased
fixed assets under capital lease agreements and incurred $464,423 in
new capital lease obligations.
<PAGE>
(5) DEFERRED INCOME
Deferred income represents acquisition fees received by the Company as
a result of the execution of a binding purchase agreement on behalf of
ICON Income Fund Eight B L.P. to purchase a portfolio of lease
investments. The deferred income amount will be recognized in income
upon consummation of the lease portfolio acquisition transaction.
<PAGE>
ICON CAPITAL CORP.
FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ICON Capital Corp.:
We have audited the accompanying balance sheets of ICON Capital Corp. as of
March 31, 2000 and 1999, and the related statements of income, changes in
stockholder's equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ICON Capital Corp. as of March
31, 2000 and 1999, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted
in the United States of America.
KPMG LLP
October 5, 2000
New York, New York
<PAGE>
ICON CAPITAL CORP.
BALANCE SHEETS
MARCH 31,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
ASSETS
Cash $ 123,572 774,338
Receivables from Parent 3,327,769 1,505,986
Receivables from managed partnerships 567,715 475,000
Prepaid and other assets 322,908 269,898
Deferred charges 112,103 792,437
Fixed assets and leasehold improvements, at cost, less accumulated
depreciation and amortization of $793,773 and $318,078 1,522,602 1,937,646
---------------- ----------------
Total assets $ 5,976,669 $ 5,755,305
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 498,328 $ 693,907
Capital lease obligations 1,269,503 1,557,081
Loan payable 476,541 -
Deferred state income taxes 47,073 46,585
Deferred gain on sale of furniture and fixtures 660,456 853,761
---------------- ----------------
Total liabilities 2,951,901 3,151,334
---------------- ----------------
Commitments and contingencies
Stockholder's equity:
Common stock: no par value; $10 stated
value; authorized 3,000 shares;
issued and outstanding 1,500 shares 15,000 15,000
Additional paid-in capital 716,200 716,200
Retained earnings 3,393,568 2,972,771
---------------- ----------------
4,124,768 3,703,971
Note receivable from stockholder (1,100,000) (1,100,000)
---------------- ----------------
Total stockholder's equity 3,024,768 2,603,971
---------------- -----------------
Total liabilities and stockholder's equity $ 5,976,669 $ 5,755,305
================ ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues:
Fees - managed partnerships $ 13,434,863 $ 14,057,423
Servicing fee 256,246 302,188
Interest income and other 38,931 40,680
Management fees - ICON Securities Corp. - 758,039
----------------- ----------------
Total revenues 13,730,040 15,158,330
----------------- ----------------
Expenses:
General and administrative fee - ICON Holdings Corp. 8,827,990 1,627,506
Selling, general and administrative 2,460,999 8,950,128
Amortization of deferred charges 1,306,754 1,344,012
Depreciation and amortization, net of deferred gain (Note 7) 282,391 249,729
Interest expense 150,578 174,493
----------------- ----------------
Total expenses 13,028,712 12,345,868
----------------- ----------------
Income before provision for income taxes 701,328 2,812,462
Provision for income taxes 280,531 1,170,591
----------------- ----------------
Net income $ 420,797 $ 1,641,871
================= ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
COMMON STOCK NOTE TOTAL
------------ ADDITIONAL RECEIVABLE STOCK-
SHARES STATED PAID-IN RETAINED FROM HOLDER'S
OUTSTANDING VALUE CAPITAL EARNINGS STOCKHOLDER EQUITY
----------- ------ ------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1998 1,500 $ 15,000 $ 716,200 $ 1,330,900 $ (1,100,000) $ 962,100
Net income - - - 1,641,871 - 1,641,871
------- ---------- ------------ --------------- -------------- ---------------
March 31, 1999 1,500 15,000 716,200 2,972,771 (1,100,000) 2,603,971
Net income - - - 420,797 - 420,797
------- ---------- ------------ --------------- -------------- ---------------
March 31, 2000 1,500 $ 15,000 $ 716,200 $ 3,393,568 $ (1,100,000) $ 3,024,768
======= ========== ============ =============== ============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 420,797 $ 1,641,871
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 282,391 249,729
Amortization of deferred charges 1,306,754 1,344,012
Deferred state income taxes 488 15,053
Changes in operating assets and liabilities:
Receivables from Parent (1,821,783) 767,496
Receivables from managed partnerships (92,715) (134,010)
Prepaid and other assets (53,010) (43,043)
Accounts payable and accrued expenses (195,579) (369,755)
----------------- -----------------
Net cash (used in) provided by operating activities (152,657) 3,471,353
---------------- ----------------
Cash flows from investing activities:
Purchases of fixed assets and leasehold improvements (60,652) (511,038)
Increase in deferred charges (626,420) (1,612,179)
----------------- -----------------
Net cash used in investing activities (687,072) (2,123,217)
----------------- -----------------
Cash flows from financing activities:
Proceeds from loan payable 500,000 -
Repayment of loans payable (23,459) (2,000,000)
Proceeds from sale leaseback of furniture and fixtures - 1,500,000
Principal payments on capital lease obligations (287,578) (253,201)
----------------- -----------------
Net cash provided by (used in) financing activities 188,963 (753,201)
---------------- -----------------
Net (decrease) increase in cash (650,766) 594,935
Cash, beginning of period 774,338 179,403
---------------- -----------------
Cash, end of period $ 123,572 $ 774,338
================ ================
Cash paid for interest $ 150,578 $ 174,493
---------------- ----------------
Cash paid for income taxes $ 8,946 $ 9,925
---------------- -----------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(1) ORGANIZATION
ICON Capital Corp. (the "Company") is a wholly owned subsidiary of ICON
Holdings Corp. ("Holdings" or "Parent"). The primary activity of the
Company is the development, marketing and management of publicly registered
equipment leasing limited partnerships.
The Company is the general partner and manager of ICON Cash Flow Partners,
L.P., Series B ("ICON Cash Flow B"), ICON Cash Flow Partners, L.P. Series C
("ICON Cash Flow C"), ICON Cash Flow Partners L.P., Series D ("ICON Cash
Flow D"), ICON Cash Flow Partners L.P., Series E ("ICON Cash Flow E") ,
ICON Cash Flow Partners L.P. Six ("ICON Cash Flow Six"), ICON Cash Flow
Partners L.P. Seven ("ICON Cash Flow Seven"), and ICON Income Fund Eight A
L.P. ("ICON Eight A") and ICON Income Fund Eight B L.P. ("ICON Eight B")
(collectively the "Partnerships"), which are publicly registered equipment
leasing limited partnerships. The Partnerships were formed for the purpose
of acquiring equipment and leasing such equipment to third parties. The
Company's investments in the Partnerships are included in prepaid and other
assets. The Company was also the General Partner of ICON Cash Flow
Partners, L.P., Series A, which was liquidated in the year 2000.
The Company earns fees from the Partnerships on the sale of Partnership
units. Additionally, the Company also earns acquisition and management fees
and shares in Partnership cash distributions.
The following table identifies pertinent offering information by the
Partnerships:
<TABLE>
<CAPTION>
Date Operations Date Ceased Gross Proceeds
Began Offering Units Raised
----- -------------- ------
<S> <C> <C>
ICON Cash Flow B September 22, 1989 November 15, 1990 $ 20,000,000
ICON Cash Flow C January 3, 1991 June 20, 1991 20,000,000
ICON Cash Flow D September 13, 1991 June 5, 1992 40,000,000
ICON Cash Flow E June 5, 1992 July 31, 1993 61,041,151
ICON Cash Flow Six March 31, 1994 November 8, 1995 38,385,712
ICON Cash Flow Seven January 19, 1996 September 16,1998 99,999,683
ICON Eight A October 14, 1998 May 17, 2000 75,000,000
ICON Eight B May 25, 2000 (1) 3,040,096
----------------
$ 357,466,642
================
</TABLE>
(1) Gross proceeds raised through June 26, 2000.
ICON Eight B was formed on February 7, 2000 with an initial capital
contribution of $2,000 and began offering its units to suitable investors
on May 25,2000. The offering period for ICON Eight B will end on the
earlier of May 19, 2001 or when ICON Eight B raises $75,000,000. In the
event the offering does not reach $75,000,000 by May 19, 2001, ICON Eight B
may extend the offering period for up to one year.
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING AND PRESENTATION
The Company's financial statements have been prepared on the historical
cost basis of accounting using the accrual basis. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(b) REVENUE RECOGNITION
The Company earns fees from the Partnerships for the organization and
offering of each Partnership and for the acquisition, management and
administration of their investments. Organization and offering fees are
earned based on investment units sold and are recognized at each
closing. Acquisition fees are earned based on the purchase price paid
or the principal amount of each transaction entered into. Management
and administrative fees are earned for managing the Partnership's
equipment leasing and financing transactions. Management and
administrative fees are earned upon payment of rental obligations from
lease and financing transactions.
See note 4 for a discussion of servicing fee revenue.
(c) DEFERRED CHARGES
Under the terms of the Partnerships' agreements, the Company is
entitled to be reimbursed for the costs of organizing and offering the
units of the Partnerships from the gross proceeds raised, subject to
certain limitations, based on the number of investment units sold. The
unamortized balance of these costs are reflected on the balance sheets
as deferred charges and are being amortized over the offering periods.
(d) FIXED ASSETS AND LEASEHOLD IMPROVEMENTS
Fixed assets, which consists primarily of a capital lease, is recorded
at cost and is being depreciated over three to five years using the
straight-line method. Leasehold improvements are also recorded at cost
and are being amortized over the estimated useful lives of the
improvements, or the term of the lease, if shorter, using the
straight-line method.
(e) INCOME TAXES
The Company accounts for its income taxes following the liability
method as provided for in Statement of Financial Accounting Standard
No. 109, "Accounting for Income Taxes."
The Company's activity is included in the consolidated Federal income
tax returns of Holdings. The Company provides for income taxes as if it
were a stand alone entity. See Note (6).
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(F) RECLASSIFICATIONS
Certain 1999 amounts have been reclassified to conform to the current
year presentation.
(3) STOCKHOLDER'S EQUITY
As of March 31, 2000, the Company held a demand promissory note for
$1,100,000 from Holdings. The note is without interest, except in the case
of default, at which time the note would bear interest at the rate of 18%.
The note is reflected for financial statement reporting purposes as a
reduction of stockholders' equity and was retired by Holdings subsequent to
March 31, 2000 (See Note 4).
(4) RELATED PARTY TRANSACTIONS
The Company earns fees from the Partnerships for the organization and
offering of each Partnership and for the acquisition, management and
administration of their investments. The balance sheet item "Receivables
from managed partnerships" relates to such fees, which have been earned by
the Company but not paid by the Partnerships.
Prior to January 1, 1999, all personnel of the ICON Holdings group were
employed by, and all expenses were paid by, the Company. Effective January
1, 1999, management made the decision to implement certain organizational
changes, and corporate resources, including but not limited to personnel,
were reallocated between the Company, Holdings, and other subsidiaries of
Holdings in an effort to more accurately align revenues and expenses among
the functions of the companies. Management also eliminated the management
fee paid to the Company by ICON Securities Corp. (also wholly owned by
Holdings).
The Company has periodically made cash advances to its Parent to cover
general and administrative expenses, its allocated portion of income taxes
and for other corporate purposes. As of March 31, 2000, receivables from
Parent of $3,327,769 represented such cash advanced to Holdings, net of
general and administrative fees and federal and state tax obligations
payable to Holdings. $1,341,739 of the March 31, 2000 balance was settled
subsequent to year end with the remaining balance applied to general and
administrative fees and income taxes incurred by the Company during fiscal
2001.
It is anticipated that the Company will, in the future, continue to
periodically advance monies to Holdings for general and administrative
expenses, income taxes and for other corporate purposes. It is expected
that substantially all future receivables due from Holdings, which result
from these periodic cash advances, will be realized by applying such
amounts against future general and administrative fees and income taxes
payable by the Company to Holdings.
Subsequent to March 31, 2000 the Company declared dividends of $2,909,933
of which $1,100,000 was used by Holdings to retire the $1,100,000 demand
promissory note payable to the Company (See Note 3).
ICON Receivables 1998-A, ("1998-A"), a non consolidated affiliate of
Holdings, was formed for the purpose of acquiring, warehousing and
securitizing a portfolio of leases. The Company, as servicer, earns a
servicing fee from 1998-A. This fee is earned monthly and is based on the
discounted lease balance of 1998-A's outstanding lease pool. (See Note 7
for a discussion of a related party sale leaseback transaction.)
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(5) PREPAID AND OTHER ASSETS
Included in prepaid and other assets are unamortized insurance costs, the
Company's investment in the Partnerships and security deposits.
(6) INCOME TAXES
The provision for income taxes for the years ended March 31, 2000 and 1999
consisted of the following:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current:
Federal $ 211,034 $ 665,620
State 67,497 212,162
------------- ------------
Total current 278,531 877,782
------------- ------------
Deferred:
Federal 1,512 220,066
State 488 72,743
------------- ------------
Total deferred 2,000 292,809
------------- ------------
Total $ 280,531 $ 1,170,591
============= ============
</TABLE>
Deferred income taxes at both dates are primarily the result of temporary
differences relating to the carrying value of fixed assets, the investments
in the Partnerships and deferred charges.
ICON Holdings Corp. files a consolidated federal income tax return and a
combined return for certain states which include the operating results of
the Company. The Company's allocable share of the consolidated federal tax
expense and combined state tax expense is reflected on the books of the
Company on a separate entity basis. Deferred income taxes are provided for
the temporary differences between the financial reporting basis and the tax
basis of the Company's assets and liabilities. The Company's share of
current and deferred federal tax obligations and its share of current and
deferred combined state tax obligations are recorded as reductions of
receivables from Holdings. Deferred federal and state income taxes netted
against such receivables were $831,172 and $829,660 at March 31, 2000 and
1999, respectively. The deferred state income tax liabilities on the
balance sheet at March 31, 2000 and 1999 are related to states where the
company files as a separate entity.
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The following table reconciles income taxes computed at the federal
statutory rate to the Company's effective tax rate for the years ended
March 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
---- ----
Tax Rate Tax Rate
--- ---- --- ----
<S> <C> <C> <C> <C>
Federal statutory $ 238,452 34.00% $ 956,237 34.00%
State income taxes, net of Federal tax effect 44,870 6.40 188,037 6.69
Meals and entertainment exclusion 698 .10 24,293 .86
Other (3,489) (.50) 2,024 .07
------------- ------ ------------ ------
Total $ 280,531 40.00% $ 1,170,591 41.62%
============= ====== ============ ======
</TABLE>
(7) SALE LEASEBACK
On July 31, 1998 the Company entered into an agreement to sell a portion
of its fixed assets to 1998-A, for $1,500,000 based upon a third party
appraisal. 1998-A simultaneously leased the fixed assets back to the
Company. Under the lease, the Company agreed to pay 60 equal monthly
installments of $31,255 with the first payment due August 1998. The
lease contains an option to purchase the assets at the end of the term
for one dollar ($1.00). The Company treated the transaction as a sale of
assets and recorded a deferred gain on sale in the amount of $966,522.
The deferred gain is being amortized against depreciation expense on a
straight-line basis over the remaining useful life of the assets sold.
The capital lease obligation is included on the March 31, 2000 and 1999
balance sheets in "Capital lease obligations."
(8) LOAN PAYABLE AND CAPITAL LEASE OBLIGATIONS
The Company entered into a Loan and Security Agreement on December 9,
1999 with TKO Finance Corporation under which it borrowed a total of
$500,000 in two traunches of $250,000. The total $500,000 loan bears
interest at 11.5% per annum and is payable in monthly installments of
$16,465 through December 2002, with a final payment of $17,448 due on
January 1, 2003. The loan is secured by a lien on all the assets of the
Company. The repayment schedule of the loan is as follows:
Year Ended
March 31,
---------
2001 $ 150,549
2002 168,804
2003 157,188
-------------
Total $ 476,541
=============
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The repayment schedule of various obligations under capital leases (see
note 7), payable in monthly installments, matures as follows:
Year Ended
March 31,
---------
2001 $ 470,433
2002 462,711
2003 419,214
2004 137,141
-------------
1,489,499
Less amounts
representing interest 219,996
-------------
Total $ 1,269,503
=============
(9) COMMITMENTS
The Company entered into a Guarantee Agreement with M & T Bank on
December 8, 1999. Under the Agreement the Company guaranteed payment of
an $875,000 mortgage loan obligation owed by a non-consolidated
affiliate of the Company. The mortgage loan obligation matures as
follows:
Fiscal Year Ending
March 31, Amount
--------- ------
2001 $ 6,229
2002 6,805
2003 7,435
2004 8,122
2005 845,423
------------
Total $ 874,014
============
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The Company was obligated under operating leases for office space through
the year 2005. The leases were transferred to Holdings effective January
1, 1999. See note 4. Although all rental obligations were transferred to
Holdings, a portion of the leases remain in the Company's name. The future
minimum rental commitments under non-cancelable operating leases, which
will be paid by Holdings, but which are currently in the Company's name
are due as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
MARCH 31, AMOUNT
--------- ------
<S> <C> <C>
2001 $ 606,683
2002 620,703
2003 616,393
2004 540,900
2005 360,600
------------
Total $ 2,745,279
============
</TABLE>
34
<PAGE>
ICON INCOME FUND EIGHT B L.P.
CROSS REFERENCE SHEET REQUIRED BY ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
----------------------- ----------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Cover Pages of Registration Statement and
Outside Front Cover Page of Prospectus Prospectus
2. Inside Front and Outside Back Cover Cover Page; Back Page
Pages of Prospectus
3. Summary Information, Risk Factors and Summary of the Offering; Risk Factors
Ratio of Earnings to Fixed Charges
4. Use of Proceeds Sources and Uses of Offering Proceeds; Our
Compensation; Investment Objectives and
Policies
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Cover Pages; Plan of Distribution
9. Description of Securities to be Registered Cover Pages; Summary of the Offering;
Summary of the Partnership Agreement;
Partnership Agreement
10. Interests of Named Experts and Counsel Experts; Legal Matters
11. Information with Respect to the Registrant Summary of the Offering; Management;
Investment Objectives and Policies;
Summary of the Partnership Agreement;
Financial Statements
12. Disclosure of Commission Position on Fiduciary Responsibility; Partnership
Indemnification for Securities Act Agreement
Liabilities
</TABLE>
------------------------
* Omitted because the item is inapplicable or the answer is negative.
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[LOGO]
ICON INCOME FUND EIGHT B L.P.
$75,000,000 (MAXIMUM OFFERING)
750,000 UNITS OF LIMITED PARTNERSHIP INTEREST
(MINIMUM CAPITALIZATION OF 12,000 UNITS)
$100.00 PER UNIT
MINIMUM INVESTMENT: 25 UNITS ($2,500)
(10 UNITS OR $1,000 FOR IRAS OR QUALIFIED PLANS)
<TABLE>
<CAPTION>
Price Sales Proceeds
to Public Commissions to Partnership
--------- ----------- --------------
<S> <C> <C> <C>
Per Unit $ 100 $ 10 $ 90
Minimum Offering of 12,000 Units $ 1,200,000 $ 120,000 $ 1,080,000
Maximum Offering of 750,000 Units $75,000,000 $7,500,000 $67,500,000
</TABLE>
THESE ARE SPECULATIVE SECURITIES AND THIS INVESTMENT INVOLVES A HIGH DEGREE OF
RISK. CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 7, WHICH INCLUDE THE
FOLLOWING:
* The profitability of this investment cannot be estimated
* We will receive substantial fees, only some of which are related to the
amount of distributions you receive
* You may be unable to resell the units and therefore you should be prepared
to hold them for the life of the Partnership
* We manage other similar partnerships and so we are subject to conflicts of
interest
This prospectus describes an investment in units of ICON Income Fund Eight B
L.P., which is an equipment leasing program. We, ICON Capital Corp., have formed
the Partnership as its general partner.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Notice to Pennsylvania investors: Because the minimum amount of this
offering is less than $3,750,000 (a maximum to minimum offering ratio of 20:1),
you are cautioned to carefully evaluate our ability to fully accomplish our
stated objectives and to inquire as to the current dollar volume of investments.
This prospectus is dated May 19, 2000.
You must meet the requirements described below to invest in the Partnership.
Because we do not have direct knowledge of your financial situation, we will
<PAGE>
rely on what you tell us. In addition, brokers (sometimes called selling
dealers) must have reasonable grounds to believe that this investment is
suitable for you. Consequently, it is important that the information you provide
is complete and accurate. When evaluating your suitability for this investment
using the standards listed below, keep in mind that net worth does not include
the value of your home furnishings, personal automobiles and the equity in your
home.
INVESTOR SUITABILITY
You must meet our basic suitability requirements to invest. In general, you
must either have:
(1) a net worth of at least $30,000 PLUS $30,000 of annual gross income;
or
(2) a net worth of at least $75,000.
CERTAIN STATE REQUIREMENTS
Residents of Alabama, Arizona, Arkansas, California, Indiana, Iowa, Kansas,
Maine, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, North Dakota,
Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Texas, Vermont and
Washington must have either of the following in order to invest:
(1) a net worth of at least $45,000 PLUS $45,000 of annual gross income;
or
(2) a net worth of at least $150,000.
Residents of Massachusetts and North Carolina must have either of the
following in order to invest:
(1) a net worth of at least $60,000 PLUS $60,000 of annual gross income;
or
(2) a net worth of at least $225,000.
If you are a Nebraska or Pennsylvania resident, your investment may not
exceed 10% of your net worth. If you are an Ohio resident, your investment may
not exceed 10% of your liquid net worth.
WHO SHOULD INVEST
You should only invest if you:
- are prepared to hold this investment for 8-10 years, comprised of the
period ending 5 years from when we complete the offering which is called
the reinvestment period and the following 1-3 years when we will liquidate
the assets of the Partnership;
- have no need for this investment to be liquid except for cash that you may
<PAGE>
receive from monthly distributions; and
- are prepared to assume the substantial risks associated with this
investment.
MINIMUM INVESTMENT
The minimum number of units you must purchase is 25. Residents of Nebraska
must purchase a minimum of 50 units. For IRAs and qualified plans, you must
purchase at least 10 units.
THE USE OF FORECASTS IN THIS OFFERING IS PROHIBITED. ANY REPRESENTATIONS TO
THE CONTRARY AND ANY PREDICTIONS, WRITTEN OR ORAL, AS TO THE AMOUNT OR CERTAINTY
OF ANY PRESENT OR FUTURE CASH BENEFIT OR TAX CONSEQUENCE WHICH MAY FLOW FROM AN
INVESTMENT IN THIS PROGRAM IS NOT PERMITTED.
See the section of this prospectus entitled "INVESTOR SUITABILITY AND MINIMUM
INVESTMENT REQUIREMENTS; SUBSCRIPTION PROCEDURES" and the Subscription Agreement
for a more detailed explanation of state suitability requirements.
ii
<PAGE>
TABLE OF CONTENTS
We include cross-references in this prospectus to section captions where you
can find further related discussions. The following table provides the pages on
which these captions are located. In this prospectus, "general partner," "we,"
"us" and "our" refer to ICON Capital Corp., the general partner of the
Partnership.
<TABLE>
<S> <C>
SUMMARY OF THE OFFERING..................................... 1
Investment Objectives and Policies........................ 1
Summary of Certain Risk Factors........................... 1
Uses of Offering Proceeds................................. 2
Our Compensation.......................................... 3
Our Relationship to the Partnership is Not Free of
Conflicts............................................... 3
Our Fiduciary Responsibility.............................. 3
Other Offerings We Sponsor and Manage..................... 3
Management; Financial Statements.......................... 4
Federal Income Tax Considerations......................... 4
Capitalization............................................ 4
Summary of the Partnership Agreement...................... 4
Restrictions on Your Ability to Transfer Units............ 4
Plan of Distribution...................................... 5
RISK FACTORS................................................ 7
Partnership Risks......................................... 7
Investment Risks.......................................... 11
Federal Income Tax Risks and ERISA Risks.................. 13
SOURCES AND USES OF OFFERING PROCEEDS....................... 16
OUR COMPENSATION............................................ 18
Organization and Offering Stage........................... 18
Operational Stage......................................... 19
Interest in Profits or Losses............................. 22
CONFLICTS OF INTEREST....................................... 24
No Arm's Length Negotiation of Agreements................. 24
Our Compensation.......................................... 24
Effect of Leverage on Our Compensation.................... 24
Competition with the Partnership for Equipment............ 25
Our Liability for Partnership Obligations; Our
Determination of Reserves............................... 26
Joint Ventures............................................ 26
Lease Referrals........................................... 26
Participation of an Affiliate in this Offering............ 26
Tax Matters Partner....................................... 26
FIDUCIARY RESPONSIBILITY.................................... 27
Conflicts................................................. 27
Indemnification........................................... 27
Investor Remedies......................................... 28
OUR OTHER PROGRAMS.......................................... 29
RELATIONSHIPS WITH SOME OF OUR AFFILIATES................... 32
MANAGEMENT.................................................. 33
The General Partner....................................... 33
Our Affiliates............................................ 34
iii
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES.......................... 35
General................................................... 35
Acquisition Policies and Procedures....................... 35
Leases and Financing Transactions......................... 36
Transaction Approval Procedures........................... 38
Credit Review Procedures.................................. 38
Equipment................................................. 38
Portfolio Acquisitions.................................... 40
Other Investments......................................... 40
Interim Financing......................................... 40
CASH DISTRIBUTIONS.......................................... 41
Monthly Cash Distributions................................ 41
First Cash Distributions to the Limited Partners.......... 42
Reinvestment of Undistributed Cash in Additional
Equipment, Leases and Financing Transactions............ 42
Distribution of Cash From Sales of the Partnership's
Investments............................................. 42
Reinvestment of Distributions............................. 42
FEDERAL INCOME TAX CONSEQUENCES............................. 43
Opinion of Tax Counsel.................................... 43
Classification as a Partnership........................... 43
Taxation of Partnerships in General....................... 43
Publicly Traded Partnerships.............................. 44
Taxation of Distributions................................. 45
Partnership Income versus Partnership Distributions....... 46
Allocations of Profits and Losses......................... 46
Deductibility of Losses; Passive Losses, Tax Basis and "At
Risk" Limitation........................................ 47
Deductions for Organizational and Offering Expenses;
Start-Up Costs.......................................... 49
Tax Treatment of Leases................................... 49
Cost Recovery............................................. 49
Limitations on Cost Recovery Deductions................... 50
Deferred Payment Leases................................... 51
Sale or Other Disposition of Partnership Property......... 51
Sale or Other Disposition of Partnership Interest......... 52
Treatment of Cash Distributions upon Redemption........... 52
Gifts of Units............................................ 53
Consequence of No Section 754 Election.................... 53
Tax Treatment of Termination of the Partnership Pursuant
to the Partnership Agreement............................ 53
Audit by the IRS.......................................... 53
Alternative Minimum Tax................................... 54
Interest Expense.......................................... 55
Self-Employment Income and Tax............................ 55
Limited Deductions for Activities not Engaged in for
Profit.................................................. 55
Foreign Source Taxable Income............................. 56
Registration, Interest and Penalties...................... 56
State and Local Taxation.................................. 57
Foreign Investors......................................... 58
Tax Treatment of Certain Trusts and Estates............... 58
Taxation of Employee Benefit Plans and Other Tax-exempt
Organizations........................................... 58
Corporate Investors....................................... 58
INVESTMENT BY QUALIFIED PLANS............................... 59
Fiduciaries under ERISA................................... 59
iv
<PAGE>
Prohibited Transactions Under ERISA and the Tax Code...... 59
Plan Assets............................................... 60
Other ERISA Considerations................................ 61
CAPITALIZATION.............................................. 62
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION.............. 63
SUMMARY OF THE PARTNERSHIP AGREEMENT........................ 64
Establishment and Nature of the Partnership............... 64
Name and Address.......................................... 64
Purposes and Powers....................................... 64
Duration of Partnership................................... 64
Capital Contributions..................................... 64
Powers of the Partners.................................... 65
Limitations on Our Powers................................. 65
Indemnification........................................... 66
Liability of Partners..................................... 67
Non-assessability of Units................................ 67
Distribution of Distributable Cash From Operations and
From Sales.............................................. 67
Allocation of Profits and Losses.......................... 68
Withdrawal of the General Partner......................... 68
Transfer of Units......................................... 69
Dissolution and Winding-up................................ 69
Access to Books and Records............................... 70
Meetings and Voting Rights of Limited Partners............ 70
Amending the Partnership Agreement........................ 70
TRANSFER OF UNITS........................................... 72
Withdrawal................................................ 72
Restrictions on the Transfer of Units..................... 72
Limited Right to Redeem Units............................. 73
Consequences of Transfer.................................. 74
REPORTS TO LIMITED PARTNERS................................. 75
Annual Reports............................................ 75
Quarterly Reports......................................... 75
PLAN OF DISTRIBUTION........................................ 76
General................................................... 76
Segregation of Subscription Payments...................... 76
INVESTOR SUITABILITY AND MINIMUM INVESTMENT REQUIREMENTS;
SUBSCRIPTION PROCEDURES................................... 78
General Suitability Considerations........................ 78
Minimum Investment........................................ 78
Suitability Standard for Qualified Plans and IRAs......... 79
Suitability Standard for Other Fiduciaries................ 79
Additional Considerations for IRAs, Qualified Plans, and
Tax-Exempt Entities..................................... 79
Transfer of Units......................................... 80
Additional Transfer Restriction for Residents of
California.............................................. 80
Subscriber Representations................................ 80
Conflicts of Interest..................................... 81
Co-signature by Selling Dealer............................ 81
Binding Effect of the Partnership Agreement............... 82
Citizenship............................................... 82
How to Subscribe.......................................... 83
v
<PAGE>
SALES MATERIAL.............................................. 83
EXPERTS..................................................... 84
LEGAL MATTERS............................................... 84
ADDITIONAL INFORMATION...................................... 84
TABULAR INFORMATION CONCERNING PRIOR PUBLIC PROGRAMS........ 85
FINANCIAL STATEMENTS........................................ 85
Exhibit A-- Amended and Restated Agreement of Limited
Partnership of Icon Income Fund Eight B L.P.
Exhibit B-- Prior Performance Tables for the Prior Public
Programs
Exhibit C-- Subscription Documents
</TABLE>
vi
<PAGE>
SUMMARY OF THE OFFERING
This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus, including "RISK FACTORS," carefully
before making an investment decision.
ICON Income Fund Eight B L.P. is an equipment leasing program formed on
February 7, 2000. The Partnership will primarily engage in the business of
leasing equipment and acquiring residual interests in leased equipment. To a
lesser degree, the Partnership will make loans that are secured by equipment to
businesses we determine are creditworthy and engage in any other business
activities that are consistent with the Partnership's objectives and in which
the Partnership may lawfully engage.
We expect that most of the net proceeds we raise from this offering will be
invested in equipment that is or will be leased, and this will produce passive
income for federal income tax purposes. We call the users of leased equipment
lessees. Some of the proceeds may be loaned to users of equipment. We call these
loans financing transactions, and we call the businesses that use the equipment
which is subject to a loan borrowers. The financing transactions, and some
leases, will produce portfolio income rather than passive income for federal
income tax purposes.
We anticipate that the Partnership will complete its reinvestment period 5
years from the date we complete our offer to sell units for the Partnership, but
the reinvestment period may be extended at our discretion. We will then sell the
Partnership's investments in the ordinary course of business within a further
period ending from 8 to 10 years after we begin offering units. You should
expect to hold your units for the full term of the Partnership, which is 8 to 10
years from the time you invest.
INVESTMENT OBJECTIVES AND POLICIES
We have four investment objectives:
(1) INVEST IN EQUIPMENT AND FINANCING TRANSACTIONS: to invest at favorable
prices in a diversified portfolio of primarily used equipment having long
lives, high resale values, and, to a lesser degree, in financing
transactions that are secured by equipment to creditworthy businesses at
attractive rates of interest.
(2) MAKE CASH DISTRIBUTIONS: to make substantially tax-deferred cash
distributions during the early years of the Partnership, beginning the
month after the month you are admitted as a limited partner;
(3) DIVERSIFICATION TO REDUCE RISK: to purchase a diversified portfolio of
equipment subject to leases or financing transactions with creditworthy
lessees or borrowers. A diverse portfolio comprised of various types of
equipment and a range of maturity dates makes it less likely that changes
in any one market sector will significantly impact the Partnership.
Creditworthy lessees and borrowers lessen the Partnership's risk of
economic loss due to bankruptcy of a lessee or borrower. We also intend
to emphasize investments in used, long-lived, low obsolescence equipment
to reduce the impact of economic depreciation; and
(4) PROVIDE A FAVORABLE TOTAL RETURN: provide you a total return on your
investment which, by the time we sell the Partnership's equipment and
other assets, compares favorably with other illiquid investments that do
not guarantee a return of principal.
SUMMARY OF CERTAIN RISK FACTORS
This investment involves a higher degree of risk. In addition to this
summary of certain risks, you should read the entire section of this prospectus
entitled "RISK FACTORS" before making an investment decision.
1
<PAGE>
PARTNERSHIP RISKS
- The ultimate composition of the Partnership's investment portfolio is
currently unknown.
- The Partnership's success will partially depend on the residual values of
the equipment we acquire for them.
- If only the minimum offering size is raised, the Partnership may not be
able to diversify its investments.
- The Partnership could incur losses if an equipment lessee or borrower
defaults.
- Losses as a result of equipment lessee defaults may be greater if the
Partnership acquires the leased equipment with borrowed funds.
- The Partnership will be subject to various conflicts of interest arising
out of its relationships to us and our affiliates, including the fact that
our compensation from the Partnership is not the result of an arm's length
negotiation.
INVESTMENT RISKS
- You will have limited voting rights and no management authority.
- There is no guarantee you will receive a return comparable to that of
investors in similar programs we sponsored and manage.
- The amount of distributions you will receive, and your return from this
investment, is difficult to predict.
- The rate of monthly cash distributions is not fixed.
- There is no secondary market for units so your ability to transfer them is
limited.
FEDERAL INCOME TAX RISKS
- If the IRS classifies the Partnership as a corporation, you will lose tax
benefits.
- You may incur tax liability in excess of the cash distributions you
receive.
- There are limitations on your ability to deduct Partnership losses. This
investment may cause you to pay additional taxes.
USES OF OFFERING PROCEEDS
Assuming all of the units are sold, we will:
- invest at least 80.40% of the funds we receive from investors in equipment
and financing transactions, and in a reserve of at least 1%; and
- use the remaining 19.60% of the funds to pay fees and expenses relating to
this offering and organizing the Partnership.
Assuming only the minimum number of units (12,000) are sold for the
Partnership, we will:
- invest at least 75% of the funds we receive from investors in equipment,
leases and financing transactions, and in a reserve of at least 1%; and
- use the remaining 25% of the funds to pay fees and expenses relating to
this offering and organizing the Partnership.
2
<PAGE>
OUR COMPENSATION
The dealer-manager, which is a company affiliated with us, will select the
brokers, manage this offering, and be compensated for those and other services.
We will acquire the assets for and manage the business of the Partnership. The
section of this prospectus entitled "OUR COMPENSATION" details the estimated
amount and range of each item of compensation that we and the dealer-manager
will be paid. The most significant items are:
- approximately 19.60% of the proceeds from the offering (assuming we sell
all 750,000 units) will pay fees and expenses relating to this offering
and organizing the Partnership. We and our affiliates will receive
approximately 11.60% of the proceeds and 8.0% will be paid to unrelated
brokers;
- we are entitled to a management fee of between 2% and 5% of gross rental
payments under the leases and 2% of payments on financing transactions;
- initially, we will receive 1% and the investors as a group (sometimes
called limited partners) will receive 99% of cash distributions from the
Partnership's operations and sales. This will continue until the limited
partners have received what we call payout, which is a total cash
distribution equal to the amount of their investment plus an 8.0%
cumulative annual return on their investment; and
- after payout, 10% of cash distributions from sales and operations will be
paid to us and 90% shall be paid to the limited partners, but if at payout
the limited partners as a group have not received cash distributions equal
to at least 150% of their investment, we will continue to receive only 1%
of cash distributions, and accrue 9%, until the limited partners receive
distributions equal to 150% of their total investment.
OUR RELATIONSHIP TO THE PARTNERSHIP IS NOT FREE OF CONFLICTS
The Partnership will be subject to conflicts of interest because of our
relationship to it. These conflicts may include:
- the lack of arm's length negotiations in determining our compensation;
- competition with other leasing programs that we sponsor for the
acquisition, lease, financing or sale of equipment and investment in
financing transactions;
- competition with our affiliates for the acquisition, lease, financing or
sale of equipment and investment in financing transactions; and
- competition for management services with other leasing programs that we or
our affiliates sponsor.
In addition to the fiduciary duty that we owe you as the general partner of
the Partnership, the Partnership Agreement contains provisions to minimize
conflicts between us, our affiliates and you. See "CONFLICTS OF INTEREST" and
"SUMMARY OF THE PARTNERSHIP AGREEMENT."
OUR FIDUCIARY RESPONSIBILITY
We will act as fiduciary to the Partnership. However, the Partnership will
indemnify us for many of our acts on its behalf and we will be permitted to take
actions that may involve a conflict of interest. See "CONFLICTS OF INTEREST."
OTHER OFFERINGS WE SPONSOR AND MANAGE
We sponsor, and are currently managing, six other public leasing programs
with objectives similar to those of the Partnership. See "OUR OTHER PROGRAMS"
and Exhibit B for more detailed information about such other programs.
3
<PAGE>
MANAGEMENT; FINANCIAL STATEMENTS
We are the sole general partner of the Partnership. We are a Connecticut
corporation located at 111 Church Street, White Plains, New York 10601
(telephone 914-993-1700). We will manage and control the affairs of the
Partnership. See "MANAGEMENT" for a description of our officers and other key
personnel who will be responsible on our behalf to manage the Partnership's
business. Our financial statements and those of the Partnership are located in
"FINANCIAL STATEMENTS" section of this prospectus.
FEDERAL INCOME TAX CONSIDERATIONS
See "FEDERAL INCOME TAX CONSEQUENCES" for a discussion of significant
federal income tax issues pertinent to you. That section also describes a legal
opinion regarding federal income tax matters that we have received which
addresses the material federal income tax issues that may be relevant to you if
you are an individual U.S. citizen or resident. If you are not an individual,
you need to consult with your tax advisor to determine if you would face any
special tax consequences because of an investment in the Partnership.
We have obtained an opinion from Greene Radovsky Maloney & Share LLP, our
tax counsel, concerning the Partnership's classification for federal income tax
purposes. See "FEDERAL INCOME TAX CONSEQUENCES--Classification as a
Partnership." The opinion states that tax counsel has reviewed the summaries of
federal income tax consequences to investors and of certain tax-exempt entities,
including qualified plans, set forth in this prospectus under the captions "RISK
FACTORS--Federal Income Tax Risks and ERISA Risks" and "FEDERAL INCOME TAX
CONSEQUENCES" and "INVESTMENT BY QUALIFIED PLANS." Tax counsel believes that the
statements and conclusions in these sections of the prospectus are correct under
present tax law.
CAPITALIZATION
The section of the prospectus entitled "CAPITALIZATION" includes a table
showing the Partnership's current and projected capitalization, after deduction
of the costs of this offering and organizing the Partnership.
SUMMARY OF THE PARTNERSHIP AGREEMENT
The relationship between you, the limited partners, and us, the general
partner, is governed by the Partnership Agreement. You should be particularly
aware that under the Partnership Agreement:
- you will have limited voting rights;
- your units will not be freely transferable and, even if transferable, can
probably only be sold at a substantial discount to the price you paid for
them; and
- the fiduciary duty that we owe you has been modified because of our
sponsorship of other similar programs. This was done to avoid conflicts in
fiduciary standards that would otherwise apply to the sponsor of only one
such program.
See "FIDUCIARY RESPONSIBILITY," "SUMMARY OF THE PARTNERSHIP AGREEMENT,"
"TRANSFER OF UNITS" and "REPORTS TO LIMITED PARTNERS" for further details.
RESTRICTIONS ON YOUR ABILITY TO TRANSFER UNITS
The Partnership Agreement restricts your ability to transfer units. These
restrictions are imposed so that the Partnership is not treated as a "publicly
traded Partnership," which would make it subject to taxation as a corporation.
See "FEDERAL INCOME TAX CONSEQUENCES--Publicly Traded Partnerships." As a result
of these restrictions, you will be unable to transfer your units in a given year
if the total
4
<PAGE>
transfer limits for the Partnership have been reached during that particular
year. See "TRANSFER OF UNITS."
PLAN OF DISTRIBUTION
THE OFFERING--The Partnership is offering between 12,000 and 750,000 units,
with a maximum offering amount of $75,000,000. We do not guarantee that any
specified amount of money will be raised. The dealer-manager and the brokers
will offer the units for sale.
OFFERING PERIOD--We anticipate the offering of units in the Partnership most
likely will close one year from the date hereof. In no event will the offering
close later than 24 months from the date of this Prospectus. The applicable
state securities authority in most states must approve our continuing the
offering for more than one year after it commences. We may terminate the
offering of units in the Partnership at any time.
MINIMUM OFFERING--Unless the Partnership receives subscriptions for 12,000
units prior to the completion of its offering period, no units will be issued,
and all funds received in connection with its offering will be promptly refunded
to investors. Although we (and our affiliates) may buy up to 10% of the total
units purchased, not more than 600 of the units we purchase will be included in
determining whether the minimum offering size for the Partnership has been
achieved.
ESCROW AGENT; DISTRIBUTION OF ESCROW INTEREST--We will deposit and hold your
investment in an interest-bearing escrow account at a national bank until:
- the minimum offering size of $1,200,000 has been received, excluding
investments from Pennsylvania residents; or
- one year after the offering begins, whichever comes first.
If you are a Pennsylvania resident, your investment is subject to the
further conditions that:
- it must be held in escrow until at least $3,750,000 (5% of the maximum
offering of $75,000,000) has been received; and
- you are offered the opportunity to rescind your investment if $3,750,000
has not been received within 120 days following the date your funds are
received by the escrow agent, and every 120 days thereafter, during the
period of the offering in Pennsylvania.
While your investment is held in escrow, your money will be invested in savings
or money-market accounts bearing interest at prevailing rates. This will occur
from the time the investment is deposited with the escrow agent until:
- you are admitted to the Partnership as a limited partner;
- if you are a Pennsylvania investors, the end of the 120-day period
following the effective date of the offering during which your money was
received. During this period, aggregate subscriptions of $3,750,000 must
be satisfied for you to be admitted as a limited partner, or you will have
the option to have your investment refunded; or
- one year from the time the offering period began, whichever comes first.
The interest earned on your investment will be paid to you upon admission to the
Partnership. If you are not admitted as a limited partner of the Partnership,
the interest will be paid when your investment funds are returned.
5
<PAGE>
SUBSCRIPTION--You must fill out a Subscription Agreement, attached as
Exhibit C to this prospectus, in order to purchase units. By subscribing for
units, you will be deemed to have made all of the representations and warranties
contained in the Subscription Agreement and you will be bound by all of the
terms of the Subscription Agreement and of the Partnership Agreement.
CLOSINGS--The initial closing of the offering for the Partnership will be
held after subscriptions for at least 12,000 units have been received by the
escrow agent. At that time, subscribers for at least that number of units may be
admitted to the Partnership as limited partners. After the initial closing, the
Partnership intends to hold daily closings until the offering is completed or
terminated.
6
<PAGE>
RISK FACTORS
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ
THE FOLLOWING RISKS AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE
PURCHASING UNITS. THE PARTNERSHIP'S BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION COULD BE ADVERSELY AFFECTED BY ANY OF THE FOLLOWING RISKS, WHICH COULD
RESULT IN THE PARTNERSHIP FAILING TO PROVIDE THE EXPECTED RETURNS ON YOUR
INVESTMENT OR EVEN A LOSS OF A PORTION OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS BASED UPON
CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS
RELATE TO OUR FUTURE PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS, AND THE
ASSUMPTIONS UNDERLYING OR RELATING TO ANY OF THESE STATEMENTS. THESE STATEMENTS
MAY BE IDENTIFIED BY THE USE OF WORDS SUCH AS "EXPECTS," "ANTICIPATES,"
"INTENDS," AND "PLANS" AND SIMILAR EXPRESSIONS. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED IN THESE STATEMENTS. FACTORS THAT COULD
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN
THIS PROSPECTUS.
PARTNERSHIP RISKS
THE ULTIMATE COMPOSITION OF THE PARTNERSHIP'S INVESTMENT PORTFOLIOS IS
CURRENTLY UNKNOWN
The ultimate composition of the Partnership's investment portfolio cannot be
predicted, as there is no way of anticipating what types of equipment and
financing transactions will be available on reasonable terms at the times the
Partnership is ready to invest its funds. We may vary the Partnership's
investment portfolio or may invest in financing transactions (which may have
lower profit potential than investments in equipment) to a greater degree than
currently anticipated. However, once the minimum number of units (12,000) is
sold, it is our intention to invest all net offering proceeds and undistributed
cash flow in equipment and financing transactions, as described in the
section entitled "INVESTMENT OBJECTIVES AND POLICIES."
THE PARTNERSHIP'S SUCCESS WILL PARTIALLY DEPEND ON THE RESIDUAL VALUES OF
THE EQUIPMENT WE ACQUIRE FOR THEM
A significant part of the value of any equipment leasing transaction is the
potential value of the equipment once the primary lease term expires. We call
this value, which is realized upon the expiration of the lease, the residual
value. Your ultimate investment return will partly depend upon the residual
value at the time of the equipment's sale or re-lease, and certain assets may
have little or no value at that time. The amount of this residual value will
depend to a significant extent on:
- our ability to acquire or enter into lease agreements that preserve or
enhance the value of the equipment during the Partnership's ownership
period until the leases expire;
- our ability to maximize the value of the equipment upon its sale or
re-lease when the lease expires;
- market conditions prevailing at lease expiration;
- the cost of new equipment at the time we are remarketing used equipment;
- the extent to which technological developments during the lease term
reduce the market for a certain type of used equipment; and
- the strength of the economy.
IF ONLY THE MINIMUM OFFERING SIZE IS RAISED THE PARTNERSHIP MAY NOT BE ABLE
TO DIVERSIFY ITS INVESTMENTS
The Partnership may begin operations with minimum capitalization of
approximately $1,200,000. Our ability to diversify the Partnership's
investments, and its potential to provide attractive returns, could be adversely
affected by having only the minimum amount of funds at our disposal. If only the
minimum
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<PAGE>
number of units are sold, the Partnership will not be able to achieve as much
portfolio diversification as it could with more capital. See "SOURCES AND USES
OF OFFERING PROCEEDS."
IF ANY USED EQUIPMENT THAT IS ACQUIRED HAS NOT BEEN PROPERLY MAINTAINED, THE
PARTNERSHIP MAY RECEIVE LESS RESIDUAL VALUE THAN EXPECTED
We expect to significantly invest in used equipment. See "INVESTMENT
OBJECTIVES AND POLICIES--General" and "--Equipment." To prudently do so, we plan
to inspect large items of used equipment prior to purchase, and will seek to
obtain representations from the sellers and lessees of seasoned and used
equipment that:
- the equipment has been maintained in compliance with the terms of their
leases;
- that neither the seller, as lessor, nor the lessee, is in violation of any
material terms of such leases; and
- the equipment is in good operating condition and repair and that the
lessee has no defenses to rents payable for the equipment resulting from
its condition.
The Partnership would have rights against the seller of the equipment for
any losses arising from a breach of representations made to the Partnership, and
against the lessee for default under the lease. There is no assurance, however,
that these rights would make the Partnership whole for all of its investment in
the transaction or its expected returns on the transaction if lessees stop
making rental payments in full due to undetected problems or issues. There is
also no assurance that an inspection of used equipment prior to purchasing it
will reveal defects.
THE PARTNERSHIP MAY INVEST IN OPTIONS THAT COULD BECOME UNPROFITABLE IF THE
PARTY GRANTING THE OPTION FILES FOR BANKRUPTCY
The Partnership may acquire options to purchase equipment for a fixed price
at a future date, typically at the end of a lease term. In the event of a
bankruptcy by the party granting the option, the Partnership might be unable to
enforce the option or recover the option price paid.
THE PARTNERSHIP COULD INCUR LOSSES IF A LESSEE OR BORROWER DEFAULTS
If a lessee or borrower defaults on its payment obligations, the Partnership
would need to attempt to repossess the equipment or, in the case of financing
transactions, attempt to foreclose on the collateral securing the financing
transaction. The Partnership might be unable (1) to repossess the equipment or
foreclose on the collateral at all or, in the event of bankruptcy, only after
significant delay, or (2) to sell or re-lease the repossessed equipment or
foreclosed collateral on terms comparable to those under the original lease. In
these cases, the Partnership might sustain a significant loss of anticipated
revenues, resulting in the inability to fully recover its investment.
If a lessee defaults on a lease which was purchased by the Partnership using
borrowed funds, the entire proceeds from the repossessed equipment must first go
to repay the related lender of the borrowed funds. Only after that repayment
would any of the remaining proceeds from the equipment be available to the
Partnership. In such a circumstance, the Partnership's entire investment in such
equipment might be lost.
LOSSES AS A RESULT OF LESSEE DEFAULTS MAY BE GREATER IF THE PARTNERSHIP
ACQUIRES THE LEASED EQUIPMENT WITH BORROWED FUNDS
Although we expect the Partnership to acquire some of its investments for
cash, we intend to have the Partnership borrow to acquire additional investments
and generate additional revenues. A lien on the equipment that is being financed
and the related leases will secure such borrowings. Although borrowing
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<PAGE>
permits the Partnership to acquire a greater number and variety of investments,
it may also increase the Partnership's risk of loss. For example, if a lessee
defaults in the payment of rentals due under a lease that has been assigned to a
lender, then the lender could cause the repossession and liquidation of the
equipment and the Partnership might not recover its investment in that item of
equipment.
EXCESSIVE DEFAULTS IN SECURITIZATIONS MAY RESULT IN PARTNERSHIP LOSSES
The Partnership may invest in special purpose entities formed to acquire
pools of leases and financing transactions. These pools, which are often
described as "securitizations," would typically consist of many hundreds or
thousands of leases or financing transactions. Each pool will have a loss
reserve for the percentage of its transactions that it projects will default. If
the actual default experience of a pool in which the Partnership invests is
worse than the loss reserve, the Partnership's return on its investment in the
pool could be reduced or eliminated, or the investment itself, could be lost.
LEASING EQUIPMENT IN FOREIGN COUNTRIES MAY BE RISKIER THAN LEASING IN THE
UNITED STATES
If the Partnership leases equipment outside the United States, regulations
of other countries will apply which may adversely effect the Partnership's title
to equipment in those countries. Foreign courts may not recognize judgments
obtained in United States courts, and different accounting or financial
reporting practices may make it difficult to judge lessees' and borrowers'
financial viability, heightening the risk of default and the loss of the
Partnership's investments.
It may be difficult for the Partnership to repossess its equipment if a
foreign lessee defaults. The Partnership may have difficulty enforcing its
rights under the lease or financing transaction. Moreover, foreign jurisdictions
may confiscate equipment. Use of equipment in a foreign country will be subject
to that country's tax laws, which may impose unanticipated taxes. While we will
seek to require the lessees and borrowers to reimburse the Partnership for all
taxes on the use of the equipment and require them to maintain insurance
covering the risks of confiscation of the equipment, there is no assurance that
we will be successful or that insurance reimbursements will be adequate to allow
for recovery of and a return on foreign investments.
THE PARTNERSHIP COULD INCUR LOSSES AS A RESULT OF FOREIGN CURRENCY
FLUCTUATION
The Partnership may enter into foreign leasing or financing transactions for
which they would receive payments in foreign currencies. In these cases, the
Partnership may enter into a contract to protect from fluctuations in the
currency exchange rate. These contracts, known as hedge contracts, would allow
the Partnership to receive a fixed U.S. dollar equivalent for these payments
regardless of fluctuations in the currency exchange rate. If the lease or
financing payments were disrupted due to default by the lessee or borrower, the
Partnership would probably continue to meet its obligations under the hedge
contract by acquiring the foreign currency equivalent of the missing payments,
but at possibly unfavorable exchange rates.
Furthermore, when the Partnership acquires a residual interest in foreign
equipment, it may be impossible to hedge foreign currency exposure with respect
to residual values since the amount and timing of receipt of the residual
interest is unpredictable. This could positively or negatively affect the
Partnership's income from such a transaction, as measured in U.S. dollars.
INVESTMENT IN JOINT VENTURES MAY SUBJECT THE PARTNERSHIP TO RISKS RELATING
TO ITS CO-INVESTORS
The Partnership Agreement permits the Partnership to invest in joint
ventures. Investing in joint ventures involves additional risks not present when
directly entering into leases or financing transactions. These risks include the
possibility that the Partnership's co-investors might become bankrupt or have
economic or business interests or goals that are inconsistent with those of the
Partnership and want to manage the joint ventures in ways that do not maximize
the return to the Partnership. Among other things,
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<PAGE>
actions by a co-investor might subject leases or financing transactions that are
owned by the joint venture to liabilities greater than those contemplated by the
Partnership. Also, when more than one person controls a joint venture, there
might be a stalemate on decisions, including a proposed sale or other transfer
of any leases or financing transactions at unfavorable prices or terms.
WE MAY BE UNABLE TO OBTAIN INSURANCE FOR CERTAIN TYPES OF LOSSES
While the leases and financing transactions will generally require lessees
and borrowers to have comprehensive insurance and assume the risk of loss, some
losses, such as from war or earthquakes, may be either uninsurable or not
economically insurable. Furthermore, not all possible contingencies affecting
equipment can be anticipated or insured against. If such a disaster would occur
to the equipment or collateral securing the leases and financing transactions,
the Partnership could suffer a total loss of investments in affected equipment.
THE PARTNERSHIP COULD SUFFER LOSSES IF IT FAILS TO MAINTAIN EQUIPMENT
REGISTRATION
Aircraft and marine vessels are subject to registration requirements by the
Federal Aviation Administration and United States Coast Guard, respectively.
Railroad cars, over-the-road vehicles and other equipment may also be subject to
governmental registration requirements. Failing to register these types of
equipment or losing the registration could result in substantial penalties,
forced liquidation of the equipment and/or the inability to operate and lease
the equipment.
UNDETECTED YEAR 2000 PROBLEMS
Most computer programs have been written using two digits rather than four
to define the applicable year. As a result, the programs are not designed to
make the transition to the year 2000. This computer software problem is commonly
referred to as the "year 2000" issue. Computer programs with date-sensitive
applications may, if not modified, fail or miscalculate dates, causing system
failures, the inability to process transactions or other disruptions of
operations. We use third-party software in managing the Partnership and we are
communicating with key software vendors to ensure that these systems are year
2000 compliant. If lessees and borrowers were to have year 2000 problems, then
their lease and financing payments to the Partnership could be delayed or
missed. Although the impact of the year 2000 issue will depend on how lessees
and borrowers address the issue, each of them will have a material self-interest
in resolving any year 2000 issue. As of the date of this prospectus, we have not
experienced any material year 2000 problems, nor are we aware of any material
problems experienced by any lessee or borrower.
CONFLICTS OF INTEREST
The Partnership will be subject to various conflicts of interest arising out
of its relationship to us and our affiliates. See "CONFLICTS OF INTEREST." These
conflicts may include:
- the lack of separate legal representation and arm's length negotiations
regarding compensation payable to us;
- the fact that we will receive more fees for acquiring equipment and
financing transactions if the Partnership utilizes debt to fund these
transactions;
- the lack of prohibitions in the Partnership Agreement on our ability to
compete with the Partnership for equipment acquisitions and other types of
business;
- our discretion to determine when to distribute cash flow to the limited
partners or to the Partnership's reserve account could be affected by the
fact that deficient reserves relative to the Partnership's contingent
liabilities may expose us to liability to creditors of the Partnership;
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<PAGE>
- our opportunities to earn fees for referring a prospective lessee to
lessors other than the Partnership;
- the fact that the dealer-manager, who is affiliated with us and is not an
independent securities firm, will review and investigate the Partnership
and the information in this prospectus;
- our ability as tax matters partner to negotiate with the IRS to settle tax
disputes that would bind the Partnership and the limited partners might
not be in your best interest given your tax situation; and
- our decisions as to when and whether to sell a jointly owned assets when
the co-owner is another program we manage.
WE WILL NOT DEVOTE OUR TIME EXCLUSIVELY TO MANAGING THE PARTNERSHIP
The Partnership will not employ its own full-time officers, directors or
employees. Instead, we will supervise and control the business affairs of the
Partnership. Our officers and employees will only devote the amount of time they
think is necessary to conduct the Partnership's business. See "CONFLICTS OF
INTEREST."
Equipment leases have sometimes been held by the courts to be loan
transactions subject to state usury laws that limit the interest rate that can
be charged. Although we anticipate structuring the leases to avoid usury laws,
there can be no assurance that we will be successful in doing this.
IF A LEASE WERE DETERMINED TO BE A LOAN, IT WOULD BE SUBJECT TO USURY LAWS
Equipment leases have sometimes been held by the courts to be loan
transactions subject to state usury laws, which limit the interest rate that can
be charged. Although we anticipate entering into or acquiring leases which we
believed are structured so that they avoid being deemed loans, and would
therefore not be subject to the usury laws, there can be no assurance that we
will be successful in doing this. Loans at usurious interest rates are subject
to a reduction in the amount of interest due under the loans. Financing
transactions are also subject to the usury laws.
INVESTMENT RISKS
YOU WILL HAVE LIMITED VOTING RIGHTS AND NO MANAGEMENT AUTHORITY
We will make all management decisions for the Partnership, including
determining which equipment it will purchase and which financing transactions it
will enter into. The success of the Partnership will depend on the quality of
the investment decisions we make, particularly relating to the acquisition of
equipment and financing transactions and the re-leasing and disposition of
equipment. You are not permitted to take part in managing the Partnership or
establishing the Partnership's investment objectives or policies. Accordingly,
you should not invest unless you are willing to entrust all aspects of
Partnership management to us.
Generally, you will only be able to vote on extraordinary matters, such as a
proposed amendment to the Partnership Agreement. For any matter submitted for
your vote, the consent of limited partners owning not less than a majority of a
Partnership's units is required for approval. The Partnership Agreement provides
that units we own are not counted in determining the percentage of units
necessary for a vote concerning:
- our removal as general partner; or
- any transaction between the Partnership and us. See Section 13.2 of the
Partnership Agreement, entitled "Limited Voting Rights of the Limited
Partners."
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THERE IS NO GUARANTEE YOU WILL RECEIVE A RETURN COMPARABLE TO THAT OF
INVESTORS IN SIMILAR PROGRAMS WE SPONSORED AND MANAGE
You should not assume that you will experience investment results or returns
comparable to those experienced by investors in any other programs we sponsored
and manage. You should also keep in mind that a portion of distributions made to
date by other programs we sponsored and manage has included a return of
investors' capital contributions. See Table III that appears in Exhibit B.
Additionally, three similar programs that we sponsored and manage, although with
different management than those programs currently have, experienced losses of a
portion of their investments in 1991 and 1992 due primarily to lessee
bankruptcies. Regularly scheduled distributions of cash to limited partners were
not interrupted by these losses, however.
LOSSES COULD EXCEED RESERVES RESULTING IN REDUCED DISTRIBUTIONS
While we will do our best to avoid and minimize losses and to establish
adequate reserves for losses, Partnership losses could exceed those reserves. If
so, there could be a reduction in your distributions. The Partnership will
initially set aside 1% of the offering proceeds as reserves for losses. After
the reinvestment period, the reserves will be not less than the smaller of 1% of
the offering proceeds or 1% of the Partnership's aggregate adjusted capital
accounts.
THE AMOUNT OF DISTRIBUTIONS YOU WILL RECEIVE AND YOUR RETURN FROM THIS
INVESTMENT IS DIFFICULT TO PREDICT
We arrived at the initial rate of cash distribution by estimating what we
believe is a sustainable rate of distribution during the reinvestment period.
The actual distribution rate may be greater or less than the initial rate of
distribution during the reinvestment period if we deem it prudent to revise the
rate. Furthermore, over the entire life of the Partnership the actual rate of
return on your investment may be greater than or less than the rate of
distribution. If the rate of return on your investment were ultimately less than
the initial distribution rate, then some of your distributions would include a
return of some of your investment. Until assets have been liquidated and cash
has been distributed, the final calculation of the return on your investment
cannot be determined. There is no assurance that you will achieve any specified
rate of return on your investment. See "CASH DISTRIBUTIONS--Monthly Cash
Distributions."
THE RATE OF MONTHLY CASH DISTRIBUTIONS IS NOT FIXED
While we intend to make monthly cash distributions from the Partnership's
cash flows, we may determine it is in the best interest of the Partnership to
periodically change the amount of the cash distributions you receive or not make
any distributions in some months. During the liquidation period, regularly
scheduled distributions will decrease because there will be fewer leases and
financing transactions available to generate cash flow, although it is expected
that lump sums will be distributed from time to time if and when large assets
are sold. See "CASH DISTRIBUTIONS--Monthly Cash Distributions."
THERE IS NO SECONDARY MARKET FOR UNITS SO YOUR ABILITY TO TRANSFER THEM IS
LIMITED
The units are limited partnership interests. In order to avoid treatment as
a "publicly traded partnership," Treasury Department regulations prohibit us
from creating or participating in a "secondary market" for the units. Your
ability to sell or otherwise transfer your units, other than at a substantial
discount, is extremely limited. You must view your investment in the Partnership
as a long-term, illiquid investment. See "TRANSFER OF UNITS."
IF YOU CHOOSE TO REDEEM YOUR UNITS YOU MAY NOT RECEIVE YOUR FULL CAPITAL
ACCOUNT BALANCE
Beginning the second full quarter following the final closing date of this
offering, you may request that the Partnership redeem up to 100% of your units.
The Partnership is under no obligation to do so,
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however, and will not maintain any cash reserve for this purpose. If we allow
the Partnership to redeem your units, the redemption price has been unilaterally
set and is described in the section of this prospectus captioned "TRANSFER OF
UNITS--Limited Right to Redeem." The redemption price may be less than the
unreturned amount of your investment. If your units are redeemed, the redemption
price will probably provide you a significantly lower value than the value you
would realize by retaining your units for the duration of the Partnership.
FEDERAL INCOME TAX RISKS AND ERISA RISKS
FEDERAL TAX CONSIDERATIONS IN GENERAL
Although this investment may be appealing to certain investors for federal
income tax purposes, you should invest based on economic rather than tax
factors. While tax counsel has reviewed the section of the prospectus entitled
"FEDERAL INCOME TAX CONSEQUENCES" for accuracy, their opinion about that
section is limited largely to tax matters they believe are material to an
individual taxpayer. Furthermore, the opinion is subject to assumptions
concerning the future operations of the Partnership and is not binding on the
IRS. In addition, the IRS has not ruled on any federal income tax issue in
relation to the Partnership. Because your other income and expenses may affect
the tax consequences of this investment, there can be no assurance that you will
obtain the tax consequences described in this prospectus. You and your advisers
should not only carefully review the "FEDERAL INCOME TAX CONSEQUENCES" section,
but also carefully review your tax circumstances.
Some of the tax consequences described are unclear because recent tax laws
have not yet been interpreted. The tax benefits described may be challenged by
the IRS upon audit of any tax return of the Partnership. If an audit adjusts the
Partnership's tax return, you might have to adjust your income tax return as
well. This might also result in an examination of your return for items
unrelated to the Partnership, or an examination of your prior years' returns.
You could incur substantial legal and accounting costs in contesting any IRS
challenge, regardless of the outcome. The Partnership will not reimburse you for
any legal and accounting expenses you incur because of an examination of your
income tax return. Nor will the Partnership represent you in connection with an
audit by the IRS of items unrelated to the Partnership. See "FEDERAL INCOME TAX
CONSEQUENCES--Audit by the IRS."
IF THE IRS CLASSIFIES THE PARTNERSHIP AS A CORPORATION, YOU WILL LOSE TAX
BENEFITS
If the IRS successfully contends that the Partnership should be treated as a
"publicly traded partnership," the Partnership would then be treated as a
corporation for federal income tax purposes rather than as a partnership. If so,
all of the possible tax benefits of this investment could be eliminated and:
- losses realized by the Partnership would not pass through to you;
- the Partnership would be taxed at income tax rates applicable to
corporations thereby reducing distributions to you; and
- your distributions would be taxed as dividend income to the extent of
current and accumulated earnings and profits.
To minimize this possibility, Section 10 of the Partnership Agreement places
restrictions on your ability to transfer units. See "FEDERAL INCOME TAX
CONSEQUENCES--Publicly Traded Partnerships."
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THE PARTNERSHIP COULD LOSE COST RECOVERY OR DEPRECIATION DEDUCTIONS IF THE
IRS TREATS ITS LEASES AS SALES OR FINANCINGS
We expect that, for federal income tax purposes, the Partnership will be
treated as the owner and lessor of the equipment it owns or co-owns and/or
leases. However, the IRS may challenge the leases and instead assert that they
are sales or financings. If the IRS determines that the Partnership is not the
owner of its equipment, it would not be entitled to cost recovery, depreciation
or amortization deductions, and its leasing income might be deemed to be
portfolio income instead of passive income. See "FEDERAL INCOME TAX
CONSEQUENCES--Tax Treatment of Leases" and "--Deductibility of Losses; Passive
Losses, Tax Basis and "At Risk" Limitation."
YOU MAY INCUR TAX LIABILITY IN EXCESS OF THE CASH DISTRIBUTIONS YOU RECEIVE
Your tax liability from this investment may exceed the cash distributions
you receive from it. While we expect that your taxable income from this
investment for most years will be less than your cash distributions in those
years, to the extent any Partnership debt is repaid with rental income or
proceeds from equipment sales, taxable income could exceed the related cash
distributions. Additionally, a sale of Partnership property may result in taxes
in any year that are greater than the amount of cash from the sale and give you
tax liability in excess of cash distributions.
THERE ARE LIMITATIONS ON YOUR ABILITY TO DEDUCT PARTNERSHIP LOSSES
Your ability to deduct losses generated by the Partnership is limited to the
amounts that you have at risk in this activity. This is generally the amount of
your investment, plus any profit allocations and minus any loss allocation and
distributions. Additionally, your ability to deduct losses attributable to
passive activities is restricted. Because the Partnership's operations will
constitute passive activities, you can only use losses from the Partnership to
offset passive income in calculating tax liability. Furthermore, passive losses
may not be used to offset portfolio income. See "FEDERAL INCOME TAX
CONSEQUENCES--Deductibility of Losses; Passive Losses, Tax Basis and "At Risk"
Limitations."
THE IRS MAY ALLOCATE MORE TAXABLE INCOME TO YOU THAN THE PARTNERSHIP
AGREEMENT PROVIDES
The IRS might successfully challenge our allocations of profits or losses.
If so, the IRS would require reallocation of taxable income and loss, resulting
in more taxable income or less loss for you than the Partnership Agreement
allocates. See "FEDERAL INCOME TAX CONSEQUENCES--Allocations of Profits and
Losses."
IF YOU ARE A TAX-EXEMPT ORGANIZATION YOU WILL HAVE UNRELATED BUSINESS
TAXABLE INCOME
Tax-exempt organizations are nevertheless subject to unrelated business tax
on unrelated business taxable income ("UBTI"). Such organizations are required
to file federal income tax returns if they have UBTI from all sources in excess
of $1,000 per year. The Partnership's leasing income will constitute UBTI, as
will a portion of its income from financing transactions. See "FEDERAL INCOME
TAX CONSEQUENCES--Taxation of Employee Benefit Plans and Other Tax-exempt
Organizations."
IF YOU ARE A FOREIGN INVESTOR YOU MIGHT BE SUBJECT TO U.S. TAX WITHHOLDING
AND BE REQUIRED TO FILE U.S. TAX RETURNS
Foreign investors should be aware that their share of the income from the
Partnership might be subject to U.S. income tax withholding. Foreign investors
may also be required to file U.S. income tax returns. See "FEDERAL INCOME TAX
CONSEQUENCES--Foreign Investors."
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THIS INVESTMENT MAY CAUSE YOU TO PAY ADDITIONAL TAXES
You may be required to pay alternative minimum tax in connection with this
investment, as you will be allocated a ratable share of tax preference items.
Our operation of the Partnership may lead to other adjustments that could also
increase your alternative minimum tax. Alternative minimum tax is treated in the
same manner as the regular income tax for purposes of making estimated tax
payments. See "FEDERAL INCOME TAX CONSEQUENCES--Alternative Minimum Tax." You
also may be subject to state and local taxation, such as income, franchise or
personal property taxes in your state, as a result of this investment. The
Partnership's use of equipment outside the U.S. might also subject the
Partnership and you to income or other types of taxation in foreign countries.
THE ASSETS OF THE PARTNERSHIP MAY BE PLAN ASSETS FOR ERISA PURPOSES
ERISA and the tax code may apply what is known as the look-through rule to
this investment. Under that rule, the assets of an entity in which a qualified
plan or IRA has made an equity investment may constitute assets of the qualified
plan or IRA. If you are a fiduciary of a qualified plan or IRA, you should
consult with your advisor and carefully consider the effect of that treatment if
that were it to occur. See "INVESTMENT BY QUALIFIED PLANS."
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SOURCES AND USES OF OFFERING PROCEEDS
The first table below is our best estimate of the use of the offering
proceeds if only the minimum number of units (12,000) is sold. Because the
Partnership has not made any acquisitions, we cannot precisely calculate some of
the expenses below at this time, so the amounts may vary substantially from
these estimates. The second table below is our estimate of our fees and expenses
expressed as a percentage of total assets, assuming the maximum number of units
(750,000) is sold. Assuming we sell the maximum number of units offered
(750,000) and receive $75,000,000 of funds to invest in the Partnership, we
project that we will invest 80.21% of the offering proceeds in leases and
financing transactions.
<TABLE>
<CAPTION>
FEES AND EXPENSES
AS A % OF
-----------------------
MINIMUM OFFERING OFFERING
OF 12,000 UNITS PROCEEDS ASSETS
---------------- ---------- ----------
<S> <C> <C> <C>
Offering Proceeds(1)--Assets......................... $1,200,000 $1,200,000 $2,883,333
Expenses:
Sales Commissions(2)................................. (96,000) 8.00% 3.33%
Underwriting Fees(3)................................. (24,000) 2.00% 0.83%
O&O Expense Allowance(4)............................. (42,000) 3.50% 1.46%
---------- ---------- ----------
Public Offering Expenses............................. (162,000) 13.50% 5.62%
Acquisition Fees(5).................................. (86,500) 7.21% 3.00%
Fees and Expenses as % of Offering Proceeds(6)....... 20.71%
Fees and Expenses as % of Assets..................... 8.62%
</TABLE>
<TABLE>
<CAPTION>
FEES AND EXPENSES
AS A % OF
--------------------------
MAXIMUM OFFERING OFFERING
OF 750,000 UNITS PROCEEDS ASSETS
---------------- ----------- ------------
<S> <C> <C> <C>
Offering Proceeds(1).............................. $75,000,000 $75,000,000 $182,291,677
Expenses:
Sales Commissions(2).............................. (6,000,000) 8.00% 3.29%
Underwriting Fees(3).............................. (1,500,000) 2.00% 0.82%
O&O Expense Allowance(4).......................... (1,875,000) 2.50% 1.03%
----------- ----------- ------------
Public Offering Expenses.......................... (9,375,000) 12.50% 5.14%
Acquisition Fees(5)............................... (5,468,750) 7.29% 3.00%
Fees and Expenses as % of Offering Proceeds(6).... 19.79%
Fees and Expenses as % of Assets.................. 8.14%
</TABLE>
------------------------
(1) Excluding $1,000 contributed by both the original limited partner and us to
the Partnership at the time of its formation. Upon the initial closing date
of the Partnership, the original limited partner will withdraw from the
Partnership and his capital contribution of $1,000 will be refunded.
(2) The Partnership will pay brokers a sales commission of $8.00 per unit sold
(8% of offering proceeds), but no sales commission will be paid on units
sold to affiliated limited partners.
(3) The Partnership will pay ICON Securities Corp., an affiliate of ours who is
acting as dealer-manager, an underwriting fee equal to $2.00 for each unit
sold (2.0% of offering proceeds) for managing the offering and to reimburse
it, on a non-accountable basis, for wholesaling fees and expenses.
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(4) The Partnership will pay us organizational and operating expense allowance,
called an O & O Expense Allowance, equal to $3.50 for each unit sold (3.5%
of offering proceeds) if the offering results in offering proceeds of
$25,000,000 or less. We will reduce the percentage of O & O expense
allowance payable to us by the Partnership from 3.5% to 2.5% for offering
proceeds exceeding $25,000,000 but less than $50,000,000; and from 2.5% to
1.5% for offering proceeds exceeding $50,000,000.
The O & O Expense Allowance will be paid on a non-accountable basis,
which means that the payment we receive may be less than, or greater than,
the actual costs and expenses that we incur in:
(a) organizing the Partnership and offering units for sale, which may
include legal, accounting, printing, advertising and promotional
expenses for preparing the Partnership for registration and then
offering and distributing the units to the public; and
(b) fees and expenses actually incurred and charged to us by the
dealer-manager and prospective selling dealers. Due diligence fees
and expenses are limited to an aggregate amount not to exceed the
lesser of (a) one-half of 1% of the offering proceeds or (b) the
amount permitted to be paid pursuant to Rule 2810 of the NASD Conduct
Rules. We will pay all O&O expenses in excess of those previously
noted, in the aggregate, without reimbursement from the Partnership.
(5) Acquisition fees are computed by multiplying 3.0% times the total purchase
price of the Partnership's investments purchased with both offering proceeds
and with the maximum allowable borrowings. The acquisition fees in the table
are calculated assuming that, on average, total Partnership indebtedness
will equal 67% of the purchase price of all investments.
(6) The Partnership intends to establish an initial reserve equal to 1.0% of
offering proceeds, which will be maintained and used for insurance, certain
repairs, replacements and miscellaneous contingencies.
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<PAGE>
OUR COMPENSATION
The following table summarizes the types and estimated amounts of all
compensation or distributions that we and our affiliates may be paid, directly
or indirectly, by the Partnership. Some of this compensation will be paid
regardless of the success or profitability of the Partnership's operations, and
was not determined by arm's-length negotiations.
Although some of the compensation described below may vary from the amounts
projected, the total amounts of compensation payable to all persons, including
us, is limited by provisions in the Partnership Agreement and the requirements
of (a) the NASAA Guidelines, which have maximum compensation and minimum use of
proceeds requirements and (b) the NASD's Conduct Rules (which limit selling
compensation).
ORGANIZATION AND OFFERING STAGE
<TABLE>
<CAPTION>
TYPE OF COMPENSATION METHOD OF COMPENSATION ESTIMATED DOLLAR AMOUNT
----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
UNDERWRITING FEE--payable to 2.0% ($2.00 per unit) of the $24,000 if the minimum
ICON Securities Corp., the offering proceeds on all offering of 12,000 units is
dealer-manager units sold. sold per Partnership, up to a
maximum of $1,500,000 if all
750,000 units are sold.
SALES COMMISSION--expected to 8.0% ($8.00 per unit) of the Not determinable at this
be paid primarily to selling offering proceeds from all time.
dealers with only a small units sold, other than for If all units sold were sold
amount expected to be paid to units sold to affiliated by the dealer-manager, which
ICON Securities Corp. limited partners which shall we do not expect, the maximum
be sold on a net of sales amount of sales commissions
commission basis. that the dealer-manager could
receive would be $96,000 if
the minimum offering of
12,000 units is sold and
$6,000,000 if all 750,000
units are sold. In each case,
these amounts are calculated
without giving effect to
possible reduction of the
sales commissions due to
commissions that are not
payable for units purchased
by affiliated limited
partners, if any.
O & O EXPENSE ALLOWANCE-- 3.5% ($3.50 per unit) of the Not determinable at this
payable to us or the dealer- first $25,000,000 of offering time.
manager, or both, for proceeds; 2.5% ($2.50 per A minimum of $42,000 if the
organizational and offering unit) of offering proceeds in minimum offering of 12,000
expenses excess of $25,000,000 but units is sold, up to a
less than $50,000,000; and maximum of $1,875,000 if all
1.5% ($1.50 per unit) of 750,000 units are sold.
offering proceeds exceeding
$50,000,000, on a
non-accountable basis
(exclusive of sales
commissions) whether or not
incurred. We will pay actual
organizational and offering
expenses for this offering to
the extent such expenses
exceed the O & O
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
TYPE OF COMPENSATION METHOD OF COMPENSATION ESTIMATED DOLLAR AMOUNT
----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
expense allowance.
We will pay or advance bona
fide due diligence fees and
expenses of the
dealer-manager and actual and
prospective selling dealers
on a fully accountable basis
from such allowance up to,
but not in excess, of the
lesser of the maximum amount
payable under the NASD
Conduct Rules, or 1/2 of 1%
of the offering proceeds.
OPERATIONAL STAGE
ACQUISITION FEE--payable to 3.0% of Total acquisition fees would
us. (a) the purchase price paid equal 11.5% of offering
by the Partnership to the proceeds (or $138,000) if the
seller of each item of minimum offering of 12,000
equipment acquired or units is sold) and 7.10% of
residual value interest offering proceeds (or
acquired; the fee includes $5,328,102 if all 750,000
debt incurred or assumed or units are sold). In both
debt which would be assumed instances this assumes that
if the option to acquire a total Partnership
residual value interest were indebtedness will equal 67%
immediately exercised; and of the purchase price of all
(b) the principal amount of investments.
each financing transaction
entered into or acquired by
the Partnership.(1)
In calculating acquisition
fees, fees payable by or on
behalf of
</TABLE>
------------------------
(1) Total acquisition fees paid from all sources is limited to 3.0% of
offering proceeds, an amount equal to the LESSER of (a) 15.0% of offering
proceeds or (b) the difference between (1) the maximum front-end fees
allowable under the NASAA Guidelines and (2) all other front-end fees (i.e.,
sales commissions, underwriting fees and the O & O expense allowance, which
total 13.5% of offering proceeds). Pursuant to the NASAA Guidelines, the
maximum front-end fees which the Partnership may pay is 20% of offering
proceeds (if no debt is employed by the Partnership to acquire its
investments) which percentage is increased by .0625% for each 1% of
indebtedness (up to a maximum of 80% of the cost of the Partnership's
investments) so utilized. As a result, if the Partnership utilized
indebtedness equal to 67% of the cost of the Partnership's investments, the
Partnership would be able to pay total front-end fees equal to 19.60% of
offering proceeds and acquisition fees would be limited to 7.5% of offering
proceeds. As also described in the above table, we will be entitled to
receive acquisition fees from the Partnership for evaluating, selecting,
negotiating and closing the acquisition of the Partnership's equipment and
entering into financing Transactions. In addition, sellers of equipment to
the Partnership may pay fees to brokers or finders representing such sellers,
but in no event may such brokers or finders include us or any of our
affiliates.
19
<PAGE>
<TABLE>
<CAPTION>
TYPE OF COMPENSATION METHOD OF COMPENSATION ESTIMATED DOLLAR AMOUNT
----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
the Partnership to
unaffiliated finders and
brokers will be deducted from
acquisition fees otherwise
payable to us. No finder's or
broker's fees may be paid to
any of our affiliates.
We will reduce or refund
acquisition fees if the
Partnership's investment in
equipment is less than the
greater of (a) 80% of the
offering proceeds reduced by
.0625% for each 1% of
borrowings encumbering the
Partnership's equipment, or
(b) 75% of the offering
proceeds.
MANAGEMENT FEE--payable to us The LESSER of: Not determinable at this
for actively managing the (i)(a) 5% of gross rental time.
leasing, re-leasing, payments from operating We have agreed to
financing and refinancing of lease, except operating subordinate, without
Partnership leases and leases for which management interest, our receipt of
financing transactions services are performed by monthly payments of the
non-affiliates under our management fees to the
supervision for which 1% of limited partners' receipt of
annual gross rental payments first cash distributions
shall be payable; until the earlier of (1) the
(b) 2% of gross rental limited partners' receipt of
payments and debt service all accrued but previously
payments from fullpayout unpaid, and current,
leases with net lease installments of first cash
provisions, 2% of annual distributions or
gross principal and interest (2) expiration of the
payments from financing reinvestment period. Any
transactions; management fee deferred will
(c) and 7% of gross rental be deferred without interest
payments from equipment during the reinvestment
operated by the Partnership period until the limited
as provided in NASAA partners have received all
Guidelines accrued and previously unpaid
Section IV.E.4(2); or first cash distributions.
(ii) management fees which Management fees payable with
are competitive and/or respect to investments
customarily charged by others acquired by the Partnership
rendering similar services as prior to the effective date
an ongoing of our withdrawal as general
partner will remain
</TABLE>
------------------------
(2) If we provide both equipment management and additional services, relating to
the continued and active operation of Partnership equipment, such as on-going
marketing and re-leasing of equipment, hiring or arranging for the hiring of
crews or operating personnel for the Partnership's equipment and similar
services, we may charge the Partnership a management fee not to exceed 7.0% of
the gross rental payments from equipment operated by the Partnership.
20
<PAGE>
<TABLE>
<CAPTION>
TYPE OF COMPENSATION METHOD OF COMPENSATION ESTIMATED DOLLAR AMOUNT
----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
public activity in the same payable to us despite our
geographic location for withdrawal as and when the
similar equipment and Partnership receives the
financing transactions. rental proceeds from the
investments creating the
obligation to pay the
management fees.
CASH FLOW--share Prior to payout, which is the Not determinable at this
distributable to us time when cash distributions time.
in an amount equal to the sum
of the limited partners'
(1) capital contributions
and (2) an 8.0% cumulative
annual return thereon,
compounded daily, have been
made, distributions of
available cash from
operations and sales shall be
made 99% to the limited
partners and 1% to us. After
payout, distributions of
available cash shall be
distributed 90% to the
limited partners and 10% to
us, unless limited partners
have not received
distributions equal to 150%
of their investment, in which
case the ratio will remain
99:1 until that level of
distributions has been
achieved.
SUBORDINATED REMARKETING For sales of equipment and Not determinable at this
FEE--payable to us for financing transactions, an time.
arranging the sale of the amount equal to the lesser of
Partnership's equipment (1) 3.0% of the contract
financing transactions. sales price for the
Partnership's investments, or
(2) one-half the normal
competitive commission
charged by unaffiliated
parties for such services in
light of the size, type and
location of the leases and
financing transactions. No
subordinated remarketing fee
will accrue or be payable for
any portion of cash from
sales which is reinvested in
additional Partnership
investments. Payment of the
subordinated remarketing fee
will be deferred until after
payout and will be made
without interest.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
TYPE OF COMPENSATION METHOD OF COMPENSATION ESTIMATED DOLLAR AMOUNT
----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
REIMBURSEMENT FOR OUT-OF- The Partnership will Not determinable at this
POCKET ACQUISITION EXPENSES reimburse our affiliates and time.
DIRECTLY ATTRIBUTABLE TO THE us for some expenses incurred
ACQUISITION OF EQUIPMENT-- in connection with the
payable to us and our Partnership's operations.
affiliates(3)
INTEREST IN PROFITS OR LOSSES
PARTNERSHIP'S PROFITS AND We will be allocated shares Not determinable at this
LOSSES FOR TAX of the Partnership's profits time.
PURPOSES--share allocable to and losses for tax purposes
us that generally approximate
our share of available cash
from operations and from
sales.
</TABLE>
------------------------
(3) In the event we or an affiliate purchases equipment with our own funds in
order to facilitate the later purchase by the Partnership, or borrows on
behalf of the Partnership for any Partnership purpose, we or the affiliate
will be entitled to receive interest on the funds expended on behalf of the
Partnership until the Partnership purchases the equipment or repays the
loan. Interest will be paid at a rate equal to that which would be charged
by third-party financing institutions on comparable loans for the same
purpose in the same geographic area.
The O & O Expense Allowance will be paid on a non-accountable basis,
which means that the payment we receive may be less than, or greater than,
the actual costs and expenses that we incur in:
(a) organizing the Partnership and offering units for sale, which may
include legal, accounting, printing advertising and promotional
expenses for preparing the Partnership for registration and then
offering and distributing the units to the public; and
(b) fees and expenses actually incurred and charged to us by the
dealer-manager and prospective selling dealers. Due diligence fees
and expenses are limited to an aggregate amount not to exceed the
lesser of (a) one-half of 1% of the offering proceeds or (b) the
amount permitted to be paid pursuant to Rule 2810 of the NASD Conduct
Rules. We will pay all O&O expenses in excess of those previously
noted, in the aggregate, without reimbursement from the Partnership.
In addition to the O & O Expense Allowance, the Partnership will reimburse
us and our affiliates for: (1) the actual costs of goods and materials used for
or by the Partnership and obtained from unaffiliated parties; (2) expenses
related to the purchase, operation, financing and disposition of the
Partnership's leases and financing transactions incurred prior to the time that
the Partnership has funds available to pay such expenses directly; and
(3) administrative services necessary to the prudent operation of the
Partnership (such as accounting, professional, secretarial and investor
relations staff, and capital items including computers and related equipment),
not in excess of the lesser of our, or our affiliate's, costs, or 90% of the
costs that the Partnership would be required to pay to independent parties for
comparable services. The Partnership's annual reports to the limited partners
will provide a breakdown of services performed by, and amounts reimbursed to,
our affiliates and us.
Section 6.4(i) of the Partnership Agreement limits the types and annual
amounts of expenses of the Partnership that may actually be paid by the
Partnership to us. No reimbursement is permitted for services
22
<PAGE>
for which we are entitled to compensation by way of a separate fee. Excluded
from the allowable reimbursement, except as permitted under Section 6.4(i) of
the Partnership Agreement, will be:
(1) salaries, fringe benefits, travel expenses or other administrative items
incurred by or allocated to any person with a controlling interest in us
or any of our affiliates; and
(2) expenses for rent, depreciation and utilities or for capital equipment
or other administrative items, other than as specified provided in such
Section 6.4(i).
While the Partnership is not permitted to pay any remuneration to any of our
or our affiliates' officers or directors for services on the Partnership's
behalf, we or the dealer manager may apply any portion or none of the O & O
Expense Allowance to defray such costs.
We expect that the Partnership will also directly pay third parties for
services provided to the Partnership from time to time. These services will
include compensation to unaffiliated professionals for such matters as auditing,
legal services, accountancy services and advice, tax services and advice,
equipment and portfolio management and advice, and in any other area which we
deem necessary and appropriate for the professional management of the affairs of
the Partnership.
23
<PAGE>
CONFLICTS OF INTEREST
The Partnership will be subject to various conflicts of interest arising out
of its relationship to us and our affiliates. There are some provisions in the
Partnership Agreement that are intended to protect your interests when conflicts
arise. Please review Sections 6.2 and 6.4 of the Partnership Agreement, which
limits the actions we can take on behalf of the Partnership and limits our
compensation from the Partnership. In addition, see "FIDUCIARY RESPONSIBILITY"
for a discussion of our fiduciary obligations to you, which require us to
consider your best interests in managing the Partnership's assets and affairs.
The conflicts include the following:
NO ARM'S LENGTH NEGOTIATION OF AGREEMENTS
We are represented by the same legal counsel as the Partnership and the
dealer-manager. The limited partners, as a group, have not been represented by
legal counsel and the Partnership's legal counsel has not acted on behalf of
prospective investors nor conducted a review or investigation on their behalf.
Therefore, none of the agreements and arrangements between the Partnership and
either the dealer-manager or us was negotiated on an arm's length basis. The
attorneys, accountants and other experts who perform services for the
Partnership will also perform services for us, the dealer-manager, some of our
affiliates and for other partnerships or ventures that we or our affiliates may
sponsor. However, should a dispute arise between the Partnership and us, we will
have the Partnership retain separate legal counsel to represent the Partnership
in connection with the dispute.
OUR COMPENSATION
We have unilaterally determined the compensation that we and the
dealer-manager will be paid by the Partnership. However, we believe that the
amount of compensation is representative of practices in the industry and
complies with the NASAA Guidelines in effect on the date of this prospectus.
Both we and the dealer-manager will receive substantial compensation upon the
closing of this offering and upon, or from, the Partnership's acquisition, use
and sale of its leases and financing transactions. We will make decisions
involving these transactions in our sole discretion. See "OUR COMPENSATION."
A conflict of interest may also arise from our decisions concerning the
timing of the Partnership's purchases and sales of equipment or the termination
of the Partnership, each of which events will have an effect on the timing and
amounts of our compensation. In such circumstances, our interest in continuing
the Partnership and receiving management fees, for example, may conflict with
the interests of the limited partners in realizing an earlier return of their
investment or distributions.
EFFECT OF LEVERAGE ON OUR COMPENSATION
We intend to acquire the Partnership's investments with borrowings of
approximately 67% of the aggregate purchase price of the Partnership's total
investments, but the actual level of borrowings may vary and we are permitted to
finance up to 80% of the aggregate purchase price of all the Partnership's
investments if offering proceeds do not exceed $25,000,000. If offering proceeds
do not exceed $25,000,000, we believe that higher leverage will best serve the
Partnership by allowing it to own a greater diversity of equipment and spreading
credit risk among a greater number of lessees than could be the case if lower
leverage were utilized. Since our acquisition fees are based upon the purchase
price of all equipment and financing transactions we acquire for the
Partnership, including related borrowings, we would earn a greater amount of
acquisition fees (subject to the limit on those fees) if a greater percent of
debt were employed.
If offering proceeds exceed $25,000,000, we have agreed to a pro rata
limitation on borrowings. For example, if offering proceeds were $50,000,000,
the permitted borrowing limit would be reduced from 80% of the aggregate
purchase price of the Partnership's total investments to 75%. If offering
proceeds reach the maximum offering size of $75,000,000, the limit would be
reduced further to 67%. Following the offering period and to the extent the
limits described above require leverage of less than 75%, the
24
<PAGE>
Partnership's permitted leverage may rise to 75% when reinvestment proceeds are
reinvested by the Partnership. See "OUR COMPENSATION."
COMPETITION WITH THE PARTNERSHIP FOR EQUIPMENT
We and our affiliates are engaged directly and indirectly in the business of
acquiring equipment for our own accounts as well as for other programs. In the
future, we, or any of our affiliates, may form, sponsor, and act as a general
partner of or as an advisor to other investment entities (including other public
equipment ownership and leasing partnerships). Those entities could have
investment objectives similar to the Partnership's and may be in a position to
acquire the same investments at the same time as the Partnership. See
"RELATIONSHIPS WITH SOME OF OUR AFFILIATES" and "MANAGEMENT" for a chart of and
a description of our relationship to the Partnership.
Until all capital contributions (the initial amounts invested by limited
partners) have been invested or committed, used to pay permitted front-end fees
or returned to limited partners as provided in the Partnership Agreement, all
investment opportunities meeting the investment objectives of the Partnership
(including equipment acquisition, financing, refinancing, leasing and re-leasing
opportunities) shall be presented to the Partnership FIRST except in the
following circumstances:
- The required cash investment is greater than the cash that the Partnership
has available for investment;
- The amount of debt to be incurred or assumed is above levels that we
believe are acceptable for the Partnership;
- The equipment type is not appropriate to the Partnership's objectives,
which include seeking to avoid concentrations of exposure to any one class
of equipment;
- The lessee's credit quality does not satisfy the Partnership's objectives
of maintaining a high-quality portfolio with low credit losses while
avoiding a concentrated exposure to any individual lessee or user;
- The remaining lease or financing term extends beyond the date by which we
must liquidate the Partnership's investments;
- The Partnership's available cash flow is not commensurate with its need to
make distributions during the Partnership's reinvestment period;
- The structure of the proposed transaction, particularly the end-of-lease
options governing the equipment, does not provide the opportunity to
obtain the residual values needed to meet the Partnership's total return
requirements; and
- The transaction does not comply with the terms of the Partnership
Agreement.
The Partnership Agreement does not prohibit us or our affiliates from
investing in equipment leases or acquiring financing transactions, and we can
engage in acquisitions, financing, refinancing, leasing and re-leasing
opportunities on our or their own behalf or on behalf of other partnerships. We
and our affiliates shall have the right to take for our or their own account, or
to recommend to any program we manage, any particular investment opportunity
after considering the factors in the preceding paragraph.
Any conflicts in determining and allocating investments between the
Partnership and us or between the Partnership and another program will be
resolved by the investment committee, which will evaluate the suitability of all
prospective lease acquisitions and financing transactions for investment by the
Partnership. If the investments available from time to time to the Partnership
and to other programs we manage is less than the aggregate amount of investment
then sought by them, the available investment will generally be allocated to the
investment entity that has been seeking investments for the longest period of
time.
Conflicts may also arise between two or more investment programs (including
the Partnership) that we or one of our affiliates advise or manage, or between
one or more of investment programs and an affiliate of ours acting for its own
account, which may be seeking to re-lease or sell similar equipment at
25
<PAGE>
the same time. In these cases, the first opportunity to re-lease or sell
equipment will generally be allocated to the investment program attempting to
re-lease or sell equipment that has been subject to the lease which expired
first, or, if the leases expire simultaneously, the lease which was first to
take effect. However, we may make exceptions to this general policy where
equipment is subject to remarketing commitments with contrary provisions or
where, in our judgment, other circumstances make applying this policy
inequitable or not economically feasible for a particular investment program.
OUR LIABILITY FOR PARTNERSHIP OBLIGATIONS; OUR DETERMINATION OF RESERVES
As a general rule, we are liable for the Partnership's liabilities to the
extent that they exceed its assets (including reserves for working capital and
contingent liabilities). We determine the amount of reserves and we allocate the
Partnership's cash flow to maintain or increase the amount in the reserve
account. Because we may be exposed to liability to creditors of the Partnership
if there is a deficiency in the amount of reserves relative to the Partnership's
contingent liabilities, we may have a conflict of interest in determining when
to allocate cash flow for distribution to you or to the Partnership's reserve
account.
JOINT VENTURES
For added diversification, the Partnership may invest in joint ventures with
other programs that we or others sponsor and manage. If the Partnership enters
into a joint venture, we would have a fiduciary duty to the Partnership and to
any other investment programs we manage that participate in it. Having these
duties to several partnerships may result in conflicts in determining when and
whether to dispose of any jointly owned investment. To minimize the likelihood
of a conflict between these fiduciary duties, the Partnership Agreement
restricts our ability to make investments in joint ventures by requiring that
the joint investment comply with the investment criteria and investment
objectives of the Partnership. See "RISK FACTORS--Partnership Risks."
LEASE REFERRALS
From time to time, we may have the opportunity to earn fees for referring
prospective equipment or financing transactions to a purchaser other than the
Partnership. This could involve conflicts of interest because we would receive
compensation as a result of the referral even though the Partnership would not
receive any benefits. Section 6.5 of the Partnership Agreement provides that, if
the Partnership has funds available for investment, we will not refer
prospective equipment or financing transactions to third parties for
compensation, unless, using the criteria listed above under "Competition with
the Partnership for Equipment," we decide that the investment in question is
inconsistent with the investment and diversification objectives of the
Partnership.
PARTICIPATION OF AN AFFILIATE IN THIS OFFERING
Units will be sold on a best-efforts basis through ICON Securities Corp.
(the dealer-manager), who will receive underwriting fees for all units sold in
addition to sales commissions for any units sold by its securities
representatives. Because ICON Securities Corp. is affiliated with us, its review
and investigation of the Partnership and the information provided in this
prospectus will not have the benefit of a review and investigation by an
independent securities firm in the capacity of a dealer-manager.
TAX MATTERS PARTNER
We are the Partnership's tax matters partner for purposes of dealing with
the Internal Revenue Service on any audit or other administrative proceeding
before the IRS and/or any legal proceeding. As tax matters partner, we are
empowered to negotiate with the IRS and to settle tax disputes, thereby binding
the limited partners and the Partnership by any settlement. While we will seek
to take into consideration your interest in agreeing to any settlement of any
disputed items of Partnership's income and expense, there is no assurance that
any settlement will be in the best interest of any specific limited partner
given his or her specific tax situation.
26
<PAGE>
FIDUCIARY RESPONSIBILITY
CONFLICTS
GENERAL. The Partnership Agreement makes us accountable to the Partnership
as a fiduciary. Therefore, we must always act with integrity and good faith, and
exercise due diligence in conducting the business of the Partnership and in
resolving conflicts of interest, subject to certain limitations set forth in the
Partnership Agreement. By law, general partners are held to a duty of the
highest good faith in conducting partnership affairs. This normally means that a
general partner cannot engage in activities which might create an interest for
itself that is adverse to that of the partnership of which it is the general
partner. Because we and other investment programs that we manage or in the
future may manage will acquire equipment and enter into financing transactions,
we may be deemed to have a position adverse to the Partnership.
MODIFICATION. Section 6.5 of the Partnership Agreement includes provisions
to resolve conflicts of interest that may arise between the Partnership and
other investment programs we manage with respect to particular investment
opportunities that become available. We shall make investment opportunities
available as described in that section of the Partnership Agreement. However,
until all capital contributions have been invested or committed, used to pay
permitted front-end fees or returned to limited partners as provided in the
Partnership Agreement, all investment opportunities meeting the investment
objectives of the Partnership shall be presented to the Partnership first. If
two or more investment programs that we manage are in a position to lease the
same equipment or provide the same financing, we will generally afford priority
to the entity that has equipment which has been available for lease or sale or
that has had funds available to invest for the longest period of time. We are
not certain whether these provisions regarding allocating opportunities are
enforceable.
DETRIMENT AND BENEFIT. If the Partnership Agreement did not modify the
general common law fiduciary duties, we could not serve as the general partner
for the Partnership and any other investment program that might acquire, finance
and lease equipment at the same time. The modification may operate as a
detriment to you because there may be business opportunities that we will not
make available to the Partnership.
The foregoing modifications permit us to act as a general partner to more
than one similar investment program, and we believe the Partnership should
benefit from our resulting experience. The modifications also permit the
Partnership to enter into joint ventures to acquire a larger and more diverse
asset pool. However, the modifications relieve us and our affiliates of the
strict fiduciary duty of a general partner acting as such for only one
investment program at a time. The modifications attempt to resolve any conflicts
arising from our management of multiple investment programs in a manner
consistent with the expectations of the investors of all of these programs, our
fiduciary duties and the Partnership's and other programs' investment
objectives, especially including that of investment diversification.
INDEMNIFICATION
The Partnership Agreement limits our liability to the Partnership and to
you. The Partnership will indemnify us and our affiliates, from the
Partnership's assets, for any liability, loss, cost and expense of litigation
arising out of our acts or omissions provided that:
(1) we or our affiliate made a determination in good faith that the action
or inaction was in the best interests of the Partnership;
(2) we or our affiliate were acting on behalf of or performing services for
the Partnership; and
(3) the course of conduct did not constitute negligence or misconduct on our
part or that of our affiliate.
As a result, your right to sue us for alleged breach of our fiduciary duty
in conducting the affairs of the Partnership may be limited. However, we and
each of our affiliates will be liable, responsible and accountable, and the
Partnership will not be so liable for, liability, loss, cost or expense due to
our or our
27
<PAGE>
affiliate's fraud, negligence, misconduct or breach of fiduciary duty to the
Partnership or any partner, as determined by a court. The Partnership will not
have to pay the cost of insurance that insures us or any affiliate for any
liability for which we cannot be indemnified.
In addition, we have agreed to indemnify the dealer-manager and the selling
dealers against all losses, claims, damages, liabilities and expenses incurred
by any of them (except those arising as a result of their own fraud, negligence
or misconduct) in connection with the offer or sale of units. Any successful
claim for indemnification would deplete the Partnership's assets by the amount
paid and could reduce the amount of distributions subsequently made to you.
The Partnership is not permitted to indemnify us, any of our affiliates, or
any selling dealer for any losses, liabilities, litigation, settlement or any
other costs or expenses arising out of an alleged violation of federal or state
securities laws unless the following have occurred:
(1) (a) there was a successful adjudication on the merits in favor of us,
our affiliate or the selling dealer on each count of alleged
securities laws violation;
(b) the claims were dismissed on the merits by the court;
(c) the court approved a settlement of the claims and indemnification
regarding the costs of claims; plus
(2) we have advised the court regarding the current position of the
Securities and Exchange Commission, the Securities Divisions of the
Commonwealths of Massachusetts and Pennsylvania, the States of Missouri
and Texas and any other relevant regulatory body on the issue of
indemnification for securities law violations.
INVESTOR REMEDIES
There are a number of remedies available to you if you believe we have
breached our fiduciary duty to you. You may sue on behalf of yourself and all
other similarly situated limited partners (a class action) to recover damages,
or you may bring suit on behalf of the Partnership (a derivative action) to
recover damages from us or from third parties where we have failed or refused to
enforce an obligation. Further, if you suffer losses resulting from violation of
the anti-fraud provisions of federal or state securities laws in connection with
the purchase or sale of units, you may be able to recover the losses from a
selling dealer, the dealer-manager, or anyone associated with either of them. In
addition, for investors that are employee benefit plans, case law applying the
fiduciary duty concepts of ERISA to an insurance company in connection with an
insurance contract might apply with equal force to us.
We will provide quarterly and annual reports of operations and must, on
demand, give you or your legal representative a copy of the Form 10-K and true
and full information concerning the Partnership's affairs. Further, you may
inspect or copy the Partnership's books and records at any time during normal
business hours. See "SUMMARY OF THE PARTNERSHIP AGREEMENT--Access to Books and
Records."
This is a developing and constantly changing area of the law and this
summary, which describes in general terms the remedies available to you if we
breach our fiduciary duty, is based on statutes and judicial and administrative
decisions as of the date of this prospectus. If you have questions concerning
our duties or you believe that we have breached a fiduciary duty, you should
consult your own counsel.
In the opinion of the SEC, indemnifying an entity for liabilities arising
under the Securities Act is contrary to public policy and therefore
unenforceable. If we assert a claim against the Partnership for indemnification
of such liabilities (other than for expenses incurred in a successful defense)
under the Partnership Agreement or otherwise, the Partnership will submit to a
court of competent jurisdiction the question of whether such indemnification is
against public policy as expressed in the Securities Act.
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<PAGE>
OUR OTHER PROGRAMS
We were formed in 1985 to finance and lease equipment, and sponsor and act
as the general partner for publicly offered, income-oriented equipment leasing
limited partnerships. In addition to the Partnership, we are the general partner
of: ICON Cash Flow Partners, L.P., Series B; ICON Cash Flow Partners, L.P.,
Series C; ICON Cash Flow Partners, L.P., Series D; ICON Cash Flow
Partners, L.P., Series E; ICON Cash Flow Partners L.P. Six; ICON Cash Flow
Partners L.P. Seven; and ICON Income Fund Eight A L.P., and we were the general
partner of ICON Cash Flow Partners, L.P., Series A which was liquidated and
dissolved in 1999. These limited Partnerships are referred to collectively as
our prior public programs. All were publicly offered and are income-oriented
equipment leasing limited partnerships with objectives similar to that of the
Partnership. We and our affiliates have also engaged in the past, and may in the
future engage in the business of brokering or acquiring equipment leasing or
financing transactions which do not meet the investment criteria we have
established for the Partnership and for our prior public programs (such as
criteria for creditworthiness, equipment types, excess transaction size or
concentration by lessee, location or industry).
PRIOR PROGRAMS SUBSCRIPTIONS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
NO. OF TOTAL
LIMITED PARTNERSHIP INVESTORS SUBSCRIPTIONS
------------------- --------- -------------
<S> <C> <C>
Series A (dissolved in 1999)........................... 226 $ 2,504,500
Series B............................................... 1,756 20,000,000
Series C............................................... 1,741 20,000,000
Series D............................................... 3,060 40,000,000
Series E............................................... 3,753 61,041,151
L.P. Six............................................... 2,283 38,385,712
L.P. Seven............................................. 4,650 99,999,682
Eight A................................................ 2,430 59,518,458
</TABLE>
Our prior public programs are all actively engaged in purchasing equipment
and entering into and acquiring leases and financing transactions. As of
December 31, 1999, our prior public programs had originated or acquired
investments as follows:
INVESTMENTS ORIGINATED OR
ACQUIRED BY PRIOR PUBLIC PROGRAMS
AS OF DECEMBER 31, 1999
(ALL AMOUNTS IN DOLLARS OF ORIGINAL ACQUISITION COST)
<TABLE>
<CAPTION>
LIMITED PARTNERSHIP LEASED EQUIPMENT FINANCING TRANSACTIONS TOTAL INVESTMENTS
------------------- ---------------- ---------------------- -----------------
<S> <C> <C> <C>
Series A................... $ 6,226,774 $ 1,556,694 $ 7,783,468
Series B................... $ 63,732,913 $ 4,068,058 $ 67,800,971
Series C................... $ 69,021,386 $ 3,632,705 $ 72,654,090
Series D................... $116,714,143 $20,596,614 $137,310,757
Series E................... $243,851,134 $35,474,334 $279,325,468
L.P. Six................... $152,822,820 $13,288,941 $166,111,761
L.P. Seven................. $309,824,776 $ 1,556,908 $311,381,684
Eight A.................... $139,378,509 $ 0 $139,378,509
</TABLE>
As of December 31, 1999, our prior public programs had leases and financing
transactions under management (determined by the original cost of the investment
acquired less the total original cost of assets sold) consisting of the dollar
amounts shown below, and representing the percentages shown below, respectively,
of the original cost of investments acquired.
29
<PAGE>
INVESTMENT PORTFOLIO OF
PRIOR PROGRAMS AS OF
DECEMBER 31, 1999
<TABLE>
<CAPTION>
LIMITED LEASED FINANCING TOTAL
PARTNERSHIP EQUIPMENT TRANSACTIONS INVESTMENTS
----------- ----------- ------------ -----------
<S> <C> <C> <C>
Series A............................... -- -- --
Series B............................... $ 1,377,689 $ 582,976 1,960,665
Series C............................... 1,081,788 1,100,636 2,182,424
Series D............................... 17,016,650 1,915,899 18,932,549
Series E............................... 75,184,007 27,916,178 103,100,185
L.P. Six............................... 46,116,063 2,204,250 48,320,313
L.P. Seven............................. 274,823,670 1,903,741 276,727,411
Eight A................................ 136,275,272 136,275,272
</TABLE>
The percentages and amounts of cash distributions which represented
investment income (after deductions for depreciation and amortization of initial
direct costs of its investments) and a return of capital (corresponding to a
portion of the depreciation deductions for the related equipment) for Series A
through Eight A for each year from their dates of formation through
December 31, 1999 are included in TABLE III of Exhibit B to the Prospectus.
Additional investment information concerning such Programs as of December 31,
1999, is also included in Tables I, II and V of Exhibit B to the prospectus.
Three of our prior public programs, Series A, Series B and Series C,
experienced unexpected losses in 1992, which are shown on TABLE III of
Exhibit B to Cumulative Supplement No. 3. Series A experienced losses of
$133,569 in 1992 primarily related to the bankruptcy of Richmond Gordman
Stores, Inc. In 1992, Series B wrote down its residual positions by $506,690,
$138,218 of which was related to the bankruptcy of Richmond Gordman Stores, Inc.
and $368,472 of which was related to rapid obsolescence of equipment due to
unexpected withdrawal of software support by the manufacturer. Series C
wrote-down its residual position in 1992 by $1,412,365 relating to the
bankruptcy of PharMor, Inc. which involved the reported misappropriation of
funds by the management of that company and the overstatement of inventory on
its audited financial statements.
We have taken steps that has assisted Series A, and we believe will assist
Series B and Series C in partially recovering its losses, including:
(1) foregoing administrative expense reimbursements from July 1, 1991
through September 30, 1993, which we were otherwise entitled to receive,
in the amount of $34,961 (Series A), $697,463 (Series B) and $859,961
(Series C);
(2) reducing the annual cash distribution rate to 9% effective September 1,
1993 for Series A, B and C to make available additional funds for
supplemental reinvestments for each of those programs;
(3) effective September 30, 1993, deferring $38,081 in Series A management
fees and, effective November 15, 1995 and June 19, 1996, eliminating
Series B and C's obligation to pay $220,000 and $529,125, respectively,
in accrued and future management fees;
(4) effective January 1, 1994 reducing the management fees which Series A,
Series B and Series C would each pay us to a flat rate of 2% and,
effective January 1, 1995, further reducing the management fees which
Series A pays us to a flat rate of 1%;
(5) effective January 31, 1994, converting the variable rate borrowing
facilities of Series A, B and C to fixed rate, term loan financings in
the original principal amounts of $720,000, $1,600,000 and $1,500,000,
respectively, to eliminate interest rate risk on the related portions of
those programs' portfolios;
30
<PAGE>
(6) effective January 31, 1995, amending the partnership agreement of
Series A, by vote of a majority of its limited partners, to:
(a) extend the reinvestment period of Series A by not less than 2 nor
more than 4 years;
(b) authorize us to make loans to Series A for terms greater than twelve
months and for up to $250,000; and
(c) (as noted in clause (4), above) decrease the rate of management fees
payable to us by Series A to a flat 1% of gross revenues from all of
its leases and financing transactions (pursuant to the amendments, in
February and March 1995, we lent $75,000 and $100,000, respectively,
to Series A, which was converted to a capital contribution in
September, 1997);
(7) effective November 15, 1995, amending the partnership agreement of
Series B, by vote of a majority of its limited partners, to:
(a) extend the reinvestment period of Series B for up to four additional
years and thereby delay the start and end of the liquidation period;
(b) eliminate the obligation of Series B to pay us $220,000 of the
$347,000 of accrued management fees and any future management fees;
and
(c) limit past management fees payable by Series B to $127,000 and
require us to pay that amount to Series B as an additional capital
contribution; and
(8) effective June 19, 1996, amending the partnership agreement of
Series C, by vote of a majority of its limited partners, to:
(a) extend the reinvestment period of Series C for up to four and
one-half additional years and thereby delay the start and the end of
the liquidation period;
(b) eliminate the obligation of series B to pay us $529,125 of the
$634,125 of accrued management fees; and
(c) limit past management fees payable by Series C to $105,000 and
require us to pay that amount to Series C as an additional capital
contribution.
We can provide no assurance that the forgoing steps will be successful in
recovering the full amount of the losses of Series B and Series C. To the extent
these efforts are not successful, and Series B or Series C do not earn
sufficient amounts through their respective remaining periods of operations to
recoup the losses, any of those programs so effected would not be able to return
all of their respective investors' capital contributions.
The information presented in this section of the prospectus concerning our
prior public programs, as well as the information and data in the Tables
included as Exhibit B for our prior public programs, represents our experience
in the prior programs and are not audited. IF YOU PURCHASE UNITS IN THE
PARTNERSHIP YOU WILL NOT HAVE ANY OWNERSHIP INTEREST IN ANY OTHER PROGRAM AS A
RESULT OF YOUR PURCHASE. YOU SHOULD NOT ASSUME THAT YOU WILL EXPERIENCE RETURNS,
IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN OUR PRIOR PUBLIC
PROGRAMS.
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<PAGE>
RELATIONSHIPS WITH SOME OF OUR AFFILIATES
The following diagram shows our relationship to some of our affiliates. The
solid lines indicate ownership and the broken lines indicate contractual
relationships. All of the entities shown below are corporations except as
otherwise indicated.
[LOGO]
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<PAGE>
MANAGEMENT
THE GENERAL PARTNER
We are a Connecticut corporation formed in 1985 under the name ICON
Properties, Inc. We changed our name on July 19, 1990 to more accurately
reflect the scope and focus of our business activities. Our financial
statements are presented in this prospectus show that our financial
condition, with an aggregate maximum net worth in excess of one million
dollars, is commensurate with the financial obligations we have assumed in
the offering and in the operation of the Partnership. Our principal offices
are located at 111 Church Street, White Plains, New York 10601 ((914)
993-1700), with additional offices located at 31 Milk Street, Suite 1111,
Boston, Massachusetts 02109 ((617) 338-4292); Four Embarcadero Center, Suite
1810, San Francisco, California 94111 ((415) 981-4266) and 599 Lexington
Avenue, Suite 2705, New York, NY 10022 ((212) 418-4700). Our officers, listed
below, have extensive experience in selecting, acquiring, leasing, financing,
managing and remarketing (re-leasing and selling) equipment.
All services relating to the day-to-day management of equipment and entering
into leases and financing transactions will be performed by us or under our
direction. These services include collecting payments due from the lessees and
borrowers, remarketing equipment which is off-lease, inspecting equipment, being
a liaison with lessees and borrowers, supervising equipment maintenance, and
monitoring performance by the lessees and borrowers of their obligations,
including payment of rent or principal and interest and all operating expenses.
Our officers and directors are:
<TABLE>
<S> <C>
Beaufort J. B. Clarke..................... Chairman, Chief Executive Officer and
Director
Paul B. Weiss............................. President and Director
Thomas W. Martin.......................... Executive Vice President, Treasurer and
Director
Allen V. Hirsch........................... Senior Vice President
Louis J.C. Cusano......................... Senior Vice President and Counsel
</TABLE>
Beaufort J. B. Clarke, 53, became our Chairman, Chief Executive Officer and
Director and those of the dealer-manager as well in August of 1996. He was our
President from August of 1996 until December 31, 1998. Prior to his present
positions, Mr. Clarke was founder, President and Chief Executive Officer of
Griffin Equity Partners, Inc. (a purchaser of equipment leasing portfolios) from
October 1993 through August 1996. Prior to that, Mr. Clarke was President of
Gemini Financial Holdings, Inc. (an equipment leasing company) from June 1990
through September 1993. Previously, Mr. Clarke was a Vice President of AT&T
Systems Leasing. Mr. Clarke formerly was an attorney with Shearman and Sterling.
Mr. Clarke received a B.A. degree from the University of Virginia and a J.D.
degree from the University of South Carolina.
Thomas W. Martin, 45, became our Executive Vice President, Treasurer and
Director and those of the dealer-manager as well in August of 1996. Mr. Martin
was the Executive Vice President and Chief Financial Officer of Griffin Equity
Partners, Inc. from October 1993 to August 1996. Prior to that, Mr. Martin was
Senior Vice President from April 1992 to October 1993 and he held the position
of Vice President at Chancellor Corporation (an equipment leasing company) for 7
years. Mr. Martin has a B.S. degree from University of New Hampshire.
Paul B. Weiss, 39, became our President and Director on January 1, 1999.
Mr. Weiss was our Director and Executive Vice President responsible for lease
acquisitions from November of 1996 until December 31, 1998. Mr. Weiss served as
Executive Vice President and co-founder of Griffin Equity Partners, Inc. from
October of 1993 through November of 1996. Prior to that, Mr. Weiss was Senior
Vice President of Gemini Financial Holdings, Inc. from 1991 to 1993 and Vice
President of Pegasus Capital Corporation (an
33
<PAGE>
equipment leasing company) from 1989 through 1991. Mr. Weiss has a B.A. in
Economics from Connecticut College.
Allen V. Hirsch, 46, joined us in December of 1996 as Senior Vice President.
At that time Mr. Hirsch also became the President and Chief Executive Officer of
the dealer-manager. Prior to joining us, Mr. Hirsch spent 16 years with PLM
Financial Services and its affiliates, most recently as President of PLM
Securities Corp. for four years. He also served as the Vice Chairman of the
Board of PLM International (an equipment leasing company) from May of 1989
through June of 1996. Mr. Hirsch holds a B.S. degree in Civil Engineering from
the University of Illinois, a M.S. degree in Transportation from the University
of Maryland and a M.B.A. from Harvard Business School.
Louis J.C. Cusano, Esq., 39, became our Senior Vice President and Counsel in
June of 1999. Previously, from 1995 to 1999 Mr. Cusano was Executive Vice
President and General Counsel to Nikko Hotel's Essex House Real Estate
Corporation, a subsidiary of Japan Airlines' hotel and hospitality group. Prior
to that, Mr. Cusano was an attorney with Dewey Ballantine and in private
practice concentrating on leasing, corporate finance and real estate
transactions. Mr. Cusano received a J.D. from the Boston University School of
Law and a B.A. from the University of Virginia.
OUR AFFILIATES
ICON Securities Corp., the dealer-manager, is a New York corporation and a
wholly owned subsidiary of ICON Holdings Corp. It was formed in 1982 to manage
the equity sales for investor programs sponsored by its affiliates. It is
registered with the Securities and Exchange Commission and is a member of the
National Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. ICON Securities Corp. is the dealer-manager of this
offering.
34
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GENERAL
INVESTMENT OBJECTIVES. The Partnership will purchase various types of
equipment that it will lease or is already being leased at the time of purchase.
The Partnership may enter into financing transactions where it loans funds to
equipment users. The leases and financing transactions will primarily be with
businesses located in North America and Europe that we determine are
creditworthy. We have four investment objectives:
(1) INVEST IN EQUIPMENT AND FINANCING TRANSACTIONS: to invest at favorable
prices in a diversified portfolio of primarily used equipment having long
lives and high resale values, and, to a lesser degree, in financing
transactions that are secured by equipment to creditworthy businesses at
attractive rates of interest;
(2) MAKE CASH DISTRIBUTIONS: to make substantially tax-deferred cash
distributions during the early years of the Partnership, beginning the
month after the month you are admitted as a limited partner;
(3) DIVERSIFICATION TO REDUCE RISK: to purchase a diversified portfolio of
equipment subject to leases or financing transactions with creditworthy
lessees or borrowers. A diverse portfolio comprised of various types of
equipment and a range of maturity dates makes it less likely that changes
in any one market sector will significantly impact the Partnership.
Creditworthy lessees and borrowers lessen the Partnership's risk of
economic loss due to bankruptcy of a lessee or borrower. We also intend
to emphasize investments in used, long-lived, low obsolescence equipment
to reduce the impact of economic depreciation; and
(4) PROVIDE A FAVORABLE TOTAL RETURN: to provide you a total return on your
investment which, by the time we sell the Partnership's equipment and
other assets, compares favorably with other illiquid investments that do
not guarantee a return of principal.
We expect the Partnership initially to invest the sum of the following:
- 75% of the funds received from investors, increasing to 80.40% if all of
the units are sold; plus
- borrowed funds in an amount up to a maximum of 80% of the purchase price
of the Partnership's investment portfolio, declining to a maximum of 67%
if all of the units are sold; plus
- excess cash flow not held in reserve or distributed.
ACQUISITION POLICIES AND PROCEDURES
We believe the Partnership can achieve significant benefits through buying
long-lived, low obsolescence capital equipment both new and used and then, in
the case of leases, leasing the equipment and, in the case of financing
transactions, lending money to borrowers to finance their acquisition of
equipment. We also believe that such equipment types can be supplemented, to a
lesser degree, by higher obsolescence equipment in situations where it can be
acquired on attractive terms. The principal investment for the Partnership will
be the outright purchase of equipment which is already subject to lease. The
Partnership will purchase equipment either in its own name or through a special
purpose entity it owns. The Partnership may, in some case jointly purchase
equipment with other programs we manage or unaffiliated third parties. From this
type of investment, the Partnership should generate cash flow from leasing the
equipment and should ultimately receive sales proceeds when it sells the
equipment.
Some of the Partnership's investments may consist of buying an option giving
them the right to assume a lease or to purchase equipment in the future, at
prices that we consider favorable. When the Partnership later exercises its
option, it will directly or indirectly become the owner of the equipment. There
would not be cash flow to the Partnership until it exercised its option, if at
all. The Partnership may also, on occasion,
35
<PAGE>
make other commitments to lease, purchase or purchase options in equipment in
the future on conditions that we believe are in the Partnership's best interest.
A wide range of investment structures exists and we believe we have experience
to tailor equipment investment structures to particular investment
opportunities.
The Partnership will primarily acquire equipment subject to an existing
lease with a lessee that is not affiliated with us. In most instances we expect
the Partnership to purchase used equipment from the current users or other
leasing companies, or new equipment from manufacturers, dealers or proposed
lessees. When we buy equipment from current users, we may enter sale-leaseback
arrangements with them.
LEASES AND FINANCING TRANSACTIONS
LEASES IN GENERAL. In a typical lease, the Partnership will lease equipment
and the lessee will make periodic payments to the Partnership, usually of a
fixed dollar amount, payable for a fixed own the length of time. The most
important characteristic that distinguishes a lease from other financing
arrangements involving equipment is that when the lessee's right to use the
equipment ends upon the expiration of a lease, a significant part of the
equipment's economic life remains. The value remaining after the expiration of
the initial lease term is the residual value of the equipment. In most cases,
the profitability of a lease transaction for the Partnership will depend on its
ability to realize the equipment's residual value. In some of the Partnership's
lease transactions, all of the return on its investments may come from the
residual value of the leased equipment. These transactions are referred to by us
as leveraged leases.
LEVERAGED LEASES. We intend to have the Partnership borrow funds, or
"leverage," as a means of acquiring and building a pool of investments and
related receivables. When the Partnership enters into a leveraged lease, the
Partnership will borrow funds from a lender and assign to the lender some or all
of the cash rental payments (and perhaps a portion of the expected residual
value of the equipment). The total of the scheduled rental payments and any
portion of the residual value pledged to the lender are calculated to fully
repay the loan. We anticipate that the net effect of any leveraged lease
transaction will be that the Partnership's cash payment to buy the equipment
will be lower than otherwise because the loan will defray a significant portion
of the equipment's purchase price. The debt will primarily be non-recourse. That
is, the lender will generally have no recourse to the assets of the Partnership
other than to foreclose on the Partnership's interest in the lease securing the
debt and dispose of the related equipment. The Partnership will retain the tax
benefits of owning the equipment, as well as some or all of its residual value.
See "FEDERAL INCOME TAX CONSEQUENCES--Tax Treatment of Leases."
OPTIONS. The Partnership may purchase options to acquire equipment, usually
for a fixed price, upon the expiration of an existing lease. The Partnership
will acquire options when we believe the rental value of the equipment is
significantly greater than the purchase price plus the option price.
LEASE PROVISIONS. The terms and provisions of each lease will vary
depending upon a number of factors including the type and intended use of the
equipment, the business, operations and financial condition of the lessee, any
regulatory considerations and the tax consequences and accounting treatment of
the lease transaction.
We anticipate that each lease will hold the lessee responsible for:
(1) paying rent without deduction or offset of any kind;
(2) bearing the risk of equipment loss and maintaining both casualty and
liability insurance on the equipment;
(3) paying sales, use or similar taxes relating to the lease or other use of
the equipment;
(4) indemnifying the Partnership against any liability resulting from any
act or omission of the lessee or its agents;
36
<PAGE>
(5) maintaining the equipment in good working order and condition during the
term of the lease; and
(6) not permitting the assignment or sublease of the equipment without our
prior written consent.
The Partnership's leases will usually have terms ranging from 2 to 7 years.
We also anticipate that most leases will not be cancelable during their initial
terms. But, we may agree to allow cancellation of a lease if it appears to be in
the Partnership's best interest, provided a lessee pays enough compensation to
the Partnership so that the cancellation will not prevent the Partnership from
achieving its objectives. At the end of each lease term, the lessee may have the
option to buy the equipment or renew the lease, either at set prices or at
prices tied to current fair market value.
LEASES DENOMINATED IN FOREIGN CURRENCIES. The Partnership may acquire some
leases where the rental payments are denominated in a currency other than United
States dollars. If a lease is denominated in a major currency such as the pound
sterling, deutsche mark or yen, which historically have stable exchange
relationships with the dollar, dollar hedging may be unnecessary or not cost
effective to protect the value of the rental payments. We expect to hedge leases
denominated in more volatile currencies so as to reduce the risks associated
with swings in exchange rates. To hedge a lease, the Partnership would enter
into a hedge contract. Under such a contract the Partnership would receive a
fixed number of United States dollars with respect to the rent and any other
fixed, periodic payments due under a lease even if the exchange rate between the
United States dollar and the currency the lease is denominated in changes over
the lease term. We expect that the Partnership would enter into hedge contracts
only if two additional requirements could be satisfied. First, the hedge
transaction expenses would have to be low enough so that the return on the lease
in question, even with these hedge transaction expenses taken into account,
meets the Partnership's objectives. Second, the lessee whose lease obligations
are being hedged must be superior from a credit standpoint since the Partnership
would typically remain obligated under the hedge contract even if the lessee in
question defaulted on the lease obligations being hedged. See "RISK FACTORS--
Partnership Risks."
FINANCING TRANSACTIONS IN GENERAL. The Partnership will also invest in
transactions that we will call financing transactions, which are loans or
full-payout leases. While these transactions are frequently legally structured
as leases, because the lessee has the right to use the equipment for its entire
useful life, the transactions are treated as secured loans for most purposes.
The nominal lessee, whom we will call the borrower, is treated as the owner from
the outset of the transaction. The Partnership, the nominal lessor, is treated
as a lender whose loan is secured by the equipment. Since the Partnership would
not receive most of the residual value in this type of transaction, the
profitability of the transaction would be primarily determined by the periodic
payments it receives from the borrower during the term.
Financing transactions can be documented in two ways. First, a lease could
be utilized as described above. The lease would include a nominal or bargain
purchase option at the end of the lease term. The borrower would be deemed the
owner of the equipment from the inception of the transaction and the Partnership
would be deemed a lender with a security interest in the equipment. Second, a
written promissory note or other instrument indicating that the user has an
irrevocable obligation to repay the principal amount of the note, together with
interest, could be used. Payments by the user would be sufficient to return the
Partnership's full cost associated with the financing transaction, together with
an appropriate yield. Furthermore, the repayment obligation would be
collateralized by a security interest in tangible or intangible personal
property belonging to the user (in addition to the equipment) that our
investment committee deems to be appropriate.
SECURITIZATIONS. The Partnership may also invest in securitizations, often
taking the form of an interest in a special purpose entity. The special purpose
entity is created to accumulate a portfolio consisting primarily of middle
market and small ticket leases or loans. When a suitably large portfolio of such
leases or loans has been accumulated, the portfolio is rated by rating agencies
such as Moody's Investors Services, Inc. or Fitch IBCA, and debt and equity
interests in the portfolio are then sold to third party investors. The investors
receive a return on their investments from the rents received by the special
37
<PAGE>
purpose entity from the leases and financing transactions owned by it. By
combining a large number or relatively small transactions into one large one,
having senior and subordinate investors and having the entity's obligations
rated by rating agencies, the cost of financing the pool of transactions is
substantially less than financing them individually. We anticipate that the
Partnership may acquire subordinate interests in securitizations. Subordinate
interest holders usually hope to receive a significantly higher percentage
return on their investment than the senior lenders receive on theirs, in
exchange for the greater risks associated with their subordinate position. The
actual loss experience of the securitization lessees and borrowers determines
whether a higher percentage return is actually realized.
TRANSACTION APPROVAL PROCEDURES
We have established an investment committee, which has set, and may from
time to time revise, standards and procedures for the review and approval of
potential leases and financing transactions. The investment committee is
responsible for supervising and approving significant individual transactions or
portfolio purchases, as well as transactions that vary from standard credit
criteria and policies. The investment committee will consist of at least two
persons whom we designate. We expect that all four persons will be our officers
and employees of those of one of our affiliates. The investment committee will
make decisions by majority vote and will promptly complete a written report of
all actions taken. As of the date of this prospectus, the members of the
investment committee are Messrs. Clarke, Martin and Weiss.
The investment committee will make investment decisions using the investment
policies described in this prospectus and the undertakings set forth under
"CONFLICTS OF INTEREST." All potential equipment acquisitions and financing
transactions shall be evaluated on the basis of:
- the extent to which the transaction appears to satisfy the Partnership's
investment objectives;
- the creditworthiness of the prospective lessee or borrower and the
character of its business;
- the type of equipment to be purchased for lease or which will secure the
proposed financing transactions; and
- to the extent deemed prudent, the availability of additional collateral
and credit enhancements to secure the transaction in the event the
potential lessee or borrower defaults.
CREDIT REVIEW PROCEDURES
We maintain credit review procedures in reviewing potential lessees and
borrowers. The procedures generally require the following:
- an intensive and comprehensive analysis of a potential lessee's or
borrower's current and past years' financial statements and, if
appropriate, income tax returns and any and all additional information on
the lessee or borrower's business which may help determine the ability of
the lessee or borrower to meet its obligations;
- for lessees and borrowers which do not have senior debt rated investment
grade by an independent rating agency, independent verification of the
potential lessee's or user's credit history, bank accounts, trade
references, and credit reports from credit agencies such as Dun &
Bradstreet, TRW, etc.; and
- verification and review of the underlying equipment or other collateral.
EQUIPMENT
"USED" EQUIPMENT. We anticipate that the majority of the Partnership's
investments will be in used equipment, that is, equipment initially delivered to
the current lessee more than two months prior to the Partnership's purchase of
the equipment. Used equipment transactions can be advantageous because we will
have the opportunity to analyze payment histories and compliance with other
lease provisions, the condition of the equipment, and how it is used and
maintained by the lessee and or user, prior to
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purchasing it. We will not make substantial equipment purchases without
obtaining information and reports, and making inspections and surveys to
determine the probably economic life, reliability and productivity of the
equipment, as well as the competitive position, suitability and desirability of
investing in the equipment compared with other investment opportunities.
EQUIPMENT REGISTRATION. The ownership of some types of assets, most notably
aircraft and marine vessels, over-the-road motor vehicles and rolling stock, is
recorded in central registries maintained by states or, in case of rolling
stock, aircraft and marine vessels, the federal government. Liens and
encumbrances of such equipment are also recorded in the registries. Many foreign
countries maintain similar registries for transportation assets as well. The
registries permit a purchaser to independently confirm that the seller they are
dealing with is the true owner of an asset and that the asset is free of liens.
These registries also increase the likelihood that a lender can secure his
security interest in an asset, thus reducing the cost of such loans.
TYPES OF EQUIPMENT. We expect the Partnership to invest in the following
types of equipment:
- transportation equipment such as aircraft (including airframes, engines,
avionics, parts and ground handling equipment), rail equipment (including
boxcars, tank cars, hopper cars, flatcars, locomotives and various other
equipment used by railroads in the maintenance of their railroad track),
tractors, trailers, heavy duty trucks and intermodal (rail, over-the-road
and marine) containers and chassis, and marine vessels (including towboats
and barges);
- machine tools and manufacturing equipment such as computer-and
mechanically-controlled lathes, drill presses, vertical and horizontal
milling machines, rotary and cylindrical grinders, metal fabrication and
slitting equipment, and other metal forming equipment;
- materials handling equipment such as fork-lifts and more specialized
equipment for moving materials in warehouse or shipping or areas;
- furniture and fixtures, store fixtures, display cases, freezers,
manufacturing equipment, electronic test equipment, medical diagnostic and
testing equipment (such as radiology equipment, sonographic equipment,
patient monitoring equipment) and miscellaneous medical equipment
(including lab test equipment, blood-gas analyzers, treatment room
furniture);
- office and management information systems equipment such as microcomputer
management information systems, communication and related peripheral
equipment and photocopying equipment and printing systems (such as
electronic laser printers); and
- other equipment which we expect to have a value in the future which would
allow the Partnership to meet its objectives.
ECONOMIC USEFUL LIVES OF EQUIPMENT. We will generally seek to buy equipment
subject to leases having a remaining term greater than two years and, where, on
expiration of the lease, at least one-third of the economic useful life of the
equipment is likely to remain, based upon its age or utilization history. To
maximize remarketing options and returns, we will seek to avoid investing in
equipment that may become technologically obsolete or is otherwise of limited
utility, for reasons including excessive wear and tear. However, we will make
exceptions for equipment which we have reason to believe will contribute to the
Partnership's overall objectives.
PORTFOLIO REVIEW AND REMARKETING. We intend to evaluate the Partnership's
investments at least annually, and more frequently if circumstances require, to
determine whether each item of equipment and financing transaction should remain
in the portfolios or should be sold. We will make that decision based upon the
Partnership's operating results, general economic conditions, tax
considerations, the nature and condition of items of equipment, the financial
condition of the parties obligated to make payments under leases and financing
transactions, alternate investment opportunities then available to the
Partnership and other factors that we deem appropriate to the evaluation.
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Following the expiration of any lease, the Partnership will try to remarket
the equipment by either (i) extending or renewing the lease with the existing
lessee, (ii) leasing the equipment to a new lessee or (iii) selling the
equipment to the existing lessee or a third party.
PORTFOLIO ACQUISITIONS
The Partnership may purchase portfolios of equipment subject to leases
and/or financing transactions. In evaluating a portfolio acquisition, we expect
to follow one or more of the following procedures:
- review for completeness and accuracy of documentation (a) the largest of
the leases or financing transactions in the portfolio, and/or (b) a
substantial random sampling of leases and financing transactions
(particularly in the event that there is not a concentration of large
transactions);
- review and verify lessee and user payment histories where practicable;
- evaluate underlying equipment or other collateral and verify their values;
- obtain Dun & Bradstreet and/or TRW credit reports for a representative
number of non-investment grade potential lessees and users; and
- perform Uniform Commercial Code lien searches against selected potential
lessees and users, as well as against the current holder of the portfolio.
In connection with the acquisition of any portfolio, we may require that
such acquisition be full or partially recourse to the current holder of the
portfolio in the event any underlying lessee or user defaults.
OTHER INVESTMENTS
The Partnership may also, from time to time, invest in other types of
property, both real and personal, tangible and intangible, including contract
rights, lease rights, debt instruments and equity interests in corporations,
partnerships, affiliated programs, joint ventures, other entities. However, the
Partnership may make such investments only in furtherance of its investment
objectives, in accordance with its investment policies, and in relation to the
acquisition of equipment or other transactions as described in this section of
this prospectus. The Partnership may also repurchase its units if the
repurchasing does not impair the operations of the Partnership's investment
program.
INTERIM FINANCING
We or any of our affiliates (but not our prior programs) may acquire
equipment for the Partnership on an interim basis not to exceed six months, so
long as the acquisition is in the best interest of the Partnership and the
equipment is purchased by the Partnership for a price no greater than our cost
for the equipment. Neither we nor our affiliates may benefit from the
acquisition, except for allowable compensation to us as described in "OUR
COMPENSATION." When we or an affiliate purchases equipment on this type of
interim basis with our own funds in order to facilitate the ultimate purchase by
the Partnership, we or our affiliates, as the case may be, will be entitled to
receive interest on the funds expended on behalf of the Partnership at a rate
equal to that which would be charged by third-party financing institutions on
comparable loans for the same purpose in the same geographic area. But, the
Partnership will not pay a higher rate of interest than that which we or our
affiliate is paying if we or our affiliate either assumes an existing loan or
borrows money to loan to the Partnership. The Partnership will pay interest on
such funds or other loans until the Partnership buys the equipment or repays the
other loan. Interest on these loans will begin to accrue on the date we or our
affiliate buys the equipment. Any rental payments received or accrued by us or
our affiliate prior to the sale of the equipment to the Partnership will either
reduce the sales price of the equipment to the Partnership or will be assigned
to the Partnership upon its purchase of the equipment. If a loan secured by
equipment is assumed in connection with such an acquisition, the loan must have
the same interest terms at the time the Partnership acquires the equipment as it
had when we or our affiliate first acquired the equipment.
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CASH DISTRIBUTIONS
WHILE IT IS THE PARTNERSHIP'S OBJECTIVE TO MAKE THE MONTHLY CASH
DISTRIBUTIONS TO THE PARTNERS AS DESCRIBED BELOW, WE CAN MAKE NO PREDICTION AS
TO WHAT LEVEL OF DISTRIBUTIONS OR RETURN ON INVESTMENT, IF ANY, WILL BE
ACHIEVED. NO SPECIFIC AMOUNT OF DISTRIBUTIONS IS GUARANTEED AND LIMITED PARTNERS
BEAR A SIGNIFICANT RISK OF LOSS ON THIS INVESTMENT.
MONTHLY CASH DISTRIBUTIONS
Section 8.1(a) of the Partnership Agreement provides that each limited
partner is entitled to receive monthly cash distributions computed as described
below. These distributions will be made for each period beginning with the month
after the limited partner's admission to the Partnership, and ending with the
expiration or termination of the reinvestment period, to the extent that cash
from operations and from sales are available for this purpose. The reinvestment
period is the Partnership's period of active investment and reinvestment, which
ends 5 years after the Partnership's final closing date. The annual amount of
these distributions will be computed by:
(1) multiplying 10.75% by a limited partner's original investment; and then
(2) reducing that amount by any portion of the original investment that has
either been returned to the limited partner because the Partnership did
not invest all of the offering proceeds or redeemed by the Partnership.
A ratable portion (i.e., one-twelfth) of the annual distribution amount will
be payable monthly.
Available cash to make such distributions will be reduced by the following:
(a) the Partnership's expenses, the timing and amounts of which are expected to
be largely non-discretionary; and (b) monies which we determine in our
discretion to set aside as reserves or reinvest in additional investments. Thus,
our decisions to establish additional reserves might affect the ability of the
Partnership to make monthly cash distributions. Furthermore, the Partnership's
ability to make cash distributions to the limited partners may be subject to
restrictions imposed upon the Partnership by its banks or other lenders. See "--
Reinvestment of Undistributed Cash in Additional Equipment, Leases, and
Financing Transactions."
If available cash is insufficient in any calendar month to pay the full
amount of the distributions described above, only the actual amount available is
required to be distributed. These cash distributions will be noncumulative,
meaning that if there is insufficient cash available to make the full
distribution in a given month, the shortfall will not be made up in any
subsequent monthly distribution. These cash distributions will also be computed
on a non-compounded basis. That is to say the principal amount upon which the
cash distributions is computed will not be increased as the result of the
inability of the Partnership to distribute any monthly portion of the annual
amount, or reduced by any distributions actually made in any prior period. We
expect that a substantial portion of all of these cash distributions (e.g. the
portion that exceeds taxable income for GAAP purposes) will be treated as a
return of the limited partners original investment and that the balance of these
distributions will be treated as a return on the original investment.
The Partnership Agreement also provides that each limited partner is
entitled to receive monthly cash distributions, if the scheduled distributions
described above are inadequate, sufficient to permit the limited partners to pay
federal, state and local income taxes resulting from the Partnership's
operations. For this purpose, the Partnership Agreement assumes that all limited
partners are subject to income taxation at a 31% cumulative tax rate on taxable
distributions for GAAP purposes). These distributions will be made to the extent
that available cash on hand is sufficient for that purpose.
We anticipate that the monthly cash distributions, provided funds are
available, will be made approximately 5 days after the end of each month,
commencing in the first full month following the initial closing date, which is
the date the minimum offering size is achieved. Since monthly cash distributions
are
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subject to the availability of funds, there can be no assurance that any
anticipated monthly distributions will be made.
FIRST CASH DISTRIBUTIONS TO THE LIMITED PARTNERS
Our monthly management fees will be deferred until each limited partner
receives all of what are called "first cash distributions." First cash
distributions refer to all distributions limited partners receive on their
unreturned investment up to an 8% annual cumulative return. Until the earlier of
each limited partner receiving all accrued and unpaid first cash distributions
or the end of the reinvestment period, our monthly management fees will be
deferred, without interest. It is the objective of the Partnership to make the
first cash distributions regardless of the number of units sold, subject only to
the limitations described in "--Monthly Cash Distributions" above.
The ratio of cash distributions to limited partners and to us is different
before and after payout. See "OUR COMPENSATION--Operational Stage." Payout is
the time when cash distributions have been made in an amount equal to the sum of
the limited partners' investment in the Partnership plus an 8% cumulative annual
return on their investment, compounded daily. Prior to payout, distributions
will be made 99% to the limited partners and 1% to us. After payout,
distributions will be tentatively targeted at 90% to the limited partners and
10% to us, but if the limited partners as a group have not received cash
distributions equal to at least 150% of their investment, we will continue to
only receive 1% of cash distributions (and accrue 9%) until the limited partners
receive distributions equal to 150% of their total investment.
REINVESTMENT OF UNDISTRIBUTED CASH IN ADDITIONAL EQUIPMENT, LEASES AND FINANCING
TRANSACTIONS
During the reinvestment period, the Partnership intends to reinvest
substantially all of its undistributed cash not held in reserve, as well as
proceeds of financing not needed to pay current obligations, in additional
equipment and financing transactions.
DISTRIBUTION OF CASH FROM SALES OF THE PARTNERSHIP'S INVESTMENTS
After the reinvestment period, the Partnership will dispose of its equipment
and liquidate all of its investments in financing transactions as soon as we
deem it prudent, which may or may not be before the expiration of the remaining
term of the related lease. The Partnership will then distribute to the partners
substantially all the proceeds from those dispositions together with reserves
and cash not previously distributed, less the estimated costs and expenses and
projected disbursements and reserves required for orderly termination of the
Partnership and the payment of any deferred management fees and subordinated
remarketing fees, if any, which have accrued but not been paid. Distributions
made after the reinvestment period will depend upon results of prior operations,
the cash from sales of the Partnership's investments, and the amount of cash
flow, if any, that the Partnership derives from the operation of its remaining
investments during this later period.
REINVESTMENT OF DISTRIBUTIONS
You may elect to have your distributions reinvested in additional units
during the offering period of the Partnership. We will invest distributions not
later than 30 days from the distribution date, to the extent that units are
available for purchase. Any distributions that you choose to invest in units
will be purchased at the public offering price. Commissions equal to 8.0% of the
units' purchase price will be paid to the unaffiliated selling dealer
responsible for your original purchase of units. You may choose to reinvest your
distributions at any time by completing the authorization form that appears in
Exhibit C, "Subscription Documents". Reinvestment of distributions will commence
with the next distribution payable after the Partnership receives your
authorization form or subscription agreement. We reserve the right to prohibit
qualified plan investors from reinvesting their distributions if such
participation would cause the underlying assets of the Partnership to constitute
"plan assets." See "INVESTMENT BY QUALIFIED PLANS."
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FEDERAL INCOME TAX CONSEQUENCES
THIS SECTION DISCUSSES THE FEDERAL INCOME TAX CONSEQUENCES FOR AN INDIVIDUAL
INVESTOR WHO IS AN U.S. CITIZEN OR RESIDENT. THE TAX CONSEQUENCES OF INVESTING
IN THIS PARTNERSHIP WILL NOT BE THE SAME FOR ALL INVESTORS. A CAREFUL ANALYSIS
OF YOUR PARTICULAR TAX SITUATION IS REQUIRED TO EVALUATE THIS INVESTMENT
PROPERLY. THEREFORE, WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR.
TAX TREATMENT FOR OTHER INVESTORS--SUCH AS TRUSTS, CORPORATIONS, TAX-EXEMPT
ORGANIZATIONS AND EMPLOYEE BENEFIT PLANS, AND FOREIGN INVESTORS--ARE LIKELY TO
SIGNIFICANTLY DIFFER FROM THE PRINCIPAL TAX CONSEQUENCES OUTLINED IN THIS
SECTION. SEE "--FOREIGN INVESTORS," "--TAX TREATMENT OF CERTAIN TRUSTS AND
ESTATES," "--TAXATION OF EMPLOYEE BENEFIT PLANS AND OTHER TAX-EXEMPT
ORGANIZATIONS" AND "--CORPORATE INVESTORS." STATE AND LOCAL TAX CONSEQUENCES MAY
DIFFER FROM THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED BELOW. SEE "--STATE
AND LOCAL TAXATION."
OPINION OF TAX COUNSEL
We have obtained a legal opinion from Greene Radovsky Maloney & Share LLP,
our tax counsel, concerning the Partnership's classification as a partnership
for federal tax purposes. The opinion of tax counsel on a number of tax issues
is discussed in this prospectus. Tax counsel reviewed the summaries of federal
tax consequences to individual investors of an investment in units and the
federal tax consequences to some tax-exempt entities, including qualified plans,
that are set forth in this Prospectus under the headings "RISK FACTORS--Federal
Income Tax Risks and ERISA Risks" and "FEDERAL INCOME TAX CONSEQUENCES" and
"INVESTMENT BY QUALIFIED PLANS." To the extent those summaries contain
statements or conclusions of law, tax counsel is of the opinion that these
statements or conclusions are correct under the present Internal Revenue Code,
applicable current and proposed IRS regulations, current published
administrative positions of the IRS, and judicial decisions.
The opinion is based on the facts described in this prospectus and on
additional facts that we provided to tax counsel about how we plan to operate
the Partnership. Any alteration of Partnership activities from the description
we gave to tax counsel may render the opinion unreliable. Furthermore, the
opinion of tax counsel is based upon existing law, which is subject to change
either prospectively or retroactively.
You should note that the tax opinion represents only tax counsel's best
legal judgment, and has no binding effect or official status of any kind. We
cannot guarantee that the IRS will accept the conclusions set forth in tax
counsel's opinion.
CLASSIFICATION AS A PARTNERSHIP
Tax counsel have given us their opinion that, under current tax laws and
regulations, the Partnership will be classified for tax purposes as a
partnership and not as a corporation. We will not request a ruling from the IRS
on this matter. Tax Counsel's opinion on this issue is based partially on our
representations that: (1) the business of the Partnership will be conducted as
described in this prospectus; and (2) the Partnership will not elect to be
classified as an association taxable as a corporation.
TAXATION OF PARTNERSHIPS IN GENERAL
For income tax purposes, a partnership is treated as a pass through entity.
This means that the individual partners, and not the partnership, pay tax on
partnership income and deduct the partnership's losses. As a limited partner,
you will report your share of the Partnership's income, deductions, capital
gains and losses on your federal tax return. You will also pay the taxes on your
share of any taxable income earned by the Partnership.
One tax advantage of a partnership is that its earnings are only taxed once
by the federal government. The partnership files an informational return with
the IRS, but has no tax liability. Because it pays no income taxes, the
partnership has more income to distribute to its investors. By contrast, a
corporation's
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earnings are effectively taxed twice. The corporation itself must pay corporate
income taxes, reducing the amount available to distribute in dividends to its
shareholders; the shareholders are then required to pay personal income taxes on
the dividends they receive. Another tax advantage of partnerships is that
investors often can deduct their share of any losses the partnership incurs; a
corporation does not pass through deductible losses to investors.
We believe that your most substantial tax risk from this investment would be
for the IRS to treat the Partnership like a corporation for tax purposes, by
classifying it as a "publicly traded partnership." Were that to happen, the
Partnership would have to pay tax on its income, reducing the amount of income
available it could distribute to you, and you would not be able to deduct your
share of any losses. Such a classification could adversely affect your after-tax
return, especially if the classification were to occur retroactively.
Furthermore, a change in the Partnership's tax status would be treated as an
exchange by the IRS, which could give rise to additional tax liabilities. See
"--Publicly Traded Partnerships."
Your ability to deduct losses generated by the Partnership is limited to the
amounts that you have at risk in this investment. This is generally the amount
of your investment, plus any profit allocations and minus any loss allocations
and distributions. Additionally, your ability to deduct losses attributable to
passive activities is restricted. Because the Partnership's operations will
constitute passive activities, you can only use losses from the Partnership to
offset passive income in calculating tax liability. Furthermore, passive losses
may not be used to offset portfolio income.
Leasing activities will generate the overwhelming majority of the
Partnership's income. We expect that, for federal income tax purposes, the
Partnership's equipment leases will be treated as true leases and the
Partnership will be considered the owner and lessor of the equipment. The IRS
may challenge the leases, however, and instead assert that they are sales or
financings. This would result in the loss of cost recovery or depreciation
deductions by the Partnership. See "--Tax Treatment of Leases."
PUBLICLY TRADED PARTNERSHIPS
Some limited partnerships are classified for tax purposes as publicly traded
partnerships, referred to as "PTPs." PTPs may be taxed as corporations. A PTP is
a partnership in which interests are traded on an established securities market
or are readily tradable on either a secondary market or the substantial
equivalent of a secondary market. If the PTP derives less than 90% of its gross
income from sources such as interest and dividends, rents from real property,
and gains from the sale of real property, the PTP is taxed as a corporation.
We do not intend to list the units in the Partnership on any market. Units
are also not readily tradable on a secondary market, nor do we expect them to be
in the future. Therefore, the Partnership will be a PTP only if the units become
readily tradable on the substantial equivalent of a secondary market. Limited
partnership interests do not become readily tradable merely because we provide
information to limited partners regarding other partners' desires to buy or sell
units to each other or occasionally arrange transfers between limited partners.
Transfers made through a qualified matching service are also not counted. A
matching service qualifies for this exclusion if it satisfies all seven of the
following:
(1) it consists of a system that lists customers' bid and ask quotes in
order to match sellers and buyers;
(2) deals occur either by matching the list of interested buyers to
interested sellers or by bidding on listed interests;
(3) sellers cannot enter into a binding agreement to sell their interest
until at least 15 days after information regarding their offering is made
available to potential buyers;
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(4) the closing of the sale does not occur until at least 45 days after
information about the offering is made available;
(5) the matching service only displays quotes that express interest in
trading but do not represent firm commitments to buy or sell at the
quoted price;
(6) the seller's information is removed from the matching service within 120
days after the posting and, if removed for any reason other than a sale,
no offer to sell from that seller is entered into the matching service
for at least 60 days; and
(7) the percentage of interests in the partnership capital or profits
transferred during the tax year (other than through private transfers)
does not exceed 10% of the total interests in partnership capital or
profits.
In the opinion of tax counsel, the IRS will not treat the Partnership as a
PTP. This opinion is based in part on our representation to tax counsel that the
units will not be listed on a securities exchange or NASDAQ and that, in
accordance with Section 10.2(c) of the Partnership Agreement, we will refuse to
permit any assignment of units which violates the "safe harbor" test described
above. See "TRANSFER OF UNITS--Restrictions on the Transfer of Units."
If the Partnership were classified as a PTP, it would be treated for federal
income tax purposes as a corporation unless 90% or more of its income were to
come from certain "qualified sources." The Partnership's business will be the
leasing and financing of personal (but not real) property, and income from this
source is not "qualified." Thus, if the Partnership were a PTP, it would be
taxed as a corporation. The major consequences of corporate tax treatment would
be that the Partnership's losses would not be passed through to the partners,
and its income could be subject to corporate income tax. If the Partnership were
taxed as a corporation, and particularly if the PTP classification were made
retroactively, corporate taxation could have a substantial adverse effect on
your after-tax return. Furthermore, the IRS would treat a change in tax status
from a partnership to a PTP taxable as a corporation as an exchange that would
give rise to tax liabilities for the limited partners if the Partnership's debt
exceeded the tax basis of the Partnership's assets at the time of the change in
tax status--even though limited partners likely would not receive cash
distributions from the Partnership to cover such tax liabilities. See
"--Classification as a Partnership" and "--Sale or Other Disposition of
Partnership Interest."
TAXATION OF DISTRIBUTIONS
As long as the Partnership is classified as a partnership under federal tax
law, it will not be subject to federal income tax. Rather, you will be required
to report your share of the Partnership's annual income, gains, losses,
deductions, and credits on you federal income tax return, and to pay your share
of any tax liabilities.
You will be furnished with all information about the Partnership necessary
to prepare your federal income tax return not later than 75 days after the end
of each fiscal year. The Partnership will also file an annual partnership
information return with the IRS. We will report our finances on an accrual basis
and use a December 31 fiscal year. The Partnership's income and loss for the
year will be allocated among the limited partners based on the number of units
held by each limited partner during the year. If any partners hold their units
for less than the entire year, they will be allocated a share proportional to
the part of the year during which they held their units. For purposes of
allocating income or loss among the partners, the Partnership will treat its
operations as occurring ratably over each fiscal year--in other words, we will
assume that income and loss are spread evenly over the fiscal year. Depreciation
or other cost recovery with respect to equipment may create a deferral of tax
liability. Larger cost recovery deductions in the early years may reduce or
eliminate the Partnership's taxable income in the initial years of the
Partnership's operations. This deferral, however, will be offset in later years,
when smaller depreciation and cost recovery deductions will offset less
Partnership income, while an increasing portion of the Partnership's
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revenue must be applied to reduce debt principal. In later years, it is possible
that taxable income will exceed cash distributions.
You do not have to pay income tax on cash distributions that exceed your
share of the Partnership's taxable income. The excess will reduce your tax basis
for your units, however. Your tax basis will also increase or decrease annually
based on your allocable share of the Partnership's income or loss for the year.
Any cash distributions you receive that exceed both your share of the
Partnership's taxable income and your tax basis will be taxable to you,
generally as capital gains, provided the units are capital assets in your hands.
The Partnership intends to make sufficient cash distributions to enable you
to pay your federal income taxes on your share of taxable income. To determine
how much cash will be necessary to cover your tax liability, we will assume that
all limited partners are in the highest marginal federal income tax bracket, and
we will determine the amount without regard to any surtaxes.
PARTNERSHIP INCOME VERSUS PARTNERSHIP DISTRIBUTIONS
The taxable income reported to you each year by the Partnership will not
equal the cash distributions that you receive. The difference between reported
income and cash distributions arises primarily from two facts: first,
depreciation and other cost recovery deductions reduce the Partnership's taxable
income but not its cash available for distribution. Conversely, the Partnership
revenues that we reinvest or use to repay debt principal will generally
constitute income even though using revenues for those purposes reduces the cash
distributed to you. See "--Cost Recovery." Therefore, the cash distributions
that we make to you may be greater or less than your share of the Partnership's
taxable income in any given year.
ALLOCATIONS OF PROFITS AND LOSSES
Your share of any item of income, gain, loss, deductions, or credits is
determined by the Partnership Agreement. As a general rule, when we are
reinvesting proceeds in equipment (the first five to eight years after the
Partnership is closed to new investors), 99% of the Partnership's profits will
be allocated among its limited partners in proportion to their units, and we
will be allocated 1%. This allocation will continue until the later of:
(1) each limited partner's capital contribution, reduced by distributions from
the Partnership that are in excess of his or her 8% cumulative return, is
reduced to zero; or (2) each limited partner has been allocated profits equal to
the sum of his or her aggregate 8% cumulative return plus any Partnership losses
previously allocated to the partner. Thereafter during the reinvestment period,
the Partnership's profits will be allocated 90% among the limited partners in
proportion to their units and 10% to us. Then, while we liquidate the equipment
of the Partnership, which we refer to as the disposition period and which we
expect to last one to three years, profits first will be allocated to all
partners in the amount necessary to eliminate any deficits in their capital
accounts. Profits will then be allocated as described immediately above.
As a general rule, for the duration of the Partnership, 99% of its losses
will be allocated among the limited partners in proportion to their units, and
1% will be allocated to us.
The IRS respects a Partnership's allocation of income, gain, loss,
deductions, or credits if:
(a) the allocation has substantial economic effect, or
(b) the partners can show that the allocation accords with the partner's
interest in the partnership, or
(c) the allocation accords with the partner's interest in the partnership
under special rules requiring that partners receiving allocations of
losses and deductions generated by purchasing assets with borrowed money
be charged back income and gain to the extent the income and gain is
generated by the assets that previously generated the losses and
deductions.
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The determination of substantial economic effect is made at the end of a
partnership's taxable year. IRS regulations generally provide that, for an
allocation to have economic effect, the following conditions must be true:
- the allocation must be reflected by an increase or decrease in the
relevant partner's capital account;
- liquidation proceeds must be distributed in accordance with the partners'
capital account balances;
- the partnership agreement must provide for the possibility that a partner
will have a deficit balance in his capital account upon liquidation of the
partnership and either the partner must be required to restore the deficit
amount to the partnership, so that amount may be used to pay creditors or
to distribute to other partners with positive capital account balances,
or, in the absence of an obligation to restore the deficit, the
partnership agreement must contain a qualified income offset provision. A
qualified income offset provision mandates that when a partner is
allocated losses and deductions by the partnership which cause a deficit
in the partner's capital account or increase a preexisting deficit, that
partner must be allocated income and gains as quickly as possible to
eliminate any deficit balance in his or her capital account that is
greater than any amount that he or she is obligated to restore.
The economic effect of an allocation is substantial if there is a reasonable
possibility that it will substantially affect the amount to be received by the
partners from the partnership, independent of tax consequences. An economic
effect is not substantial if, at the time the allocation becomes part of the
partnership agreement: (1) at least one partner's after-tax return may, in
present value terms, be enhanced compared to his or her return if the allocation
were not contained in the partnership agreement; and (2) there is a strong
likelihood that no partner's after-tax return will, in present value terms, be
substantially diminished compared to his or her return if the allocation were
not contained in the partnership agreement. The IRS regulations on this issue
state that, in determining after-tax return, a partner's entire tax situation,
including aspects unrelated to the partnership, will be taken into account.
The Partnership Agreement contains several provisions designed to ensure
that allocations have a substantial economic effect.
(1) It requires that all allocations of revenue, income, gains, costs,
expenses, losses, deductions and distributions are reflected by an increase or
decrease in the relevant partners' capital accounts.
(2) All partners who are allocated losses and deductions generated by assets
acquired with borrowed money will be charged back income and gains generated by
those assets.
(3) Although no limited partner having a deficit balance in his or her
capital account after the final liquidating distribution will be required to
make a cash contribution to the Partnership to eliminate the deficit, the
Partnership Agreement does contain a provision for a qualified income offset.
Based on the foregoing, the allocations provided in the Partnership
Agreement should be respected for tax purposes. If upon audit however, the IRS
takes the position that any of those allocations should not be recognized, and
if the IRS position were sustained by the courts, you could be taxed upon a
portion of the income allocated to us, and part of the deductions allocated to
you could be disallowed.
DEDUCTIBILITY OF LOSSES; PASSIVE LOSSES, TAX BASIS AND "AT RISK" LIMITATION
PASSIVE LOSSES. The passive activity rules allow taxpayers to deduct their
passive activity losses only against their passive activity income. Passive
activity income does not include portfolio income like interest, dividends and
royalties, or ordinary income from salary and other types of compensation for
personal services. Therefore, taxpayers will generally be required to segregate
income and loss into three categories: active trade or business income or loss;
passive activity income or loss; and portfolio income or loss. The passive
activity rules apply to individuals, estates, trusts, personal service
corporations and some closely-held corporations (including S corporations).
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A passive activity is one that involves the conduct of a trade or business
in which the taxpayer does not materially participate. The IRS generally
considers rental activities passive, whether or not a taxpayer materially
participates; furthermore, the IRS generally considers the status of limited
partners to be passive with respect to a partnership's activities. Accordingly,
we expect that you must treat your share of the Partnership's income or losses
as passive income or loss. You may have some portfolio income or loss; for
example, interest earned on the Partnership's funds pending their investment in
equipment would be portfolio income.
You can deduct passive losses against passive income to reduce your overall
income tax liability; but you cannot offset ordinary or portfolio income with
passive losses. Your tax deduction for passive losses will be limited by the
amount of your passive income in any given tax year. If your share of the
Partnership's passive losses is greater than your passive income, you will have
a suspended loss, meaning that you cannot deduct the loss in the year you
incurred it. You can, however, carry the suspended loss forward indefinitely to
offset any passive activity income you derive in future years, whether from the
Partnership or another passive activity. Additionally, any suspended losses
generally may be deducted against non-passive income when you recognize a
capital gain or loss from the sale of your entire interest in the Partnership.
Finally, passive income from the Partnership can be used to absorb losses from
other passive activities, subject to the rules regarding PTPs.
Losses from a PTP are treated as passive activity losses that may only be
used to offset income subsequently generated by the same PTP that is taxed as a
partnership. The IRS generally treats income from a PTP as portfolio income,
unless it is used to offset previous losses from the same PTP. The Partnership
has been structured to avoid being classified as a PTP; however, these
rules mean that income or losses from the Partnership may not be used to offset
any losses or income you may derive from another partnership which is classified
as PTP.
TAX BASIS. Your initial tax basis in your Partnership interest will be the
price you paid for your units. Your tax basis will then be adjusted by your
share of Partnership income or loss, and by your share of any adjustment of the
Partnership's nonrecourse debt (i.e., debt for which you are not personally
liable). Your basis will be reduced by the amount of any cash distributions you
receive and any reductions in your share of the Partnership's nonrecourse debt;
you may only deduct your share of the Partnership's losses, if any, to the
extent of the basis in your units.
"AT-RISK" LIMITATION. Generally, taxpayers may not deduct partnership
losses they incur that exceed the total amount the taxpayer has at risk in the
partnership at the end of a partnership's tax year. For the most part, the
amount a taxpayer has at risk equals the money and the adjusted basis of other
property contributed to the partnership.
You will not be at risk, and will not be entitled to increase the basis of
your units, with respect to the Partnership's recourse liabilities, like trade
payables. Nor will you be at risk with respect to nonrecourse liabilities
incurred by the Partnership, like amounts borrowed to finance equipment
purchases, even though nonrecourse liabilities may increase the tax basis of the
units. Thus your initial amount at risk will be the amount of your investment.
This at-risk amount will be reduced by your cash distributions and loss
allocations, and increased by income allocations.
The at-risk rules limit your ability to use Partnership losses to offset
your income from other sources. Losses from the Partnership may only be taken up
to the amount that you have at risk in this investment. Although the Partnership
may generate tax losses for a taxable year, you will be unable to use such
losses should they exceed your at-risk amount. Any unused losses may be carried
forward indefinitely until you have sufficient at risk amounts in the
Partnership to use the losses.
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DEDUCTIONS FOR ORGANIZATIONAL AND OFFERING EXPENSES; START-UP COSTS
The costs of organizing the Partnership and selling its units, as well as
other start-up costs, may not be deducted in the year they are incurred; rather,
they must be capitalized. Organizational expenses and startup costs may be
written off by the Partnership over a 60-month period.
Syndication expenses, which are the costs incurred to promote or effect the
sale of units, may be deducted, if at all, only upon liquidation of the
Partnership, and then perhaps only as a capital loss. Syndication expenses
include brokerage fees (such as the underwriting fees and sales commissions
provided for in the Partnership Agreement); registration and filing fees with
the SEC and each state in which units are sold; legal fees of underwriters,
placement agents, and the issuer (the Partnership) for securities advice and
advice concerning the adequacy of tax disclosures in the offering documents;
accounting fees for the preparation of information to be included in the
offering materials; printing and reproduction costs; and other selling or
promotional expenses.
We will endeavor to treat the organizational, start-up, and syndication
costs of the Partnership in accordance with the foregoing rules. There is
uncertainty, however, about the distinction between trade or business expenses
that may be currently deducted, and organizational, start-up, and syndication
costs that must be capitalized or deferred. Because of this uncertainty, the IRS
could challenge the current deduction of some Partnership expenses on the
grounds that the expenses are not deductible in the year incurred.
TAX TREATMENT OF LEASES
Your depreciation and cost recovery deductions with respect to any item of
Partnership equipment depends, in part, on the tax classification of the rental
agreement under which it is leased. These deductions are only available if the
rental agreement is a true lease of equipment, meaning the Partnership retains
ownership of it. Depreciation and cost recovery deductions are not available if
the transaction is classified as a sale, or as a financing or refinancing
arrangement, where ownership shifts to a purchaser, the nominal lessee.
Whether the Partnership is the owner of any particular item of equipment,
and whether a lease is a true lease for federal income tax purposes, depends
upon both factual and legal considerations. The IRS has published guidelines on
the tax treatment of leveraged leases. These guidelines do not purport to be
substantive rules of law and are not supposed to be applied in audit contexts,
although they have been in a number of instances.
Whether any lease will meet the relevant requirements to be characterized as
a true lease, and whether the Partnership will be treated for tax purposes as
the owner of each item of equipment acquired by the Partnership, would depend on
the specific facts in each case. Since these facts cannot now be determined with
regard to leases that will be entered into in the future, tax counsel can render
no opinion on this issue.
COST RECOVERY
The equipment we plan to acquire and lease for the Partnership generally is
classified as 3-year, 5-year or 7-year property, and may be written off for
federal income tax purposes, through cost recovery or depreciation deductions,
over its respective recovery period. The amount deductible in each year may be
calculated using the 200 percent declining-balance depreciation method,
switching to the straight-line method at a time that maximizes the deduction. A
taxpayer may, however, choose to use a straight-line method of depreciation for
the entire recovery period.
The Partnership will allocate all or part of the acquisition fees, which are
fees paid to us in connection with the selection and purchase of equipment, to
the cost basis of equipment. We cannot assure you that the IRS will agree that
cost recovery deductions calculated on a cost basis that includes acquisition
fees are properly allowable. The IRS might assert that the acquisition fees are
attributable to items other than the
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equipment, or are not subject to cost recovery at all. If the IRS were
successful in making that claim, the cost recovery deductions available to the
Partnership would be reduced accordingly. Because the determination of this
issue depends on the magnitude and type of services performed for the
acquisition fees, which is presently undeterminable and may vary in for each
piece of equipment acquired by the Partnership, tax counsel is unable to render
an opinion about whether our cost recovery deductions would be upheld if
challenged by the IRS.
In some circumstances, a taxpayer will be required to recover the cost of an
asset over longer period of time than described above. These circumstances
include the use of equipment predominantly outside the United States and the use
of equipment by a tax-exempt entity. See "--Limitations on Cost Recovery
Deductions."
LIMITATIONS ON COST RECOVERY DEDUCTIONS
PROPERTY USED PREDOMINANTLY OUTSIDE THE UNITED STATES. The Partnership may
own and lease equipment that is used predominantly outside the United States.
The cost of this equipment must be written off for federal income tax purposes
using the straight line method of depreciation over a period corresponding to
the equipment's ADR Class Life, which generally is longer than the 3-year,
5-year or 7-year periods permitted for other property. If the Equipment does not
have an ADR Class Life, a 12-year period must be used. Certain types of property
used predominantly outside the United States nevertheless qualify for the normal
rules discussed above, that is, a shorter depreciable life should be allowable.
The exceptions include the following:
(1) aircraft registered in the United States that are operated to and from
the United States;
(2) some railroad rolling stock used within and without the United States;
(3) vessels documented under the laws of the United States which are
operated in the foreign or domestic commerce of the United States; and
(4) containers owned by a United States taxpayer which are used in the
transportation of property to and from the United States.
TAX-EXEMPT LEASING. The Partnership may lease equipment to tax-exempt
entities. Property leased to tax-exempt entities, called tax-exempt use
property, must be written off for federal income tax purposes using the
straight-line method of depreciation. The depreciation period is the longer of
- the equipment's ADR Class Life, which generally is longer than the 3-year,
5-year or 7-year periods permitted for property not leased to tax-exempt
entities; or
- 125% of the term of the lease, including all options to renew as well as
some successor leases for the equipment.
The definition of a tax-exempt entity includes governmental bodies and
tax-exempt governmental instrumentalities, tax-exempt organizations, some
foreign persons and entities, and some international organizations. The term
also generally includes organizations that were tax-exempt at any time during
the five-year period before the organization first uses the property involved.
Foreign persons or entities are treated as tax-exempt entities with respect to
property if less than 50% of the income derived from the leased property is
subject to U.S. income tax.
The term tax-exempt use property does not include:
(1) property which is used predominantly by a tax-exempt entity in an
unrelated trade or business, if the entity pays unrelated business income
tax on the income from the trade or business;
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(2) property leased to a tax-exempt entity under a short-term lease, meaning
a lease which has a term of either less than one year, or less than 30%
of the property's ADR Class Life as long as that is less than three
years; and
(3) certain high-technology equipment.
If any property is owned by a partnership which has both a tax-exempt
entity and a non-exempt person or entity as partners, the tax-exempt entity's
proportionate share of the property is treated as tax-exempt use property,
unless specific requirements relating to the allocation of profits and losses
among the partners are met. These requirements will not be met by the
Partnership. Taxable income from the Partnership, however, will probably be
treated as unrelated business taxable income in the hands of employee benefit
plans and other tax-exempt investors. See "--Taxation of Employee Benefit
Plans and Other Tax-exempt Organizations." Additionally, a substantial
portion of the Partnership's taxable income will be treated as United States
source business income in the hands of foreign limited partners for which no
exemption is available. See "--Foreign Investors." Therefore, we do not
anticipate that the depreciation limitations applicable to tax-exempt use
property will be material as they relate to equipment owned by the
Partnership and not leased to or used by a tax-exempt entity.
DEFERRED PAYMENT LEASES
Section 467 of the Internal Revenue Code requires both the lessor and lessee
in some rental agreements to annually accrue the rent and interest on any rental
payments which will be paid in the future. A Section 467 rental agreement is any
rental agreement for the use of tangible property which involves total payments
in excess of $250,000 and either provides for increasing rental payments, or
provides that some rent for the use of property in a calendar year is payable
after the close of the following calendar year. In general, the amount of rent
that must be allocated to a tax year will be determined by the terms of the
lease. In some circumstances, however, rents will be required to be allocated to
a year prior to the year in which it will be paid, with the exact amount
determined based upon present value principals; the excess of the present value
amount would accrue as interest. The Partnership may enter into transactions
that meet the definition of a Section 467 rental agreement, which could result
in the acceleration of income recognition by the Partnership prior to receipt of
the corresponding cash flow.
SALE OR OTHER DISPOSITION OF PARTNERSHIP PROPERTY
Because of the different individual tax rates for capital gains and ordinary
income, the tax code provides various rules classifying income as ordinary
income or capital gains, and for distinguishing between long-term and short-term
gains and losses. The distinction between ordinary income and capital gains is
relevant for other purposes as well. For example, there are limits on the amount
of capital losses that an individual may offset against ordinary income.
Upon a sale or other disposition of equipment, the Partnership will realize
capital gain or loss equal to the difference between the basis of the equipment
at the time of disposition and the price received for it upon disposition. Any
foreclosure of a security interest in equipment would be considered a taxable
disposition and the Partnership would realize capital gain if the face amount of
the debt being discharged were greater than the tax basis of the equipment, even
though the Partnership would receive no cash.
Because the equipment is tangible personal property, upon its disposition,
all of the depreciation and cost recovery deductions taken by the Partnership
will be subject to recapture to the extent of any realized gain. Recapture means
that the depreciation previously deducted is reversed by recognizing the
depreciated amounts as ordinary income in the year of the sale. Recapture cannot
be avoided by holding the equipment for any specified period of time. If the
Partnership were to sell property on an installment basis, all depreciation
recapture income is recognized at the time of sale, even though the payments are
received in later taxable years.
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Certain gains and losses are grouped together to determine their tax
treatment. The gains on the sale or exchange of some assets including equipment
used in a trade or business and held for more than one year are added to the
gains from some compulsory or involuntary conversions; if these gains exceed the
losses from such sales, exchanges, and conversions, the excess gains will be
taxed as capital gains (subject to a special recapture rule described below). If
the losses exceed the gains, however, the excess losses will be treated as
ordinary losses. Under a special recapture provision, any net gain under this
aggregation rule will be treated as ordinary income rather than capital gains if
the taxpayer has non-recaptured net losses, which are net losses under this
aggregation rule from the five preceding taxable years which have not yet been
offset against net gains in those years.
SALE OR OTHER DISPOSITION OF PARTNERSHIP INTEREST
The gain or loss you realize on the sale of units includes the cash or other
consideration you receive from the purchaser, as well as your share of the
Partnership's nonrecourse indebtedness. This gain or loss will, except as noted
below, be taxed as long-term or short-term capital gain or loss, depending on
how long you hold your units, assuming that your units qualify as capital assets
in your hands.
The portion of your gain attributable to ordinary income assets, which
includes inventory and unrealized receivables, would be treated as ordinary
income. Ordinary income assets include assets that are subject to recapture of
recovery or depreciation deductions, determined as if your proportionate share
of the Partnership's properties are sold at the time you sell your units. Thus,
a substantial portion of any gain upon the sale of your units may be treated as
ordinary income.
You must promptly notify us of any sale or exchange of your units. Once we
are notified, we are required to inform the IRS, the buyer, and you of the fair
market value of the allocable share of unrealized receivables and appreciated
inventory attributable to the units you sold or exchanged. This report must be
made on or before January 31 following the calendar year of sale. The penalty
for failure to inform the IRS is $50 for each failure, with a limit of $100,000.
If you fail to notify us of the transfer of your units, you will be penalized
$50 per failure.
TREATMENT OF CASH DISTRIBUTIONS UPON REDEMPTION
The redemption by the Partnership of all or a portion of your units will be
treated as a sale or exchange of the units for tax purposes, and may generate
taxable income to you. The amount you realize in such redemption will equal the
sum of the cash you receive, plus your share of the Partnership's non-recourse
liabilities.
Simultaneously with your receipt of a cash distribution from the
Partnership, your share of the Partnership's ordinary income assets will be
reduced. You will be deemed to have received the cash, or a portion of the cash,
in exchange for your share of ordinary income assets. If the distribution that
is deemed a payment for the ordinary income assets exceeds your share of the
adjusted basis of the ordinary income assets, you must recognize the excess as
ordinary income. The remainder of the distribution, if any, will be treated in
the same manner as a partnership distribution (i.e., you will recognize income
only to the extent that cash distributions exceed your adjusted basis in your
units). See "--Taxation of Distributions."
We anticipate that funds used to redeem units will be payable out of cash
from operations and cash from sales that otherwise would be available for
distribution to all limited partners or for reinvestment in additional
equipment. Accordingly, while any redemption of units would decrease the
aggregate number of units outstanding, and thereby proportionally increase each
remaining limited partner's distributive share of the Partnership's income,
gain, loss and deductions, it may also reduce the total amount of cash which is
available for investment or reinvestment.
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GIFTS OF UNITS
Generally, no gain or loss is recognized upon the gift of property. A gift
of units, however, including a charitable contribution, may be treated partially
as a sale, to the extent of your share of the Partnership's nonrecourse
liabilities. You may be required to recognize gain in an amount equal to the
difference between your share of nonrecourse debt and, in the case of a
charitable contribution, the portion of the basis in the units allocable to that
deemed sale transaction. In the event of a non-charitable gift, the amount of
your share of the nonrecourse debt is offset by your entire basis in the units.
Charitable contribution deductions for the fair market value of the units will
be reduced by the amounts involved in such a partial sale and, in any event, may
be subject to reduction in certain cases by the amount of gain which would be
taxed as ordinary income on a sale of your units.
CONSEQUENCE OF NO SECTION 754 ELECTION
Because of the complexities of the tax accounting required, the Partnership
does not presently intend to file elections under Section 754 of the tax code to
adjust the basis of property in the case of transfers of units. As a
consequence, a person who obtains units may be subject to tax upon the portion
of the proceeds of sales of the Partnership's property that represents a return
of capital to that person. This may affect adversely the price that potential
purchasers would be willing to pay for units.
TAX TREATMENT OF TERMINATION OF THE PARTNERSHIP PURSUANT TO THE PARTNERSHIP
AGREEMENT
In the event the Partnership terminates pursuant to the Partnership
Agreement, we are required to dispose of the Partnership assets, apply the
proceeds and other Partnership funds to repayment of Partnership liabilities,
and distribute any remaining funds to the partners in accordance with their
positive capital accounts balances. Sales and other dispositions of the
Partnership's assets would have the tax consequences described in "--Sale or
Other Disposition of Partnership Property". Cash distributions made at
liquidation that exceed the tax basis of your Partnership interest generally
would be taxable as capital gain, provided your units constitute capital assets
in your hands. Cash distributions in amounts less than your basis may result in
a loss, generally a capital loss which would be subject to the general
limitations on deductibility of losses.
AUDIT BY THE IRS
No tax rulings have been sought by the Partnership from the IRS. While the
Partnership (and any joint ventures in which the Partnership participates)
intends to claim only those deductions and assert only those tax positions for
which there is a substantial basis, the IRS may audit the returns of the
Partnership or any joint venture involving the Partnership, and it may not agree
with some or all of the tax positions we take.
An audit of the Partnership's information return may result in an increase
in its income, the disallowance of deductions, and the reallocation of income
and deductions among the partners. In addition, an audit of the Partnership's
information return may lead to an audit of your personal income tax return,
which could lead to adjustments of items unrelated to this investment.
You must report your share of the Partnership's income, losses, gains,
deductions, and credits on your individual return in a manner consistent with
the Partnership's return unless you file a statement with the IRS identifying
the inconsistency, or unless you can prove your return is in accordance with
information provided by the Partnership. Failure to comply with this requirement
will subject you to penalties and may result in an extended time period for the
IRS to challenge your return.
In most circumstances, the federal tax treatment of the Partnership's
income, gains, losses, deductions and credits will be determined at the
partnership level in a unified partnership proceeding, rather than in separate
proceedings with its partners. In any audit of a partnership, the IRS will deal
with the partnership's "tax matters partner." We, as general partner, will be
designated as the Partnership's tax
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matters partner in the Partnership Agreement. Only limited partners having at
least a 1% interest in the Partnership will be entitled to receive a separate
notice from the IRS of any audit of the Partnership's return and of the results
of the audit. Limited partners who have an interest of less than 1% will not be
entitled to notice from the IRS; however, groups of partners who together own a
5% or greater interest in the Partnership may, by notification to the IRS,
become a "notice group" and designate a member of their group to receive IRS
notices. All limited partners have the right to participate in any audit of the
Partnership. We are required to keep you informed of any administrative and
judicial proceedings involving the tax matters of the Partnership. Also, we will
keep you advised of any significant audit activities with respect to the
Partnership.
As the tax matters partner, we are authorized to enter into settlement
agreements with the IRS that are binding upon partners with less than a 1%
interest, except for partners who are members of a notice group or who have
filed a statement with the IRS that we do not have authority to enter into
settlement agreements that are binding upon them. You are entitled to have any
favorable settlement agreement reached between the IRS and another partner with
respect to a Partnership item applied to you.
We are empowered by the Partnership Agreement to conduct, on behalf of the
Partnership and its limited partners, all examinations by tax authorities
relating to the Partnership at the expense of the Partnership. See "SUMMARY OF
THE PARTNERSHIP AGREEMENT." A tax controversy could result in substantial legal
and accounting expenses being charged to the Partnership, even if the outcome is
favorable.
ALTERNATIVE MINIMUM TAX
Some taxpayers must pay an alternative minimum tax (AMT) if the AMT exceeds
the taxpayer's regular federal income tax liability for the year. For
noncorporate taxpayers, the AMT is imposed on alternative minimum taxable income
(AMTI) that is above an exemption amount. The AMTI is based on a recomputation
of taxable income, which is increased by tax preference items, and other
adjustments to taxable income are made. The AMT tax rate for noncorporate
taxpayers is 26% for the first $175,000 ($87,500 for married individuals filing
separately) of a taxpayer's AMTI in excess of the exemption amount; additional
AMTI is taxed at 28%. The exemption amount is $45,000 for married individuals
filing jointly, $33,750 for single persons, and $22,500 for estates, trusts, and
married individuals filing separately.
The principal adjustments include:
- depreciation deductions are limited to those that do not exceed those
computed using the 150% declining balance method and, for property placed
in service before January 1, 1999, an extended recovery period;
- mining exploration and development costs are capitalized and amortized
over ten years;
- magazine circulation expenditures are amortized over three years;
- research and experimental expenditures are amortized over ten years;
- miscellaneous itemized deductions are not allowed;
- medical expenses are deductible only to the extent they exceed 10% of
adjusted gross income;
- state and local property and income taxes are not deductible;
- interest deductions are restricted;
- the standard deduction and personal exemptions are not allowed;
- only some types of operating losses are deductible; and
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- the amount by which the fair market value of stock received from
exercising an incentive stock option exceeds the exercise price must be
included as income.
The principal tax preference items that must be added to taxable income for
AMT purposes include:
(1) the excess of depletion over the adjusted basis of the property at the
end of the year;
(2) the excess of intangible drilling costs over 65% of net oil and gas
income: and
(3) private activity bond interest.
We do not anticipate that any significant tax preference items will be
generated by the Partnership. The principal Partnership items that may have an
impact on your AMTI are interest expense allocable to cash reserves maintained
by the Partnership and depreciation on equipment purchased before January 1,
1999. We expect that the Partnership will depreciate its equipment using the
straight-line method. Therefore, the Partnership's activities should not give
rise to any significant depreciation adjustments for purposes of computing your
AMTI. You should be aware, however, that for purposes of computing AMTI,
interest you pay to acquire or maintain an ownership interest in a passive
activity (such as units in the Partnership) is deductible only to the extent
that the interest payments, when added to your passive activity income or loss
and computed with the appropriate alternative minimum tax adjustments and tax
preferences, does not result in a passive activity loss. Accordingly, if you
borrow money and incur interest expense in connection with your purchase of
units, you may only be allowed a limited deduction for that interest in
computing AMTI.
The rules relating to the alternative minimum tax for corporations are
different than those just described. Corporations contemplating purchase of the
units should consult their tax advisors as to the possible AMT consequences of
investing in units.
INTEREST EXPENSE
In general, interest paid in connection with investment activities is
deductible only against investment income. Interest paid in connection with
investments in passive activities, like the Partnership, may only be deducted in
accordance with the rules for losses derived from passive activities. See
"--Deductibility of Losses: Passive Losses, Tax Basis and At-Risk Limitation."
Interest paid by the Partnership likely will be treated as passive activity
interest, except to the extent it is allocable to reserves being maintained by
the Partnership, as would any interest expense you incur on money borrowed to
purchase units. The Partnership may enter into transactions involving the
prepayment of interest or the payment of points, commitment fees, and loan
origination or brokerage fees. In general, prepaid interest, points, and similar
costs may not be deducted currently; they usually have to be capitalized and
written off over the life of the related loan.
SELF-EMPLOYMENT INCOME AND TAX
If you are self-employed, your distributive share of Partnership income will
not be subject to self-employment tax.
LIMITED DEDUCTIONS FOR ACTIVITIES NOT ENGAGED IN FOR PROFIT
The ability to take deductions for activities not engaged in for profit is
limited. The law presumes that an activity is engaged in for profit if the gross
income from the activity exceeds the deductions from the activity in at least
three out of the five consecutive years, ending with tax year at issue. We
intend to operate the Partnership for the purpose of providing an economic
profit, and anticipate that the Partnership will have sufficient income to
entitle it to the benefit of the presumption that it operates for profit. If the
IRS were to treat the Partnership's activities as not being engaged in for
profit, any deductions of the Partnership in excess of its income might be
permanently disallowed.
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FOREIGN SOURCE TAXABLE INCOME
Rental income and interest received by the Partnership from sources in
foreign countries could be subject to withholding and/or income taxes imposed by
those countries. In addition, capital gains on the sale of equipment may also be
subject to capital gains taxes in foreign countries where the Partnership sells
equipment. Tax treaties between some countries and the United States may reduce
or eliminate such taxes. The foreign activities of the Partnership, however, may
require you to file tax returns in foreign countries. We cannot predict what tax
rate Partnership income will be subject to in other countries, since the amount
of the Partnership's assets to be invested in various countries is not known.
We will inform you of your proportionate share of any foreign income and the
foreign taxes paid by the Partnership; you will then be required to include
these items on your tax return. At your option, you generally will be entitled
to claim either a credit (subject to the limitations discussed below) or, if you
itemize your deductions, a deduction (subject to the limitations generally
applicable to deductions) for your share of foreign taxes in computing your
federal income taxes.
Generally, a credit for foreign taxes may not exceed the federal tax
liability attributable to your total foreign source taxable income. Your share
of the Partnership's rental income and interest income attributable to equipment
used outside the U.S. will qualify as foreign source income; the source of
income from the sale of equipment will usually be attributed to the location of
the equipment. Several limits apply to the foreign tax credit. The credit is
applied separately to different types of foreign source income, including
foreign source passive income like interest income; special limits also apply to
income from the sale of capital assets. The foreign tax credit may offset only
90% of the alternative minimum tax imposed on corporations and individuals.
Furthermore, in calculating the foreign tax credit limitation, the amount of
your foreign source income is reduced by various deductions that are allocated
and/or apportioned to the foreign source income. One such deduction is interest
expense, a portion of which will generally reduce the foreign source income of
any limited partner who owns foreign assets, either directly or indirectly. For
these purposes, foreign assets owned by the Partnership will be treated as owned
by the limited partners, and indebtedness incurred by the Partnership will be
treated as incurred by limited partners.
Because of these limits, you may be unable to claim credit for the full
amount of your proportionate share of the foreign taxes attributable to the
income of the Partnership. In addition, any foreign losses generated by the
Partnership could reduce the tax credits available to you from foreign source
income unrelated to the Partnership. The foregoing is only a general description
of the foreign tax credit under current law. Since the availability of a credit
or deduction depends on your particular circumstance, we advise you to consult
your own tax adviser.
REGISTRATION, INTEREST AND PENALTIES
TAX SHELTER REGISTRATION. Tax shelters must registered with the IRS. Under
temporary IRS regulations, an investment is a tax shelter if a potential
investor could reasonably infer from representations made in connection with the
sale of the investment that the aggregate amount of deductions and 350% of the
credits potentially allowable with respect to the investment will be greater
than twice the amount to be invested for any of the first five years. The
Partnership is a tax shelter under the IRS definition because the term "amount
of deductions" means gross deductions, and gross income expected to be realized
by the Partnership is not counted. A tax shelter is not required to be
registered initially, however, if it is a projected income investment. A
projected income investment is any tax shelter that is not expected to reduce
the cumulative tax liability of any investor in first five years of the
investment. Because there can be no assurance that unexpected economic or
business developments will not cause you to incur tax losses from the
Partnership, with the result that your cumulative tax liability during the first
five years might be reduced, we will register the Partnership as a "tax shelter"
with the IRS and the Partnership will have a tax shelter registration number.
However, if the Partnership is a projected income investment, you are not
required to include the Partnership's registration number on your tax returns.
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Even though the Partnership may be a projected income investment, it will
nonetheless be required to maintain a list identifying each person who sold a
unit and including information required by the IRS regulations. This list must
be made available to the IRS upon its request.
If the Partnership ceases to be a projected income investment, the
Partnership and its limited partners will become subject to all remaining
requirements applicable to tax shelters. This means, among other things, that
you will be required to include the Partnership's registration number on your
tax returns. We are required to notify you if the Partnership no longer
qualifies as a projected income investment, and to inform you that you must
begin to report the Partnership's registration number on your tax return if you
claim a deduction, credit, or other tax benefit from the Partnership.
WE ARE REQUIRED BY IRS REGULATIONS TO INCLUDE THE FOLLOWING STATEMENT IN THE
PROSPECTUS: "ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED
BY THE INTERNAL REVENUE SERVICE."
INTEREST ON UNDERPAYMENTS. The interest that taxpayers must pay for
underpayment of federal taxes is the Federal short-term rate plus three
percentage points, compounded daily. The Federal short-term rate is set
quarterly by the Treasury Department based on the yield of U.S. obligations with
maturities of three years or less.
PENALTY FOR SUBSTANTIAL UNDERSTATEMENTS. The tax code also contains a
penalty for substantial understatement of federal income tax liability equal to
20% of the amount of the understatement. An understatement occurs if the correct
tax for the year (as finally determined after all administrative and judicial
proceedings) exceeds the tax liability actually shown on the taxpayer's returns
for the year. An understatement on an individual's return will be considered
substantial for purposes of the penalty if it exceeds both (a) 10% of the
correct tax, and (b) $5,000. The imposition of this penalty may be avoided
however if, in the case of any item that is not attributable to a "tax shelter,"
(a) there was substantial authority for the taxpayer's treatment of the item, or
(b) the relevant facts affecting the item's tax treatment were adequately
disclosed in the taxpayer's return provided that the taxpayer had a "reasonable
basis" for the tax treatment of such item. In the case of an item that is
attributable to a "tax shelter," the penalty may be avoided if (a) there was
substantial authority for the taxpayer's treatment of the item, and (b) the
taxpayer reasonably believed that his treatment of the item on the return was
more likely than not the proper treatment.
For purposes of the understatement penalty, "tax shelter" includes a
partnership if a significant purpose of the partnership is "the avoidance or
evasion of Federal income tax." The Partnership should not be treated as a "tax
shelter" within the meaning of this provision because (1) the Partnership's
objectives include the provision of cash distributions (real economic gain) to
the investors throughout the operating life of the Partnership, and
(2) claiming the tax benefits associated with the ownership of equipment would
be consistent with Congressional purpose in providing those benefits.
STATE AND LOCAL TAXATION
In addition to the federal income tax consequences described above, you
should consider potential state and local tax consequences of this investment.
Your share of the taxable income or loss of the Partnership generally must be
included in determining reportable income for state or local tax purposes in the
jurisdiction where you reside. In addition, other states in which the
Partnership owns equipment or does business may require you to file state income
tax returns and may impose taxes on your pro rata share of the Partnership's
income derived from that state. Any tax losses generated by the Partnership's
operations in such states may not be available to offset income from other
sources in other states. To the extent that you pay tax to a state by virtue of
the operations of the Partnership within that state, you may be entitled to a
deduction or credit against tax owed to your state of residence with respect to
the same income. Payment of state and local taxes will constitute a deduction
for federal income tax purposes,
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assuming that you itemize deductions. We advise you to consult your own tax
adviser to determine the effect of state and local taxes, including gift and
death taxes as well as income taxes, which may be payable in connection with
this investment.
FOREIGN INVESTORS
Foreign investors in the Partnership should be aware that, to a substantial
degree, the income of the Partnership will consist of trade or business income
that is attributable to or effectively connected with a fixed place of business
maintained by the Partnership in the United States. As such, the Partnership's
income will be subject to U.S. taxation in the hands of foreign investors and it
is unlikely that any exemption will be available under any applicable tax
treaty. Foreign investors may be required to file a U.S. federal income tax
return to report their distributive shares of the Partnership's income, gains,
losses, and deductions. Additionally, the Partnership is required to withhold
tax on each foreign investor's distributive share of income from the
Partnership, whether or not any cash distributions are made; any amount required
to be withheld will be deducted from distributions otherwise payable to the
foreign investor and the investor will be liable to repay the Partnership for
any withholdings in excess of the distributions to which he or she is otherwise
entitled. Foreign investors should consult with their tax advisors regarding the
applicability of these rules and regarding the other tax consequences described
in this Section.
TAX TREATMENT OF CERTAIN TRUSTS AND ESTATES
The tax treatment of trusts and estates can differ from the tax treatment of
individuals. Investors who are trusts and estates should consult with their tax
advisors regarding the applicability of the tax rules discussed in this Section.
TAXATION OF EMPLOYEE BENEFIT PLANS AND OTHER TAX-EXEMPT ORGANIZATIONS
Employee benefit plans, such as qualified pension and profit sharing plans,
Keogh plans, and IRAs, generally are exempt from federal income tax, except that
any unrelated business taxable income that exceeds $1,000 in any taxable year is
subject to an unrelated business income tax. Other charitable and tax-exempt
organizations are likewise subject to the unrelated business income tax.
Tax-exempt investors will be deemed to be engaged in the business carried on by
the Partnership and will be subject to the unrelated business income tax. Such
investors should consult with their tax advisors regarding the tax consequences
to them of investing in the Partnership.
CORPORATE INVESTORS
The federal income tax consequences to investors which are corporations may
differ materially from the tax consequences discussed in this Section,
particularly as they relate to the alternative minimum tax. Such investors
should consult with tax advisors as to the tax consequences to them of this
investment.
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INVESTMENT BY QUALIFIED PLANS
FIDUCIARIES UNDER ERISA
Investors that are fiduciaries of qualified plans are subject to certain
requirements under the federal law commonly known as ERISA. These requirements
include the duty to discharge their responsibilities solely in the interest of,
and for the benefit of, the qualified plan's participants and beneficiaries. A
fiduciary must:
- perform its duties with the skill, prudence and diligence of a prudent
person;
- diversify the qualified plan's investments so as to minimize the risk of
large losses; and
- act in accordance with the qualified plan's governing documents.
Fiduciaries of qualified plans include anyone who exercises any authority or
control over the management or disposition of the funds or other property of the
qualified plan. For example, any person responsible for choosing a qualified
plan's investments, or who is a member of a committee that is responsible for
choosing a qualified plan's investments, is a fiduciary of the qualified plan.
Also, an investment professional who renders or who has the authority or
responsibility to render investment advice regarding the funds or other property
of a qualified plan may be a fiduciary of the qualified plan, along with any
other person with special knowledge or influence with respect to a qualified
plan's investment or administrative activities.
IRAs generally are not subject to ERISA's fiduciary duty rules. In addition,
a participant who exercises control over his or her individual account in the
qualified plan in a self-directed investment arrangement will generally be held
responsible for the consequences of his or her investment decisions. Some
qualified plans of sole proprietorships, partnerships and closely-held
corporations are generally not subject to ERISA's fiduciary duty rules, although
they, as well as IRAs and self-directed accounts, are subject to the IRS'
prohibited transaction rules, explained below.
A person subject to ERISA's fiduciary rules with respect to a qualified plan
should consider those rules in the context of the particular circumstances of
the qualified plan before authorizing or making an investment in units with a
portion of the qualified plan's assets.
PROHIBITED TRANSACTIONS UNDER ERISA AND THE TAX CODE
The tax code and ERISA prohibit qualified plans and IRAs from engaging in
certain transactions involving assets of the qualified plan or IRA with parties
that are referred to as disqualified persons. Disqualified persons include
fiduciaries of the qualified plan or IRA, officers, directors and certain
shareholders and other owners of the company sponsoring the qualified plan, and
persons and legal entities sharing certain family or ownership relationships
with other disqualified persons. In addition, the beneficiary of an IRA is
generally considered to be a disqualified person for purposes of the prohibited
transaction rules.
Types of prohibited transactions include:
- direct or indirect transfers of a qualified plan's or IRA's assets to, or
use by or for the benefit of, a disqualified person,
- acts by a fiduciary involving the use of a qualified plan's or IRA's
assets in the fiduciary's individual interest or for the fiduciary's own
account; and
- a fiduciary receiving consideration for his or her own personal account
from any party dealing with a qualified plan or IRA in connection with a
transaction involving the assets of the qualified plan or the IRA.
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Under ERISA, a disqualified person that engages in a prohibited transaction
will be required to disgorge any profits made from the transaction and will be
required to compensate the qualified plan for any losses it sustained. The tax
code imposes excise taxes on a disqualified person that engages in a prohibited
transaction with a qualified plan or IRA. Prohibited transactions subject to
these sanctions must generally be unwound to avoid incurring additional
penalties. In addition, if you engage in a prohibited transaction with an IRA in
which you are a beneficiary, the IRA ceases to be treated as an IRA and,
therefore, all of the assets are treated as if they are distributed to you in
the year in which such transaction occurred.
In order to avoid the occurrence of a prohibited transaction under the tax
code or ERISA, units may not be purchased by a qualified plan or IRA from assets
for which we or any of our affiliates are fiduciaries.
PLAN ASSETS
If the Partnership's assets were determined under ERISA or the tax code to
be plan assets of qualified plans and/or IRAs owning units, fiduciaries of such
qualified plans and IRAs might be subject to liability for actions that we take.
In addition, some of the transactions described in this prospectus in which the
Partnership might engage, including transactions with our affiliates, might
constitute prohibited transactions under the tax code and ERISA for qualified
plans and IRAs, even if their purchase of units did not originally constitute a
prohibited transaction. Moreover, fiduciaries with responsibilities to qualified
plans and/or IRAs subject to ERISA's fiduciary duty rules might be deemed to
have improperly delegated their fiduciary responsibilities to us in violation of
ERISA.
In some circumstances, ERISA and the tax code apply a look-through
rule under which the assets of an entity in which a qualified plan or IRA has
invested may constitute plan assets. ERISA and the tax code, however, exempt
investments in certain publicly-registered securities and in certain operating
companies, as well as investments in entities not having significant equity
participation by benefit plan investors, from the look-through principle. Under
the Department of Labor's current regulations regarding what constitutes the
assets of a qualified plan or IRA in the context of investment securities such
as the units, undivided interests in the underlying assets of a collective
investment entity such as the Partnership will not be treated as plan assets of
qualified plan or IRA investors if either:
- the units are publicly offered;
- less than 25% of the units are owned by qualified plans, IRAs, and certain
other employee benefit plans; or
- the Partnership is an operating company.
To qualify for the publicly-offered exception, the units must be freely
transferable, owned by at least 100 investors independent of the Partnership and
of one another, and either (a) be part of a class of securities registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934 or (b) sold as
part of a public offering pursuant to an effective registration statement under
the Securities Act of 1933 and registered under the Securities Exchange Act of
1934 within 120 days after the end of the Partnership's fiscal year during which
the offering occurred. Units are being sold as part of an offering registered
under the Securities Act of 1933. Accordingly, whether the units will qualify
for the publicly-offered exception will depend on if they are freely
transferable within the meaning of the Department of Labor's regulations.
Whether a unit is freely transferable is a factual determination. However,
we believe that the limits on assigning units and on substituting limited
partners contained in Sections 10.2, 10.3 and 10.4 of the Partnership Agreement
fall within the scope of certain restrictions which are permitted by the
Department of Labor regulations. These regulations will not cause a
determination that securities are not freely transferable when the minimum
investment, as in the case of the units, is $10,000 or less. But, because we
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cannot be certain about the ultimate determination of the units being freely
transferable, or the determination of whether the Partnership will be an
operating company under the alternative Department of Labor exemption set forth
above, we have decided to rely on the 25% ownership exemption for these
purposes. Consequently, we will take the steps necessary to ensure that
ownership of units by qualified plans, IRAs, and certain other employee benefit
plan investors is at all times less than 25% of the total number of outstanding
units.
In calculating this limit, we will, as provided in the Department of Labor's
regulations, disregard the value of any units held by a person (other than a
qualified plan, IRA, or certain other employee benefit plans) who has
discretionary authority or control with respect to the assets of the
Partnership, or any person who provides investment advice for a fee with respect
to the assets of the Partnership, or any affiliate of any such a person. See
"INVESTOR SUITABILITY AND MINIMUM INVESTMENT REQUIREMENTS; SUBSCRIPTION
PROCEDURES--Minimum Investment." Whether the assets of the Partnership will
constitute "plan assets" is a factual issue which may depend in large part on
our ability throughout the life of the Partnership to satisfy the 25% ownership
exemption. Accordingly, the tax counsel we have retained are unable to express
an opinion on this issue.
OTHER ERISA CONSIDERATIONS
In addition to the above considerations in connection with the "plan asset"
question, a fiduciary's decision to cause a qualified plan or IRA to acquire
units should involve, among other factors, considerations that include whether:
(1) the investment is in accordance with the documents and instruments
governing the qualified plan or IRA;
(2) the purchase is prudent in light of the diversification of assets
requirement for the qualified plan and the potential difficulties that
may exist in liquidating units;
(3) the investment will provide sufficient cash distributions in light of
the qualified plan's likely required benefit payments and other needs for
liquidity;
(4) the investment is made solely in the interests of plan participants;
(5) the evaluation of the investment has properly taken into account the
potential costs of determining and paying any amounts of federal income
tax that may be owed on unrelated business taxable income derived from
the Partnership; and
(6) the fair market value of units will be sufficiently ascertainable, and
with sufficient frequency, to enable the qualified plan or IRA to value
its assets in accordance with the rules and policies applicable to the
qualified plan or IRA.
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CAPITALIZATION
The capitalization of the Partnership as of the date of this prospectus, and
as adjusted to reflect the sale of the minimum and maximum offering of units, is
as follows:
<TABLE>
AS OF THE MINIMUM OFFERING MAXIMUM OFFERING
DATE HEREOF(1) OF 12,000 UNITS OF 750,000 UNITS
-------------- ---------------- ----------------
<S> <C> <C> <C>
Our Capital Contribution(1)..................... $1,000 $ 1,000 $ 1,000
Limited Partner's Capital Contribution(2)....... 1,000(1) 1,200,000 75,000,000
------ ---------- -----------
Total Capitalization(3)......................... $2,000 $1,201,000 $75,001,000
Less Estimated O & O Expenses(4)................ -- (162,000) (9,375,000)
------ ---------- -----------
Net Capitalization.............................. $2,000 $1,039,000(2) $65,626,000
</TABLE>
------------------------
(1) The Partnership was originally capitalized by our contribution of $1,000 and
$1,000 by the original limited partner.
(2) The original limited partner will withdraw from the Partnership and receive
a return of his original capital contribution on the initial closing date.
(3) The amounts shown reflect the offering proceeds from sale of units at
$100.00 per unit before deduction of (a) sales commissions of 8.0% of
offering proceeds (or $8 per unit sold, which will be paid except in the
case of units sold to affiliated limited partners), (b) underwriting fees
equal in amount to 2.0% of offering proceeds (or $2.00 per unit sold) and
(c) the O & O Expense Allowance (without regard to such actual expenses) of
3.5% ($3.50 per unit) of the first $25,000,000 of offering proceeds; 2.5%
($2.50 per unit) of offering proceeds in excess of $25,000,000 but less than
$50,000,000; and 1.5% ($1.50 per unit) for offering proceeds exceeding
$50,000,000. We will pay actual O & O expenses for this offering to the
extent they exceed the O & O expense allowance. No fees or compensation were
payable with regard to either our or the original limited partner's
investment.
(4) The maximum dollar amount of these items of compensation payable to us, our
affiliates and non-affiliated selling dealers will equal $162,000 for the
minimum offering of 12,000 units and $9,375,000 for the maximum offering of
750,000 units, in each case computed as if all units are sold to the general
public without purchases by affiliated limited partners. Affiliated limited
partners may acquire units (for investment purposes only) on a net of sales
commissions basis for a price of $92.00 per unit (and a proportionate net
unit price for each fractional unit purchased). To the extent that units are
purchased by affiliated limited partners, both the total capital
contributions of the limited partners and the Partnership's obligation to
pay sales commissions will be reduced accordingly. See "SOURCES AND USES OF
OFFERING PROCEEDS."
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MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Partnership had limited funds at its formation (February 7, 2000). To
date, the Partnership has not had any operations. The Partnership intends to use
the proceeds of this offering to acquire equipment and to establish initially
working capital reserves of approximately 1.0% of the offering proceeds per
unit. However, unanticipated or greater than anticipated operating costs or
losses (including a lessee's inability to make timely lease payments) would
adversely affect liquidity. To the extent that working capital reserves may be
insufficient to satisfy the cash requirements of the Partnership, we anticipate
that we would obtain additional funds from the Partnership's operations, the
proceeds from the sale of equipment, bank loans, short-term loans from us or our
affiliates or the sale of equipment. We may use a portion of cash from
operations and from sales or refinancings to re-establish working capital
reserves.
OPERATIONS
The Partnership has had no operations to date. Until receipt and acceptance
of subscriptions for 12,000 units and the admission of subscribers as limited
partners on the initial closing date, the Partnership will not begin to acquire
equipment or incur indebtedness. The level of indebtedness cannot be predicted
until the offering proceeds are mostly invested. If the Partnership requires
additional cash or we determine that it is in the best interests of the
Partnership to obtain additional funds to increase cash available for investment
or for any other proper business need, the Partnership may borrow, on a secured
or unsecured basis, amounts up to 80% of the aggregate purchase price of all
investments acquired by the Partnership. The Partnership currently has no
arrangements with, or commitments from, any lender with respect to any such
borrowings. See "INVESTMENT OBJECTIVES AND POLICIES--Acquisition Policies and
Procedures."
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SUMMARY OF THE PARTNERSHIP AGREEMENT
The following is a brief summary of the material provisions of the
Partnership's Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement"). The Partnership Agreement sets forth the terms and
conditions upon which the Partnership will conduct its business and affairs and
it sets forth the rights and obligations of the limited partners. This summary
is not complete and is subject to and qualified by the detailed provisions of
the Partnership Agreement. A copy of the Partnership Agreement is included as
Exhibit A to the registration statement of which this prospectus forms a part.
Prospective investors should study the Partnership Agreement carefully before
making any investment.
ESTABLISHMENT AND NATURE OF THE PARTNERSHIPS
We organized the Partnership as a limited partnership under the Delaware
Revised Uniform Limited Partnership Act with us as its general partner. A
limited partnership is a partnership having one or more general partners and one
or more limited partners. A limited partner ordinarily does not play a role in
the management or control of a partnership's affairs, and his or her liability
for partnership obligations is generally limited to his or her investment. A
general partner, however, is personally liable for all partnership obligations.
NAME AND ADDRESS
The Partnership will be conducted under the name "ICON Income Fund Eight B
L.P.," with its principal office and place of business at 111 Church Street,
White Plains, New York 10601 (unless we change the offices with written notice
to you).
PURPOSES AND POWERS
We have organized the Partnership for the purposes of:
- acquiring, investing in, owning, leasing, re-leasing, financing,
refinancing, transferring or otherwise disposing of, and dealing in or
with, equipment of all kinds, residual interests in equipment, and options
to purchase both equipment and residual interests in equipment;
- lending and providing financing to others for their acquisition of
equipment and other tangible and intangible personal property of all
kinds, pursuant to financing arrangements or transactions secured by
various items of equipment (or interests in and leases of equipment) and
other personal property; and
- establishing, acquiring, conducting and carrying on any business suitable,
necessary, useful or convenient in connection with the above, in order to
generate monthly cash distributions to you during the term of the
Partnership.
DURATION OF PARTNERSHIP
The term of the Partnership commenced when we filed a Certificate of Limited
Partnership with the Delaware Secretary of State on February 7, 2000. It will
terminate at midnight on December 31, 2017, or earlier if a dissolution event
occurs. See "--Dissolution and Winding-Up".
CAPITAL CONTRIBUTIONS
GENERAL PARTNER. We have contributed $1,000, in cash, as our capital
contribution to the Partnership in exchange for a one percent (1%) partnership
interest.
ORIGINAL LIMITED PARTNER. The original limited partner made a capital
contribution of $1,000 to the Partnership in exchange for ten (10) units, which
represented a 99% partnership interest at that time. On the initial closing
date, the original limited partner will withdraw from the Partnership, his
capital
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contribution of $1,000 will be returned to him in full and his original
partnership interest of ten units will be retired upon the admission of
additional limited partners.
LIMITED PARTNERS. Each limited partner (other than the original limited
partner and limited partners affiliated with us) will make a capital
contribution to the Partnership's capital, in cash, in an amount equal to $100
for each unit or fraction of a unit purchased. Each limited partner affiliated
with us will make a capital contribution, in cash, in an amount equal to $92.00
for each unit or fraction of a unit purchased.
POWERS OF THE PARTNERS
GENERAL PARTNER. Except as otherwise specifically provided in the
Partnership Agreement, we will have complete and exclusive discretion in the
management and control of the affairs and business of the Partnership and will
be authorized to employ all powers necessary or advisable to carry out the
purposes and investment policies, conduct the business and affairs, and exercise
the powers of the Partnership. For example, we will have the right to make
investments for and on behalf of the Partnership and to manage the investments
and all other assets of the Partnership. You will not be permitted to
participate in the management of the Partnership. We will have the sole and
absolute discretion to accept or refuse to accept the admission of any
subscriber as a limited partner to the Partnership. Except to the extent limited
by Delaware law or the Partnership Agreement, we may delegate all or any of our
duties under the Partnership Agreement to any person, including any of our
affiliates.
The Partnership Agreement designates us as the Partnership's tax matters
partner and authorizes and directs us to represent the Partnership and its
limited partners in connection with all examinations of the Partnership's
affairs by tax authorities and any resulting administrative or judicial
proceedings, and to expend the Partnership's funds in doing so.
LIMITED PARTNERS. No limited partners shall participate in or have any
control over the Partnership's business or have any right or authority to act
for, or to bind or otherwise obligate the Partnership.
LIMITATIONS ON OUR POWERS
The Partnership Agreement and Delaware law subjects us to limitations on how
we administer the business and affairs of the Partnership, as outlined below.
DEBT. From the date when all capital contributions have been invested or
committed to investments or reserves, used to pay permitted front-end fees or
returned to you in accordance with the Partnership Agreement, the Partnership
will not incur or assume additional indebtedness when acquiring an investment if
the new debt causes total Partnership debt to exceed a certain limit. That limit
is reached when the sum of the principal amount of the new debt plus the
aggregate principal amount of the Partnership's outstanding debt exceeds 80% of
the aggregate purchase price of the investments then held by the Partnership,
including the purchase price of any investment being acquired with the new debt.
DEALINGS WITH AFFILIATES. The Partnership will not purchase or lease
investments from, nor sell or lease investments to us or any of our affiliates
(including any program in which we or any of our affiliates has an interest)
unless certain conditions are satisfied. These conditions include:
(1) a determination that the investment is in the best interests of the
Partnership;
(2) the investment is upon terms no less favorable to the Partnership than
the terms upon which we or our affiliate entered into the investment;
(3) neither we nor our affiliate are to realize any gain or other benefit,
other than permitted compensation, as a result of the investment; and
(4) we or our affiliate hold the investment only on an interim basis
(generally not longer than six months) for purposes of facilitating the
acquisition of the investment by the Partnership,
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borrowing money or obtaining financing for the Partnership or for other
purposes related to the business of the Partnership.
The Partnership may not make any loans to us or any of our affiliates. We or
any of our affiliates, however, may make loans to the Partnership, PROVIDED the
terms of the loan include:
(1) interest at a rate that does not exceed the lowest of the following:
(a) the rate at which we or the affiliate borrowed funds for the purpose
of making the loan;
(b) if no borrowing was incurred, the interest rate the Partnership could
obtain in an arm's-length borrowing, without reference to our or our
affiliate's financial abilities or guarantees;
(c) the rate from time to time announced by The Chase Manhattan Bank N.A.
at its principal lending offices in New York, New York as its prime
lending rate plus 3% per annum;
(2) repayment of the loan not later than twelve months after the date on
which it was made; and
(3) neither we nor our affiliate may receive financial charges or fees in
connection with the loan, except for reimbursement of actual and
reasonable out-of-pocket expenses.
The Partnership will not acquire any investments in exchange for units.
The Partnership may make investments in joint ventures provided that: we
determine that the investment is in the best interests of the Partnership and
will not result in duplicate fees to us or any of our affiliates; if the
investment is made with participants affiliated with us then, it will be made
upon terms that are substantially identical to the terms upon which the
participants have invested in the joint venture; if the investment is made with
non-affiliates, the Partnership will have veto power on disposition decisions;
and the joint venture will own and lease specific equipment and/or invest in one
or more specific financing transactions.
Except as permitted by the Partnership Agreement, we are prohibited from
entering into any agreements, contracts or arrangements on behalf of the
Partnership with ourselves or any of our affiliates. Furthermore, neither we nor
any of our affiliates may receive a commission or fee (except the types and
amounts described in "Our Compensation" as permitted by Section 6.4 of the
Partnership Agreement) in connection with the reinvestment of cash from sales
and from operations or of the proceeds of the resale, exchange or refinancing of
equipment. In addition, in connection with any agreement entered into by the
Partnership with us or any of our affiliates, we or our affiliate may not
receive any rebates or give-ups, nor may we or any of our affiliates participate
in any reciprocal business arrangements that could have the effect of
circumventing any of the provisions of the Partnership Agreement. Neither we nor
any of our affiliates shall pay or award any commissions or other compensation
to any person engaged by a potential investor as an investment advisor as an
inducement to the person to advise the potential investor about the Partnership.
However, this does not prohibit us from paying underwriting fees and sales
commissions otherwise in accordance with the terms of the Partnership Agreement.
INDEMNIFICATION
With some limited exceptions, the Partnership will indemnify us, our
affiliates and individual officers from the Partnership's assets. The
indemnification will apply to any liability, loss, cost and expense of
litigation that we or an affiliate suffer, arising out of certain acts or
omissions. See "FIDUCIARY RESPONSIBILITY--Indemnification."
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LIABILITY OF PARTNERS
OUR LIABILITY. We will be liable for all general obligations of the
Partnership to the extent not paid by the Partnership. However, neither we nor
any of our affiliates will have any personal liability for obligations of the
Partnership that are specifically non-recourse to us, or for repayment of the
capital contribution of any limited partner. All decisions we make will be
binding upon the Partnership. See "FIDUCIARY RESPONSIBILITY--Conflicts."
LIMITED LIABILITY OF THE LIMITED PARTNERS. You will have no personal
liability for any obligations or liabilities of the Partnership. You will only
be liable, in your capacity as a limited partner, to the extent of your capital
contribution and your PRO RATA share of any undistributed profits and other
assets of the Partnership. However, if you participate in the management or
control of the Partnership's affairs, you may be deemed to be acting as a
general partner and may lose any entitlement to limited liability as against
third parties who reasonably believe, in connection with the transaction of
business with the Partnership, that you are a general partner. See also "RISK
FACTORS--Investment Risks."
Delaware law provides that, for a period of three years from the date on
which any distribution is made to you, you may be liable to the Partnership for
the distribution if both of the following are true:
(1) after giving effect to the distribution, all liabilities of the
Partnership exceed the fair value of its assets; and
(2) you knew at the time you received the distribution that it was made in
violation of Delaware law.
NON-ASSESSABILITY OF UNITS
The units are not assessable. Except as may otherwise be required by law or
by the Partnership Agreement, after you pay for your units, you will not have
any further obligations to the Partnership, be subject to any assessment or be
required to contribute any additional capital to, or loan any funds to, the
Partnership. However, under certain circumstances, you may be required to return
distributions made to you in violation of Delaware law as described in the
immediately preceding paragraph.
DISTRIBUTION OF DISTRIBUTABLE CASH FROM OPERATIONS AND FROM SALES
Distributable cash from operations and from sales that is not reinvested in
equipment and financing transactions will be distributed 99% to the limited
partners as a group and 1% to us until payout, which is the time when cash
distributions in an amount equal to the sum of the limited partners' capital
contributions and an 8.0% annual cumulative return thereon have been made.
Income earned on escrowed funds and distributed to limited partners will be used
to satisfy the cumulative return required for payout. Thereafter, distributions
will be distributable 90% to the limited partners as a group and 10% to us,
unless limited partners as a group have not received distributions equal to at
least 150% of their investment, in which case we will continue to receive only
1% of cash distributions, and accrue 9%, until limited partners have received
distributions equal to 150% of their total investment.
During the reinvestment period, we will have the sole discretion to
determine the amount of distributable cash from operations and from sales that
are to be reinvested and the amounts that are to be distributed. However, during
such period you are entitled to receive, to the extent available, monthly cash
distributions equal to one-twelfth of 10.75% of your original investment,
reduced by (a) any portion of your original investment that has been returned to
you because we did not invest all of the offering proceeds and (b) any amounts
you received in redemption of your units. Our decision regarding the amount of
reserves to establish and the amount of funds to reinvest may affect the ability
of the Partnership to make cash distributions. Cash distributions will be
noncumulative, meaning that if there is insufficient cash to pay the full
monthly distributions, only the amount available is required to be distributed.
We expect that a substantial portion of all cash distributions, being that
portion which exceeds taxable income, will be treated as a return of your
originally invested capital and that the balance of the
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distributions will be treated as a return on your capital. Also, to the extent
there are sufficient funds, you are entitled to receive monthly cash
distributions in amounts which would permit you to pay federal, state and local
income taxes resulting from Partnership operations. After the reinvestment
period, the Partnership intends to promptly distribute substantially all cash
from operations and from sales.
ALLOCATION OF PROFITS AND LOSSES
As a general rule, during the reinvestment period the Partnership's profits
will be allocated as follows:
- FIRST, 99% will be allocated to the limited partners and 1% to us, until
each limited partner has been allocated profits equal to the excess, if
any, of:
(1) the amount still needed for distribution to provide the limited
partner an 8% annual cumulative return on his or her adjusted capital
contribution (which we call the unpaid target distribution); over
(2) the limited partner's capital account balance;
- NEXT, in a manner that will create a ratio of 90% to 10% between (a) the
excess of the limited partners' aggregate capital account balances over
the amount of their aggregate unpaid target distributions and (b) our
capital account balance; and
- THEREAFTER, 90% to the limited partners and 10% to us.
After the reinvestment period, profits first will be allocated to all
partners in the amount necessary to eliminate any deficits in their capital
accounts and, thereafter, they will be allocated as described above.
Generally, 99% of the Partnership's losses will be allocated among the
limited partners and 1% will be allocated to us throughout the term of the
Partnership.
In addition to the general provisions regarding allocations of profits and
losses, the Partnership Agreement contains a number of special allocations that
are intended to meet certain tax safe harbor provisions relating to allocations.
One such safe harbor is a qualified income offset provision, which requires that
profits be allocated to any limited partners developing deficits in their
capital account in an amount necessary to eliminate such deficits. Another safe
harbor is a minimum gain chargeback provision, which requires that depreciation
recapture and other similar items of income be allocated back to the partners
who were initially allocated the depreciation deductions or other related items
of deduction. Other special allocations provisions are designed to reflect the
business deal among the partners (see Section 8.2(f)(vii) of the Partnership
Agreement) or to protect the limited partners in the event the Partnership is
subjected to an unexpected tax liability because of a particular partner. For
example, local taxes that are imposed on the Partnership because of a limited
partner's residence in that locality will be charged to that partner.
The Partnership Agreement provides that limited partners who own units for
less than an entire year will be allocated profits or losses, which will be
treated as if they occurred ratably over the year, based on the proportionate
part of the year that they owned their units.
WITHDRAWAL OF THE GENERAL PARTNER
VOLUNTARY WITHDRAWAL. We may not voluntarily withdraw as general partner
from the Partnership without (a) 60 days' advance written notice to you, (b) an
opinion of tax counsel that the withdrawal will not cause the termination of the
Partnership or materially adversely affect the federal tax status of the
Partnership and (c) selection of, and acceptance of its appointment as general
partner by, a substitute general partner who is acceptable to the limited
partners owning a majority of the units and who has an adequate net worth in the
opinion of tax counsel.
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INVOLUNTARY WITHDRAWAL. We may be removed by the limited partners owning a
majority of the units or upon the occurrence of any other event that constitutes
an event of withdrawal under Delaware law. Neither we nor any of our affiliates
may participate in any vote by the limited partners to involuntarily remove us
as general partner or cancel any management or service contract with us or an
affiliate.
Management fees for investments acquired by the Partnership prior to the
effective date of our withdrawal will be payable when the Partnership receives
the gross rental from the investments creating the obligation to pay the
management fees. In the event that we pledge the management fees receivable to a
lender, the assignment to the lender shall be binding in the event of our
voluntary or involuntary withdrawal.
LIABILITY OF WITHDRAWN GENERAL PARTNER. Generally speaking, we will remain
liable for all obligations and liabilities incurred by us or by the Partnership
while we were acting in the capacity of general partner and for which we were
liable as general partner. But we will be free of any obligation or liability
incurred on account of or arising from the activities of the Partnership after
the time our withdrawal becomes effective.
TRANSFER OF UNITS
WITHDRAWAL OF A LIMITED PARTNER. You may withdraw from the Partnership only
by selling, transferring or assigning your units or having all or your units
redeemed in accordance with the Partnership Agreement. You may generally
transfer all or a portion of your units except to impermissible types of
transferees or by transfers which would adversely effect the Partnership. See
Section 10.2 of the Partnership Agreement.
LIMITED REDEMPTION OF UNITS. Section 10.5 of the Partnership Agreement
provides a method for you to have your units redeemed. In brief, commencing with
the second full calendar quarter following the final closing date and at any
time and from time to time thereafter until termination of the Partnership, you
may request that the Partnership redeem all or any portion of your units. This
right is subject to the availability of funds and the other provisions of
Section 10 of the Partnership Agreement. See "TRANSFER OF UNITS"--"Limited Right
to Redeem Units".
DISSOLUTION AND WINDING-UP
EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved when any of
the following events occurs:
- the withdrawal of the general partner if a substitute general partner has
not been duly admitted to the Partnership;
- the voluntary dissolution of the Partnership by the general partner with
the consent of the limited partners owning a majority of the units or,
subject to Section 13 of the Partnership Agreement, by the consent of the
same majority without action by the general partner;
- the sale of all or substantially all of the assets of the Partnership;
- the expiration of the term of the Partnership;
- the operations of the Partnership ceasing to constitute legal activities
under Delaware law or any other applicable law;
- any other event which causes the dissolution or winding-up of the
Partnership under Delaware law.
LIQUIDATION OF THE PARTNERSHIP. When a dissolution event occurs, the
investments and other assets of the Partnership will be liquidated and the
proceeds thereof will be distributed to the partners after we pay liquidation
expenses and pay the debts of the Partnership in the order of priority set forth
in the
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Partnership Agreement. The existence of the Partnership will then be terminated.
You are not guaranteed the return of, or a return on, your investment.
ACCESS TO BOOKS AND RECORDS
We will maintain the books and records of the Partnership at the
Partnership's principal office. We will maintain investor suitability records
for a period of six years. You will have the right to have a copy of the list of
limited partners mailed to you for a nominal fee. However, you must certify that
the list will not be sold or otherwise provided to another party or used for a
commercial purpose other than for your interest relative to your interest in
Partnership matters. In addition, you or your representative will have the
right, upon written request, subject to reasonable notice and at your own
expense, to inspect and copy any other Partnership books and records that we
maintain.
MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS
MEETINGS. We may call a meeting of the limited partners at any time on our
own initiative to act upon any matter on which the limited partners may vote. If
we receive written requests for a meeting from limited partners holding 10% or
more of the outstanding units we will call a meeting as well. In addition, in
lieu of a meeting, any matter that could be voted upon at a meeting of the
limited partners may be submitted for action by consent of the limited partners.
VOTING RIGHTS OF LIMITED PARTNERS. The limited partners, by the consent of
the limited partners owning a majority of the units, may take action on the
following matters without our concurrence:
- an amendment of the Partnership Agreement;
- the dissolution of the Partnership;
- the sale of all or substantially all of the Partnership's assets, except
any sales in the ordinary course of liquidating the Partnership's
investments after the reinvestment period; and
- the removal of the general partner and the election of one or more
substitute general partners.
Limited partners who dissent from any matter approved by limited partners owning
a majority of the units are nevertheless bound by such vote and do not have a
right to appraisal or automatic repurchase of their units.
AMENDING THE PARTNERSHIP AGREEMENT
AMENDMENT BY LIMITED PARTNERS WITHOUT OUR CONCURRENCE. The limited partners
may amend the Partnership Agreement by the consent of the limited partners
owning a majority of the units without our concurrence so long as the amendment
does not allow the limited partners to take part in the control or management of
the Partnership's business, or alter our rights, powers and duties as set forth
in the Partnership Agreement:
However:
(a) any amendment of the Partnership Agreement relating to how the
Partnership Agreement can be amended will require the consent of each
limited partner; and
(b) any amendment that will increase the liability of any partner or
adversely affect any partner's share of cash distributions, allocations
of profits or losses for tax purposes, or of any investment tax credit
will require the consent of each partner affected by the change.
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AMENDMENT BY US WITHOUT THE CONSENT OF THE LIMITED PARTNERS. We may,
without the consent of the limited partners, amend the Partnership Agreement to
effect any change for the benefit or protection of the limited partners,
including:
- adding to our duties or obligations, or surrendering any of our rights or
powers;
- curing any ambiguity in, or correcting or supplementing any provision of
the Partnership Agreement;
- preserving the status of the Partnership as a "limited partnership" for
federal income tax purposes;
- deleting or adding any provision that the Securities and Exchange
Commission or any other regulatory body or official requires to be deleted
or added;
- under certain circumstances, amending the allocation provisions, in
accordance with the advice of tax counsel, accountants or the IRS, to the
minimum extent necessary; and
- changing the name of the Partnership or the location of its principal
office.
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TRANSFER OF UNITS
WITHDRAWAL
You may withdraw from the Partnership only by selling or transferring all of
your units, or if all of your units are redeemed by the Partnership in
accordance with the terms of the Partnership Agreement.
RESTRICTIONS ON THE TRANSFER OF UNITS
There is no public or secondary market for the units, and none is expected
to develop. You may transfer units only upon the satisfaction of the conditions
and subject to the restrictions discussed below. Anyone to whom you transfer
units interest will become a substitute limited partner only if we have
reasonably determined that all of the conditions listed below have been
satisfied. We may also reasonably require that no adverse effect to the
Partnership results from the admission of the substitute limited partner, and
that the assignee has signed a transfer agreement and other forms, including a
power of attorney, as described in the Partnership Agreement. Consequently,
investors may not be able to liquidate their investments in the event of
emergencies or for other reasons, or obtain financing from lenders who may not
accept the units as collateral.
You may transfer or assign your own units to any person, whom we called an
assignee, only if conditions the following conditions are satisfied:
(1) You and the assignee each sign a written assignment document, in form
and substance satisfactory to us, which:
(a) states your intention that the assignee become a substitute limited
partner;
(b) reflects the assignee's acceptance of all of the terms and provisions
of the Partnership Agreement; and
(c) includes a representation by both you and the assignee that the
assignment was made in accordance with all applicable laws and
regulations, including minimum investment and investor suitability
requirements under state securities laws; and
(2) the assignee pays the Partnership a fee that will not exceed $150.00 for
costs and expenses it reasonably incurs in connection with the
assignment.
Furthermore, unless we consent, no units may be assigned:
- to a minor or incompetent unless a guardian, custodian or conservator has
been appointed to handle the affairs of the person;
- to any person if, in the opinion of tax counsel, the assignment would
result in the termination of the Partnership's taxable year or its status
as a partnership for federal income tax purposes;
- to any person if the assignment would affect the Partnership's existence
or qualification as a limited partnership under Delaware law or the
applicable laws of any other jurisdiction in which the Partnership is
conducting business;
- to any person not permitted to be an assignee under applicable law,
including, without limitation, applicable federal and state securities
laws;
- if the assignment would result in the transfer of a Partnership interest
representing less than twenty-five (25) units, or ten (10) units in the
case of an IRA or qualified plan, unless the assignment is of all of the
units owned by the limited partner;
- if the assignment would result in your retaining a portion of your
investment that is less than the greater of (A) twenty-five (25) units, or
ten (10) units in the case of an IRA or qualified plan, and
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(B) the minimum number of units required to be purchased under minimum
investment standards applicable to your initial purchase of units;
- if, in our reasonable belief, the assignment might violate applicable law;
- if the effect of the assignment would be to cause the equity participation
in the Partnership by benefit plan investors to equal or exceed 25%; or
- if the assignment would cause an impermissible percentage of units to be
owned by non-United States citizens.
Any attempt to assign units in violation of the provisions of the
Partnership Agreement or applicable law will be null and void from the outset
and will not bind the Partnership. Assignments of units will be recognized by
the Partnership as of the first day of the month following the date upon which
all conditions to the assignment have been satisfied.
The Partnership Agreement provides further that so long as there are adverse
federal income tax consequences from being treated as a publicly traded
partnership for federal income tax purposes, we will not permit any interest in
a unit to be sold on a secondary market, as defined by tax law. If we determine
that a proposed sale was effected on a secondary market, the Partnership and we
have the right to refuse to recognize the proposed sale and to take any action
we deem necessary or appropriate so that such proposed sale is not in fact
recognized.
All investors will agree to provide all information respecting assignments
which we deem necessary in order to determine whether a proposed transfer
occurred on a secondary market.
LIMITED RIGHT TO REDEEM UNITS
The Partnership will have no obligation to redeem your units, but will do so
only in our sole and absolute discretion. Beginning with the second full
calendar quarter following the final closing date and at any time thereafter,
you may request that the Partnership redeem your units. In any calendar year,
the Partnership will not redeem such number of units that, in the aggregate,
exceed 2% of the total units outstanding as of the last day of the calendar
year. Otherwise, subject to fund availability and with our prior consent, the
Partnership will redeem in cash up to 100% of your units at the applicable
redemption price.
The applicable redemption price for the units you are redeeming will be
determined, as of the date of redemption, as follows:
(a) during the second year of the reinvestment period, you will receive a
price equal to 90% of your original investment per unit;
(b) during the third year, you will receive a price equal to 92% of your
original investment per unit;
(c) during the fourth year, you will receive a price equal to 94% of your
original investment per unit;
(d) during the fifth year, you will receive a price equal to 96% of your
original investment per unit;
(e) during the first year of the liquidation period, which is the period
following the reinvestment period, you will receive a price equal to 98%
of your original investment per unit;
(f) during the second year of the liquidation period, you will receive a
price equal to 100% of your original investment per unit;
in all cases LESS the sum of (w) 100% of previous distributions to you of any
portion of your investment not invested by the Partnership, (x) 100% of previous
distributions to you, (y) 100% of any previous allocations to you of investment
tax credit amounts and (z) the aggregate amount, not exceeding $150.00, of
expenses reasonably incurred by the Partnership in connection with redeeming
your units. However, in no event will
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the applicable redemption price computed under clauses (a) through (f) exceed an
amount equal to your capital account balance as of the end of the calendar
quarter preceding the redemption minus cash distributions which have been made
or are due to be made for the calendar quarter in which the redemption occurs.
There can be no assurance that the applicable redemption price will in any
way reflect the fair market value of the units at the time of redemption.
The availability of funds for redeeming units will be subject to the
availability of sufficient cash. In this connection, it should be noted that we
intend to reinvest a substantial portion of the Partnership's cash from
operations and substantially all cash from sales during the reinvestment period.
Furthermore, units may be redeemed only if the redemption would not impair the
capital or the operations of the Partnership and would not result in the
termination of the Partnership's taxable year or of its federal income tax
status as a partnership. Any amounts used to redeem units will reduce the
Partnership's available funds for making investments and distributions to the
remaining limited partners.
In the event the Partnership receives requests to redeem more units than
there are funds sufficient to redeem, we will honor redemption requests in the
order in which duly signed and supported redemption requests are received. We
will use our reasonable efforts to honor requests for redemptions of units with
the same request date FIRST as to hardship redemptions (requests arising from
death, major medical expense and family emergency related to disability or a
material loss of family income), SECOND so as to provide liquidity for IRAs or
qualified plans to meet required distributions and FINALLY, as to all other
redemption requests.
If you desire to have a portion or all of your units redeemed, you must
submit a written request to us on a form we have approved. The request must be
duly signed by all owners of the units on the books of the Partnership.
Redemption requests will be deemed given on the earlier of the date the request
is personally delivered with receipt acknowledged or mailed by certified mail,
return receipt requested, postage prepaid, at our address set forth in this
prospectus. Hardship redemptions will be treated as having been received at
12:01 A.M. EST and all other requests will be deemed received with the start of
the business day during which received. Within the times specified above, we
will accept or deny each redemption request.
We will, in our sole discretion, decide whether a redemption is in the best
interest of the Partnership.
CONSEQUENCES OF TRANSFER
Any units tendered to, and accepted by, the Partnership for redemption will
be canceled when redeemed. In the event that you assign all units you own, or
have all your units accepted for redemption by the Partnership, you will cease
to be a limited partner and will no longer have any of the rights or privileges
of a limited partner. Whether or not any assignee becomes a substitute limited
partner, however, your assignment of your entire Partnership interest will not
release you from liability to the Partnership to the extent of any
distributions, including any return of or on your investment, made to you in
violation of Delaware law or other applicable law.
The sale of units by you may result in the recapture of all of the
depreciation deductions previously allocated to you. See the "FEDERAL INCOME TAX
CONSEQUENCES--Sale or Other Disposition of Partnership Interest." Gain or loss
realized on the redemption of your units, if you hold them as a capital asset
and if you held them for more than one year, will be a capital gain or loss, as
the case may be. However, any gain realized will be treated as ordinary income
to the extent attributable to your share of potential depreciation recapture on
the Partnership's equipment, substantially appreciated inventory items and
unrealized receivables. See "FEDERAL INCOME TAX CONSEQUENCES--Treatment of Cash
Distributions Upon Redemption."
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REPORTS TO LIMITED PARTNERS
ANNUAL REPORTS
By March 15 of each year, we will send you a statement of your share of the
Partnership's income, gains, losses, deductions and credits, if any, for the
year most recently completed to enable you to prepare your federal income tax
return.
Within 120 days after the end of the year, we will send to each person who
was a limited partner at any time during the year an annual report which will
include:
- financial statements for the Partnership for the fiscal year, including a
balance sheet as of the year end and related statements of operations,
cash flows and changes in partners' equity, which will be prepared as
required by the Partnership Agreement and accompanied by an auditor's
report containing an opinion of the Partnership's accountants;
- a breakdown, by source, of distributions made during the year to you and
to us;
- a status report with respect to each item of equipment and each financing
transaction that individually represents at least 10% of the aggregate
purchase price of the Partnership's investments at the end of the year,
including information relevant to the condition and utilization of the
equipment or the collateral securing the financing transaction;
- a breakdown of the compensation paid, and any amounts reimbursed, to us,
and a summary of the terms and conditions of (a) any contract with us that
was not filed as an exhibit to the registration statement of which this
prospectus forms a part and (b) any other programs we sponsor,
demonstrating the allocation of the compensation between the Partnership
and the other programs; and
- until all amounts invested by limited partners have been invested or
committed to investments and reserves, used to pay permitted front-end
fees or returned to investors in accordance with the Partnership
Agreement, information regarding investments made by the Partnership
during the fiscal year.
QUARTERLY REPORTS
Within 60 days after the end of each of the first three quarters in any
year, we will send to each person who was a limited partner at any time during
the quarter an interim report for the quarter which will include:
- unaudited financial statements for the Partnership for the quarter,
including a balance sheet and related statements of operations, cash flows
and changes in partners' equity;
- a tabular summary of the compensation paid, and any amounts reimbursed, to
us, including a statement of the services we performed or expenses we
incurred, and a summary of the terms and conditions of any contract with
us which was not filed as an exhibit to the registration statement of
which this forms a part; and
- until all amounts invested by limited partners have been invested or
committed to investment and reserves, used to pay permitted front-end fees
or returned to investors in accordance with the Partnership Agreement,
information regarding investments made by the Partnership during the
quarter.
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PLAN OF DISTRIBUTION
GENERAL
Subject to the conditions set forth in this prospectus and in accordance
with the terms and conditions of the Partnership Agreement, through the
dealer-manager the Partnership will offer, on a best efforts basis, a maximum of
750,000 units, all of which are priced at $100 per unit, except for certain
units which may be purchased by limited partners affiliated with us for the net
unit price of $92.00 per unit. The minimum subscription is 25 units, 10 units
for IRAs and qualified plans, except in certain states as described in this
prospectus. See "INVESTOR SUITABILITY AND MINIMUM INVESTMENT REQUIREMENTS;
SUBSCRIPTION PROCEDURES--How to Subscribe".
The offering period for the Partnership will begin on the date of this
Prospectus. We expect the offering period to terminate one year after the date
of this Prospectus, but in no event will the offering period for the Partnership
continue for longer than twenty-four months from the date of this Prospectus. We
have a reasonable period of time to conclude the Partnership's closing after the
termination of the Partnership's offering period. We may terminate the offering
period at our option at any time.
Subscribers will generally not have the right to withdraw or receive their
funds from the escrow account unless and until the offering of the Partnership
is terminated, which may be as late forty eight (48) months after the effective
date of this prospectus.
Units will be sold primarily through the selling dealers and, to a limited
extent, by the dealer-manager. The Partnership will pay to the selling dealer or
the dealer-manager, as the case may be, a sales commission equal to 8.0% of the
offering proceeds from the sale of units.
Generally, units are purchased by subscribers at a price of $100.00 per
unit. However, our officers, employees, securities representatives and those of
our affiliates and selling dealers may purchase units, for investment purposes
only, for the net unit price of $92.00 per unit. The Partnership will incur no
obligation to pay any sales commissions with respect to these purchases. The
purchase of units by us and our affiliates is limited to a maximum of 10% of the
total units sold.
The total marketing compensation to be paid to the dealer-manager and all
participating selling dealers in connection with the offering of units in the
Partnership, including sales commissions and underwriting fees, will not exceed
10.0% of the offering proceeds. However, we may pay bona fide due diligence fees
and expenses incurred by the dealer-manager and prospective selling dealers from
our O & O expense allowance up to the lesser of an additional 1/2 of 1% of
offering proceeds or the maximum amount allowable under the NASD Conduct Rules.
Any payments made in connection with due diligence activities will be paid only
on a fully accountable basis and only for bona fide due diligence activities. We
will make payments or advances for sales commissions and due diligence fees and
expenses only for bona fide sales or due diligence activities. We will require
commissions and expenses to be proven by receipt of duly signed subscription
documents, invoices and other evidence satisfactory to us. The sums we may
expend in connection with due diligence activities are included in the O & O
expense allowance paid by the Partnership to us. See "OUR COMPENSATION."
The dealer-manager agreement and the selling dealer agreements contain
provisions for the Partnership to indemnify the participating selling dealers
with respect to some types of liabilities, including liabilities arising under
the Securities Act.
SEGREGATION OF SUBSCRIPTION PAYMENTS
We will place all funds that the dealer-manager receives from subscribers in
an escrow account at The Chase Manhattan Bank N.A at the Partnership's expense.
We will do so beginning on the effective date of this prospectus until we have
accepted subscriptions for 12,000 units (or 37,500 units in the case of
residents of Pennsylvania) and the subscribers have been admitted as limited
partners on the initial closing
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date (or a subsequent closing date in the case of Pennsylvania residents).
Thereafter, we will deposit funds received through the termination date in an
interest-bearing account pending the next closing.
We will promptly accept or reject subscriptions for units after we receive a
prospective investor's subscription documents and subscription funds. Brokers
have agreed to provide each investor with final prospectuses prior to an
investor signing a subscription agreement. Each subscriber has the right to
cancel his or her subscription for a period of five business days after the date
of receipt of a final prospectus. The initial closing date will be as soon as
practicable after the Partnership receives and accepts subscriptions for 12,000
units excluding, for this purpose, subscriptions from residents of Pennsylvania.
Subsequent to the initial closing date, we anticipate holding daily closings,
provided the number of subscribed units is sufficient to justify the burden and
expense of a closing. Once subscriptions total of 37,500 units, including
subscriptions from residents of Pennsylvania, we will release from escrow all
subscription payments then remaining in escrow and terminate the escrow
agreement. Thereafter we will continue to deposit subscription payments with The
Chase Manhattan Bank N.A. in a special, segregated, interest-bearing account
which we will maintain during the offering period for the receipt and investment
of subscription payments. At each closing, the Partnership will admit as limited
partners, effective as of the next day, all subscribers whose subscriptions have
been received and accepted by the Partnership and who are then eligible to be
admitted to the Partnership. Pennsylvania subscribers are not eligible to be
admitted as limited partners prior to sale of 37,500 units in the Partnership.
The funds representing their subscriptions will be released from the escrow
account or from the Partnership's segregated subscription account, as the case
may be, to the Partnership.
We will remit to subscribers any interest earned on the subscription funds
of subscribers who are accepted and admitted as limited partners as soon as
practicable after their admission. If 12,000 units have not been subscribed on
or before the anniversary of the date on the cover of this prospectus, then the
Partnership will direct the escrow agent to release the applicable subscription
payments from escrow and return them promptly to subscribers, together with all
interest earned on the subscriptions, and the Partnership will be terminated.
For a subscriber from Pennsylvania, this will happen if 37,500 units per
Partnership have not be sold within 120 days of the escrow agent's receipt of
their subscription, and the subscriber has been offered and has elected to
rescind his or her subscription. We will apply the same procedure to return
subscription payments which are held in the escrow account for twelve months
from the date of this Prospectus. In addition, any proceeds from the sale of
units in the Partnership which have not been invested or committed for
investment within two years after the date of this Prospectus, except for
reserves and necessary operating capital, will be returned, without interest, to
the limited partners in proportion to their respective investments. These
returned proceeds will include a return of the proportionate share of the O & O
expense allowance, underwriting fees and any sales commissions paid to us or any
of our affiliates.
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INVESTOR SUITABILITY AND MINIMUM INVESTMENT REQUIREMENTS;
SUBSCRIPTION PROCEDURES
GENERAL SUITABILITY CONSIDERATIONS
Units are an illiquid asset. They are not freely transferable, there is no
public market in which to sell them, and none is expected to develop. Therefore,
only if you have adequate financial means, do not need liquidity and are able to
make a long-term investment should you purchase units. Units are not an
appropriate investment if you must rely on cash distributions from the
Partnership as an essential source of income to meet your necessary living
expenses.
Before purchasing units you should carefully consider the risk factors of
this investment, the lack of a market in which to sell for units, and the
resulting long-term nature of an investment in units. See "RISK
FACTORS"--"Partnership Risks" and--"Investment Risks".
You must meet the requirements described below to invest in the Partnership.
Because we do not have direct knowledge of your financial situation, we will
rely on what you tell us. In addition, brokers must have reasonable grounds to
believe that this investment is suitable for you. Consequently, it is important
that the information you provide is complete and accurate. When evaluating your
suitability for this investment using the standards listed below, keep in mind
that net worth does not include the value of your home furnishings, personal
automobiles and the equity in your home.
You must meet our basic suitability requirements to invest. In general, you
must have either:
(1) a net worth of at least $30,000 PLUS $30,000 of annual gross income; or
(2) a net worth of at least $75,000.
CERTAIN STATE REQUIREMENTS. Residents of Alabama, Arizona, Arkansas,
California, Indiana, Iowa, Kansas, Maine, Michigan, Minnesota, Nebraska, New
Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South
Dakota, Texas, Vermont and Washington Partnership must have either of the
following in order to invest:
(1) a net worth of at least $45,000 PLUS $45,000 of annual gross income; or
(2) a net worth of at least $150,000.
Residents of Massachusetts and North Carolina must have either of the
following in order to invest:
(1) a net worth of at least $60,000 PLUS $60,000 of annual gross income; or
(2) a net worth of at least $225,000.
If you are a Nebraska or Pennsylvania resident, your investment may not
exceed 10% of your net worth. If you are an Ohio resident, your investment may
not exceed 10% of your liquid net worth.
Under all of the foregoing suitability standards, net worth must be
determined excluding the net fair market value of your home, home furnishings
and personal automobiles. The assets included in your net worth calculation must
be valued at their fair market value.
MINIMUM INVESTMENT
The minimum number of units you must purchase is 25. Residents of Nebraska
must purchase a minimum of 50 units. For IRAs and qualified plans, you must
purchase at least 10 units.
See the section of this prospectus entitled "INVESTOR SUITABILITY AND MINIMUM
INVESTMENT REQUIREMENTS; SUBSCRIPTION PROCEDURES" and the Subscription Agreement
for a more detailed explanation of state suitability requirements.
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SUITABILITY STANDARD FOR QUALIFIED PLANS AND IRAS
An IRA can purchase units if the IRA owner meets both the basic suitability
standard and any standard applicable in the owner's state of residence.
Pension, profit-sharing or stock bonus plans, including Keogh Plans, that
meet the requirements of Section 401 of the Internal Revenue Code are called
qualified plans in this prospectus. Qualified plans that are self-directed may
purchase units if the plan participant meets both the basic suitability standard
and any standard applicable in the participant's state of residence. Qualified
plans that are not self-directed may purchase units if the plan itself meets
both our basic suitability standard and any relevant state standard.
SUITABILITY STANDARD FOR OTHER FIDUCIARIES
When units are purchased for fiduciary accounts other than IRAs and
qualified plans, such as trusts, both the basic suitability standard and any
applicable state suitability standard must be met by either the fiduciary
account itself, or by the beneficiary on whose behalf the fiduciary is acting.
If you are both the fiduciary and the person who directly or indirectly supplies
the funds for the purchase of units, then you may purchase units for the
fiduciary account if you meet both the basic suitability standard and any
applicable state standard.
ADDITIONAL CONSIDERATIONS FOR IRAS, QUALIFIED PLANS, AND TAX-EXEMPT ENTITIES
An investment in units will not, in and of itself, create an IRA or
qualified plan. To form an IRA or qualified plan, an investor must comply with
all applicable provisions of the tax code and ERISA.
IRAs, qualified plans and other tax-exempt organizations should consider the
following when deciding whether to invest:
- any income or gain realized will be unrelated business taxable income,
which is subject to the unrelated business income tax;
- for qualified plans and IRAs, ownership of units may cause a PRO RATA
share of the Partnership's assets to be considered plan assets for the
purposes of ERISA and the excise taxes imposed by the tax code; and
- any entity that is exempt from federal income taxation will be unable to
take full advantage of any tax benefits generated by the Partnership.
See "RISK FACTORS--Federal Income Tax Risks and ERISA Risks," "FEDERAL INCOME
TAX CONSEQUENCES--Taxation of Employee Benefit Plans and Other Tax-Exempt
Organizations" and "INVESTMENT BY QUALIFIED PLANS."
If you are a fiduciary or investment manager of a qualified plan or IRA, or
if your are a fiduciary of another tax-exempt organization, you should consider
all risks and investment concerns--including those unrelated to tax
considerations--in deciding whether this investment is appropriate and
economically advantageous for your plan or organization. See "RISK FACTORS",
"INVESTMENT OBJECTIVES AND POLICIES", "FEDERAL INCOME TAX CONSEQUENCES" and
"INVESTMENT BY QUALIFIED PLANS."
Although the we believe that units may represent suitable investments for
some IRAs, qualified plans, and other tax-exempt organizations, units may not be
suitable for your plan or organization due to the particular tax rules that
apply to it. For example, we believe that units will generally not be a suitable
investment for charitable remainder trusts. Furthermore, the investor
suitability standards represent minimum requirements, and the fact that your
plan or organization satisfies them does not mean that an
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investment would be suitable. You should consult your plan's tax and financial
advisors to determine whether this investment would be advantageous for your
particular situation.
TRANSFER OF UNITS
Units are subject to substantial transfer restrictions and may be
transferred only under certain circumstances and then subject to certain
conditions. See "TRANSFER OF UNITS--Restrictions on the Transfer of Units". One
condition is that you may sell or transfer your units only to a recipient who
meets all applicable suitability standards. In addition, the transfer of units
may subject you to the securities laws of the state or other jurisdiction in
which the transfer is deemed to take place. Furthermore, if you transfer less
than all of your units, you must generally retain a sufficient number of units
to satisfy the minimum investment standard applicable to you. The recipient must
also own a sufficient number of units to meet the minimum investment standard.
If the transfer is effected through a member firm of the National
Association of Securities Dealers, Inc. (the NASD), the member firm must be
satisfied that a proposed buyer meets the financial and net worth suitability
requirements specified in the NASD's conduct rules. The conduct rules also
require the member firm to inform the proposed buyer of all pertinent facts
relating to the liquidity and marketability of the units.
ADDITIONAL TRANSFER RESTRICTION FOR RESIDENTS OF CALIFORNIA
California law requires that all certificates for units that we issue to
residents of California, or that are subsequently transferred to residents of
California, bear the following legend:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF A LIMITED PARTNERSHIP
INTEREST, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
SUBSCRIBER REPRESENTATIONS
Each potential investor, whom we sometimes call a subscriber, must sign the
Subscription Agreement found on pages C-1 to C-4.
By your signature and initials in Section 5 of the Subscriber Agreement (on
page C-3), you are indicating your desire to become a limited partner and to be
bound by all the terms of the Partnership Agreement. You also appoint the us, as
the general partner, to be your true and lawful attorney-in-fact to sign
documents, including the Partnership Agreement, that may be required for the
your admission as a limited partner.
Your signature and initials in Section 5 also serve as your affirmation that
the representations printed in that section and on page C-4 of the Subscription
Agreement are true, by which you confirm that:
(1) you have received a copy of the prospectus;
(2) you have read the General Instructions on Page C-2 of the Subscription
Agreement;
(3) you understand that an investment in units is not a liquid investment;
(4) you affirm that we may rely on the accuracy of the factual data about
yourself that you report in the Subscription Agreement, including your
representation that:
(a) if you are purchasing units for an IRA, qualified plan or other
benefit plan, you have accurately identified the subscriber as such;
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(b) you have accurately identified yourself, or the investing entity, as
either a U.S. citizen or a non-U.S. citizen, having determined
citizenship in the manner described below;
(c) you have accurately reported your social security number or the
federal taxpayer identification number of the investing entity; and
(d) you are not subject to backup withholding of federal income taxes;
and
(5) you understand that we may, in our sole discretion, reject your
investment in whole or part for any reason.
We will require that EVERYONE who wishes to purchase units make these
representations in order to assist NASD-registered securities sales
representatives, selling dealers and the dealer-manager in determining whether
this investment is suitable for each subscriber. We will rely upon the accuracy
and completeness of the your representations in complying with our obligations
under state and federal securities laws, and may use these representations as a
defense in a lawsuit by subscribers or securities regulatory agencies.
The Subscription Agreement asks that you acknowledge receipt of this
prospectus and of the instruction to rely only on information contained in this
prospectus, so that we may make an informed judgment as to whether we should
accept your offer to subscribe for units. We recognize that in the sales process
a potential investor will usually discuss the Partnership with his or her
registered representative. It is possible that you may misunderstand what you
are told or that someone might tell you something different from, or contrary
to, the information contained in this Prospectus. You might also read or hear
something which contradicts the data and information contained in this
Prospectus from sources over which we have no control and for which neither we
nor our dealer-manager is responsible.
If a you becomes a limited partner and later make claims against the
Partnership, the dealer-manager, and/or us alleging that you did not receive a
prospectus for this offering--or that although you received a prospectus you
relied on information that is contradictory to that disclosed in this
prospectus--then we anticipate relying on the representations you made in your
Subscription Agreement in our defense. Your signature on the Subscription
Agreement is your acknowledgment that you did receive this prospectus, and that
we instructed you to rely exclusively on the prospectus and not to rely on any
other information or representations in your investment decision.
CONFLICTS OF INTEREST
The General Instructions on page C-2 of the Subscription Agreement ask you
to review the disclosures in this Prospectus concerning certain conflicts of
interest we face, certain risks involved in this investment, and possible
adverse effects on the federal income tax benefits which may be available as a
result your purchase of units. These disclosures are found in the
sections entitled "RISK FACTORS", "CONFLICTS OF INTEREST", "MANAGEMENT" and
"FEDERAL INCOME TAX CONSIDERATIONS".
We included this instruction because, as this investment involves inherent
conflicts of interest and risks, we do not intend to admit you as a limited
partner unless we have reason to believe that you are aware of the risks
involved in this investment. If you become a limited partner and later make
claims against the Partnership, the dealer-manager and/or us to the effect that
you were not aware that this investment involved the inherent risks described in
this prospectus, we, the Partnership, and the dealer-manager anticipate relying
on this instruction as evidence that you were aware of the degree of risk
involved in this investment.
CO-SIGNATURE BY SELLING DEALER
Selling dealers must countersign each Subscription Agreement for subscribers
solicited by their firm. By this signature, the selling dealer certifies that it
has obtained information from the potential investor
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sufficient to enable the selling dealer to determine that the investor has
satisfied the investor suitability standards described in this prospectus. Since
we, the Partnership and the dealer-manager will not have had the opportunity to
obtain financial information directly from a subscriber, we will rely on the
selling dealer's representation to determine whether to admit a subscriber as a
limited partner. If you become a limited partner and later make claims against
the Partnership, the dealer-manager and/or us alleging that the units were not a
suitable investment because you did not meet the financial requirements
contained in the investor suitability standards, we, the Partnership and the
dealer-manager anticipate relying upon the selling dealer's representation as
evidence that the you did meet the financial requirements for this investment.
BINDING EFFECT OF THE PARTNERSHIP AGREEMENT
The representation in the Subscription Agreement that you have agreed to all
the terms and conditions of the Partnership Agreement is necessary because we
and every limited partner are bound by all of the terms and conditions of that
agreement, notwithstanding the fact that limited partners do not actually sign
the Partnership Agreement. Though you do not actually sign the Partnership
Agreement, your signature on the Subscription Agreement gives us the power of
attorney pursuant to which we obligate you to each of the terms and conditions
of the Partnership Agreement.
If you become a limited partner and later makes claims against us, the
Partnership or the dealer-manager that you did not agree to be bound by all of
the terms of the Partnership Agreement and the Subscription Agreement, we, the
Partnership and the dealer-manager anticipate relying on your representation and
on the power of attorney as evidence of your agreement to be bound by all the
terms of the Partnership Agreement.
CITIZENSHIP
Federal law restricts the extent to which aircraft and marine vessels which
are registered in the United States may be owned or controlled by people who are
not United States citizens. For these purposes, "United States citizens" are:
(1) individuals who are citizens of the United States or one of its
possessions;
(2) for aircraft, partnerships in which each partner is an individual who is
a citizen of the United States, and for vessels, partnerships in which at
least 75% of the equity is held by citizens of the United States,
(3) certain trusts, the trustees of which are citizens of the United States,
provided that:
(a) in the case of aircraft, persons who are not citizens of the United
States or resident aliens do not possess more than 35% of the
aggregate power to direct or remove the trustee; and
(b) in the case of vessels, each of the beneficiaries of the trust is a
citizen of the United States; and
(4) domestic corporations of which the president (and the chairman of the
board of directors, in the case of vessels) and two-thirds or more of the
members of the board of directors and other managing officers are
citizens of the United States, and in which at least 75% of the voting
interest (or, in the case of certain vessels, a majority voting interest)
is owned or controlled by persons who are citizens of the United States.
As a consequence of these rules, the Partnership may transfer title of
certain aircraft and vessels to a trust of which the Partnership is the sole
beneficiary, or to a limited partnership beneficially owned by the Partnership,
or to a limited liability company of which the Partnership is a member. See
"RISK FACTORS--Partnership Risks."
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In addition, all investors will be required to represent and warrant whether
or not the investor is a United States citizen, and subscriptions will be
accepted from only a limited number of non-United States citizens. We will not
admit a non-United States citizen as a limited partner to the Partnership if
admitting that investor would result in the potential invalidation of equipment
registration in the United States.
HOW TO SUBSCRIBE
If you are an individual investor, you must personally sign the Subscription
Agreement and deliver it, together with a check for all subscription monies
payable in connection with your subscription, to a securities sales
representative. In the case of IRA, SEP and Keogh Plan owners, both the owner
and the plan fiduciary, if any, must sign the Subscription Agreement. In the
case of donor trusts or other trusts in which the donor is the fiduciary, the
donor must sign the Subscription Agreement. In the case of other fiduciary
accounts in which the donor neither exercises control over the account nor is a
fiduciary of the account, the plan fiduciary alone may sign the Subscription
Agreement.
Until subscriptions for 12,000 units (or 37,500 units in the case of
residents of Pennsylvania) are received by the Partnership, checks for the
purchase of units should be made payable to "ICON Income Fund Eight Escrow
Account." After the initial closing date, checks for the purchase of units
should be made payable to "ICON Income Fund Eight Subscription Account" for
deposit into an interest bearing account pending the next closing.
We will promptly review each subscription, and will accept or decline to
accept you as a limited partner in our sole and absolute discretion. If we
accept your subscription, either we or an agent of ours will give you prompt
written confirmation of your admission as a limited partner.
We, our affiliates and the selling dealers (and our and their respective
officers and employees) will have the right, but not the obligation, to
subscribe for and purchase units for our (and their) own account for investment
purposes, subject to the terms and conditions contained in this prospectus. This
includes the right to purchase units on or before the initial closing date; up
to 600 of the units so purchased will count toward the achievement of the
minimum offering. We, and our affiliates (and our and their respective officers
and employees) may not purchase more than 10% of the number of units subscribed
for by all non-affiliated investors.
The NASD's conduct rules require that any member of or person associated
with the dealer-manager or a selling dealer who sells or offers to sell units
must make every reasonable effort to assure that a potential subscriber is a
suitable investor for this investment in light of such subscriber's age,
education level, knowledge of investments, need for liquidity, net worth and
other pertinent factors. The conduct rules further require each selling dealer
to make a determination of suitability.
The State of Maine requires us to inform you that the dealer-manager and
each person selling units cannot rely on the representations made by a
subscriber in a Subscription Agreement alone in making a determination regarding
the suitability of the investment for the subscriber.
Sales Material
In addition to and apart from this prospectus, the Partnership will utilize
sales material in connection with the offering of units. This material may
include reports describing us and our affiliates, summary descriptions of
investments, pictures of equipment or facilities of lessees, materials
discussing our prior programs and a brochure and audio-visual materials or taped
presentations highlighting various features of this offering. We may also
respond to specific questions from selling dealers and prospective investors.
Business reply cards, introductory letters or similar materials may be sent to
selling dealers for customer use, and other information relating to this
offering may be made available to selling dealers for their internal use.
However, this offering is made only by means of this prospectus. Except as
described in this prospectus or in its supplements, the Partnership has not
authorized the use of other sales materials in
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connection with this offering. Although the information contained in other sale
material does not conflict with any of the information contained in this
prospectus, the material does not purport to be complete and should not be
considered as a part of this prospectus or the registration statement of which
this prospectus is a part, nor as incorporated in them by reference or as
forming the basis of this offering of the units.
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus or in its supplements or in supplemental sales literature issued by
the Partnership and described in this prospectus or in its supplements. If given
or made, you must not rely upon such information or representations. This
prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any securities other than the units, and does not constitute an offer to
sell in any jurisdiction where the solicitation would be unlawful. The delivery
of this prospectus at any time does not imply that the information contained in
it is correct as of any time other than its date.
Experts
The audited balance sheet of the Partnership as of February 7, 2000, and the
audited financial statements of ICON Capital Corp. as of March 31, 1999 and 1998
and for each of the years then ended, have been included herein in reliance upon
the reports of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, upon the authority of said firm as experts in accounting and
auditing.
Legal Matters
Greene Radovsky Maloney & Share LLP provided us with an opinion on the
legality of the securities offered in this prospectus and the tax matters set
forth under "FEDERAL INCOME TAX CONSEQUENCES."
Additional Information
A registration statement under the Securities Act has been filed with the
Securities and Exchange Commission, Washington, D.C., with respect to the units.
This prospectus, which forms a part of the registration statement, contains
information concerning the Partnership and includes a copy of the Partnership
Agreement to be utilized by the Partnership, but it does not contain all the
information set forth in the registration statement and its exhibits. The
information omitted may be examined at the principal office of the Securities
and Exchange Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, without charge, and copies may be obtained from that office upon payment
of the fee prescribed by the rules and regulations of the Securities and
Exchange Commission.
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Tabular Information Concerning Prior Public Programs
Exhibit B contains prior performance and investment information for our
previous publicly-offered income-oriented programs: Series A; Series B;
Series C, Series D; Series E; L.P. Six; L.P. Seven; and Eight A. Table I through
V of Exhibit B contain unaudited information relating to these prior public
programs, their experience in raising and investing funds, the compensation they
paid to the us and our affiliates, their operating results of, and sales or
dispositions of investments by these prior public programs. PURCHASERS OF UNITS
WILL NOT ACQUIRE ANY OWNERSHIP INTEREST IN ANY OF THE PRIOR PUBLIC PROGRAMS AND
SHOULD NOT ASSUME THAT THE RESULTS OF ANY OF THE PRIOR PUBLIC PROGRAMS WILL BE
INDICATIVE OF THE FUTURE RESULTS OF THE PARTNERSHIP. MOREOVER, THE OPERATING
RESULTS FOR THE PRIOR PUBLIC PROGRAMS SHOULD NOT BE CONSIDERED INDICATIVE OF
FUTURE RESULTS OF THE PRIOR PUBLIC PROGRAMS NOR OF WHETHER THE PRIOR PUBLIC
PROGRAMS WILL ACHIEVE THEIR INVESTMENT OBJECTIVES. FUTURE RESULTS AND THE
ACHIEVEMENT OF INVESTMENT OBJECTIVES WILL IN LARGE PART DEPEND ON FACTS WHICH WE
CANNOT DETERMINE, INCLUDING THE RESIDUAL VALUE OF EQUIPMENT HELD BY THESE PRIOR
PUBLIC PROGRAMS.
Financial Statements
The audited financial statements of ICON Capital Corp. and subsidiaries for
the years ended March 31, 1999 and 1998, the unaudited financial statements of
ICON Capital Corp. and subsidiaries for the nine months ended December 31, 1999,
the audited balance sheet of the Partnership as of February 7, 2000 and the
unaudited balance sheet of the Partnership as of March 31, 2000 are included in
this prospectus. Notwithstanding the inclusion of our financial statements, by
purchasing units, you should be aware that you are not purchasing an interest in
ICON Capital Corp., its subsidiaries, or in any of our affiliates or in any of
our prior public programs.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
ICON INCOME FUND EIGHT B L.P.
Unaudited Balance Sheets--March 31, 2000.................... 87
Balance Sheets at March 31, 2000 and February 7, 2000..... 88
Notes to Balance Sheets................................... 89
Audited Balance Sheet--February 7, 2000..................... 90
Independent Auditors' Report.............................. 91
Balance Sheet at February 7, 2000......................... 92
Notes to Balance Sheet.................................... 93
ICON CAPITAL CORP.
Unaudited Financial Statements--December 31, 1999........... 94
Balance Sheets at December 31, 1999 and March 31, 1999.... 95
Statements of Income for the Nine Months Ended December
31, 1999 and December 31, 1998.......................... 96
Statements of Changes in Stockholders Equity for the Nine
Months Ended December 31, 1999 and For the Year Ended
March 31, 1999.......................................... 97
Statements of Cash Flows for the Nine Months Ended
December 31, 1999 and December 31, 1998................. 98
Notes to Financial Statements............................. 99
Audited Financial Statements--March 31, 1999 and 1998....... 101
Independent Auditors' Report.............................. 102
Balance Sheets at March 31, 1999 and March 31, 1998....... 103
Statements of Income for the Years Ended March 31, 1999
and March 31, 1998...................................... 104
Statements of Changes in Stockholder's Equity for the
Years Ended March 31, 1999, and March 31, 1998.......... 105
Statements of Cash Flows for the Years Ended March 31,
1999 and March 31, 1998................................. 106
Notes to Financial Statements............................. 107
</TABLE>
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ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 2000
(Unaudited)
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ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 7,
2000 2000
--------- -----------
<S> <C> <C>
ASSETS
Cash........................................................ $2,000 $2,000
------ ------
$2,000 $2,000
====== ======
LIABILITIES AND PARTNERS' EQUITY
Commitments and Contingencies
Partners' Equity
General Partner........................................... $1,000 $1,000
Limited Partner........................................... 1,000 1,000
------ ------
$2,000 $2,000
====== ======
</TABLE>
See accompanying notes to balance sheet.
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ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO BALANCE SHEETS
(1) THE PARTNERSHIP
ICON Income Fund Eight B L.P. (the "Partnership"), was formed on
February 7, 2000 as a Delaware Limited Partnership. The initial capitalization
of the Partnership was $2,000. The Partnership will continue until December 31,
2017, unless terminated sooner. The Partnership intends to offer limited
partnership units on a "best efforts" basis to the general public with the
intention of raising up to $75,000,000 of capital. With the funds raised, the
Partnership intends to acquire various types of equipment and to lease such
equipment to third parties and, to a lesser degree, to enter into secured
financing transactions. The General Partner of the Partnership is ICON Capital
Corp. (the "General Partner"), a Connecticut corporation. The General Partner
will acquire the assets and manage the business of the Partnership.
(2) CAPITAL CONTRIBUTION
The General Partner has made an initial capital contribution of $1,000, and
the original limited partner has made an initial capital contribution of $1,000
to the Partnership.
(3) COMMITMENT AND CONTINGENCIES
The Partnership has not applied for an advance ruling from the Internal
Revenue Service; however, in the opinion of counsel the Partnership will be
classified as a Partnership and not as an association taxable for U.S. Federal
income tax purposes. In the absence of a ruling, there cannot be assurance that
the Partnership will not constitute an association taxable as a corporation.
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ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEET
FEBRUARY 7, 2000
(With Independent Auditors' Report Thereon)
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INDEPENDENT AUDITORS' REPORT
The Partners
ICON Income Fund Eight B L.P.:
We have audited the accompanying balance sheet of ICON Income Fund Eight B
L.P. (a Delaware limited partnership) as of February 7, 2000. This balance sheet
is the responsibility of the Partnership's management. Our responsibility is to
express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit of a balance sheet includes examining, on a test basis,
evidence supporting the amounts and disclosures in that balance sheet. An audit
of a balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of ICON Income Fund Eight B L.P. as of
February 7, 2000, in conformity with generally accepted accounting principles.
KPMG LLP
February 7, 2000
New York, New York
91
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEET
FEBRUARY 7, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash........................................................ $2,000
------
$2,000
======
LIABILITIES AND PARTNERS' EQUITY
Commitments and Contingencies
Partners' Equity
General Partner........................................... $1,000
Limited Partner........................................... 1,000
------
$2,000
======
</TABLE>
See accompanying notes to balance sheet.
92
<PAGE>
ICON INCOME FUND EIGHT B L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO BALANCE SHEET
FEBRUARY 7, 2000
(1) THE PARTNERSHIP
ICON Income Fund Eight B L.P. (the "Partnership"), was formed on
February 7, 2000 as a Delaware Limited Partnership. The initial capitalization
of the Partnership was $2,000. The Partnership will continue until December 31,
2017, unless terminated sooner. The Partnership intends to offer limited
partnership units on a "best efforts" basis to the general public with the
intention of raising up to $75,000,000 of capital. With the funds raised, the
Partnership intends to acquire various types of equipment and to lease such
equipment to third parties and, to a lesser degree, to enter into secured
financing transactions. The General Partner of the Partnership is ICON Capital
Corp. (the "General Partner"), a Connecticut corporation. The General Partner
will acquire the assets and manage the business of the Partnership.
(2) CAPITAL CONTRIBUTION
The General Partner has made an initial capital contribution of $1,000, and
the original limited partner has made an initial capital contribution of $1,000
to the Partnership.
(3) COMMITMENT AND CONTINGENCIES
The Partnership has not applied for an advance ruling from the Internal
Revenue Service; however, in the opinion of counsel the Partnership will be
classified as a Partnership and not as an association taxable for U.S. Federal
income tax purposes. In the absence of a ruling, there cannot be assurance that
the Partnership will not constitute an association taxable as a corporation.
93
<PAGE>
ICON CAPITAL CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
(UNAUDITED)
94
<PAGE>
ICON CAPITAL CORP.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ -----------
ASSETS
<S> <C> <C>
Cash........................................................ $ 477,844 $ 774,338
Receivables from related parties............................ 5,242,857 3,613,449
Receivables from related parties--managed partnerships...... 272,095 475,000
Prepaid and other assets.................................... 437,282 269,898
Deferred charges............................................ 354,033 792,437
Fixed assets and leasehold improvements, at cost, less
accumulated depreciation and amortization of $542,283 and
$318,078.................................................. 1,607,579 1,937,646
----------- -----------
Total assets................................................ $ 8,391,690 $ 7,862,768
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses....................... $ 2,386,979 $ 1,971,710
Capital lease obligations................................... 1,359,641 1,557,081
Note payable................................................ 250,000 --
Deferred income taxes....................................... 968,977 876,245
Deferred gain on sale of furniture and fixtures............. 708,782 853,761
----------- -----------
Total liabilities........................................... 5,674,379 5,258,797
----------- -----------
Commitments and contingencies
Stockholder's equity:
Common stock: no par value; $10 stated value; authorized
3,000 shares; issued and outstanding 1,500 shares....... 15,000 15,000
Additional paid-in capital................................ 716,200 716,200
Retained earnings......................................... 3,086,111 2,972,771
----------- -----------
3,817,311 3,703,971
Note receivable from stockholder............................ (1,100,000) (1,100,000)
----------- -----------
Total stockholder's equity.................................. 2,717,311 2,603,971
----------- -----------
Total liabilities and stockholder's equity.................. $ 8,391,690 $ 7,862,768
=========== ===========
</TABLE>
See accompanying notes to financial statements.
95
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF INCOME
NINE MONTHS ENDING DECEMBER 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C>> <C>
Revenues:
Fees--managed partnerships................................ $8,725,916 $10,186,199
Servicing fee--securitizations............................ 203,157 228,721
Interest income and other................................. 32,959 35,266
Management fees--securities............................... -- 758,129
---------- -----------
Total revenues.......................................... 8,962,032 11,208,315
---------- -----------
Expenses:
Management fee--Parent.................................... 4,562,193 --
General and administrative fee--Parent.................... 1,378,700 --
Selling, general and administrative....................... 1,588,213 8,310,345
Amortization of deferred charges.......................... 885,292 1,051,632
Depreciation and amortization (net of deferred gain Note
4)...................................................... 224,205 184,651
Interest expense.......................................... 117,357 132,263
---------- -----------
Total expenses.......................................... 8,755,960 9,678,891
---------- -----------
Income before provision for income taxes.................. 206,072 1,529,424
Provision for income taxes................................ 92,732 688,241
---------- -----------
Net income (loss)......................................... $ 113,340 $ 841,183
========== ===========
</TABLE>
See accompanying notes to financial statements.
96
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
AND FOR THE YEAR ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK NOTE TOTAL
---------------------- ADDITIONAL RECEIVABLE STOCK-
SHARES STATED PAID-IN RETAINED FROM HOLDER'S
OUTSTANDING VALUE CAPITAL EARNINGS STOCKHOLDER EQUITY
----------- -------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1998............. 1,500 $15,000 $716,200 $1,330,900 $(1,100,000) $ 962,100
Net Income................. -- -- -- 1,641,871 -- 1,641,871
----- ------- -------- ---------- ----------- ----------
March 31, 1999............. 1,500 15,000 716,200 2,972,771 (1,100,000) 2,603,971
Net income................. -- -- -- 113,340 -- 113,340
----- ------- -------- ---------- ----------- ----------
December 31, 1999.......... 1,500 $15,000 $716,200 $3,086,111 $(1,100,000) $2,717,311
===== ======= ======== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
97
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 113,340 $ 841,183
----------- -----------
Adjustments to reconcile net income to net cash provided
by
operating activities:
Depreciation and amortization........................... 224,205 184,651
Amortization of deferred charges........................ 885,292 1,051,632
Deferred income taxes................................... 92,732 688,241
Changes in operating assets and liabilities:
Receivables from managed partnerships................. 202,905 72,025
Receivables from related parties...................... (1,629,408) 161,232
Prepaid and other assets.............................. (167,384) (136,446)
Accounts payable and accrued expenses................. 415,268 656,749
----------- -----------
Total adjustments................................... 23,610 2,678,084
----------- -----------
Net cash provided by operating activities................. 136,950 3,519,267
----------- -----------
Cash flows from investing activities:
Purchases of fixed assets and leasehold improvements...... (39,117) (443,870)
Increase in deferred charges.............................. (446,888) (1,221,748)
----------- -----------
Net cash used for investing activities.................... (486,005) (1,665,618)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable............................... 250,000 --
Repayment of notes payable--line of credit................ -- (2,000,000)
Proceeds from sale leaseback of furniture and fixtures.... -- 1,500,000
Principal payments on capital lease obligations........... (197,439) (164,450)
----------- -----------
Net cash provided by (used for) financing activities...... 52,561 (664,450)
----------- -----------
Net (decrease) increase in cash............................. (296,494) 1,189,199
Cash, beginning of period................................... 774,338 179,403
----------- -----------
Cash, end of period......................................... $ 477,844 $ 1,368,602
=========== ===========
</TABLE>
See accompanying notes to financial statements.
98
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(UNAUDITED)
(1) BASIS OF ACCOUNTING AND PRESENTATION
The financial statements of ICON Capital Corp., (the "Company") are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of financial position and operating results for the interim period.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Management believes that the disclosures made
are adequate to prevent the information from being misleading. The financial
statements should be read in conjunction with the Company's March 31, 1999 and
1998 audited financial statements. The results of operations for the nine months
ended December 31, 1999 are not necessarily indicative of the results of
operations for the entire fiscal year ending March 31, 2000.
(2) FEES--MANAGED PARTNERSHIPS
The Company is the general partner and manager of ICON Cash Flow Partners,
L.P., Series B, ICON Cash Flow Partners, L.P., Series C, ICON Cash Flow
Partners, L.P., Series D, ICON Cash Flow Partners, L.P., Series E, ICON Cash
Flow Partners L.P. Six, ICON Cash Flow Partners L.P. Seven, and ICON Income Fund
Eight A L.P. (collectively the "Partnerships"), which are publicly registered
equipment leasing limited partnerships. The Partnerships were formed for the
purpose of acquiring equipment and leasing such equipment to third parties.
The Company earns fees from the Partnerships for the organization and
offering of each Partnership and for the acquisition and management of their
investments. The Company is also entitled to reimbursement from the Partnerships
for certain administrative expenses incurred by it on behalf of the
Partnerships. Organization and offering fees are earned based on investment
units sold and are recognized at each closing. Acquisition fees are earned based
on the purchase price paid or the principal amount of each transaction entered
into. Management fees are earned for managing the Partnership's equipment
leasing and financing transactions. Management fees are earned upon payment of
rental obligations from lease and financing transactions.
The Company had receivables from the managed partnerships of $272,095 and
$475,000 at December 31, 1999 and March 31, 1999, respectively. These amounts
represent fees that have been earned by the Company and are immediately payable.
As of December 31, 1999 the Company is entitled to receive $11,874,312 of
management fees and an estimated $5,474,466 of administrative expense
reimbursements through 2008, based on current contractual rent receivable of the
Partnerships assuming credit losses of 0%. To the extent that existing leases
and financing transactions owned by the Partnerships are terminated early,
extended, or otherwise modified, or credit losses are different from
expectations, the amounts that the Company is entitled to receive will vary. The
receipt of these amounts by the Company is subordinated to the receipt by
limited partners of periodic minimum distributions more fully described in
underlying partnership agreements.
(3) RELATED PARTY TRANSACTIONS
Prior to January 1, 1999, all personnel were employed by, and all expenses
were paid by, the Company. Effective January 1, 1999, management made the
decision to implement certain organizational changes, and corporate resources,
including but not limited to personnel, were reallocated between the Company,
99
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
(UNAUDITED)
(3) RELATED PARTY TRANSACTIONS (CONTINUED)
ICON Holdings Corp. (the "Parent"), and ICON Securities Corp. ("Securities") in
an effort to more accurately align revenues and expenses among the functions of
the companies. Management also eliminated the management fee paid to the Company
by Securities.
1998-A, a non consolidated affiliate of the Parent, was formed for the
purpose of acquiring, warehousing and securitizing a portfolio of leases. The
Company, as servicer, earns a fee from 1998-A. This fee is earned monthly and is
based on the discounted lease balance of 1998-A's outstanding lease pool.
The related party receivable at December 31, 1999 was due primarily from
the Parent. Such receivables represent cash advanced to the Parent, net of
accrued general and administrative and management fees payable to the Parent.
See Notes 5 and 7 for a discussion of a related party transaction and
related party commitments.
(4) CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ----------
<S> <C> <C>
Various obligations under capital leases, payable in
monthly installments through July 2003 (Includes
sale leaseback transaction, see note 5)........... $1,359,641 $1,557,081
========== ==========
</TABLE>
(5) SALE LEASEBACK
On July 31, 1998 the Company entered into an agreement to sell a portion
of its fixed assets to ICON Receivables Corp. 1998--A ("1998-A"), a
non-consolidated affiliate of the Parent, for $1,500,000 based upon a third
party appraisal. 1998-A simultaneously leased the fixed assets back to the
Company. Under the lease, the Company agreed to pay 60 equal monthly
installments of $31,255 with the first payment due August 1998. The lease
contains an option to purchase the assets at the end of the term for one
dollar ($1.00). The Company treated the transaction as a sale of assets and
recorded a deferred gain on sale in the amount of $966,522. The deferred gain
is being amortized against depreciation expense on a straight-line basis over
the remaining useful life of the assets sold. The capital lease obligation is
included on the December 31, 1999 balance sheet in "Capital lease
obligations."
(6) NOTE PAYABLE
On December 16, 1999, the Company borrowed $250,000 from TKO Finance
Corporation. The loan bears interest at 11.5% and is payable in monthly
installments of $8,244 with a final maturity date of January 1, 2003. The loan
is secured by a lien on all the assets of the Company.
(7) COMMITMENTS
The Company entered into a Guarantee Agreement with M & T Bank on
December 8, 1999. Under the Agreement the Company guarantees payment of an
$875,000 mortgage loan obligation owed by a non-consolidated affiliate of the
Company.
100
<PAGE>
ICON CAPITAL CORP.
FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
101
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ICON Capital Corp.:
We have audited the accompanying balance sheets of ICON Capital Corp. as of
March 31, 1999 and 1998, and the related statements of income, changes in
stockholder's equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ICON Capital Corp. as of
March 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
KPMG LLP
June 4, 1999
New York, New York
102
<PAGE>
ICON CAPITAL CORP.
BALANCE SHEETS
MARCH 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
ASSETS
<S> <C> <C>
Cash........................................................ $ 774,338 $ 179,403
Receivables from related parties............................ 3,613,449 3,580,727
Receivables from related parties--managed partnerships...... 475,000 340,990
Prepaid and other assets.................................... 269,898 226,855
Deferred charges............................................ 792,437 524,270
Fixed assets and leasehold improvements, at cost, less
accumulated depreciation and amortization of $318,078 and
$1,865,232................................................ 1,937,646 758,680
----------- -----------
Total assets................................................ $ 7,862,768 $ 5,610,925
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable and accrued expenses....................... $ 1,971,710 $ 1,819,003
Notes payable and capital lease obligations................. 1,557,081 2,246,386
Deferred income taxes, net.................................. 876,245 583,436
Deferred gain on sale of furniture and fixtures............. 853,761 --
----------- -----------
Total liabilities....................................... 5,258,797 4,648,825
----------- -----------
Commitments and contingencies
Stockholder's equity:
Common stock: no par value; $10 stated value; authorized
3,000 shares; issued and outstanding 1,500 shares......... 15,000 15,000
Additional paid-in capital.................................. 716,200 716,200
Retained earnings........................................... 2,972,771 1,330,900
----------- -----------
3,703,971 2,062,100
Note receivable from stockholder............................ (1,100,000) (1,100,000)
----------- -----------
2,603,971 962,100
----------- -----------
Total liabilities and stockholder's equity.................. $ 7,862,768 $ 5,610,925
=========== ===========
</TABLE>
See accompanying notes to financial statements.
103
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Fees--managed partnerships................................ $14,057,423 $12,048,906
Management fees--Securities............................... 758,039 716,444
Servicing fee............................................. 302,188 19,741
Interest income and other................................. 40,680 41,284
----------- -----------
Total revenues.......................................... 15,158,330 12,826,375
----------- -----------
Expenses:
Selling, general and administrative....................... 8,950,128 9,404,987
Amortization of deferred charges.......................... 1,344,012 844,636
Management fee--Parent.................................... 993,000 --
General and administrative fee--Parent.................... 634,506 --
Depreciation and amortization............................. 249,729 331,967
Interest expense.......................................... 174,493 80,885
----------- -----------
Total expenses.......................................... 12,345,868 10,662,475
----------- -----------
Income before provision for income taxes.................. 2,812,462 2,163,900
Provision for income taxes.................................. 1,170,591 1,091,379
----------- -----------
Net income................................................ $ 1,641,871 $ 1,072,521
=========== ===========
</TABLE>
See accompanying notes to financial statements.
104
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
COMMON STOCK NOTE
---------------------- ADDITIONAL RECEIVABLE TOTAL
SHARES STATED PAID-IN RETAINED FROM STOCKHOLDERS
OUTSTANDING VALUE CAPITAL EARNINGS STOCKHOLDER EQUITY
----------- -------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1997............... 1,500 $15,000 $716,200 $1,050,282 $(1,100,000) $ 681,482
Net income................... -- -- -- 1,072,521 -- 1,072,521
Distributions to Parent...... -- -- -- (791,903) -- (791,903)
----- ------- -------- ---------- ----------- ----------
March 31, 1998............... 1,500 15,000 716,200 1,330,900 (1,100,000) 962,100
Net income................... -- -- -- 1,641,871 -- 1,641,871
----- ------- -------- ---------- ----------- ----------
March 31, 1999............... 1,500 $15,000 $716,200 $2,972,771 $(1,100,000) $2,603,971
===== ======= ======== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
105
<PAGE>
ICON CAPITAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,641,871 $ 1,072,521
----------- -----------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 249,729 331,967
Amortization of deferred charges........................ 1,344,012 844,636
Deferred income taxes................................... 292,809 328,260
Changes in operating assets and liabilities:
Receivables from managed partnerships, net of deferred
management fees..................................... (134,010) 224,060
Receivables from related parties...................... (32,722) (3,399,688)
Prepaid and other assets.............................. (43,043) (39,168)
Accounts payable and accrued expenses................. 152,707 593,277
----------- -----------
Total adjustments..................................... 1,829,482 (1,116,656)
----------- -----------
Net cash provided by (used in) operating activities....... 3,471,353 (44,135)
----------- -----------
Cash flows from investing activities:
Purchases of fixed assets and leasehold improvements...... (511,038) (234,336)
Increase in deferred charges.............................. (1,612,179) (989,189)
----------- -----------
Net cash used in investing activities..................... (2,123,217) (1,223,525)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of furniture and fixtures.............. 1,500,000 --
Repayment of note payable--line of credit................. (2,000,000) --
Principal payments on capital lease obligations........... (253,201) (53,558)
Proceeds from note payable-line of credit................. -- 2,000,000
Distributions to Parent................................... -- (791,903)
----------- -----------
Net cash (used in) provided by financing activities....... (753,201) 1,154,539
----------- -----------
Net increase (decrease) in cash............................. 594,935 (113,121)
Cash, beginning of year..................................... 179,403 292,524
----------- -----------
Cash, end of year........................................... $ 774,338 $ 179,403
=========== ===========
</TABLE>
See accompanying notes to financial statements.
106
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(1) ORGANIZATION
ICON Capital Corp. (the "Company") was incorporated in 1985. Until
August 20, 1996, the Company was owned by three individuals. On August 20, 1996,
ICON Holdings Corp. ("Holdings" or the "Parent") acquired all of the outstanding
stock of the Company, as well as all of the outstanding stock of ICON Securities
Corp. ("Securities"), an affiliated company. The primary activity of the Company
is the development, marketing and management of publicly registered equipment
leasing limited partnerships.
The Company is the general partner and manager of ICON Cash Flow
Partners L.P. Series A ("ICON Cash Flow A"), ICON Cash Flow Partners L.P.,
Series B ("ICON Cash Flow B"), ICON Cash Flow Partners, L.P. Series C ("ICON
Cash Flow C"), ICON Cash Flow Partners L.P., Series D ("ICON Cash Flow D"),
ICON Cash Flow Partners L.P., Series E ("ICON Cash Flow E"), ICON Cash Flow
Partners L.P. Six ("ICON Cash Flow Six"), ICON Cash Flow Partners L.P. Seven
("ICON Cash Flow Seven"), and ICON Income Fund Eight A L.P. ("ICON Eight A")
(collectively the "Partnerships"), which are publicly registered equipment
leasing limited partnerships. The Partnerships were formed for the purpose of
acquiring equipment and leasing such equipment to third parties. The
Company's investments in the Partnerships are included in prepaid and other
assets.
The Company earns fees from the Partnerships on the sale of Partnership
units. Additionally, the Company also earns acquisition and management fees and
shares in Partnership cash distributions.
The following table identifies pertinent offering information by the
Partnerships:
<TABLE>
<CAPTION>
DATE OPERATIONS DATE CEASED GROSS PROCEEDS
BEGAN OFFERING UNITS RAISED
--------------------- --------------------- --------------
<S> <C> <C> <C>
ICON Cash Flow A....................... May 6, 1988 February 1, 1989 $ 2,504,500
ICON Cash Flow B....................... September 22, 1989 November 15, 1990 20,000,000
ICON Cash Flow C....................... January 3, 1991 June 20, 1991 20,000,000
ICON Cash Flow D....................... September 13, 1991 June 5, 1992 40,000,000
ICON Cash Flow E....................... June 5, 1992 July 31, 1993 61,041,151
ICON Cash Flow Six..................... March 31, 1994 November 8, 1995 38,385,712
ICON Cash Flow Seven................... January 19, 1996 September 16, 1998 99,999,683
ICON Eight A........................... October 14, 1998 (1) 33,730,449
------------
$315,661,495
============
</TABLE>
------------------------
(1) Gross proceeds raised through June 1, 1999.
ICON Eight A was formed on July 7, 1997 with an initial capital
contribution of $2,000 and began offering its units to suitable investors on
October 14, 1998. The offering period for ICON Eight A will end the earlier
of October 14, 1999 or when ICON Eight A raises $75,000,000. In the event the
offering does not reach $75,000,000 by October 14, 1999, ICON Eight A may
extend the offering period for up to one year.
107
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING AND PRESENTATION
The Company's financial statements have been prepared on the historical
cost basis of accounting using the accrual basis. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(b) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" requires disclosures about the fair
value of financial instruments. The Company's financial instruments (cash,
receivables and notes payable) are either payable on demand or have
short-term maturities and present relatively low credit and interest rate
risk, and as a result, their fair value approximates carrying value at March
31, 1999.
(c) REVENUE AND COST RECOGNITION
INCOME FUND FEES:
The Company earns fees from the Partnerships for the organization and
offering of each Partnership and for the acquisition, management and
administration of their investments. Organization and offering fees are earned
based on investment units sold and are recognized at each closing. Acquisition
fees are earned based on the purchase price paid or the principal amount of each
transaction entered into. Management and administrative fees are earned for
managing the Partnership's equipment leasing and financing transactions.
Management and administrative fees are earned upon payment of rental obligations
from lease and financing transactions.
Effective September 1, 1993, ICON Cash Flow A, ICON Cash Flow B, and ICON
Cash Flow C decreased monthly distributions to the limited partners from the
cash distribution rates stated in their prospectuses. As a result, all
management fees payable to the Company related to these entities were deferred
until the limited partners of ICON Cash Flow A, ICON Cash Flow B and ICON Cash
Flow C receive their stated cash distribution rate of return on a cumulative
basis. Due to the approval of amendments to the ICON Cash Flow B and ICON Cash
Flow C Partnership Agreements, effective November 15, 1995 and June 19, 1996,
the Company eliminated ICON Cash Flow B and ICON Cash Flow C's obligation to pay
$220,000 and $529,125, respectively, of the original management fees deferred.
As of December 31, 1997, ICON Cash Flow A investors had received the stated
annual rate of return, and as a result the Company reversed $38,081 in deferred
management fees and recognized such fees as income. Deferred management fees in
the amount of $232,000 remain outstanding as of March 31, 1999 and have not been
recognized in income. Of such amounts, $127,000 is due from ICON Cash Flow B and
$105,000 is due from ICON Cash Flow C and these amounts are expected to be paid
to the Company in fiscal year ended March 31, 2000. When paid, the Company will
contribute such amounts back to ICON Cash Flow B and ICON Cash Flow C.
The Company earns a servicing fee from an affiliate, ICON Receivables
1998-A ("1998-A"). See note 4.
108
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(2) SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) DEFERRED CHARGES
Under the terms of the Partnerships' agreements, the Company is entitled to
be reimbursed for the costs of organizing and offering the units of the
Partnerships from the gross proceeds raised, subject to certain limitations,
based on the number of investment units sold. The unamortized balance of these
costs are reflected on the balance sheets as deferred charges and are being
amortized over the offering periods.
(e) FIXED ASSETS AND LEASEHOLD IMPROVEMENTS
Fixed assets, which consists primarily of a capital lease, is recorded at
cost and is being depreciated over three to five years using the straight-line
method. Leasehold improvements are also recorded at cost and are being amortized
over the estimated useful lives of the improvements, or the term of the lease,
if shorter, using the straight-line method.
(f) INCOME TAXES
The Company accounts for its income taxes following the liability method as
provided for in Statement of Financial Accounting Standard No. 109, "Accounting
for Income Taxes."
The Company's activity is included in the consolidated Federal and combined
state income tax returns of Holdings. The Company provides for income taxes as
if it were a stand alone entity.
(3) STOCKHOLDER'S EQUITY
As of March 31, 1999, the Company held a demand promissory note for
$1,100,000 from Holdings. The note is without interest, except in the case of
default, at which time the note would bear interest at the rate of 18%. The note
is reflected for financial statement reporting purposes as a reduction of
stockholders' equity.
(4) RELATED PARTY TRANSACTIONS
The Company earns fees from the Partnerships for the organization and
<PAGE>
offering of each Partnership and for the acquisition, management and
administration of their investments. The balance sheet item "Receivables from
managed partnerships" relates to such fees, which have been earned by the
Company but not paid by the Partnerships.
Prior to January 1, 1999 the Company also earned a management fee from
Securities for the support and administration of Securities' operations. The
remaining related party receivable at March 31, 1998 was due primarily from
Holdings. Such receivable related to the reimbursement of amounts paid by the
Company on behalf of Holdings.
Prior to January 1, 1999, all personnel were employed by, and all expenses
were paid by, the Company. Effective January 1, 1999, management made the
decision to implement certain organizational changes, and corporate resources,
including but not limited to personnel, were reallocated between the Company,
the Parent, and Securities in an effort to more accurately align revenues and
expenses among the functions of the companies. Management also eliminated the
management fee paid to the Company by Securities.
At March 31, 1999, receivables from related parties represented cash
advanced to the Parent, net of accrued general and administrative and management
fees payable to the Parent.
109
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(4) RELATED PARTY TRANSACTIONS (CONTINUED)
1998-A, a non consolidated affiliate of the Parent, was formed for the
purpose of acquiring, warehousing and securitizing a portfolio of leases. The
Company, as servicer, earns a fee from 1998-A. This fee is earned monthly and is
based on the discounted lease balance of 1998-A's outstanding lease pool.
For the year ended March 31, 1998, the Company paid $791,903 in
distributions to Holdings.
See Note 8 for a discussion of a related party sale leaseback transaction.
(5) PREPAID AND OTHER ASSETS
Included in prepaid and other assets are unamortized insurance costs, the
Company's investment in the Partnerships and security deposits.
(6) INCOME TAXES
The provision for income taxes for the years ended March 31, 1999 and 1998
consisted of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Current:
Federal............................................ $ 665,620 $ 580,228
State.............................................. 212,162 182,891
---------- ----------
Total current.................................... 877,782 763,119
---------- ----------
Deferred:
Federal............................................ 220,066 100,481
State.............................................. 72,743 227,779
---------- ----------
Total deferred................................... 292,809 328,260
---------- ----------
Total................................................ $1,170,591 $1,091,379
========== ==========
</TABLE>
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities. The deferred tax liabilities at March 31, 1999 and 1998 were
$876,245 and $583,436, respectively. Deferred income taxes at both dates are
primarily the result of temporary differences relating to the carrying value of
fixed assets, the investments in the Partnerships and deferred charges.
110
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(6) INCOME TAXES (CONTINUED)
The following table reconciles income taxes computed at the federal
statutory rate to the Company's effective tax rate for the years ended
March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------------------- ---------------------
TAX RATE TAX RATE
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Federal statutory.................................... $ 956,237 34.00% $ 735,726 34.00%
State income taxes, net of Federal tax effect........ 188,037 6.69 271,041 12.53
Meals and entertainment exclusion.................... 24,293 .86 20,663 0.95
Other................................................ 2,024 .07 63,949 2.96
---------- ----- ---------- -----
Total................................................ $1,170,591 41.62% $1,091,379 50.44%
========== ===== ========== =====
</TABLE>
(7) NOTES PAYABLE
In December 1997, the Company entered into a discretionary line of credit
agreement (the "Facility"). The maximum amount available and outstanding under
that Facility was originally $1,300,000. In March 1998, the Facility was
increased to $2,000,000, all of which was outstanding at March 31, 1998. The
Facility was paid in full on July 31, 1998.
Notes payable at March 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Various obligations under capital leases, payable in monthly
installments through August 2003.......................... $1,557,081 $ 246,386
Line of credit.............................................. -- 2,000,000
---------- ----------
Total....................................................... $1,557,081 $2,246,386
========== ==========
</TABLE>
(8) SALE LEASEBACK
On July 31, 1998 the Company entered into an agreement to sell a portion of
its fixed assets to 1998-A, a non consolidated affiliate of the Parent, for
$1,500,000, based upon a third party appraisal. 1998-A simultaneously leased the
fixed assets back to the Company. Under the lease, the Company agreed to pay 60
equal monthly installments of $31,255 with the first payment due August 1998.
The lease contains an option to purchase the assets at the end of the term for
one dollar ($1.00). The Company treated the transaction as a sale of assets and
recorded a deferred gain on sale in the amount of $966,522. The deferred gain is
being amortized against depreciation expense on a straight line basis over the
remaining useful life of the assets sold. The capital lease obligation is
included on the March 31, 1999 balance sheet in "Notes payable and capital lease
obligations." See note 7.
(9) COMMITMENTS AND CONTINGENCIES
The Company had operating leases for office space through the year 2004. The
leases were transferred to the Parent effective January 1, 1999. See note 4.
Rent expense for the nine months ended December 31, 1998 and the year ended
March 31, 1998 totaled to $426,644 and $497,223, net of sublease income of
$141,498 and $155,749, respectively. Although all rental obligations were
transferred to the
111
<PAGE>
ICON CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
Parent, a portion of the leases remain in the Company's name. The future minimum
rental commitments under non-cancelable operating leases currently in the
Company's name are due as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING MARCH 31, AMOUNT
---------------------------- ----------
<S> <C>
2000........................................................ $ 605,205
2001........................................................ 526,136
2002........................................................ 535,764
2003........................................................ 550,789
2004........................................................ 571,824
Thereafter.................................................. 333,564
----------
Total....................................................... $3,123,282
==========
</TABLE>
(10) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the year ended March 31, 1999, the Company recorded capital lease
assets and a capital lease obligation of $1,563,897 of which $1,500,000 was
leased from an affiliate. See note 8.
During the year ended March 31, 1999 and 1998, the Company paid $174,493 and
$80,885 in interest on recourse debt, respectively.
112
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ICON INCOME FUND EIGHT B L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. ESTABLISHMENT OF PARTNERSHIP................................ A-1
Section 2. NAME, PRINCIPAL OFFICE, NAME AND ADDRESS OF REGISTERED AGENT
FOR SERVICE OF PROCESS...................................... A-1
2.1 Legal Name and Address...................................... A-1
2.2 Address of Partners......................................... A-1
Section 3. PURPOSES AND POWERS......................................... A-2
3.1 Purposes.................................................... A-2
3.2 Investments in Equipment.................................... A-2
3.3 Powers...................................................... A-2
Section 4. TERM........................................................ A-2
Section 5. PARTNERS AND CAPITAL........................................ A-3
5.1 General Partner............................................. A-3
5.2 Original Limited Partner.................................... A-3
5.3 Limited Partners............................................ A-3
5.4 Partnership Capital......................................... A-4
5.5 Capital Accounts............................................ A-5
5.6 Additional Capital Contributions............................ A-6
5.7 Loans by Partners........................................... A-6
5.8 No Right to Return of Capital............................... A-6
Section 6. GENERAL PARTNER............................................. A-6
6.1 Extent of Powers and Duties................................. A-6
6.2 Limitations on the Exercise of Powers of General Partner.... A-9
6.3 Limitation on Liability of General Partner and its
Affiliates; Indemnification................................. A-12
6.4 Compensation of General Partner and its Affiliates.......... A-12
6.5 Other Interests of the General Partner and its Affiliates... A-15
Section 7. POWERS AND LIABILITIES OF LIMITED PARTNERS.................. A-16
7.1 Absence of Control Over Partnership Business................ A-16
7.2 Limited Liability........................................... A-16
Section 8. DISTRIBUTIONS AND ALLOCATIONS............................... A-17
8.1 Distribution of Cash........................................ A-17
8.2 Allocations of Profits and Losses........................... A-18
8.3 Distributions and Allocations Among the Limited Partners.... A-20
8.4 Tax Allocations: Code Section 704(c); Revaluations.......... A-21
8.5 Compliance with NASAA Guidelines Regarding Front-End Fees... A-21
8.6 Return of Uninvested Capital Contribution................... A-21
8.7 Partner's Return of Investment in the Partnership........... A-22
8.8 No Distributions in Kind.................................... A-22
8.9 Partnership Entitled to Withhold............................ A-22
Section 9. WITHDRAWAL OF GENERAL PARTNER............................... A-23
9.1 Voluntary Withdrawal........................................ A-23
9.2 Involuntary Withdrawal...................................... A-23
9.3 Consequences of Withdrawal.................................. A-23
9.4 Liability of Withdrawn General Partner...................... A-24
9.5 Continuation of Partnership Business........................ A-24
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 10. TRANSFER OF UNITS........................................... A-24
10.1 Withdrawal of a Limited Partner............................. A-24
10.2 Assignment.................................................. A-25
10.3 Substitution................................................ A-26
10.4 Status of an Assigning Limited Partner...................... A-27
10.5 Limited Right of Presentment for Redemption of Units........ A-27
Section 11. DISSOLUTION AND WINDING-UP.................................. A-28
11.1 Events Causing Dissolution.................................. A-28
11.2 Winding Up of the Partnership; Capital Contribution by the
General Partner Upon Dissolution............................ A-28
11.3 Application of Liquidation Proceeds Upon Dissolution........ A-29
11.4 No Recourse Against Other Partners.......................... A-29
Section 12. FISCAL MATTERS.............................................. A-30
12.1 Title to Property and Bank Accounts......................... A-30
12.2 Maintenance of and Access to Basic Partnership Documents.... A-30
12.3 Financial Books and Accounting.............................. A-31
12.4 Fiscal Year................................................. A-31
12.5 Reports..................................................... A-31
12.6 Tax Returns and Tax Information............................. A-33
12.7 Accounting Decisions........................................ A-33
12.8 Federal Tax Elections....................................... A-34
12.9 Tax Matters Partner......................................... A-34
12.10 Reports to State Authorities................................ A-35
Section 13. MEETINGS AND VOTING RIGHTS OF THE LIMITED PARTNERS.......... A-35
13.1 Meetings of the Limited Partners............................ A-35
13.2 Voting Rights of the Limited Partners....................... A-36
13.3 Limitations on Action by the Limited Partners............... A-37
Section 14. AMENDMENTS.................................................. A-37
14.1 Amendments by the General Partner........................... A-37
14.2 Amendments with the Consent of the Majority Interest........ A-38
Section 15. POWER OF ATTORNEY........................................... A-38
15.1 Appointment of Attorney-in-Fact............................. A-38
15.2 Amendments to Agreement and Certificate of Limited
Partnership................................................. A-39
15.3 Power Coupled With an Interest.............................. A-39
Section 16. GENERAL PROVISIONS.......................................... A-40
16.1 Notices, Approvals and Consents............................. A-40
16.2 Further Assurances.......................................... A-40
16.3 Captions.................................................... A-40
16.4 Binding Effect.............................................. A-40
16.5 Severability................................................ A-40
16.6 Integration................................................. A-40
16.7 Applicable Law.............................................. A-41
16.8 Counterparts................................................ A-41
16.9 Creditors................................................... A-41
16.10 Interpretation.............................................. A-41
16.11 Successors and Assigns...................................... A-41
16.12 Waiver of Action for Partition.............................. A-41
Section 17. DEFINITIONS................................................. A-41
</TABLE>
A-ii
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ICON INCOME FUND EIGHT B L.P.
This Amended and Restated Agreement of Limited Partnership of ICON Income
Fund Eight B L.P., is executed as of February 9, 2000 by its general partner,
ICON Capital Corp., a Connecticut corporation, pursuant to Section 14 of the
Partnership Agreement.
WITNESSETH:
WHEREAS, ICON Income Fund Eight B L.P., a Delaware Limited Partnership (the
"Partnership") was formed as a Delaware limited partnership pursuant to a
Certificate of Limited Partnership, dated as of February 7, 2000 and filed on
February 7, 2000 under and pursuant to the Delaware Revised Uniform Limited
Partnership Act.
WHEREAS, the General Partner now wishes to correct and supplement the
Partnership Agreement pursuant to Section 14; and
NOW, THEREFORE, the Partnership Agreement is amended and restated to read in
full as follows:
SECTION 1. ESTABLISHMENT OF PARTNERSHIP.
The parties hereto hereby enter into this Agreement and do hereby set forth
the terms of the Partnership established under and pursuant to the provisions of
the Delaware Act, which terms shall govern the rights and liabilities of the
Partners, except as otherwise herein expressly stated.
SECTION 2. NAME, PRINCIPAL OFFICE, NAME AND ADDRESS OF.
2.1 LEGAL NAME AND ADDRESS.
The Partnership shall be conducted under the name "ICON Income Fund
Eight B L.P." The principal office and place of business of the Partnership
shall be 111 Church Street, White Plains, New York 10601 or at such other
address as the General Partner may from time to time determine and specify by
written notice to the Limited Partners. The Partnership may also maintain such
other offices and places of business as the General Partner may deem advisable
at any other place or places within the United States and, in connection
therewith, the General Partner shall qualify and remain qualified, and shall use
its best efforts to qualify and keep the Partnership qualified, to do business
under the laws of all such jurisdictions as may be necessary to permit the
Partnership legally to conduct its business in such jurisdictions. The
registered office of the Partnership in the State of Delaware shall be at 1013
Centre Road, Wilmington, Delaware, 19805. The name of its registered agent at
such address shall be The Corporation Service Company. The General Partner may
change the registered office and the registered agent of the Partnership, with
prior written notice to the Limited Partners.
2.2 ADDRESS OF PARTNERS.
The principal place of business of the General Partner and the places of
residence of the Limited Partners shall be those addresses set forth opposite
their respective names in Schedule A to this Agreement (as such may be
supplemented or amended from time to time). Any Partner may change his, her or
its respective place of business or residence, as the case may be, by giving
Notice of such change to the Partnership (and, in the case of the General
Partner, by also giving Notice thereof to all of the Limited Partners), which
Notice shall become effective upon receipt.
A-1
<PAGE>
SECTION 3. PURPOSES AND POWERS.
3.1 PURPOSES.
The Partnership has been organized for the purposes of: (a) acquiring,
investing in, purchasing, owning, acquiring options to purchase, holding,
leasing, re-leasing, financing, refinancing, borrowing, managing, maintaining,
operating, improving, upgrading, modifying, exchanging, assigning, encumbering,
creating security interests in, pledging, selling, transferring or otherwise
disposing of, and in all respects otherwise dealing in or with, equipment of all
kinds and purchasing equity interests in equipment-owning entities; (b) lending
and providing financing to other Persons for their acquisition of items of
equipment and other tangible and intangible personal property of all kinds,
pursuant to financing arrangements or transactions secured by various items of
equipment (or interests therein and leases thereof) or acquiring, investing in,
or purchasing such loans or financing arrangements or transactions; and (c)
establishing, acquiring, conducting and carrying on any business suitable,
necessary, useful or convenient in connection therewith, in order to generate
monthly cash distributions to the Limited Partners during the term of the
Partnership.
3.2 INVESTMENTS IN EQUIPMENT.
The equipment acquired by the Partnership shall be selected from among new
or used: (a) aircraft, rail and over-the-road transportation equipment and
marine vessels; (b) machine tools, manufacturing equipment and materials
handling equipment; (c) telecommunications, technology, computer and related
equipment; and (d) miscellaneous equipment of any other type which the General
Partner believes may be an attractive investment. The General Partner expects
most equipment the Partnership acquires to be subject to an existing Lease.
3.3 POWERS.
In furtherance of the above purposes, the Partnership shall have the power,
directly or indirectly:
(a) to acquire, invest in, purchase and/or make future commitments to
purchase, own, acquire options to purchase, hold, lease, re-lease, finance,
refinance, borrow, manage, maintain, operate, improve, upgrade, modify,
exchange, assign, encumber, create security interests in, pledge, sell, transfer
or otherwise dispose of, and in all respects otherwise deal in or with,
Equipment, Leases and Financing Transactions;
(b) to enter into Joint Ventures, partnerships and other business, financing
and legal and beneficial ownership arrangements with respect to Equipment,
Leases and Financing Transactions; and
(c) to purchase and hold trust certificates, debt securities and equity
securities issued by any Person;
(d) to lend and borrow money, to issue and accept evidences of indebtedness
in respect thereof, and to secure the same by mortgages or pledges or grants of
liens on, or other security interests in, Investments of the Partnership and
accept such kinds and amounts of security for loans and leases it makes to
others as the General Partner in its sole and absolute discretion shall deem
appropriate; and
(e) to do all things, carry on any activities and enter into, perform,
modify, supplement or terminate any contracts necessary to, connected with, or
incidental to, or in furtherance of, the purposes of the Partnership consistent
with the terms of this Agreement.
SECTION 4. TERM.
The term of the Partnership commenced upon the filing of the Certificate of
Limited Partnership with the Secretary of State of the State of Delaware on
February 9, 2000 and shall terminate at midnight on December 31, 2017, unless
sooner dissolved or terminated as provided in Section 11 of this Agreement.
A-2
<PAGE>
SECTION 5. PARTNERS AND CAPITAL.
5.1 GENERAL PARTNER.
The General Partner has contributed $1,000, in cash, as its Capital
Contribution to the Partnership.
The General Partner shall use its best efforts to maintain, at all times
from and after the date of this Agreement through and including the Termination
Date, a Net Worth that is at least sufficient for the Partnership to qualify, in
the opinion of Tax Counsel, as a partnership for federal income tax purposes and
to satisfy the net worth requirements for a "sponsor" under the NASAA
Guidelines.
5.2 ORIGINAL LIMITED PARTNER.
The Original Limited Partner has made a capital contribution of $1,000 to
the Partnership.
By his execution hereof, the Original Limited Partner hereby agrees to
withdraw as Original Limited Partner, and the parties hereto agree to return to
him his capital contribution of $1,000 and to retire his original ten
(10) Units upon the Initial Closing Date and admission of additional Limited
Partners.
5.3 LIMITED PARTNERS.
(a) From and after the Initial Closing Date, there shall be one class of
limited partners, whose interests in the Partnership shall consist of up to
750,000 Units.
(b) Any Person desiring to become a Limited Partner shall execute and
deliver to the General Partner a Subscription Agreement substantially in the
form filed as an exhibit to the Prospectus, and such other documents as the
General Partner shall request, which other documents shall be in form and
substance satisfactory to the General Partner, pursuant to which, among other
things, such Person shall, subject to acceptance of his or her subscription by
the General Partner, agree to be bound by all terms and provisions of this
Agreement.
(c) Each Limited Partner (other than Affiliated Limited Partners) shall make
a Capital Contribution, in cash, in an amount equal to the Gross Unit Price to
the capital of the Partnership for each Unit or fraction thereof purchased. Each
Affiliated Limited Partner shall make a Capital Contribution, in cash, in an
amount equal to the Net Unit Price for each Unit or fraction thereof purchased.
(d) Limited Partners must purchase a minimum of twenty-five (25) Units, but
IRAs or Qualified Plans (including Keogh Plans) may purchase a minimum of ten
(10) Units. Above such minimum purchase requirements, Limited Partners may
subscribe for additional Units or fractions thereof equal to 1/10,000th of a
Unit or any multiple thereof (unless prohibited by applicable law) at the Net
Unit Price or Gross Unit Price, whichever shall be applicable.
(e) The General Partner and any Affiliate of the General Partner shall have
the right to subscribe for Units for its own account for investment purposes
only; PROVIDED that the aggregate number of Units purchased by the General
Partner and such Affiliates collectively shall not exceed ten percent (10%) of
all Units subscribed for by non-Affiliated Persons.
(f) No subscribers shall be admitted to the Partnership unless and until the
Minimum Offering shall be achieved. Upon the determination by the General
Partner that the Minimum Offering has been achieved, the General Partner shall
set the Initial Closing Date. Following the Initial Closing Date, daily Closings
may be held. As promptly as is practicable following the admission of each
subscriber as Limited Partner, the General Partner shall send notice to such
Limited Partner in confirmation thereof.
(g) Subscriptions for Units shall promptly be accepted or rejected by the
General Partner after their receipt by the Partnership (but in any event not
later than 30 days thereafter) and a confirmation of receipt thereof sent by the
General Partner. The General Partner retains the unconditional right to refuse
to admit
A-3
<PAGE>
any subscriber as a limited partner. Each subscriber has the right to cancel his
or her subscription during a period of five business days after the date of
receipt of a final prospectus.
(h) Each Subscriber who is admitted to the Partnership as a Limited Partner
shall, for all purposes of this Agreement, become and be treated as a Limited
Partner, as of the first day immediately following the Closing Date as of which
such Subscriber is admitted to the Partnership or the Final Closing Date next
following the acceptance of their subscriptions by the General Partner and the
receipt by the General Partner of all Subscription Monies payable in connection
therewith.
(i) The name and address of each Limited Partner and the amount of the
Capital Contribution made by such Limited Partner are set forth on Schedule A
hereto, as such may be supplemented or amended from time to time. Promptly
following each Closing Date (and, in any event, within 5 business days
thereafter), the General Partner shall amend Schedule A to this Agreement to
reflect the name, address and Capital Contribution of each Limited Partner
admitted to the Partnership as a result of such Closing; PROVIDED that any
failure so to amend such Schedule A following any Closing Date shall not in any
way affect the admission of any Limited Partner to the Partnership for all
purposes of this Agreement if such Limited Partner was duly and properly
admitted to the Partnership as a result of such Closing.
(j) From the date hereof to, but not including, the Initial Closing Date,
all Subscription Monies shall be deposited in the Escrow Account. From and after
the Initial Closing Date, all Subscription Monies shall be held by the
Partnership in a Qualified Subscription Account until the release thereof on the
applicable Closing Date. Both the Escrow Account and any Qualified Subscription
Account shall be established by the General Partner for the sole purpose of
holding and investing Subscription Monies pending admission of subscribers to
the Partnership as Limited Partners.
(k) On the Initial Closing Date or any subsequent Closing Date, whichever
may be applicable, all Subscription Monies then held in the Escrow Account or
any Qualified Subscription Account, as the case may be, with respect to Units
purchased by any Limited Partner admitted to the Partnership as a result of such
Closing, together with any interest earned thereon, shall be released to the
Partnership. Any interest earned on such Subscription Monies prior to such
release shall be paid to such Limited Partner promptly after such Closing Date.
If the number of Units subscribed for are insufficient to constitute the Minimum
Offering, all Subscription Monies deposited by any subscriber shall be returned,
together with any interest earned thereon and without deduction for any
Front-End Fees, to such subscriber. Furthermore, any Subscription Monies
deposited by any subscriber who is not accepted by the General Partner to become
a Limited Partner shall be promptly returned, together with any interest earned
thereon and without deduction for any Front-End Fees, to such subscriber. In no
event shall any Subscription Monies be held in the Escrow Account or a Qualified
Subscription Account for more than one year beyond the Effective Date before
either being released to the Partnership upon a Closing or returned to the
subscriber.
5.4 PARTNERSHIP CAPITAL.
(a) No Partner shall be paid interest on any Capital Contribution (except
any interest earned on Subscription Monies as provided in Section 5.3(k)).
(b) Except as provided in Section 10.5 and except that the 10 Units
purchased by the Original Limited Partner shall be redeemed at par on the
Initial Closing Date as provided in Section 5.2, the Partnership shall not
redeem or repurchase any Unit. No Partner shall have the right to withdraw or
receive any return of such Partner's Capital Contribution, except as
specifically provided in this Agreement, and no Capital Contribution may be
returned to any Partner in the form of property other than cash.
(c) Except as otherwise specifically provided herein, no Limited Partner
shall have priority over any other Limited Partner as to: (i) the return of such
Limited Partner's Capital Contribution or Capital Account; (ii) such Limited
Partner's share of Profits and Losses; or (iii) such Limited Partner's share of
distributions of Cash From Operations and Cash From Sales.
A-4
<PAGE>
(d) Neither the General Partner nor any of its Affiliates shall have any
personal liability for the repayment of the Capital Contribution of any Limited
Partner except to the extent as may be set forth in this Agreement.
5.5 CAPITAL ACCOUNTS.
(a) A separate Capital Account shall be established and maintained for the
General Partner and for each Limited Partner.
(b) The Capital Account of the General Partner initially shall be $1,000.
(c) The Capital Account of each Limited Partner initially shall be the
amount of such Limited Partner's Capital Contribution.
(d) The Capital Account of each Partner shall be increased by: (i) the
amount of any additional money contributed by such Partner to the Partnership;
(ii) the fair market value of any property contributed by such Partner to the
Partnership (net of liabilities secured by such contributed property that the
Partnership is considered to assume or take subject to under Code Section 752);
and (iii) allocations to such Partner of Profits (or items thereof), and items
of income and gain specially allocated pursuant to Section 8.2(f) hereof. The
Capital Account of each Partner shall be decreased by: (i) the amount of money
distributed to or on behalf of such Partner by the Partnership; (ii) the fair
market value of any property distributed to or on behalf of such Partner by the
Partnership (net of liabilities secured by such distributed property that such
Partner is considered to assume or take subject to under Code Section 752); and
(iii) allocations to such Partner of Losses (or items thereof), and items of
loss and deduction specially allocated pursuant to Section 8.2(f) hereof.
(e) For purposes of this Agreement, a Partner who has more than one Unit in
the Partnership shall have a single Capital Account that reflects all such
Units, regardless of the time or manner in which such Units were acquired.
(f) If a Unit is sold or otherwise transferred, the Capital Account of the
transferor with respect to such Unit shall carry over to the transferee in
accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(l). However, if the
transfer causes a termination of the Partnership under Code Section
708(b)(1)(B), the Capital Account that carries over to the transferee will be
adjusted to the extent the constructive contribution and liquidation
rules under Treas. Reg. Section 1.708-1 apply.
(g) For any taxable year in which the Partnership has a Code Section 754
election in effect, the Capital Accounts shall be maintained in accordance with
Treas. Reg. Section 1.704-1(b)(2)(iv)(m).
(h) Upon the occurrence of the events specified in Treas. Reg.
Section 1.704-1(b)(2)(iv)(f), the Partners' Capital Accounts shall be adjusted
and thereafter maintained to reflect the revaluation of Partnership assets on
the books of the Partnership in accordance with such Treasury Regulation and
Treas. Reg. Sections 1.704-1(b)(2)(iv)(f) through (h).
(i) Notwithstanding anything herein to the contrary, the Partners' Capital
Accounts shall at all times be maintained in the manner required by Treas. Reg.
Section 1.704-1(b)(2)(iv), and any questions or ambiguities arising hereunder
shall be resolved by reference to such Treasury Regulations. Further, such
Treasury Regulations shall govern the maintenance of the Capital Accounts to the
extent this Agreement is silent as to the treatment of a particular item. In the
event Treas. Reg. Section 1.704-1(b)(2)(iv) shall fail to provide guidance as to
how adjustments to the Capital Accounts should be made to reflect particular
adjustments to Partnership capital on the books of the Partnership, such Capital
Account adjustments shall be made in a manner that is consistent with the
underlying economic arrangement of the Partners and is based, wherever
practicable, on federal tax accounting principles.
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5.6 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) The General Partner shall not be required to make any Capital
Contributions in addition to its initial $1,000 Capital Contribution except
pursuant to and in accordance with Section 11.2(a)(iii) of this Agreement.
(b) No Limited Partner shall be required to make any Capital Contribution in
addition to the initial price paid for such Limited Partner's Units pursuant to
the Offering.
5.7 LOANS BY PARTNERS.
Except as provided in Section 11.2(a)(iii), no loan by any Partner or any
Affiliate of any Partner to the Partnership (including, without limitation, any
Partnership Loan) shall constitute a Capital Contribution to the Partnership or
increase the Capital Account balance of any Partner, but shall be treated, for
all purposes, as indebtedness of the Partnership payable or collectible only out
of the assets of the Partnership in accordance with the terms and conditions
upon which such loan was made.
5.8 NO RIGHT TO RETURN OF CAPITAL.
No Partner shall be entitled to demand or receive any distribution of or
with respect to such Partner's Capital Contribution or Capital Account, except
as specifically provided under this Agreement.
SECTION 6. GENERAL PARTNER.
6.1 EXTENT OF POWERS AND DUTIES.
(a) GENERAL.
Except as expressly limited by the provisions of this Agreement, the General
Partner shall have complete and exclusive discretion in the management and
control of the affairs and business of the Partnership and shall be authorized
to employ all powers necessary, convenient or appropriate to carry out the
purposes, conduct the business and exercise the powers of the Partnership.
Without limiting the generality of the foregoing, the General Partner shall
provide such personnel and services as the General Partner, in its sole and
absolute discretion, may deem necessary or appropriate to conduct the business
activities of the Partnership and the day-to-day management of its assets, and
shall possess and enjoy with respect to the Partnership all of the rights and
powers of a partner of a partnership without limited partners to the extent
permitted by Delaware law. The General Partner may employ on behalf of the
Partnership, to the extent that it, in its sole judgment shall deem advisable,
managerial, sales, maintenance, administrative or secretarial personnel, agents,
consultants, professional advisors, appraisers, attorneys, accountants, brokers
and other Persons for the maintenance of any of the Partnership's property,
and/or the operation of the business of the Partnership. The General Partner may
employ the services of its Affiliates to assist the General Partner in its
managerial duties, and may compensate all such Persons from the assets of the
Partnership at rates which it, in its sole judgment, deems fair and reasonable;
PROVIDED that: (i) the compensation, price or fee payable to any of its
Affiliates shall not exceed an amount which is comparable and competitive with
the compensation, price or fee which would be charged by non-Affiliates of the
General Partner to render comparable services which could reasonably be made
available to the Partnership upon comparable terms; (ii) all services for which
the General Partner's Affiliates are to receive compensation from the
Partnership (other than as provided in Section 6.4 hereof) shall be embodied in
a written contract which (A) precisely describes the services to be rendered and
all compensation to be paid therefor and (B) is terminable by either party
without penalty on 60 days notice; (iii) the compensation, price and fees and
other terms of any such contract shall be fully disclosed in the prospectus as
the Effective Date; (iv) the General Partner's Affiliates must, at the time such
services are to be rendered, be engaged in the business of providing such
services to non-Affiliates and derive at least 75% of their gross revenues for
such services therefrom; and (v) any such contract may only be amended in a
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manner which is either more favorable to the General Partner's Affiliates or
less favorable to the Partnership by the vote or consent of a Majority Interest.
(b) POWERS AND DUTIES.
(i) GENERAL DUTIES. The General Partner shall diligently and
faithfully exercise its discretion to the best of its ability and use its
best efforts to carry out the purposes and conduct the business of the
Partnership in accordance with this Agreement and in the best interests of
the Partnership. The General Partner shall have responsibility as a
fiduciary for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or control, and
shall not employ, or permit any other Person to employ, such funds or assets
in any manner other than as permitted by this Agreement. Notwithstanding
anything to the contrary herein stated or implied, the Limited Partners may
not contract away the fiduciary duty owed to such Limited Partners by the
General Partner. The General Partner shall devote that amount of its time
deemed necessary in its absolute discretion to carry out its duties to the
Partnership.
(ii) GENERAL POWERS. The General Partner shall have, subject to the
provisions of this Agreement, full power and authority, as herein provided
or as provided in the Delaware Act, on behalf of the Partnership, in order
to carry out and accomplish its purposes and functions include, without
limitation, the power: (A) to acquire, invest in, purchase, own, hold,
lease, re-lease, finance, refinance, borrow, manage, maintain, operate,
improve, upgrade, modify, exchange, assign, encumber, create security
interests in, pledge, sell, transfer or otherwise dispose of, and in all
respects otherwise deal in or with, Equipment, Leases and Financing
Transactions and to contract with others to do the same on behalf of the
Partnership; (B) to select and supervise the activities of any equipment
management agents for the Partnership; (C) to assure the proper application
of revenues of the Partnership; (D) to maintain proper books of account for
the Partnership and to prepare reports of operations and tax returns
required to be furnished to the Partners pursuant to this Agreement or
taxing bodies or other governmental agencies in accordance with applicable
laws and regulations; (E) to employ the Dealer-Manager to select Selling
Dealers to offer and sell Units; (F) to expend Partnership capital; (G) to
purchase, lease, sell, exchange, improve, divide, combine and otherwise in
all respects transact business with respect to interests in real and
personal property of any and all kinds whatsoever, both tangible and
intangible, including, without limitation, equipment, contract rights, lease
rights, debt instruments and equity interests in corporations, partnerships
(both limited and general), joint ventures and other entities (including,
but not limited to, common and preferred stock, debentures, bonds and other
securities of every kind and nature), and, in connection therewith, to
execute, deliver, amend, modify and cancel documents and instruments
relating to real and personal property of whatever kind and description,
including, but not limited to, mortgages, leases and other documents of
title or conveyance, assumption agreements pertaining to such agreements,
powers of attorney and other contracts, instruments and agreements of all
kinds and to employ engineers, contractors, attorneys, accountants, brokers,
appraisers, and such other consultants, advisors, artisans and workmen as
may be necessary or advisable, in the sole and absolute discretion of the
General Partner, for all such purposes; (H) to invest any and all funds held
by the Partnership; (I) to designate depositories of the Partnership's
funds, and the terms and conditions of such deposits and drawings thereon;
(J) to borrow money or otherwise to procure extensions of credit for the
Partnership and, in connection therewith, to execute, seal, acknowledge and
deliver agreements, promissory notes, guarantees and other written documents
constituting obligations or evidences of indebtedness and to pledge,
hypothecate, mortgage, assign, transfer or convey mortgages or security
interests in the Equipment and other assets of the Partnership as security
therefor; (K) to hold all or any portion of the Investments and other assets
of the Partnership in the name of one or more trustees, nominees, or other
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entities or agents of or for the Partnership; (L) to establish Reserves in
accordance with clause (vii) of this Section 6.1(b); (M) to assure the doing
of all other things necessary, convenient or advisable in connection with
the supervision of the affairs, business and assets of the Partnership; and
(N) to take
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all such actions and execute all such documents and other instruments as the
General Partner may deem necessary, convenient or advisable to accomplish or
further the purposes of the Partnership or to protect and preserve
Partnership assets to the same extent as if the General Partner were itself
the owner thereof.
(iii) AUTHORITY TO ADMIT LIMITED PARTNERS. The General Partner shall
have the authority to do all things necessary or advisable, in the sole and
absolute discretion of the General Partner, to effect the admission of the
Limited Partners, including, but not limited to, registering the Units under
the Securities Act and effecting the qualification of, or obtaining
exemptions from the qualification of, the Units for sale with state
securities regulatory authorities.
(iv) AUTHORITY TO ENTER INTO DEALER-MANAGER AGREEMENT. The General
Partner shall have the authority to enter into, on behalf of the
Partnership, the Dealer-Manager Agreement, substantially in the form filed
as an exhibit to the Registration Statement, with the Dealer-Manager.
(v) AUTHORITY TO ENTER INTO SELLING DEALER AGREEMENTS. The General
Partner shall have the authority to enter into, on behalf of the
Partnership, or to authorize the Dealer-Manager so to enter into, separate
Selling Dealer Agreements with NASD member broker dealers selected by the
General Partner or the Dealer-Manager.
(vi) AUTHORITY TO ENTER INTO ESCROW AGREEMENT. The General Partner
shall have the authority to enter into, on behalf of the Partnership, the
Escrow Agreement, pursuant to which, among other things, the Escrow Agent
shall agree to act as the Escrow Agent with respect to all Subscription
Monies received prior to the Initial Closing Date and the Escrow Agent shall
be entitled to receive for its services in such capacity such compensation
as the General Partner may deem reasonable under the circumstances, which
compensation shall be deemed to be and shall constitute an Organization and
Offering Expense payable by the General Partner.
(vii) AUTHORITY TO CREATE RESERVES. The General Partner shall have the
authority to establish for the Partnership, and shall use its best efforts
to maintain, and in such amounts as it deems necessary, Reserves (except to
the extent limited elsewhere in this Agreement).
(viii) AUTHORITY TO CONTRACT FOR INSURANCE. The General Partner shall
have the authority to cause the Partnership to purchase and maintain such
insurance policies as the General Partner, in its sole discretion (except to
the extent limited elsewhere in this Agreement) deems reasonably necessary
to protect the interests of the Partnership. The General Partner shall have
the authority, on behalf of the Partnership, to purchase and pay the
premiums for such types of insurance, including, without limitation,
extended coverage liability and casualty and workers' compensation, and the
General Partner and any Affiliate of the General Partner and their
respective employees and agents may be named as additional insured parties
thereunder, provided the cost of premiums payable by the Partnership is not
increased thereby.
(ix) AUTHORITY TO ENTER INTO CERTAIN TRANSACTIONS IN ITS OWN NAME. The
General Partner shall have the authority to purchase or otherwise make
Investments in its own name, an Affiliate's name, the name of a nominee or
nominees, or a trust or trustees or otherwise temporarily (generally not
more than six months) hold title thereto for the purpose of facilitating the
Investment by the Partnership; provided, however, the Partnership will not
acquire Equipment from any Program except as expressly provided in this
Agreement.
(x) AUTHORITY TO ENTER INTO JOINT VENTURES. The General Partner shall
have the authority to cause the Partnership to enter into Joint Ventures,
subject to the limitations of Section 6.2(f), for the purpose of acquiring
Investments, borrowing funds, managing or disposing of Investments, or for
such other activities which the General Partner deems necessary or
appropriate.
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(xi) AUTHORITY TO REINVEST. During the Reinvestment Period, the
General Partner may reinvest all or a substantial portion of the
Partnership's Cash From Operations and Cash From Sales in additional
investments in furtherance of, and consistent with, the Partnership's
purposes and investment objectives set forth in Sections 3.1 and 3.2.
(c) DELEGATION OF POWERS.
Except as otherwise provided under this Agreement or by law, the General
Partner may, in its sole and absolute discretion, delegate all or any of its
duties under this Agreement to, and may elect, employ, contract or deal with,
any Person (including, without limitation, any of its Affiliates).
(d) RELIANCE BY THIRD PARTIES.
No Person dealing with the Partnership or its assets, whether as assignee,
lessee, purchaser, mortgagee, grantee or otherwise, shall be required to
investigate the authority of the General Partner in selling, assigning, leasing,
mortgaging, conveying or otherwise dealing with any Investments or other assets
or any part thereof, nor shall any such assignee, lessee, purchaser, mortgagee,
grantee or other Person entering into a contract with the Partnership be
required to inquire as to whether the approval of the Partners for any such
assignment, lease, sale, mortgage, transfer or other transaction has been first
obtained. Any such Person shall be conclusively protected in relying upon a
certificate of authority or of any other material fact signed by the General
Partner, or in accepting any instrument signed by the General Partner in the
name and behalf of the Partnership or the General Partner.
6.2 LIMITATIONS ON THE EXERCISE OF POWERS OF GENERAL PARTNER.
The General Partner shall have no power to take any action prohibited by
this Agreement or by the Delaware Act. Furthermore, the General Partner shall be
subject to the following in the administration of the Partnership's business and
affairs:
(a) LIMITATIONS ON INDEBTEDNESS.
From and after the date when all Capital Contributions have been invested or
committed to investment in Investments and Reserves, used to pay permitted
Front-End Fees or returned to the Limited Partners (as provided in Section 8.6,
below), the Partnership's Leverage Rate shall not exceed 80%. Notwithstanding
the foregoing, in the event the sum of all Capital Contributions exceed
$25,000,000, the Leverage Rate set forth above shall be reduced by 0.0000003%
for each dollar by which all Capital Contributions exceeds $25,000,000, down to
a minimum Leverage Rate of 67% if the Maximum Offering is attained. Following
the Offering Period and to the extent the limitations in the immediately
preceding sentence require a Leverage Rate of less than 75%, the Partnerships'
permitted Leverage Rate may rise to 75% at the time reinvestment proceeds are
reinvested by the Partnership.
(b) INVESTMENT COMPANY STATUS.
The General Partner shall not exercise its powers in a manner which causes
the Partnership to be deemed an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
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(c) SALES AND LEASES OF EQUIPMENT FROM OR TO THE GENERAL PARTNER AND ITS
AFFILIATES.
The Partnership shall neither purchase nor lease Investments from, nor sell
or lease Investments to, the General Partner or any of its Affiliates, except as
provided in this Section. Notwithstanding the first sentence of this
Section (c), the Partnership may purchase Affiliated Investments if:
(i) the General Partner determines that making the Affiliated Investment
is in the best interests of the Partnership;
(ii) such Affiliated Investment is acquired by the Partnership at a
price which does not exceed the sum of (A) the net cost to the General
Partner or such Affiliate of acquiring and holding the Investment (adjusted
for any income received and expenses paid or incurred while holding same)
plus (B) any compensation to which the General Partner and any Affiliate is
otherwise entitled to receive pursuant to this Agreement;
(iii) there is no difference in the interest terms of the Indebtedness
secured by the Investment at the time it is acquired by the General Partner
or its Affiliate and the time it is acquired by the Partnership;
(iv) neither the General Partner nor any of its Affiliates realizes any
gain, or receives any other benefit, other than compensation for its
services, if any, permitted by this Agreement, as a result of the
Partnership making such Affiliated Investment; and
(v) at the time the Affiliated Investment is transferred to the
Partnership, the General Partner or its Affiliate had held such Affiliated
Investment on an interim basis (generally not longer than six months) for
the purposes of (A) facilitating the acquisition of such Affiliated
Investment by the Partnership, (B) borrowing money or obtaining financing
for the Partnership or (C) any other lawful purpose related to the business
of the Partnership.
(d) LOANS TO OR FROM THE GENERAL PARTNER AND ITS AFFILIATES.
No loans may be made by the Partnership to the General Partner or any of its
Affiliates. The General Partner or any of its Affiliates, however, may, from
time to time, loan or advance funds to the Partnership (each such loan or
advance being hereinafter called a "Partnership Loan") in accordance with this
Section 6.2(d). The terms of any Partnership Loan permitted to be made shall
include the following:
(i) any interest payable by the Partnership in connection with such
Partnership Loan shall be charged at an annual rate of interest not in
excess of the lesser of the following: (A) the rate of interest payable by
the General Partner or its Affiliate in connection with the borrowing (in
the event that the General Partner or any Affiliate shall borrow money for
the specific purpose of making such Partnership Loan), (B) the rate of
interest that would be charged to the Partnership (without reference to the
General Partner's or its Affiliate's financial abilities or guarantees) by
unrelated lending institutions on a comparable loan for the same purpose in
the same geographic area (if neither the General Partner nor an Affiliate
borrowed money to make such Partnership Loan) or (C) a rate of interest
equal to the rate of interest from time to time announced by The Chase
Manhattan Bank (National Association) at its principal lending offices in
New York, New York as its prime lending rate plus 3% per annum;
(ii) all payments of principal and interest on such Partnership Loan
shall be due and payable within twelve months after the date on which such
Partnership Loan is made; and
(iii) neither the General Partner nor any Affiliate may receive points or
other financial charges or fees in any amount in respect of such Partnership
Loan (except that the General Partner or an Affiliate may be reimbursed,
dollar for dollar, for the actual reasonable out-of-pocket expenses
(including, without limitation, any points or other financial charges or
fees) incurred by it in connection with the making of such Partnership
Loan), PROVIDED that nothing in this clause (iii) shall
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prohibit any increase in Acquisition Fees and Management Fees otherwise
payable to the General Partner or an Affiliate in accordance with this
Agreement, notwithstanding that such increase may be an indirect result of
the making of such Partnership Loan.
If the General Partner or any of its Affiliates purchase Equipment in its
own name and with its own funds in order to facilitate ultimate purchase by the
Partnership, the General Partner or an Affiliate, as the case may be, shall be
deemed to have made a Partnership Loan in an amount equal to the Purchase Price
paid for such Equipment and shall be entitled to receive interest on such amount
in accordance with clause (i) above. Any advances made by the General Partner or
any of its Affiliates for the purpose of paying Organizational and Offering
Expenses shall not constitute a Partnership Loan, but shall be reimbursed to the
General Partner or such Affiliate (to the extent possible) from the O & O
Expense Allowance without interest on in accordance with, and to the extent
provided in, Section 6.4(e) of this Agreement.
(e) NO EXCHANGE OF INTERESTS FOR INVESTMENTS.
The Partnership shall not acquire any Investments in exchange for Units.
(f) JOINT VENTURE INVESTMENTS.
The Partnership may make Investments in Joint Ventures, PROVIDED that:
(i) the General Partner shall have determined that:
(A) such Investment is in the best interests of the Partnership; and
(B) such Investment shall not result in duplicate fees to the General
Partner or any of its Affiliates;
(ii) in the case of any Joint Venture with any non-Affiliated Person,
the Partnership must have the right to control the Joint Venture and the
Joint Venture must own specific Equipment or Leases and/or invest in one or
more specific Financing Transactions; and
(iii) in the case of any Joint Venture with any Program, all of the
following conditions are met:
(A) all Programs, including the Partnership, participating in such
Joint Venture shall have substantially identical investment objectives
and shall participate in such Joint Venture on substantially the same
terms and conditions;
(B) the compensation payable to the General Partner or any of its
Affiliates by the Partnership and by each other Program shall be
substantially identical; and
(C) the Partnership shall have a right of first refusal with respect
to the purchase of any Equipment, Lease or Financing Transactions held by
the Joint Venture if the other joint owner decides to sell its interests.
(g) EXCHANGE, MERGER, ROLL-UP OR CONSOLIDATION OF THE PARTNERSHIP
PROHIBITED.
The Partnership shall not (i) be a party to any exchange offer, merger,
Roll-Up or similar combination with any other legal entity (including any
Roll-Up Entity) or (ii) reorganize itself if such reorganization would have the
effect of an exchange offer, merger, Roll-Up or similar combination. Neither the
Partnership nor the General Partner shall solicit, or engage or compensate
members, or persons associated with members of the NASD to solicit, proxies from
any Limited Partners authorizing any exchange offer, merger, Roll-Up or similar
combination or any such reorganization.
(h) SALE OF ALL OR SUBSTANTIALLY ALL ASSETS; DISSOLUTION.
During the Reinvestment Period, the General Partner may not dissolve the
Partnership or sell or otherwise dispose of all or substantially all of the
assets of the Partnership without the Consent of the
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Majority Interest. The Partnership shall not give the General Partner or any of
its Affiliates the exclusive right to sell or exclusive employment to sell
equipment for the Partnership.
(i) NO INVESTMENTS IN LIMITED PARTNERSHIP INTERESTS OF OTHER PROGRAMS.
The Partnership shall not invest in limited partnership interests of any
other Program; provided, however, that nothing herein shall preclude the
Partnership from making investments in Joint Ventures, to the extent and in the
manner provided in this Section.
6.3 LIMITATION ON LIABILITY OF GENERAL PARTNER AND ITS AFFILIATES;
INDEMNIFICATION.
(a) Except in the case of negligence or misconduct, the General Partner and
any of its Affiliates (sometimes referred to as an "Indemnitee") shall not be
liable, responsible or accountable in damages or otherwise to the Limited
Partners or the Partnership for the doing of any act or the failure to do any
act, the effect of which may cause or result in loss or damage to the
Partnership, if done in good faith to promote the best interests of the
Partnership. Each Indemnitee shall be entitled to be indemnified by the
Partnership from the assets of the Partnership, or as an expense of the
Partnership, but not by the Limited Partners, against any liability or loss, as
a result of any claim or legal proceeding relating to the performance or
nonperformance of any act concerning the activities of the Partnership, except
in the case where such Indemnitee is negligent or engages in misconduct,
provided such act or omission was done in good faith to promote the best
interests of the Partnership. The indemnification authorized by this Section
6.3(a) shall include the payment of reasonable attorneys' fees and other
expenses (not limited to "taxable costs") incurred in settling or defending any
claim threatened action, or finally adjudicated legal proceedings.
(b) Notwithstanding subsection (a), above, the General Partner and its
Affiliates (when acting within the scope of authority of the General Partner)
and any Selling Dealer shall not be indemnified for any losses, liabilities or
expenses arising from or out of an alleged violation of federal or state
securities laws unless (i) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular Indemnitee and the court approves indemnification of the litigation
costs, or (ii) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular Indemnitee and the court
approves indemnification of the litigation costs, or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular Indemnitee
and finds that indemnification of the settlement and related costs should be
made. In any claim for indemnification for federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of the Commission, the Massachusetts, Pennsylvania, Missouri and Texas
Securities Divisions, and any other applicable regulatory authority with respect
to the issue of indemnification for securities law violations. The Partnership
shall not incur the cost of that portion of any liability insurance which
insures any Indemnitee for any liability as to which the Indemnitee is
prohibited from being indemnified under this Section.
6.4 COMPENSATION OF GENERAL PARTNER AND ITS AFFILIATES.
Neither the General Partner nor any of its Affiliate shall, in their
respective capacities as such, receive any salary, fees, profits, distributions
or other compensation except in accordance with this Section 6.4.
(a) ALLOCATIONS AND DISTRIBUTIONS.
The General Partner shall be entitled to receive the allocations and
distributions provided for under Section 8 in respect of the Units it holds.
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(b) UNDERWRITING FEES.
Fees in the amount equal to 2.0% of the Gross Offering Proceeds of Units
sold ("Underwriting Fees") shall be paid by the Partnership to the
Dealer-Manager (ICON Securities Corp.), which is an Affiliate of the General
Partner.
(c) SALES COMMISSIONS.
Commissions in the amount of 8% of the price of a Unit ("Sales Commissions")
shall be paid by the Partnership to the Dealer-Manager and each Selling-Dealer
in respect of the Units sold by each of them, PROVIDED that no Sales Commissions
shall be payable by the Partnership in respect of any Units sold to Affiliated
Limited Partners.
(d) DUE DILIGENCE EXPENSES.
Fees and expenses actually incurred for due diligence efforts expended in
connection with the Offering in a maximum amount not to exceed the lesser of
(i) 1/2 of 1% of Gross Offering Proceeds and (ii) the maximum amount permitted
to be reimbursed under Rule 2810 of the NASD Conduct Rules ("Due Diligence
Expenses") shall be paid or reimbursed by the Partnership to the Dealer-Manager
and each Selling Manager, PROVIDED that the Dealer-Manager shall be entitled to
payment of or reimbursement for Due Diligence Expenses only after each Selling
Dealer (whether prospective or actual) shall have first been paid or reimbursed
for all of its Due Diligence Expenses, and PROVIDED, FURTHER, that the amount of
Due Diligence Expenses actually paid to the Dealer-Manager shall reduce,
dollar-for-dollar, the amount of the O & O Expense Allowance otherwise payable
by the Partnership to the General Partner pursuant to Section 6.4(e) of this
Agreement.
(e) O & O EXPENSE ALLOWANCE.
The Partnership shall pay to the General Partner immediately following each
Closing Date 3.5% ($3.50 per Unit) of the first $25,000,000 or less of Gross
Offering Proceeds; 2.5% ($2.50 per Unit) for Gross Offering Proceeds in excess
of $25,000,000 but less than $50,000,000; and 1.5% ($1.50 per Unit) for Gross
Offering Proceeds exceeding $50,000,000 ("O & O Expense Allowance"), whether or
not the full amount thereof is actually incurred by the General Partner or any
of its Affiliates. The General Partner shall distribute to the Dealer-Manager
all or such portion of the O & O Expense as the General Partner shall, in its
sole and absolute discretion, deem appropriate and the Partnership shall have no
separate liability to the Dealer-Manager for any Organizational and Offering
Expenses incurred by the Dealer-Manager. The General Partner shall bear any
Organizational and Offering Expenses incurred by the General Partner or any of
its Affiliates (including, without limitation, the Dealer-Manager) in excess of
the O & O Expense Allowance.
(f) ACQUISITION FEES.
Once the Partnership has entered into a binding contract to make an
Investment, and all material conditions to the Closing of such Investment have
been satisfied, the Partnership shall pay the General Partner, for services
rendered in connection with acquiring the Investment, a fee ("Acquisition Fees")
equal to the difference (to the extent greater than zero) between (i) 3.0% of
either the Purchase Price paid by the Partnership for any item of Equipment or
Lease or the principal amount of each Financing Transaction, as the case may be,
and (ii) the aggregate amount of Acquisition Fees paid by or on behalf of the
Partnership to any other Person in connection with such Investment; PROVIDED,
HOWEVER, that:
(i) no Acquisition Fees may be paid by or on behalf of the Partnership
to any finder or broker that is an Affiliate of the General Partner;
(ii) the Partnership shall not pay any Acquisition Fees, or part
thereof, if it would cause the aggregate Purchase Price (without deducting
Front-End Fees) for the Partnership's Investments to be
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less than the greater of (x) 80% of the Gross Offering Proceeds, reduced by
.0625% for each 1% of Indebtedness encumbering any Investment, or (y) 75% of
such Gross Offering Proceeds; and
The formula in clause (ii), is illustrated as follows:
(A) No Indebtedness--80% of the Gross Offering Proceeds must be
committed to Investments.
(B) 50% Indebtedness--50% x .0625% = 3.125%
80%--3.125% = 76.875% of the Gross Offering Proceeds must be committed to
Investments.
(C) 80% Indebtedness--80% x .0625% = 5%
80%--5% = 75% of the Gross Offering Proceeds must be committed to
Investments.
(iii) the aggregate sum of (A) Acquisition Fees and (B) all other
Front-End Fees, which, in each case, may be paid to any Person pursuant to
this Agreement in connection with all Investments made by the Partnership
from any source (including, without limitation, Net Offering Proceeds,
Partnership indebtedness or reinvestment) shall not exceed an amount equal
to 20% of the Gross Offering Proceeds.
If the Partnership purchases an Investment from the General Partner or one
of its Affiliates pursuant to Section 6.2(c) for a Purchase Price which includes
an Acquisition Fee amount, such Acquisition Fee amount shall be deemed paid
pursuant to this Section 6.4(f) and there shall be no duplicative payment
thereof.
(g) MANAGEMENT FEES.
Each month the Partnership shall pay to the General Partner Management Fees
attributable to Gross Revenues of the Partnership during such month; PROVIDED,
that such Management Fees shall be paid in any month only after payment of any
accrued and unpaid First Cash Distributions for such month and for any previous
months, and, to the extent that the Partnership does not have sufficient cash in
any month to pay the required amount of all First Cash Distributions, the
payment of Management Fees shall be deferred and paid, without interest, in the
next following month in which the Partnership has sufficient cash for the
payment thereof.
(h) SUBORDINATED REMARKETING FEES.
For rendering services in connection with any Sale, the General Partner
shall earn, and be paid by the Partnership the applicable Subordinated
Remarketing Fee; PROVIDED that:
(i) no such Subordinated Remarketing Fee shall be earned in connection
with any Sale to the extent that the Cash From Sales realized thereby is
reinvested in additional Investments;
(ii) in no event shall any such Subordinated Remarketing Fee be paid
prior to Payout although, after Payout, any and all Subordinated Remarketing
Fees previously earned by the General Partner shall be paid, without any
interest thereon, by the Partnership, prior to any other distributions to
the Partners; and
(iii) the General Partner shall not be entitled to receive any amount of
Subordinated Remarketing Fees to the extent that such amount would cause the
total commissions paid to all Persons, in connection with the sale of such
Investments, to exceed a fee for such services which is reasonable,
customary and competitive in light of the size, type and location of such
Investment.
(i) OTHER PARTNERSHIP EXPENSES.
(i) Except as otherwise provided in this Section 6.4(i), expenses of the
Partnership, including Acquisition Expenses other than those incurred and
otherwise reimbursed in accordance with Sections 6.4(b) through (h), shall
be billed directly to and paid by the Partnership.
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(ii) Subject to clause (iii) of this Section 6.4(i), the General Partner
and any of its Affiliates may be reimbursed for Operating Expenses which are
actually incurred by it or them in connection with the performance or
arrangement of administrative services reasonably necessary, convenient or
advisable, in the discretion of the General Partner, to the prudent
operation of the Partnership PROVIDED that the reimbursement for same shall
be limited to the lesser of (A) its or their actual cost of providing same
or (B) the amount the Partnership would be required to pay to non-Affiliates
for comparable administrative services in the same geographic location and
PROVIDED FURTHER, that no reimbursement is permitted for such services if
the General Partner or any Affiliate is entitled to compensation in the form
of a separate fee pursuant to other provisions of this Section 6.4.
(iii) Neither the General Partner nor any of its Affiliates shall be
reimbursed by the Partnership for amounts expended by it with respect to the
following:
(A) salaries, fringe benefits, travel expenses or other
administrative items incurred by or allocated to any Controlling Person
of the General Partner or of any such Affiliate;
(B) expenses for rent, depreciation, utilities, capital equipment or
other administrative items (other than as specified in paragraph
(iii) of this Section 6.4(i), above).
6.5 OTHER INTERESTS OF THE GENERAL PARTNER AND ITS AFFILIATES.
The General Partner shall be required to devote only such time to the
affairs of the Partnership as the General Partner shall, in its sole and
absolute discretion, determine in good faith to be necessary for the business
and operations of the Partnership. The General Partner and its Affiliates are
engaged directly and indirectly in the business of acquiring and leasing
equipment for their own respective accounts as well as for other Programs. The
General Partner or any of its Affiliates may in the future form, sponsor, act as
a general partner of, or as an advisor to other investment entities (including
other public equipment ownership and leasing partnerships) which have investment
objectives similar to the Partnership's and which may be in a position to
acquire the same Investments at the same time as the Partnerships.
Neither the General Partner nor its Affiliates shall be obligated to present
any particular investment opportunity to the Partnership, and the General
Partner and its Affiliates shall have the right, subject only to the provisions
of the following paragraph, to take for its or their own accounts (without the
use of Partnership funds), or to recommend to any Affiliate of the General
Partner (including the Partnership), any particular investment opportunity.
Until all Capital Contributions have been invested or committed to
investment in Investments, allocated to Reserves, used to pay permitted
Front-End Fees or returned to the Limited Partners as provided in the Agreement,
all investment opportunities meeting the investment objectives of the
Partnership (including equipment acquisition, financing, refinancing, leasing
and re-leasing opportunities) shall be presented to the Partnership first except
in the following circumstances:
(a) the required cash needed for the investment is greater than the cash
available for investment by the Partnerships;
(b) the amount of debt is above levels deemed acceptable for the
Partnerships;
(c) the investment is not appropriate to the Partnership's objectives, which
include the avoidance of concentration of exposure to any one class of
equipment;
(d) the lessee credit quality does not satisfy the Partnership's objectives,
which include maintaining a high-quality portfolio with low credit losses while
avoiding a concentration of exposure to any individual Lessee or User;
(e) the term of the investment extends beyond the Liquidation Period;
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(f) the available cash flow (or lack thereof) is not commensurate with the
Partnership's need to make certain distributions to Limited Partners during the
Reinvestment Period
(g) the transaction structure, particularly with respect to the end-of-lease
options governing the equipment, does not provide the Partnership with the
residual value opportunity commensurate with the total return requirements of
the Partnership; and
(h) the transaction does not comply with the terms of Agreement.
The General Partner and its Affiliates are not prohibited from investing in
equipment leasing acquisitions, financing, refinancing, leasing and re-leasing
opportunities on its or their own behalf or on behalf of the Programs. The
General Partner and each such Affiliate shall have the right, subject only to
the provisions of the immediately preceding paragraph, to take for its own
account (individually or otherwise), or to recommend to any Program (including
the Partnership), any particular investment opportunity after considering the
factors in the preceding paragraph.
Any conflicts in determining and allocating Investments between the General
Partner and Programs on the one hand and a Partnership will be resolved by the
Investment Committee, which will evaluate the suitability of all prospective
lease acquisitions and financing transactions for investment by the Partnership.
If the aggregate amount of Investments available from time to time to the
Partnership and to other Programs is less than the aggregate amount of
Investments then sought by them, the available Investments shall generally be
allocated by the General Partner to the Program which has been seeking
Investments for the longest period of time.
If conflicts arise between the Partnership and one or more other Programs,
which may be seeking to re-lease or sell similar Equipment at the same time, the
first opportunity to re-lease or sell Equipment shall generally be allocated by
the General Partner to the Program attempting to re-lease or sell Equipment
which has been subject to the lease which expired first, or, if the leases
expire simultaneously, the lease which was first to take effect. However, the
General Partner in its discretion may make exceptions to this general policy
where Equipment is subject to remarketing commitments which provide otherwise or
in cases in which, in the General Partner's judgment, other circumstances make
the application of such policy inequitable or not economically feasible for a
particular Program, including the Partnership.
SECTION 7. POWERS AND LIABILITIES OF LIMITED PARTNERS.
7.1 ABSENCE OF CONTROL OVER PARTNERSHIP BUSINESS.
The Limited Partners hereby consent to the exercise by the General Partner
of the powers conferred on the General Partner by this Agreement. No Limited
Partner shall participate in or have any control over the Partnership's business
or have any right or authority to act for, or to bind or otherwise obligate, the
Partnership (except one who is also the General Partner, and then only in its
capacity as the General Partner). No Limited Partner shall have the right to
have the Partnership dissolved and liquidated or to have all or any part of such
Limited Partner's Capital Contribution or Capital Account returned except as
provided in this Agreement.
7.2 LIMITED LIABILITY.
The liability of each Limited Partner in such capacity shall be limited to
the amount of such Limited Partner's Capital Contribution and PRO RATA share of
any undistributed Profits and other assets of the Partnership. Except as may
otherwise be required by law, after the payment of all Subscription Monies for
the Units purchased by such Limited Partner, no Limited Partner shall have any
further obligations to the Partnership, be subject to any additional assessment
or be required to contribute any additional capital to, or to loan any funds to,
the Partnership.
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No Limited Partner shall have any personal liability on account of any
obligations and liabilities of, including any amounts payable by, the
Partnership under or pursuant to, or otherwise in connection with, this
Agreement or the conduct of the business of the Partnership.
SECTION 8. DISTRIBUTIONS AND ALLOCATIONS.
8.1 DISTRIBUTION OF CASH.
(a) During the Reinvestment Period, the General Partner shall determine in
its sole discretion what portion, if any, of cash on hand shall be invested and
reinvested in additional Investments and which portion shall be distributed to
the Partners; provided, however, that the General Partner shall not reinvest,
but shall distribute to the extent available, cash to Limited Partners in an
amount equal to the following amounts:
(i) For the period beginning with a Limited Partner's admission to the
Partnership and ending with the expiration of the Reinvestment Period, each
Limited Partner shall be entitled to receive monthly cash distributions, to
the extent that cash is sufficient for such purpose, computed by multiplying
0.895333% by each Limited Partner's respective Capital Contribution reduced
by any portion thereof which has been (A) returned to such Limited Partner
pursuant to Section 8.6, or (B) redeemed by the Partnership pursuant to
Section 10.5 of this Agreement; provided, that each monthly cash
distribution amount shall be computed as provided in the preceding sentence
on a non-cumulative basis (that is, without increase for any portion of the
monthly cash distribution amount computed pursuant to this clause (i) which
the Partnership is unable to make, and without reduction for any cash
distributions actually made, in any prior period); and
(ii) Any additional amounts necessary to permit the annual sum of all
distributions to Limited Partners to equal estimated federal income taxes
resulting from Operations (assuming that all Limited Partners are subject to
income taxation at the highest marginal federal income tax rate (determined
without regard to state taxes, if any) on taxable income of the Partnership.
(b) During the Liquidation Period, no additional Investments shall be made,
and all Cash Flow shall be distributed to the Partners except for amounts held
in Reserve or necessary to increase or replenish Reserves in the sole discretion
of the General Partner.
(c) Prior to Payout, distributions pursuant to this Section 8.1 shall be
made 99% to the Limited Partners and 1% to the General Partner; PROVIDED,
HOWEVER, that prior to the admission to the Partnership of any Limited Partners,
such distributions shall be made 1% to the Original Limited Partner and 99% to
the General Partner. After Payout, distributions pursuant to this Section 8.1
shall be tentatively attributed and distributed 90% to the Limited Partners and
10% to the General Partner; PROVIDED, HOWEVER, that, if at the time of Payout,
each respective Limited Partner has not yet received total cash distributions
pursuant to this Section 8.1(c) equal to 150% of such Limited Partner's Capital
Contribution (reduced by any amounts paid to such Limited Partner (i) as a
return of his uninvested Capital Contributions pursuant to Section 8.6 and
(ii) in redemption of his Units pursuant to Section 10.5), distributions shall
continue to be made 99% to the Limited Partners and 1% to the General Partner
until the total cash distributions made to the Limited Partners equal 150% of
the Limited Partners' aggregate original Capital Contributions. The amount
tentatively attributed to the General Partner pursuant to the previous sentence
but not theretofore distributed to the General Partner shall be distributed to
the General Partner, without interest, first from Cash From Operations after the
Limited Partners have received distributions equal to 150% of their aggregate
Capital Contributions.
(d) Notwithstanding the provisions of Section 8.1(c), distributions of cash
following a Dissolution Event shall be made in accordance with the provisions of
Section 11.3.
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8.2 ALLOCATIONS OF PROFITS AND LOSSES.
(a) The Profits and Losses of the Partnership shall be determined for each
Fiscal Year or Fiscal Period.
(b) Except as otherwise provided in this Agreement, whenever a proportionate
part of the Partnership's Profits or Losses is allocated to a Partner, every
item of income, gain, loss or deduction entering into the computation of such
Profits or Losses, or arising from the transactions with respect to which such
Profits or Losses were realized, shall be allocated to such Partner in the same
proportion.
(c) Profits for any Fiscal Period during the Reinvestment Period shall be
allocated to the Partners as follows:
(i) FIRST, 1% to the General Partner and 99% to the Limited Partners
until the Limited Partners have been allocated Profits equal to the excess,
if any, of their aggregate Unpaid Target Distributions over their aggregate
Capital Account balances;
(ii) NEXT, in a manner that will cause (A) the excess of the Limited
Partners' aggregate Capital Account balances over the amount of their
aggregate Unpaid Target Distributions and (B) the General Partner's Capital
Account balance, to be in the ratio of 90% to 10%; and
(iii) THEREAFTER, 90% to the Limited Partners and 10% to the General
Partner.
(d) Profits for any Fiscal Period during the Liquidation Period shall be
allocated to the Partners as follows:
(i) FIRST, to the Partners in proportion to and to the extent of the
deficit balances, if any, in their respective Capital Accounts;
(ii) NEXT, 1% to the General Partner and 99% to the Limited Partners
until the Limited Partners have been allocated Profits equal to the excess,
if any, of their aggregate Unpaid Target Distributions over their aggregate
Capital Account balances;
(iii) NEXT, in a manner that will cause (A) the excess of the Limited
Partners' aggregate Capital Account balances over the amount of their
aggregate Unpaid Target Distributions and (B) the General Partner's Capital
Account balance, to be in the ratio of 90% to 10%; and
(iv) THEREAFTER, 90% to the Limited Partners and 10% to the General
Partner.
(e) Losses for any Fiscal Period shall be allocated to the Partners as
follows:
(i) FIRST, 1% to the General Partner and 99% to the Limited Partners
until the Limited Partners have been allocated Losses equal to the excess,
if any, of their aggregate Capital Account balances over their aggregate
Adjusted Capital Contributions;
(ii) NEXT, to the Partners in proportion to and to the extent of their
respective remaining positive Capital Account balances, if any; and
(iii) THEREAFTER, 1% to the General Partner and 99% to the Limited
Partners; provided, however, that if and to the extent that an allocation of
Losses to any Limited Partner pursuant to this Section 8.2(e) or
Section 8.2(f) would result in any Limited Partner having an Adjusted
Capital Account Deficit, such Losses shall be allocated to all other
Partners in accordance with this Section 8.2(e) and, when no Limited Partner
can be allocated any such Losses without violating the limitation contained
in this proviso, such remaining Losses shall be allocated to the General
Partner.
(f) SPECIAL ALLOCATIONS.
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The following special allocations shall, except as otherwise provided, be
made prior to allocations in Section 8.2(a)-(e) in the following order:
(i) MINIMUM GAIN CHARGE-BACK. Notwithstanding any other provision of
this Section 8, if there is a net decrease in Partnership Minimum Gain or in
any Partner Nonrecourse Debt Minimum Gain during any Fiscal Period, prior to
any other allocation pursuant this Section 8, each Partner shall be
specifically allocated items of Partnership income and gain for such Fiscal
Period (and, if necessary, subsequent Fiscal Periods) in an amount and
manner required by Treas. Reg. Sections 1.704-2(f) and 1.704-2(i)(4) or any
successor provisions. The items to be so allocated shall be determined in
accordance with Treas. Reg. Section 1.704-2(j)(2) or any successor
provision.
(ii) PARTNERSHIP NONRECOURSE DEDUCTIONS. Partnership Nonrecourse
Deductions for any Fiscal Period shall be allocated 99% to the Limited
Partners and 1% to the General Partner.
(iii) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions
for any Fiscal Period shall be allocated to the Partner who made or
guaranteed or is otherwise liable with respect to the loan to which such
Partner Nonrecourse Deductions are attributable in accordance with
principles of Treas. Reg. Section 1.704-2(i) or any successor provision.
(iv) QUALIFIED INCOME OFFSET. If in any Fiscal Period, any Partner has
an Adjusted Capital Account Deficit, whether resulting from an unexpected
adjustment, allocation or distribution described in Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) or otherwise, such Partner shall
be allocated items of Partnership income and gain (consisting of a PRO RATA
portion of each item of Partnership income, including gross income, and gain
for such Fiscal Period) sufficient to eliminate such Adjusted Capital
Account Deficit as quickly as possible, to the extent required by such
Treasury Regulation. It is the intention of the parties that this allocation
provision constitute a "qualified income offset" within the meaning of
Treas. Reg. Section 1.704-1(b)(2)(ii)(d).
(v) CURATIVE ALLOCATIONS. The special allocations provided for in the
proviso of Section 8.2(e) and in Sections 8.2(f)(i)-(iv) are intended to
comply with certain requirements of Treas. Reg. Sections 1.704-1 and
1.704-2. To the extent that any of such special allocations shall have been
made, subsequent allocations of income, gains, losses and deductions and
items thereof (curative allocations) shall be made as soon as possible and
in a manner so as to cause, to the extent possible without violating the
requirements of Treas. Reg. Sections 1.704-1 and 1.704-2, the Partners'
Capital Account balances to be as nearly as possible in the same proportions
in which they would have been had such special allocations not occurred. In
making such curative allocations, due regard shall be given to the character
of the Profits and Losses and items thereof that were originally allocated
pursuant to the provision of Sections 8.2(e) and
Sections 8.2(f)(i)-(iv) in order to put the Partners as nearly as possible
in the positions in which they would have been had such special allocations
not occurred.
If the General Partner determines, after consultation with Tax Counsel, that
the allocation of any item of Partnership income, gain, loss or deduction is not
specified in this Section 8 (an "unallocated item"), or that the allocation of
any item of Partnership income, gain, loss or deduction hereunder is clearly
inconsistent with the Partners' economic interests in the Partnership determined
by reference to this Agreement, the general principles of Treas. Reg.
Section 1.704-1(b) and the factors set forth in Treas. Reg. Section
1.704-1(b)(3)(ii) (a "misallocated item"), then the General Partner may allocate
such unallocated items and reallocate such misallocated items, to reflect such
economic interests.
(vi) SPECIAL ALLOCATION OF STATE, LOCAL AND FOREIGN TAXES. Any state,
local or foreign taxes imposed on the Partnership by reason of a Partner
being a citizen, resident or national of such state, locality or foreign
jurisdiction, including any item(s) of taxable income or tax loss resulting
therefrom, shall be specially allocated to such Partner.
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(vii) TRANSACTIONS WITH PARTNERSHIP. If, and to the extent that, any
Partner is deemed to recognize any item of income, gain, loss, deduction or
credit as a result of any transaction between such Partner and the
Partnership pursuant to Code Sections 482, 483, 1272-1274, 7872 or any
similar provision now or hereafter in effect, any corresponding Profits or
Losses or items thereof shall be allocated to the Partner who was charged
with such item.
(viii) FEES AND COMMISSIONS PAID TO GENERAL PARTNER. It is the intent
of the Partnership that any amount paid or deemed paid to the General
Partner as a fee or payment described in Section 6.4 shall be treated as a
"guaranteed payment" or a payment to a partner not acting in his capacity as
a partner pursuant to Section 707(c) of the Code to the extent possible. If
any such fee or payment is deemed to be a distribution to the General
Partner and not a guaranteed payment or a payment to a partner not acting in
his capacity as a partner, the General Partner shall be allocated an amount
of Partnership gross ordinary income equal to such payment.
(ix) SELLING COMMISSIONS, UNDERWRITING FEES, ACQUISITION FEES AND O & O
EXPENSE ALLOWANCE. Selling Commissions, Underwriting Fees, Acquisition Fees
and the O & O Expense Allowance shall be allocated 100% to the Limited
Partners. Organizational and Offering Expenses, in excess of Sales
Commissions, Underwriting Fees and the O & O Expense Allowance, shall be
allocated 100% to the General Partner.
8.3 DISTRIBUTIONS AND ALLOCATIONS AMONG THE LIMITED PARTNERS.
(a) Except to the extent otherwise provided herein, all distributions of
cash and all allocations of Profits and Losses and items thereof for any Fiscal
Year or Fiscal Period shall be distributed or allocated, as the case may be,
among the Limited Partners in proportion to their respective numbers of Units.
Each distribution of cash shall be made to the Limited Partners (or their
respective assignees) of record as of the last day of the month next preceding
the date on which such distribution is made.
(b) All distributions of cash and all allocations of Profits and Losses or
items thereof for any Fiscal Year in which any Limited Partners are admitted to
the Partnership, shall be allocated among the Limited Partners as follows:
(i) FIRST, the Operations and Sales shall be deemed to have occurred
ratably over such Fiscal Year, irrespective of the actual results of
Operations or Sales;
(ii) SECOND, all Profits and Losses for such Fiscal Year shall be
allocated among the Limited Partners in the ratio that the number of Units
held by each Limited Partner multiplied by the number of days in such Fiscal
Year that such Units were held by such Limited Partner bears to the sum of
that calculation for all Limited Partners; and
(iii) THIRD, all monthly distributions made to the Limited Partners
pursuant to Section 8.1(c) shall be distributed among the Limited Partners
in the ratio that the number of Units held by each Limited Partner
multiplied by the number of days in the month preceding the month in which
the distribution is made that such Units were held by such Limited Partner
bears to the sum of that calculation for all Limited Partners. If the
General Partner determines at any time that the sum of the monthly
distributions made to any Limited Partner during or with respect to a Fiscal
Year does not (or will not) properly reflect such Limited Partner's share of
the total distributions made or to be made by the Partnership for such
Fiscal Year, the General Partner shall, as soon as practicable, make a
supplemental distribution to such Limited Partner, or withhold from a
subsequent distribution that otherwise would be payable to such Limited
Partner, such amount as shall cause the total distributions to such Limited
Partner for such Fiscal Year to be the proper amount.
(c) In the event of a transfer of a Unit during a Fiscal Year in accordance
with Section 10, the transferor and transferee shall be allocated a ratable
share of Profits and Losses for such Fiscal Year based on the number of days in
such Fiscal Year that each held such transferred Units. Monthly distributions
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made by the Partnership in accordance with Section 8.1(c) shall be allocated
between the transferor and transferee (and subsequently adjusted, if necessary)
in the manner set forth in Section 8.3(b)(iii).
(d) Each distribution made to a Limited Partner pursuant to Section 8.1(c),
8.6 or 11.3 of this Agreement, any interest on Subscription Monies relating to
such Limited Partner's Units paid to such Limited Partner pursuant to
Section 5.3(k), and any amount paid to such Limited Partner in redemption of
such Limited Partner's Units pursuant to Section 10.5 shall be applied as
follows:
(i) first, in reduction of such Limited Partner's Unpaid Cumulative
Return, to the extent thereof, as determined immediately before such
distribution; and
(ii) then, in reduction of such Limited Partner's Adjusted Capital
Contribution, to the extent thereof, as determined immediately before such
distribution.
8.4 TAX ALLOCATIONS: CODE SECTION 704(c); REVALUATIONS.
(a) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction, and items thereof, with respect
to any property contributed to the capital of the Partnership shall, solely for
tax purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value.
(b) In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to clause (b) of the definition of Gross Asset Value herein and
Section 5.5(h) hereof, subsequent allocations of income, gain, loss and
deduction, and items thereof, with respect to such asset shall take account of
any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in a manner consistent with the requirements
of Proposed Treas. Reg. Section 1.704-3(a)(6) or the corresponding provision of
final or successor Treasury Regulations.
(c) Any elections or other decisions relating to the allocations required by
clauses (a) and (b) of Section 8.4 shall be made in a manner that reasonably
reflects the purpose and intention of this Agreement. Allocations pursuant to
this clause (c) of Section 8.4 are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Partner's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
8.5 COMPLIANCE WITH NASAA GUIDELINES REGARDING FRONT-END FEES.
Notwithstanding anything in this Agreement to the contrary, in the event the
Partnership fails, at any time after the expiration of 30 months from the date
of the Prospectus, to comply with the restrictions set forth in Section
6.4(b) through (f) above, the General Partner shall appropriately adjust the
allocations and distributions set forth in this Section 8 so as to comply with
the requirements contained in NASAA Guidelines. No adjustment proposed to be
made pursuant to this Section 8.5 shall require the General Partner to obtain
the consent of the Limited Partners unless such proposed adjustment adversely
effects the allocations or distributions made, or to be made, to any Limited
Partner.
8.6 RETURN OF UNINVESTED CAPITAL CONTRIBUTION.
If an amount equal to 100% of Net Offering Proceeds has not been used to
make Investments or committed to Reserves within the later of (i) twenty-four
(24) months after the Effective Date of the Offering or (ii) 12 months of the
receipt thereof by the Partnership, the amount of such uninvested Net Offering
Proceeds shall be promptly distributed by the Partnership to the Limited
Partners, PRO RATA based upon their respective number of Units, as a return of
capital, without interest and without reduction for Front-End Fees in respect of
such uninvested Capital Contributions (which distributions shall not in any
event exceed the related Capital Contribution of any Limited Partner). Funds
shall be deemed to have
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been committed to Investments and need not be returned to a Limited Partner to
the extent written agreements in principle, commitment letters, letters of
intent or understanding, option agreements or any similar contracts or
understandings are executed and not terminated during the applicable twenty-four
(24) or twelve (12) month period described above, if such Investments are
ultimately consummated within a further period of twelve (12) months. Funds
deemed committed which are not actually so invested within such twelve (12)
month period will be promptly distributed, without interest and without
reduction for Front-End Fees in respect of such uninvested Net Offering
Proceeds, to the Limited Partners on a PRO RATA basis, as a return of capital.
8.7 PARTNER'S RETURN OF INVESTMENT IN THE PARTNERSHIP.
Each Limited Partner shall look solely to the assets of the Partnership for
the return of his Capital Contribution and for any other distributions with
respect to his or her Units. If the assets of the Partnership remaining after
payment or discharge, or provision for payment or discharge, of its debts and
liabilities are insufficient to return such Capital Contribution or to make any
other distribution to such Partner, he or she shall not have any recourse
against the personal assets of any other Partner, except to the limited extent
set forth in Section 6.3, Section 9.3(a) and Section 11.2(a)(iii).
8.8 NO DISTRIBUTIONS IN KIND.
Distributions in kind shall not be permitted except upon dissolution and
liquidation of the Partnership's assets and may only then be made to a
liquidating trust established for the purpose of: (a) liquidating the assets
transferred to it; and (b) distributing the net cash proceeds of such
liquidation in cash to the Partners in accordance with the provisions of this
Agreement.
8.9 PARTNERSHIP ENTITLED TO WITHHOLD.
The Partnership shall at all times be entitled to withhold or make payments
to any governmental authority with respect to any federal, state, local or
foreign tax liability of any Partner arising as a result of such Partner's
participation in the Partnership. Each such amount so withheld or paid shall be
deemed to be a distribution for purposes of Section 8 and Section 11, as the
case may be, to the extent such Partner is then entitled to a distribution. To
the extent that the amount of such withholdings or payments made with respect to
any Partner exceeds the amount to which such Partner is then entitled as a
distribution, the excess shall be treated as a demand loan, bearing interest at
a rate equal to twelve percent (12%) per annum simple interest from the date of
such payment or withholding until such excess is repaid to the Partnership (i)
by deduction from any distributions subsequently payable to such Partner
pursuant to this Agreement or (ii) earlier payment of such excess and interest
by such Partner to the Partnership. Such excess and interest shall, in any case,
be payable not less than 30 days after demand therefore by the General Partner,
which demand shall be made only if the General Partner determines that such
Partner is not likely to be entitled to distributions within 12 months from the
date of such withholding or payment by the Partnership in an amount sufficient
to pay such excess and interest. The withholdings and payments referred to in
this Section 8.8 shall be made at the maximum applicable statutory rate under
the applicable tax law unless the General Partner shall have received an opinion
of counsel or other evidence, satisfactory to the General Partner, to the effect
that a lower rate is applicable, or that no withholding or payment is required.
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SECTION 9. WITHDRAWAL OF GENERAL PARTNER.
9.1 VOLUNTARY WITHDRAWAL.
The General Partner may not voluntarily withdraw as a General Partner from
the Partnership unless (a) the Limited Partners have received 60 days' advance
written notice of the General Partner's intention to withdraw, (b) the
Partnership shall have received an opinion of Tax Counsel to the effect that
such withdrawal will not constitute a termination of the Partnership or
otherwise materially adversely affect the status of the Partnership for federal
income tax purposes and (c) a Substitute General Partner shall have been
selected and such Substitute General Partner (i) shall have expressed a
willingness to be admitted to the Partnership, (ii) shall have received the
specific written Consent of the Majority Interest to such admission and (iii)
shall have a Net Worth sufficient, in the opinion of Tax Counsel, for the
Partnership to continue to be classified as a partnership for federal income tax
purposes and to satisfy the net worth requirements for "sponsors" under the
NASAA Guidelines.
9.2 INVOLUNTARY WITHDRAWAL.
The General Partner shall be deemed to have involuntarily withdrawn as a
General Partner from the Partnership upon the removal of the General Partner
pursuant to the Consent of the Majority Interest or upon the occurrence of any
other event that constitutes an event of withdrawal under the Delaware Act as
then in effect.
For purposes of this Section 9.2 and Section 13, neither the General Partner
nor any of its Affiliates will participate in any vote by the Limited Partners
to (a) involuntarily remove the General Partner or (b) cancel any management or
service contract with the General Partner or any such Affiliate.
9.3 CONSEQUENCES OF WITHDRAWAL.
(a) Upon the voluntary or involuntary withdrawal of the General Partner in
accordance with Section 9.1, the General Partner, or its estate, successors or
legal representatives, shall be entitled to receive from the Partnership (i) an
amount equal to the positive balance, if any, in the General Partner's Capital
Account (as adjusted to the date of such withdrawal by allocation pursuant to
Section 8 of any Profits or Losses or other allocable items realized by the
Partnership through such date of Withdrawal and any unrealized gains and losses
inherent in the Partnership's assets as of such date), PROVIDED, HOWEVER, that
in no event shall such amount exceed the fair market value of the Units then
held by the General Partner, as calculated in accordance with the provisions of
clause (b) of this Section 9.3, plus or minus, as the case may be,
(ii) Management Fees payable with respect to Leases and Financing Transactions
acquired by the Partnership prior to the effective date of the Withdrawal shall
remain payable to the General Partner notwithstanding any such Withdrawal as and
when the Partnership receives the cash from such Leases and Financing
Transactions creating the obligation to pay such Management Fees and in the
event that the General Partner pledges the Management Fees receivable to a
Lender, the assignment to the Lender shall be binding in the event of the
voluntary or involuntary withdrawal of the General Partner (iii) an amount equal
to the difference between (A) any amounts due and owing to the General Partner
by the Partnership and (B) any amounts due and owing by the General Partner to
the Partnership, and, upon such payment, the General Partner's interest in the
income, losses, distributions and capital of the Partnership shall be
terminated. The right of the General Partner, or its estate, successors or legal
representatives, to receipt of such amount shall be subject to (x) any claim for
damages by the Partnership or any Partner against the General Partner, or its
estate, successors or legal representatives, that such Withdrawal shall have
been made in contravention of this Agreement and (y) if the General Partner has
a negative balance in its Capital Account after making the adjustments provided
for in the first sentence of this clause (a) of Section 9.3, payment to the
Partnership of an amount equal to the lesser of (1) the amount of such deficit
balance or (2) the excess of 1.01% of the total Capital Contributions of the
Limited Partners over the capital previously contributed by the General Partner.
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(b) For purposes of this Section 9.3, the fair market value of the withdrawn
General Partner's Units shall be determined, in good faith, by such General
Partner and the Partnership, or, if they cannot agree, by arbitration in
accordance with the then current rules of the American Arbitration Association
by two independent appraisers, one selected by the withdrawn General Partner and
one by the Limited Partners. In the event that such two appraisers are unable to
agree on the value of the withdrawn General Partner's Units within 90 days, they
shall within 20 days thereafter jointly appoint a third independent appraiser
whose determination shall be final and binding; PROVIDED, HOWEVER, that if the
two appraisers are unable to agree within such 20 days on a third appraiser, the
third appraiser shall be selected by the American Arbitration Association. The
expense of arbitration shall be borne equally by the withdrawn General Partner
and the Partnership.
(c) The method of payment to the General Partner upon withdrawal, whether
voluntary or involuntary, must be fair and must protect the solvency and
liquidity of the Partnership. When the withdrawal is voluntary, the method of
payment will be presumed to be fair if it provides for a non-interest-bearing,
unsecured promissory note of the Partnership, with principal payable, if at all,
from distributions that the withdrawn General Partner otherwise would have
received under the Partnership Agreement had the General Partner not withdrawn.
When the withdrawal is involuntary, the method of payment will be presumed to be
fair if it provides for a promissory note bearing interest on the outstanding
principal amount thereof at the LESSER of (i) the rate of interest (inclusive of
any points or other loan charges) which the Partnership would be required to pay
to an unrelated bank or commercial lending institution for an unsecured, 60
month loan of like amount or (ii) the rate of interest from time to time
announced by The Chase Manhattan Bank (National Association) at its principal
lending offices in New York, New York as its prime lending rate plus 3% and
providing for repayments of principal thereunder in sixty (60) equal monthly
installments, together with accrued but unpaid interest.
9.4 LIABILITY OF WITHDRAWN GENERAL PARTNER.
If the business of the Partnership is continued after Withdrawal of the
General Partner, the General Partner, or its estate, successors or legal
representatives, shall remain liable for all obligations and liabilities
incurred by it or by the Partnership while it was acting in the capacity of
General Partner and for which it was liable as General Partner, but shall be
free of any obligation or liability incurred on account of or arising from the
activities of the Partnership from and after the time such Withdrawal shall have
become effective.
9.5 CONTINUATION OF PARTNERSHIP BUSINESS.
In the event that the General Partner withdraws from the Partnership, the
General Partner, or its estate, successors or legal representatives, shall
deliver to the Limited Partners Notice stating the reasons for such Withdrawal.
If, within 90 days following such Withdrawal, any Person shall be admitted to
the Partnership as a Substitute General Partner, such Substitute General Partner
shall execute a counterpart of this Agreement and the business of the
Partnership shall continue. If no Substitute General Partner shall have been so
admitted to the Partnership within 90 days following the date of the General
Partner's Withdrawal, then the Partnership shall be dissolved.
SECTION 10. TRANSFER OF UNITS.
10.1 WITHDRAWAL OF A LIMITED PARTNER.
A Limited Partner may withdraw from the Partnership only by Assigning or
having all of his or her Units redeemed in accordance with this Section 10. The
withdrawal of a Limited Partner shall not dissolve or terminate the Partnership.
In the event of the withdrawal of any Limited Partner because of death, legal
incompetence, dissolution or other termination, the estate, legal representative
or successor of such
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Limited Partner shall be deemed to be the Assignee of the Partnership Interest
of such Limited Partner and may become a Substitute Limited Partner upon
compliance with the provisions of Section 10.3.
10.2 ASSIGNMENT.
(a) Subject to the provisions of Sections 10.2(b) and (c) and 10.3 of this
Agreement, any Limited Partner may Assign all or any portion of the Units owned
by such Limited Partner to any Person (the "Assignee"); PROVIDED that
(i) such Limited Partner and such Assignee shall each execute a written
Assignment instrument, which shall:
(A) set forth the terms of such Assignment;
(B) in the case of Assignments other than by operation of law, state
the intention of such Limited Partner that such Assignee shall become a
Substitute Limited Partner and, in all cases, evidence the acceptance by
the Assignee of all of the terms and provisions of this Agreement;
(C) include a representation by both such Limited Partner and such
Assignee that such Assignment was made in accordance with all applicable
laws and regulations (including, without limitation, such minimum
investment and investor suitability requirements as may then be
applicable under state securities laws); and
(D) otherwise be satisfactory in form and substance to the General
Partner; and
(ii) such Assignee shall pay to the Partnership an aggregate amount, not
exceeding $150.00, of expenses reasonably incurred by the Partnership in
connection with such Assignment.
(b) Notwithstanding the foregoing, unless the General Partner shall
specifically Consent, no Units may be Assigned:
(i) to a minor or incompetent (unless a guardian, custodian or
conservator has been appointed to handle the affairs of such Person);
(ii) to any Person if, in the Opinion of Tax Counsel, such Assignment
would result in the termination of the Partnership's taxable year or its
status as a partnership for federal income tax purposes, PROVIDED that the
Partnership may permit such Assignment to become effective if and when, in
the opinion of Tax Counsel, such Assignment would no longer result in the
termination of the Partnership's taxable year or its status as a partnership
for federal income tax purposes;
(iii) to any Person if such Assignment would affect the Partnership's
existence or qualification as a limited partnership under the Delaware Act
or the applicable laws of any other jurisdiction in which the Partnership is
then conducting business;
(iv) to any Person not permitted to be an Assignee under applicable law,
including, without limitation, applicable federal and state securities laws;
(v) if such Assignment would result in the transfer of less than
twenty-five (25) Units, or ten (10) Units in the case of a Qualified Plan
(unless such Assignment is of all of the Units owned by such Limited
Partner);
(vi) if such Assignment would result in the retention by such Limited
Partner of less than the greater of (A) twenty-five (25) Units, or ten
(10) Units in the case of a Qualified Plan, and (B) the minimum number of
Units required to be purchased under minimum investment standards applicable
to an initial purchase of Units by such Limited Partner;
(vii) if, in the reasonable belief of the General Partner, such
Assignment might violate applicable law;
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(viii) if the effect of such Assignment would be to cause the "equity
participation" in the Partnership by "benefit plan investors" (both within
the meaning of DOL Reg. Section 2510.3-101(f)) to equal or exceed 25%; or
(ix) if such transfer would cause an impermissible percentage of Units
to be owned by non-United States citizens.
Any attempt to make any Assignment of Units in violation of this
Section 10.2(b) shall be null and void AB INITIO.
(c) So long as there are adverse federal income tax consequences from being
treated as a "publicly traded partnership" for federal income tax purposes, the
General Partner shall not permit any Unit (or interest therein) to be Assigned
on a secondary public market (or a substantial equivalent thereof) as defined
under the Code and any Treasury Regulations or published notices promulgated
thereunder (a "Secondary Market") and, if the General Partner determines in its
sole and absolute discretion, that a proposed Assignment was effected on a
Secondary Market, the Partnership and the General Partner have the right to
refuse to recognize any such proposed Assignment and to take any action deemed
necessary or appropriate in the General Partner's reasonable discretion so that
such proposed Assignment is not, in fact, recognized. For purposes of this
Section 10.2(c), any Assignment which results in a failure to meet the
"safe-harbor" provisions of Treasury Regulations Section 1.7704-1, or any
substitute safe-harbor provisions subsequently established by Treasury
Regulations or published notices, shall be treated as causing the Units to be
publicly traded. The Limited Partners agree to provide all information
respecting Assignments which the General Partner deems necessary in order to
determine whether a proposed transfer occurred or will occur on a Secondary
Market.
(d) Assignments made in accordance with this Section 10.2 shall be
considered terminated on the last day of the month upon which all of the
conditions of this Section 10.2 shall have been satisfied and effective for
record purposes and for purposes of Section 8 as of the first day of the month
following the date upon which all of the conditions of this Section 10.2 shall
have been satisfied. Distributions to the Assignee shall commence the month
following effectiveness of the assignment.
10.3 SUBSTITUTION.
(a) An Assignee shall be admitted to the Partnership as a Substitute Limited
Partner only if:
(i) the General Partner has reasonably determined that all conditions
specified in Section 10.2 have been satisfied and that no adverse effect to
the Partnership does or may result from such admission; and
(ii) such Assignee shall have executed a transfer agreement and such
other forms, including a power of attorney to the effect required by
Section 15, as the General Partner reasonably may require to determine
compliance with this Section 10.
(b) An Assignee who does not become a Substitute Limited Partner in
accordance with this Section 10.3 and who desires to make a further Assignment
of his or her Units shall be subject to all the provisions of Sections 10.2,
10.3 and 10.4 to the same extent and in the same manner as a Limited Partner
desiring to make an Assignment of Units. Failure or refusal of the General
Partner to admit an Assignee as a Substitute Limited Partner shall in no way
affect the right of such Assignee to receive distributions of cash and the share
of the Profits or Losses for tax purposes to which his or her predecessor in
interest would have been entitled in accordance with Section 8.
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10.4 STATUS OF AN ASSIGNING LIMITED PARTNER.
Any Limited Partner that shall Assign all of his or her Units to an Assignee
who becomes a Substitute Limited Partner shall cease to be a Limited Partner and
shall no longer have any of the rights or privileges of a Limited Partner.
10.5 LIMITED RIGHT OF PRESENTMENT FOR REDEMPTION OF UNITS.
(a) Commencing with the second full calendar quarter following the Final
Closing Date and at any time and from time to time thereafter until termination
of the Partnership, any Limited Partner (other than an Affiliated Limited
Partner) may request that the Partnership redeem, and, subject to the
availability of funds in accordance with clause (b) below and the other
provisions of this Section 10.5 and provided that the Partnership shall not, in
any calendar year, redeem Partnership Interests that, in the aggregate, exceed
2% of the total Units outstanding as of the last day of such year, with the
prior Consent of the General Partner, the Partnership shall redeem, for cash, up
to 100% of the Partnership Interest of such Limited Partner, at the Applicable
Redemption Price. The Partnership shall be under no obligation to redeem Units
of a Limited Partner and shall do so only in the sole and absolute discretion of
the General Partner.
(b) No reserves shall be established by the Partnership for the redemption
of Units. The availability of funds for the redemption of any Unit shall be
subject to the availability of sufficient Distributable Cash. Furthermore, Units
may be redeemed only if such redemption would not impair the capital or the
Operations of the Partnership and would not result in the termination under the
Code of the Partnership's taxable year or of its federal income tax status as a
partnership.
(c) A Limited Partner desiring to have a portion or all of his Units
redeemed shall submit a written request to the General Partner on a form
approved by the General Partner duly signed by all owners of such Units on the
books of the Partnership. Redemption requests hereunder shall be deemed given on
the earlier of the date the same is (i) personally delivered with receipt
acknowledged, or (ii) mailed by certified mail, return receipt requested,
postage prepaid, at the General Partner's address set forth herein. Requests
arising from death, major medical expense and family emergency related to
disability or a material loss of family income, collectively "Hardship
Redemptions" shall be treated as having been received at 12:01 A.M. EST and all
other redemption requests shall be deemed received with the start of the
business day during which received. The General Partner shall promptly accept or
deny each redemption request. The General Partner shall, in its sole discretion,
decide whether a redemption is in the best interests of the Partnership.
(d) In the event that the General Partner receives requests for the
Partnership to redeem more Units than there are funds sufficient to redeem, the
General Partner shall honor redemption requests in the order in which duly
executed and supported redemption requests are received. The General Partner
shall use its reasonable efforts to honor requests for redemptions of Units with
the same request date FIRST as to Hardship Redemptions, SECOND so as to provide
liquidity for IRAs or Qualified Plans to meet required distributions and FINALLY
as to all other redemption requests.
(e) Within 30 days following the date upon which the General Partner
receives a written request from any Limited Partner to redeem Units held by such
Limited Partner, the General Partner shall deliver written notice to such
Limited Partner indicating (i) the number, if any, of such Units to be redeemed
and (ii) if appropriate, the date of redemption thereof, which shall be a date
within 30 days following the date of such notice, and the Applicable Redemption
Price with respect thereto. Not less than ten (10) days prior to the redemption
date specified in the Partnership's notice, the Limited Partner requesting
redemption shall deliver to the Partnership all transfer instruments and other
documents reasonably requested by the Partnership to evidence such redemption
and the Partnership shall pay to such Limited Partner the Applicable Redemption
Price per Unit redeemed. In the event that all Units of any Limited Partner are
so redeemed, such Limited Partner shall be deemed to have withdrawn from the
Partnership and shall, from
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and after the date of the redemption of all Units of such Limited Partner, cease
to have the rights of a Limited Partner.
SECTION 11. DISSOLUTION AND WINDING-UP.
11.1 EVENTS CAUSING DISSOLUTION.
The Partnership shall be dissolved upon the happening of any of the
following events (each a "Dissolution Event"):
(a) the withdrawal of the General Partner, unless a Substitute General
Partner shall have been admitted to the Partnership in accordance with
Section 9.5; or
(b) the voluntary dissolution of the Partnership (i) by the General Partner
with the Consent of the Majority Interest or (ii) subject to Section 13, by the
Consent of the Majority Interest without action by the General Partner; or
(c) the Sale of all or substantially all of the Investments of the
Partnership (which Sale prior to the end of the Reinvestment Period requires the
Consent of the Majority Interest); or
(d) the expiration of the Partnership term specified in Section 4 of this
Agreement; or
(e) the Operations of the Partnership shall cease to constitute legal
activities under the Delaware Act or any other applicable law; or
(f) any other event which causes the dissolution or winding-up of the
Partnership under the Delaware Act to the extent not otherwise provided herein.
11.2 WINDING UP OF THE PARTNERSHIP; CAPITAL CONTRIBUTION BY THE GENERAL
PARTNER UPON DISSOLUTION.
(a) Upon the occurrence of a Dissolution Event, the winding-up of the
Partnership and the termination of its existence shall be accomplished as
follows:
(i) the General Partner (or if there shall be none, such other Person as
shall be selected by the Consent of the Majority Interest, or if no such
other Person is so selected, such other Person as is required by law to wind
up the affairs of the Partnership, which Person, in either event, may
exercise all of the powers granted to the General Partner herein and is
hereby authorized to do any and all acts and things authorized by law and by
this Agreement for such purposes and any and all such other acts or things
consistent therewith as may be expressly authorized by the Majority
Interest) shall proceed with the liquidation of the Partnership (including,
without limitation, the Sale of any remaining Investments and cancellation
of the Certificate of Limited Partnership), and is hereby authorized to
adopt such plan, method or procedure as may be deemed reasonable by the
General Partner (or such other Person effecting the winding up) to
effectuate an orderly winding-up;
(ii) all Profits or Losses or items thereof and all amounts required to
be specially allocated pursuant to Section 8.2(f) for the period prior to
final termination shall be credited or charged, as the case may be, to the
Partners in accordance with Section 8;
(iii) in the event that, after all requirements of clauses (i) and
(ii) of this Section 11.2(a) shall have been accomplished, the General
Partner shall have a deficit balance in its Capital Account, the General
Partner shall contribute within thirty (30) days to the Partnership as a
Capital Contribution an amount equal to the lesser of (A) the amount of such
deficit balance or (B) the excess of 1.01% of the total Capital
Contributions of the Limited Partners over the capital previously
contributed by the General Partner (for this purpose, any payments made by
the General Partner as co-signatory or guarantor of any of the indebtedness
of the Partnership and not yet reimbursed to the General Partner at the time
of dissolution of the Partnership and any amounts due and unpaid to the
General
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Partner on, under or with respect to any Partnership Loans at the time of
such dissolution shall be deemed to be Capital Contributions by the General
Partner to the Partnership and any obligation of the Partnership to
reimburse or repay such amounts shall thereupon cease);
(iv) the proceeds from Sales and all other assets of the Partnership
shall be applied and distributed in liquidation as provided in
Section 11.3; and
(v) the General Partner (or such other Person effecting the winding up)
shall file such certificates and other documents as shall be required by the
Delaware Act, the Code and any other applicable laws to terminate the
Partnership.
(b) If the winding-up of the Partnership is effected by the General Partner,
the General Partner shall be compensated for its services in connection
therewith as provided in Section 6.4 of this Agreement and, if such winding up
is effected by any such other Person (whether selected by the Majority Interest
or as required by law), such other Person shall be compensated for its services
in connection therewith in an amount not in excess of the amount customarily
paid to non-affiliated third parties rendering similar services in respect of
similar entities in the same geographic location.
11.3 APPLICATION OF LIQUIDATION PROCEEDS UPON DISSOLUTION.
Following the occurrence of any Dissolution Event, the proceeds of
liquidation and the other assets of the Partnership shall be applied as follows
and in the following order of priority:
(a) FIRST, to the payment of creditors of the Partnership in order of
priority as provided by law, except obligations to Partners or their Affiliates;
(b) NEXT, to the setting up of any Reserve that the General Partner (or such
other Person effecting the winding-up) shall determine is reasonably necessary
for any contingent or unforeseen liability or obligation of the Partnership or
the Partners; such Reserve may, in the sole and absolute discretion of the
General Partner (or such other Person effecting the winding up) be paid over to
an escrow agent selected by it to be held in escrow for the purpose of
disbursing such Reserve in payment of any of the aforementioned contingencies,
and at the expiration of such period as the General Partner (or such other
Person effecting the winding up) may deem advisable, to distribute the balance
thereafter remaining as provided in clauses (c)-(e) of this Section 11.3.
(c) NEXT, to the payment of all obligations to the Partners in proportion to
and to the extent of advances made by each Partner pursuant to the provisions of
this Agreement;
(d) NEXT, to the payment of all reimbursements to which the General Partner
or any of its Affiliates may be entitled pursuant to this Agreement; and
(e) THEREAFTER, to the Partners in proportion to and to the extent of the
positive balances of their Capital Accounts.
11.4 NO RECOURSE AGAINST OTHER PARTNERS.
Following the occurrence of any Dissolution Event, each Limited Partner
shall look solely to the assets of the Partnership for the return of, and any
return on, such Limited Partner's Capital Contribution. If, after the complete
payment and discharge of all debts, liabilities and other obligations of the
Partnership, the assets of the Partnership are insufficient to provide the
return of, or a return on, the Capital Contribution of any Limited Partner, such
Limited Partner shall have no recourse against any other Limited Partner or the
General Partner, except to the extent that the General Partner is obligated to
make an additional Capital Contribution to the Partnership pursuant to
Section 11.2(a)(iii) hereof.
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SECTION 12. FISCAL MATTERS.
12.1 TITLE TO PROPERTY AND BANK ACCOUNTS.
Except to the extent that trustees, nominees or other agents are utilized as
permitted by Section 6.1(b)(ii)(K), all Investments and other assets of the
Partnership shall be held in the name of the Partnership. The funds of the
Partnership shall be deposited in the name of the Partnership in such bank
account or accounts as shall be designated by the General Partner, and
withdrawals therefrom shall be made upon the signature of the General Partner or
such Person or Persons as shall be designated in writing by the General Partner.
The funds of the Partnership shall not be commingled with the funds of any other
Person.
12.2 MAINTENANCE OF AND ACCESS TO BASIC PARTNERSHIP DOCUMENTS.
(a) The General Partner shall maintain at the Partnership's principal
office, the following documents:
(i) the Participant List;
(ii) a copy of the Certificate of Limited Partnership and all amendments
thereto, together with executed copies of any powers of attorney pursuant to
which the Certificate or any such amendment has been executed;
(iii) copies of this Agreement and any amendments hereto;
(iv) copies of the audited financial statements of the Partnership for
the three most recently completed Fiscal Years, including, in each case, the
balance sheet and related statements of operations, cash flows and changes
in Partners' equity at or for such Fiscal Year, together with the report of
the Partnership's independent auditors with respect thereto;
(v) copies of the Partnership's federal, state and local income tax
returns and reports, if any, for the three most recently completed Fiscal
Years;
(vi) records as required by applicable tax authorities including those
specifically required to be maintained by "tax shelters", if so required by
the Partnership; and
(vii) investor suitability records for Units sold by any Affiliate of the
General Partner for a period of six years.
(b) Each Limited Partner and his or her designated representative shall
be given access to all of the foregoing records of the Partnership and such
other records of the Partnership which relate to business affairs and
financial condition of the Partnership, and may inspect the same and make
copies of the same (subject, in the case of copying the Participant's List,
to compliance with clause (c) of this Section 12.2) at a reasonable expense
to such Limited Partner, during normal business hours upon reasonable advance
written notice to the General Partner, which notice shall specify the date
and time of the intended visit and identify with reasonable specificity the
documents which such Limited Partner or his or her representative will wish
to examine or copy or both.
(c) In addition, the General Partner shall mail a copy of the Participant
List to, or as directed by, any Limited Partner within ten (10) business days
of receipt by the Partnership of a written request therefor together with a
check in payment of the cost to the General Partner of preparing and
transmitting such list to such party or his designated representative;
PROVIDED that, in connection with any copying or request for a copy of, such
Limited Partner shall certify that the Participant List is not being
requested for further reproduction and sale or any other commercial purpose
unrelated to the affairs of the Partnership or for any unlawful purpose.
(d) If the General Partner refuses or neglects to (i) permit a Limited
Partner or his or her representative to examine the Participant List at the
office of the Partnership during normal business hours
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and with reasonable notice to the General Partner or (ii) produce and mail a
copy of the Participant List within ten (10) days after receipt of the
applicable Limited Partner's written request (evidenced by a U.S. Postal
Service registered or certified mail receipt), the General Partner shall be
liable to such Limited Partner who requested such list for the costs,
including reasonable attorneys' fees, incurred by such Limited Partner to
compel production of the Participant List, and for the actual damages (if
any) suffered by such Limited Partner by reason of such refusal or neglect.
It shall be a defense that the requesting Limited Partner has failed or
refused to provide the General Partner with either (i) the required fee or
(ii) the certification called for in the next sentence and, in the case of
clause (ii), the General Partner believes that the actual purpose and reason
for a request for a copy of the Participant List is to secure such List for
the purpose of the sale, reproduction or other use thereof for a commercial
purpose other than in the interest of the Limited Partner relative to the
affairs of the Partnership. In connection with any such request, the General
Partner will require the Limited Partner requesting the Participant List to
certify that the List is not being requested for a commercial purpose
unrelated to the affairs of the Partnership. The remedies provided under this
Section 12.2 to Limited Partners requesting copies of the Participant List
are in addition to, and shall not in any way limit, other remedies available
to Limited Partners under federal law or any applicable state laws.
12.3 FINANCIAL BOOKS AND ACCOUNTING.
The General Partner shall keep, or cause to be kept, complete and
accurate financial books and records with respect to the business and affairs
of the Partnership. Except to the extent otherwise required by the accounting
methods adopted by the Partnership for federal income tax purposes, such
books and records shall be kept on an accrual basis and all financial
statements of the Partnership shall be prepared for each Fiscal Year in
accordance with generally accepted accounting principles as applied within
the United States of America.
12.4 FISCAL YEAR.
Except as may otherwise be determined from time to time by the General
Partner (in a manner which is consistent with the Code and the Treasury
Regulations thereunder or is consented to by the IRS), the Fiscal Year of the
Partnership for both federal income tax and financial reporting purposes
shall end on December 31 of each year.
12.5 REPORTS.
(A) QUARTERLY REPORTS. Not later than 60 days after the end of each of
the first three Fiscal Quarters of each Fiscal Year, the General Partner
shall send, to each Person who was a Limited Partner at any time during such
Fiscal Quarter, the following written materials:
(i) a report containing the same financial information as is contained
in the Partnership's quarterly report on Form 10-Q filed with the Commission
under the Securities Exchange Act of 1934, as amended, which shall include
unaudited financial statements for the Partnership at and for such Fiscal
Quarter, including a balance sheet and related statements of operations,
cash flows and changes in Partners' equity, all of which financial
statements shall be prepared in accordance with the rules and regulations of
the Commission;
(ii) a tabular summary, prepared by the General Partner, with respect to
the fees and other compensation and costs and expenses which were paid or
reimbursed by the Partnership to the General Partner and its Affiliates
during such Fiscal Quarter, identified and properly allocated as to type and
amount. Such tabulation shall (A) include a detailed statement identifying
any services rendered or to be rendered to the Partnership and the
compensation received therefor and (B) summarize the terms and conditions of
any contract, which was not filed as an exhibit to the Registration
Statement, as amended and in effect as on the Effective Date. The
requirement for such
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summary shall not be circumvented by lump-sum payments to non-Affiliates who
then disburse the funds to, or for the benefit of, the General Partner and
its Affiliates; and
(iii) until all Capital Contributions have been invested or committed to
investment in Investments and Reserves, used to pay permitted Front-End Fees
or returned to the Limited Partners (as provided in Section 8.7, above), a
special report concerning all Investments made during such Fiscal Quarter
which shall include (A) a description of the types of Equipment and Leases
acquired and Financing Transactions made, (B) the total Purchase Price paid
for such categories of Investments, (C) the amounts of Capital Contributions
and indebtedness used to acquire such Investments, (D) the Acquisition Fees
and Acquisition Expenses paid (identified by party) in connection therewith
and (E) the amount of Capital Contributions, if any, which remain unexpended
and uncommitted to pending Investments as of the end of such Fiscal Quarter.
(B) ANNUAL REPORTS. Not later than 120 days after the end of each Fiscal
Year, the General Partner shall send to each Person who was a Limited Partner at
any time during such Fiscal Year the following written materials:
(i) financial statements for the Partnership for such Fiscal Year,
including a balance sheet as of the end of such Fiscal Year and related
statements of operations, cash flows and changes in Partners' equity, which
shall be prepared in accordance with the rules and regulations of the
Commission and shall be accompanied by an auditor's report containing an
opinion of the Accountants;
(ii) an analysis, prepared by the General Partner (which need not be
audited by the Accountants), of distributions made to the General Partner
and the Limited Partners during such Fiscal Year separately identifying the
portion (if any) of such distributions from:
(A) Cash From Operations during such period;
(B) Cash From Operations during a prior period which had been held as
Reserves;
(C) Cash From Sales;
(D) Capital Contributions originally used to establish a Reserve;
(iii) a status report with respect to each piece of Equipment and each
Financing Transaction which individually represents at least 10% of the
aggregate Purchase Price of the Partnership's Investments held at the end of
such Fiscal Year, which report shall state:
(A) the condition of each such item of Equipment and of any personal
property securing any Financing Transaction to which such report applies;
(B) how such Equipment was being utilized as of the end of such
Fiscal Year (I.E., leased, operated directly by the Partnership or held
for lease, repair or sale);
(C) the remaining term of any Lease to which such Equipment is
subject;
(D) the projected or intended use of such Equipment during the next
following Fiscal Year;
(E) the method used to determine values set forth therein;
(F) such other information as may be relevant to the value or use of
such Equipment or any personal property securing any such Financing
Transaction as the General Partner, in good faith, deems appropriate;
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(iv) the annual report shall contain a breakdown of all fees and other
compensation paid, and all costs and expenses reimbursed, to the General
Partner and its Affiliates by the Partnership during such Fiscal Year
identified (and properly allocated) as to type and amount:
(A) In the case of any fees and other compensation, such breakdown
shall identify the services rendered or to be rendered to the Partnership
and the compensation therefor and shall summarize the terms and
conditions of any contract which was not filed as an exhibit to the
Registration Statement, as amended and in effect on the Effective Date.
The requirement for such information shall not be circumvented by
lump-sum payments to non-Affiliates who then disburse the funds to, or
for the benefit of, the General Partner and its Affiliates;
(B) In the case of reimbursed costs and expenses, the General Partner
shall also prepare an allocation of the total amount of all such items
and shall include support for such allocation to demonstrate how the
Partnership's portion of such total amounts were allocated between the
Partnership and any other Programs in accordance with this Agreement and
the respective governing agreements of such other Programs. Such cost and
expense allocation shall be reviewed by the Accountants in connection
with their audit of the financial statements of the Partnership for such
Fiscal Year in accordance with the American Institute of Certified Public
Accountants United States Auditing standards relating to special reports
and such Accountants shall state that, in connection with the performance
of such audit, such Accountants reviewed, at a minimum, the time records
of, and the nature of the work performed by, individual employees of the
General Partner and its Affiliates, the cost of whose services were
reimbursed; and
(C) The additional costs of the special review required by this
clause will be itemized by the Accountants on a Program by Program basis
and may be reimbursed to the General Partner and its Affiliates by the
Partnership in accordance with this subparagraph only to the extent such
reimbursement, when added to the cost for all administrative services
rendered, does not exceed the competitive rate for such services as
determined in such report;
(v) until all Capital Contributions have been invested or committed to
investment in Investments and Reserves, used to pay permitted Front-End Fees
or returned to the Limited Partners (as provided in Section 8.7, above), a
special report concerning all Investments made during such Fiscal Year which
shall include (A) a description of the types of Equipment or Leases acquired
or Financing Transactions made, (B) the total Purchase Price paid for such
Investments, (C) the amounts of Capital Contributions and indebtedness used
to acquire such Investments, (D) the Acquisition Fees and Acquisition
Expenses paid (identified by party) in connection therewith and (E) the
amount of Capital Contributions, if any, which remain unexpended and
uncommitted to pending Investments as of the end of such Fiscal Year.
12.6 TAX RETURNS AND TAX INFORMATION.
The General Partner shall:
(a) prepare or cause the Accountants to prepare, in accordance with
applicable laws and regulations, the tax returns (federal, state, local and
foreign, if any) of the Partnership for each Fiscal Year not later than 75 days
after the end of such Fiscal Year; and
(b) deliver to each Partner by March 15 following each Fiscal Year a
Form K-1 or other statement setting forth such Partner's share of the
Partnership's income, gains, losses, deductions, and items thereof, and credits
if any, for such Fiscal Year.
12.7 ACCOUNTING DECISIONS.
All decisions as to accounting matters, except as specifically provided to
the contrary herein, shall be made by the General Partner in accordance with the
accounting methods adopted by the Partnership for
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federal income tax purposes or otherwise in accordance with generally accepted
accounting principles. Such decisions must be acceptable to the Accountants, and
the General Partner may rely upon the advice of the Accountants as to whether
such decisions are in accordance with the methods adopted by the Partnership for
federal income tax purposes or generally accepted accounting principles.
12.8 FEDERAL TAX ELECTIONS.
The Partnership, in the sole and absolute discretion of the General Partner,
may make elections for federal tax purposes as follows:
(a) in case of a transfer of all or some of the Units of a Partner, the
Partnership, in the absolute discretion of the General Partner, may timely elect
pursuant to Section 754 of the Code (or corresponding provisions of future law),
and pursuant to similar provisions of applicable state or local income tax laws,
to adjust the basis of the assets of the Partnership. In such event, any basis
adjustment attributable to such election shall be allocated solely to the
transferee; and
(b) all other elections, including but not limited to the adoption of
accelerated depreciation and cost recovery methods, required or permitted to be
made by the Partnership under the Code shall be made by the General Partner in
such manner as will, in the opinion of the General Partner (as advised by Tax
Counsel or the Accountants as the General Partner deems necessary) be most
advantageous to the Limited Partners as a group. The Partnership shall, to the
extent permitted by applicable law and regulations, elect to treat as an expense
for federal income tax purposes all amounts incurred by it for state and local
taxes, interest and other charges which may, in accordance with applicable law
and regulations, be considered as expenses.
12.9 TAX MATTERS PARTNER.
(a) The General Partner is hereby designated as the "Tax Matters Partner"
under Section 6231(a)(7) of the Code and may hereafter designate its
successor as Tax Matters Partner, to manage administrative and judicial tax
proceedings conducted at the Partnership level by the Internal Revenue
Service with respect to Partnership matters. Any Partner shall have the right
to participate in such administrative or judicial proceedings relating to the
determination of Partnership items at the Partnership level to the extent
provided by Section 6224 of the Code. The Limited Partners shall not act
independently with respect to tax audits or tax litigation affecting the
Partnership, and actions taken by the General Partner as Tax Matters Partner
in connection with tax audits shall be binding in all respects upon the
Limited Partners.
(b) The Tax Matters Partner shall have the following duties;
(i) to the extent and in the manner required by applicable law and
regulations, to furnish the name, address, number of Units owned and
taxpayer identification number of each Partner to the Secretary of the
Treasury or his delegate (the "Secretary"); and
(ii) to the extent and in the manner required by applicable law and
regulations, to keep each Partner informed of administrative and judicial
proceedings for the adjustment at the Partnership level of any item required
to be taken into account by a Partner for income tax purposes (such judicial
proceedings referred to hereinafter as "judicial review").
(c) Subject to Section 6.3 hereof, the Partnership shall indemnify and
reimburse the Tax Matters Partner for all expenses, including legal and
accounting fees, claims, liabilities, losses and damages incurred in
connection with any administrative or judicial proceeding with respect to the
tax liability of the Partners. The payment of all such expenses shall be made
before any distributions are made from Cash Flow. Neither the General Partner
nor any Affiliate nor any other Person shall have any obligation to provide
funds for such purpose. The taking of any action and the incurring of any
expense by the Tax Matters Partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole
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and absolute discretion of the Tax Matters Partner; and the provisions on
limitations of liability of the General Partner and indemnification set forth
in Section 6.3 of this Agreement shall be fully applicable to the Tax Matters
Partner in its capacity as such.
(d) The Tax Matters Partner is hereby authorized, but not required:
(i) to enter in to any settlement with the IRS or the Secretary with
respect to any tax audit or judicial review, in which agreement the Tax
Matters Partner may expressly state that such agreement shall bind the other
Partners, except that such settlement agreement shall not bind any Partner
who (within the time prescribed pursuant to Section 6224(c)(3) of the Code
and regulations thereunder) files a statement with the Secretary providing
that the Tax Matters Partner shall not have the authority to enter into a
settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of a final administrative adjustment at
the partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the Tax Matters
Partner, to seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court, the District Court
of the United Sates for the district in which the Partnership's principal
place of business is located, the United States Court of Claims or any other
appropriate forum;
(iii) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by the
Secretary, to file a petition for judicial review with respect to such
request;
(v) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be taken in
to account by a Partner for tax purposes, or an item affected by such item;
and
(vi) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax proceeding
to the extent permitted by applicable law or regulations.
12.10 REPORTS TO STATE AUTHORITIES.
The General Partner shall prepare and file with all appropriate state
regulatory bodies and other authorities all reports required to be so filed by
state securities or "blue sky" authorities and by the NASAA Guidelines.
SECTION 13. MEETINGS AND VOTING RIGHTS OF THE LIMITED PARTNERS.
13.1 MEETINGS OF THE LIMITED PARTNERS.
(a) A meeting of the Limited Partners may be called by the General
Partner on its own initiative, and shall be called by the General Partner
following its receipt of written request(s) for a meeting from Limited
Partners holding 10% or more of the then outstanding Units, to act upon any
matter on which the Limited Partners may vote (as set forth in this
Agreement). Every such request for a meeting shall state with reasonable
specificity (i) the purpose(s) for which such meeting is to be held and (ii)
the text of any matter, resolution or action proposed to be voted upon by the
Limited Partners at such meeting (with which text the General Partner shall,
subject to the provisions of Section 13.3, submit an accurate summary of such
proposal in its Notice of such meeting to the Limited Partners). Within ten
days following the receipt of such a request, the General Partner shall give
Notice to all Limited Partners of such meeting in the manner and for a time
and place as specified in paragraph 13.1(b). In addition, the General Partner
acting on its own initiative may, and following its receipt of written
request(s) therefor from Limited Partners holding
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more than 10% of the then outstanding Units shall, submit for action by Consent
of the Limited Partners, in lieu of a meeting, any matter on which the Limited
Partners may vote (as set forth in this Section 13).
(b) A Notice of any such meeting (or action by written Consent without a
meeting) shall be given to all Limited Partners either (i) personally or by
mail (if such meeting is being called, or Consent action is being solicited,
by the General Partner upon the request of the Limited Partners) or (ii) by
regular mail (if such meeting is being called, or Consent action is being
solicited, by the General Partner on its own initiative) and a meeting called
pursuant to such Notice shall be held (or Consent action taken) not less than
15 days nor more than 60 days after the date such Notice is distributed. Such
Notice shall be delivered or mailed to each Limited Partner at his or her
record address, or at such other address as he or she may have furnished in
writing to the General Partner for receipt of Notices, and shall state the
place, date and time of such meeting (which shall be the place, date and
time, if any, specified in the request for such meeting or such other place,
date and time as the General Partner shall determine to be reasonable and
convenient to the Limited Partners) and shall state the purpose(s) for which
such meeting is to be held. If any meeting of the Limited Partners is
properly adjourned to another time or place, and if any announcement of the
adjournment of time or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting. The presence in person or
by proxy of the Majority Interest shall constitute a quorum at all meetings
of the Limited Partners; PROVIDED, HOWEVER, that, if there be no such quorum,
holders of a majority of the Units so present or so represented may adjourn
the meeting from time to time without further notice, until a quorum shall
have been obtained. No Notice of any meeting of Limited Partners need be
given to any Limited Partner who attends in person or is represented by proxy
(except when a Limited Partner attends a meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
on the ground that the meeting is not lawfully called or convened) or to any
Limited Partner otherwise entitled to such Notice who has executed and filed
with the records of the meeting, either before or after the time thereof, a
written waiver of such Notice.
(c) For the purpose of determining the Limited Partners entitled to vote
on any matter submitted to the Limited Partners at any meeting of such
Limited Partners (or to take action by Consent in lieu thereof), or any
adjournment thereof, the General Partner or the Limited Partners requesting
such meeting may fix, in advance, a date as the record date, which shall be a
date not more than fifty (50) days nor less than ten (10) days prior to any
such meeting (or Consent action), for the purpose of any such determination.
(d) Any Limited Partner may authorize any Person or Persons to act for
such Limited Partner by proxy in respect of all matters as to which such
Limited Partner is entitled to participate, whether by waiving Notice of any
meeting, taking action by Consent or voting as to any matter or participating
at a meeting of the Limited Partners. Every proxy must be signed by a Limited
Partner or his or her attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Limited
Partner executing it.
(e) At each meeting of the Limited Partners, the Limited Partners present
or represented by proxy may adopt such rules for the conduct of such meeting
as they shall deem appropriate, provided that such rules shall not be
inconsistent with the provisions of this Agreement.
13.2 VOTING RIGHTS OF THE LIMITED PARTNERS.
Subject to Section 13.3, the Limited Partners, acting by Consent of the
Majority Interest may take the following actions without the concurrence of
the General Partner:
(a) amend this Agreement, other than (1) in any manner to allow the
Limited Partners to take part in the control or management of the
Partnership's business, and (2) without the specific Consent of the General
Partner, to alter the rights, powers and duties of the General Partner as set
forth in this Agreement;
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(b) dissolve the Partnership;
(c) remove the General Partner and elect one or more Substitute General
Partners; and
(d) approve or disapprove of the Sale or series of Sales of all or
substantially all the assets of the Partnership except for any such Sale or
series of Sales in the ordinary course of liquidating the Partnership's
Investments during the Disposition Period.
In determining the requisite percentage of Units necessary to approve a
matter on which the General Partner and its Affiliates may not vote or
consent, any Units owned by the General Partner and its Affiliates shall not
be included. With respect to any Units owned by the General Partner and its
Affiliates, the General Partner and its Affiliates may not vote on matters
submitted to the Limited Partners regarding the removal of the General
Partner and its Affiliates or regarding any transaction between the
Partnership and the General Partner and its Affiliates.
13.3 LIMITATIONS ON ACTION BY THE LIMITED PARTNERS.
The rights of the Limited Partners under Section 13.2 shall not be
exercised or be effective in any manner (a) to subject a Limited Partner to
liability as a general partner under the Delaware Act or under the laws of
any other jurisdiction in which the Partnership may be qualified or own an
item of Equipment or (b) to contract away the fiduciary duty owed to such
Limited Partner by the General Partner and its Affiliates under common law.
Any action taken pursuant to Section 13.2 shall be void if any non-Affiliated
Limited Partner, within 45 days after such action is taken, obtains a
temporary restraining order, preliminary injunction or declaratory judgment
from a court of competent jurisdiction on grounds that, or an opinion of
legal counsel selected by the Limited Partners to the effect that, such
action, if given effect, would have one or more of the prohibited effects
referred to in this Section 13.3. For purposes of this Section 13.3, counsel
shall be deemed to have been selected by the Limited Partners if such counsel
is affirmatively approved by the Consent of the Majority Interest within 45
days of the date that the holders of 10% or more of the Units propose counsel
for this purpose.
SECTION 14. AMENDMENTS.
14.1 AMENDMENTS BY THE GENERAL PARTNER.
Subject to Section 13.2 of this Agreement and all applicable law, this
Agreement may be amended, at any time and from time to time, by the General
Partner without the Consent of the Majority Interest to effect any change in
this Agreement for the benefit or protection of the Limited Partners,
including, without limitation:
(a) to add to the representations, duties or obligations of the General
Partner or to surrender any right or power granted to the General Partner
herein;
(b) to cure any ambiguity, to correct or supplement any provision herein
that may be inconsistent with any other provision herein or to add any other
provision with respect to matters or questions arising under this Agreement
that will not be inconsistent with the terms of this Agreement;
(c) to preserve the status of the Partnership as a "limited partnership"
for federal income tax purposes (or under the Delaware Act or any comparable
law of any other state in which the Partnership may be required to be
qualified);
(d) to delete or add any provision of or to this Agreement required to be
so deleted or added by the staff of the Commission, by any other federal or
state regulatory body or other agency (including, without limitation, any
"blue sky" commission) or by any Administrator or similar such official;
(e) to permit the Units to fall within any exemption from the definition
of "plan assets" contained in Section 2510.3-101 of Title 29 of the Code of
Federal Regulations;
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(f) if the Partnership is advised by Tax Counsel, by the Partnership's
Accountants or by the IRS that any allocations of income, gain, loss or
deduction provided for in this Agreement are unlikely to be respected for
federal income tax purposes, to amend the allocation provisions of this
Agreement, in accordance with the advice of such Tax Counsel, such
Accountants or the IRS, to the minimum extent necessary to effect as nearly
as practicable the plan of allocations and distributions provided in this
Agreement; and
(g) to change the name of the Partnership or the location of its principal
office.
14.2 AMENDMENTS WITH THE CONSENT OF THE MAJORITY INTEREST.
In addition to the amendments permitted to be made by the General Partner
pursuant to Section 14.1, the General Partner may propose to the Limited
Partners, in writing, any other amendment to this Agreement. The General
Partner may include in any such submission a statement of the purpose for the
proposed amendment and of the General Partner's opinion with respect thereto.
Upon the Consent of the Majority Interest, such amendment shall take effect;
PROVIDED, HOWEVER, that (a) no such amendment shall increase the liability of
any Partner or adversely affect any Partner's share of distributions of cash
or allocations of Profits or Losses for tax purposes or of any investment tax
credit amounts of the Partnership without in each case the consent of each
Partner affected thereby; and (b) no such amendment shall modify or amend
this Section 14 without the consent of each Limited Partner.
SECTION 15. POWER OF ATTORNEY.
15.1 APPOINTMENT OF ATTORNEY-IN-FACT.
By their subscription for Units and their admission as Limited Partners
hereunder, Limited Partners make, constitute and appoint the General Partner,
each authorized officer of the General Partner and each Person who shall
thereafter become a Substitute General Partner during the term of the
Partnership, with full power of substitution, the true and lawful
attorney-in-fact of, and in the name, place and stead of, such Limited
Partner, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file and publish:
(a) this Agreement, Schedule A to this Agreement and the Certificate of
Limited Partnership under the Delaware Act and any other applicable laws of
the State of Delaware and any other applicable jurisdiction, and any
amendment of any thereof (including, without limitation, amendments
reflecting the addition of any Person as a Partner or any admission or
substitution of other Partners or the Capital Contribution made by any such
Person or by any Partner) and any other document, certificate or instrument
required to be executed and delivered, at any time, in order to reflect the
admission of any Partner (including, without limitation, any Substitute
General Partner and any Substitute Limited Partner);
(b) any other document, certificate or instrument required to reflect any
action of the Partners duly taken in the manner provided for in this
Agreement, whether or not such Limited Partner voted in favor of or otherwise
consented to such action;
(c) any other document, certificate or instrument that may be required by
any regulatory body or other agency or the applicable laws of the United
States, any state or any other jurisdiction in which the Partnership is doing
or intends to do business or that the General Partner deems advisable;
(d) any certificate of dissolution or cancellation of the Certificate of
Limited Partnership that may be reasonably necessary to effect the
termination of the Partnership; and
(e) any instrument or papers required to continue or terminate the
business of the Partnership pursuant to Sections 9.5 and 11 hereof; PROVIDED
that no such attorney-in-fact shall take any action as attorney-in-fact for
any Limited Partner if such action could in any way increase the liability of
such Limited Partner beyond the liability expressly set forth in this
Agreement or alter the rights of such
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Limited Partner under Section 8, unless (in either case) such Limited Partner
has given a power of attorney to such attorney-in-fact expressly for such
purpose.
15.2 AMENDMENTS TO AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
(a) Each Limited Partner is aware that the terms of this Agreement permit
certain amendments of this Agreement to be effected and certain other actions
to be taken or omitted by, or with respect to, the Partnership, in each case
with the approval of less than all of the Limited Partners, if a specified
percentage of the Partners shall have voted in favor of, or otherwise
consented to, such action. If, as and when:
(i) any amendment of this Agreement is proposed or any action is
proposed to be taken or omitted by, or with respect to, the Partnership,
which amendment or action requires, under the terms of this Agreement, the
Consent of the Partners;
(ii) Partners holding the percentage of Units specified in this
Agreement as being required for such amendment or action have consented to
such amendment or action in the manner contemplated by this Agreement; and
(iii) any Limited Partner has failed or refused to consent to such
amendment or action (hereinafter referred to as the "non-consenting Limited
Partner"),
then each non-consenting Limited Partner agrees that each attorney-in-fact
specified in Section 15.1 is hereby authorized and empowered to make,
execute, sign, acknowledge, swear to, verify, deliver, record, file and
publish, for and on behalf of such non-consenting Limited Partner, and in his
name, place and stead, any and all documents, certificates and instruments
that the General Partner may deem necessary, convenient or advisable to
permit such amendment to be lawfully made or such action lawfully taken or
omitted. Each Limited Partner is fully aware that he or she has executed this
special power of attorney and that each other Partner will rely on the
effectiveness of such special power of attorney with a view to the orderly
administration of the Partnership's business and affairs.
(b) Any amendment to this Agreement reflecting the admission to the
Partnership of any Substitute Limited Partner shall be signed by the General
Partner and by or on behalf of the Substitute Limited Partner. Any amendment
reflecting the withdrawal or removal of the General Partner and the admission
of any Substitute General Partner of the Partnership upon the withdrawal of
the General Partner need be signed only by such Substitute General Partner.
15.3 POWER COUPLED WITH AN INTEREST.
The foregoing grant of authority by each Limited Partner:
(a) is a special power of attorney coupled with an interest in favor of
such attorney-in-fact and as such shall be irrevocable and shall survive the
death, incapacity, insolvency, dissolution or termination of such Limited
Partner;
(b) may be exercised for such Limited Partner by a signature of such
attorney-in-fact or by listing or referring to the names of all of the
Limited Partners, including such Limited Partner, and executing any
instrument with a single signature of any one of such attorneys-in-fact
acting as attorney-in-fact for all of them; and
(c) shall survive the Assignment by any Limited Partner of all or less
than all of such Limited Partner's Units, PROVIDED that, if any Assignee of
all of a Limited Partner's Units shall have furnished to the General Partner
a power of attorney complying with the provisions of Section 15.1 of this
Agreement and the admission to the Partnership of such Assignee as a
Substitute Limited Partner shall have been approved by the General Partner,
this power of attorney shall survive such Assignment with respect to the
assignor Limited Partner for the sole purpose of enabling such
attorneys-in-fact to execute, acknowledge
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and file any instrument necessary to effect such Assignment and admission and
shall thereafter terminate with respect to such Limited Partner.
SECTION 16. GENERAL PROVISIONS.
16.1 NOTICES, APPROVALS AND CONSENTS.
All Notices, approvals, Consents or other communications hereunder shall
be in writing and signed by the party giving the same, and shall be deemed to
have been delivered when the same are (a) deposited in the United States mail
and sent by first class or certified mail, postage prepaid, (b) hand
delivered, (c) sent by overnight courier or (d) telecopied. In each case,
such delivery shall be made to the parties at the addresses set forth below
or at such other addresses as such parties may designate by notice to the
Partnership:
(a) If to the Partnership or the General Partner, at the principal office
of the Partnership, to:
ICON Income Fund Eight B L.P.
c/o ICON Capital Corp.
111 Church Street
White Plains, New York 10601
Attention: President
Telephone: (914) 993-1700
Telecopy: (914) 698-0699
(b) If to any Limited Partner, at the address set forth in Schedule A
hereto opposite such Limited Partner's name, or to such other address as may
be designated for the purpose by Notice from such Limited Partner given in
the manner hereby specified.
16.2 FURTHER ASSURANCES.
The Partners will execute, acknowledge and deliver such further
instruments and do such further acts and things as may be required to carry
out the intent and purpose of this Agreement.
16.3 CAPTIONS.
Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provisions hereof.
16.4 BINDING EFFECT.
Except to the extent required under the Delaware Act and for fees, rights
to reimbursement and other compensation provided as such, none of the
provisions of this Agreement shall be for the benefit of or be enforceable by
any creditor of the Partnership.
16.5 SEVERABILITY.
If one or more of the provisions of this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and any other application thereof shall not in any way be affected or
impaired thereby, and such remaining provisions shall be interpreted
consistently with the omission of such invalid, illegal or unenforceable
provisions.
16.6 INTEGRATION.
This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the parties in
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connection therewith that conflict with the express terms of this Agreement.
No covenant, representation or condition not expressed in this Agreement
shall affect, or be effective to interpret, change or restrict, the express
provisions of this Agreement.
16.7 APPLICABLE LAW.
This Agreement shall be construed and enforced in accordance with, and
governed by, the laws of the State of Delaware, including, without
limitation, the Delaware Act (except and solely to the extent that provisions
of the laws of any other jurisdiction are stated to be applicable in any
section of this Agreement), without giving effect to the conflict of laws
provisions thereof.
16.8 COUNTERPARTS.
This Agreement may be signed by each party hereto upon a separate
counterpart (including, in the case of a Limited Partner, a separate
subscription agreement or signature page executed by one or more such
Partners), but all such counterparts, when taken together, shall constitute
but one and the same instrument.
16.9 CREDITORS.
No creditor who makes a loan to the Partnership shall have or acquire at
any time, as a result of making such a loan, any direct or indirect interest
in the profits, capital or property of the Partnership other than as a
secured creditor except solely by an assignment of the Units of a Limited
Partner as provided herein above.
16.10 INTERPRETATION.
Unless the context in which words are used in this Agreement otherwise
indicates that such is the intent, words in the singular shall include the
plural and in the masculine shall include the feminine and neuter and vice
versa.
16.11 SUCCESSORS AND ASSIGNS.
Each and all of the covenants, terms, provisions and agreements herein
contained shall be binding upon and inure to the benefit of the successors
and assigns of the respective parties hereto. In furtherance of and not in
limitation of the foregoing, the General Partner may assign as collateral
security or otherwise any items of compensation payable to it pursuant to the
terms of this Agreement; notwithstanding any such assignment the General
Partner and not any such assignee shall remain solely liable for its
obligations hereunder.
16.12 WAIVER OF ACTION FOR PARTITION.
Each of the parties hereto irrevocably waives, during the term of the
Partnership, any right that he or she may have to maintain any action for
partition with respect to the property of the Partnership.
SECTION 17. DEFINITIONS.
Defined terms used in this Agreement shall have the meanings specified
below. Certain additional defined terms are set forth elsewhere in this
Agreement. Unless the context requires otherwise, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, and vice
versa, and "Article" and "Section" references are references to the Articles and
Sections of this Agreement.
"ACCOUNTANTS" means KPMG LLP, or such other firm of independent certified
public accountants as shall be engaged from time to time by the General Partner
on behalf of the Partnership.
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"ACQUISITION EXPENSES" means expenses (other than Acquisition Fees) incurred
and paid to any Person which are attributable to selection and acquisition of
equipment, leases and financing transactions, whether or not acquired or entered
into, including legal fees and expenses, travel and communications expenses,
costs of credit reports and appraisals and reference materials used to evaluate
transactions, non-refundable option payments on equipment and other tangible or
intangible personal property not acquired, fees payable to finders and brokers
which are not Affiliates of the General Partner, accounting fees and expenses,
costs of each acquisition of an item of Equipment, Lease or a Financing
Transaction (including the negotiation of Leases and the negotiation and
documentation of Partnership borrowings, including commitment or standby fees
payable to Lenders), insurance costs and miscellaneous other expenses however
designated.
"ACQUISITION FEES" means, in connection with any Investment, the amount
payable from all sources in respect of (a) all fees and commissions paid by any
party in connection with the selection and purchase of any item of Equipment or
Lease and the negotiation and consummation of any Financing Transaction, however
designated and however treated for tax and accounting purposes, and (b) all
finder's fees and loan fees or points paid in connection therewith to a lender
which is not an Affiliate of the General Partner, but not any Acquisition
Expenses.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Capital Account
as of the end of any taxable year, the amount by which the balance in such
Capital Account is less than zero. For this purpose, a Partner's Capital Account
balance shall be (a) reduced for any items described in Treas. Reg. Section
1.704-1(b)(2)(ii)(d)(4),(5), and (6), (b) increased for any amount such Partner
is unconditionally obligated to contribute to the Partnership no later than the
end of the taxable year in which his or her Units, or the General Partner's
Units, are liquidated (as defined in Treas. Reg. Section 1.704-1(b)(2)(ii)(g))
or, if later, within 90 days after such liquidation, and (c) increased for any
amount such Partner is treated as being obligated to contribute to the
Partnership pursuant to the penultimate sentences of Treas. Reg. Sections
1.704-2(g)(1) and 1.704-2(i)(5) (relating to minimum gain).
"ADJUSTED CAPITAL CONTRIBUTION" means, as to any Limited Partner, as of the
date of determination, such Limited Partner's Capital Contribution reduced, but
not below zero, by all distributions theretofore made to such Limited Partner by
the Partnership which are deemed to be in reduction of such Limited Partner's
Capital Contribution pursuant to Section 8.3(d)(ii).
"ADMINISTRATOR" means the official or agency administering the securities
laws of a state.
"AFFILIATE" means, with respect to any Person, (a) any other Person directly
or indirectly controlling, controlled by or under common control with such
Person, (b) any officer, director or partner of such Person, (c) any other
Person owning or controlling 10% or more of the outstanding voting securities of
such Person and (d) if such Person is an officer, director or partner, any other
Person for which such Person acts in such capacity.
"AFFILIATED INVESTMENT" means any Investment in which the General Partner,
any of its Affiliates or any Program either has or in the past has had an
interest, but excluding any Joint Venture.
"AFFILIATED LIMITED PARTNER" means any officer, employee or securities
representative of the General Partner or any Affiliate of the General Partner or
of any Selling Dealer who is admitted as a Limited Partner at a Closing.
"AGREEMENT" means this Agreement of Limited Partnership, as the same may
hereafter be amended, supplemented or restated from time to time.
"APPLICABLE REDEMPTION PRICE" means, with respect to any Unit, the following
amount (determined as of the date of redemption of such Unit):
(a) during the second year of the Reinvestment Period, each Limited Partner
shall receive an amount equal to 90% of the original Capital Contribution
of such Limited Partner;
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(b) during the third year of the Reinvestment Period, each limited partner
shall receive an amount equal to 92% of the original Capital Contribution
of such Limited Partner;
(c) during the fourth year of the Reinvestment Period, each limited partner
shall receive an amount equal to 94% of the original Capital Contribution
of such Limited Partner;
(d) during the fifth year of the Reinvestment Period, each limited partner
shall receive an amount equal to 96% of the original Capital Contribution
of such Limited Partner;
(e) during the first year of the Liquidation Period, each limited partner
shall receive an amount equal to 98% of the original Capital Contribution
of such Limited Partner;
(f) during the second year of the Liquidation Period and each year
thereafter, each limited partner shall receive an amount equal to 100% of
the original Capital Contribution of such Limited Partner;
LESS the sum of (i) 100% of previous distributions to such Limited Partner
of uninvested Capital Contributions, (ii) 100% of previous distributions of
Cash Flow, (iii) 100% of any previous allocations to such Limited Partner of
investment tax credit amounts and (iv) the aggregate amount, not exceeding
$150.00, of expenses reasonably incurred by a Partnership in connection with
the redemption of his or her Units; PROVIDED, HOWEVER, that in no event
shall the Applicable Redemption Price computed under either clause (a) or
(b) of this definition exceed an amount equal to such Limited Partner's
Capital Account balance as of the end of the calendar quarter preceding such
redemption minus cash distributions which have been made or are due to be
made for the calendar quarter in which the redemption occurs (for a
redemption of all Units owned by such Limited Partner or that portion of
such amount which is proportionate to the percentage of such Limited
Partner's Units which are redeemed in the case of partial redemptions).
"ASSIGNEE" means any Person to whom any Units have been Assigned, in whole
or in part, in a manner permitted by Section 10.2 of this Agreement.
"ASSIGNMENT" means, with respect to any Units, the offer, sale, assignment,
transfer, gift or other disposition of, such Unit, whether voluntarily or by
operation of law, except that in the case of a BONA FIDE pledge or other
hypothecation, no Assignment shall be deemed to have occurred unless and until
the secured party has exercised his right of foreclosure with respect thereto;
and the terms "ASSIGN" and "ASSIGNING" have a correlative meaning.
"CAPITAL ACCOUNT" means the capital account maintained for each Partner
pursuant to Section 5.5 of this Agreement.
"CAPITAL CONTRIBUTIONS" means (a) as to the General Partner, its initial
$1,000 contribution to the capital of the Partnership plus such additional
amounts as may be contributed to the capital of the Partnership by the General
Partner and (b) as to any Limited Partner, the gross amount of initial
investment in the Partnership actually paid by such Limited Partner for Units,
without deductions for Underwriting Fees, Sales Commissions and Front-End Fees.
"CASH FROM OPERATIONS" means cash provided from operations, without
deduction for depreciation, but after deducting cash funds used to pay all other
cash expenses, debt payments, capital improvements and replacements (other than
cash funds withdrawn from Reserves).
"CASH FROM SALES" means the cash received by the Partnership as a result of
a Sale reduced by (a) all Indebtedness of the Partnership required to be paid as
a result of the Sale, whether or not then payable (including, without
limitation, any liabilities on an item of Equipment sold that are not assumed by
the buyer and any remarketing fees required to be paid to Persons who are not
Affiliates of the General Partner), (b) the Subordinated Remarketing Fee (to the
extent permitted to be paid at the time pursuant to Section 6.4(h) of this
Agreement), (c) any accrued but previously unpaid Management Fees to the
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extent then payable, (d) any Reserves to the extent deemed reasonable by the
General Partner and (e) all expenses incurred in connection with such Sale. In
the event the Partnership takes back a promissory note or other evidence of
indebtedness in connection with any Sale, all payments subsequently received in
cash by the Partnership with respect to such note shall be included in Cash From
Sales upon receipt, irrespective of the treatment of such payments by the
Partnership for tax or accounting purposes. If, in payment for Equipment sold,
the Partnership receives purchase money obligations secured by liens on such
Equipment, the amount of such obligations shall not be included in Cash From
Sales until and to the extent the obligations are realized in cash, sold or
otherwise disposed of.
"CLOSING" means the admission of Limited Partners to the Partnership in
accordance with Section 5.3 of this Agreement.
"CLOSING DATE" means any date on which any Limited Partner shall be admitted
to the Partnership, and includes the Initial Closing Date and any subsequent
Closing Date, including the Final Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended, and in effect
from time to time, or corresponding provisions of subsequent laws.
"COMMISSION" means the Securities and Exchange Commission.
"CONSENT" means either (a) consent given by vote at a meeting called and
held in accordance with the provisions of Section 13.1 of this Agreement or
(b) the written consent without a meeting, as the case may be, of any Person to
do the act or thing for which the consent is solicited, or the act of granting
such consent, as the context may require.
"CONTROLLING PERSON" means, with respect to the General Partner or any of
its Affiliates, any of its chairmen, directors, presidents, secretaries or
corporate clerks, treasurers, vice presidents, any holder of a 5% or larger
equity interest in the General Partner or any such Affiliate, or any Person
having the power to direct or cause the direction of the General Partner or any
such Affiliate, whether through the ownership of voting securities, by contract
or otherwise.
"CUMULATIVE RETURN" means, as to any Limited Partner, an amount equal to an
eight (8%) percent annual cumulative return on such Limited Partner's Adjusted
Capital Contribution (calculated before application of any distribution made to
such Limited Partner pursuant on the date of such calculation) as outstanding
from time to time, compounded daily from a date not later than the last day of
the calendar quarter in which the original Capital Contribution is made.
"DEALER-MANAGER" means ICON Securities Corp., an Affiliate of the General
Partner.
"DEALER-MANAGER AGREEMENT" means the agreement entered into between the
General Partner and the Dealer-Manager, substantially in the form thereof filed
as an exhibit to the Registration Statement.
"DELAWARE ACT" means the Delaware Revised Uniform Limited Partnership Act, 6
Del. Code Ann. tit. 6, Section17-101, et seq., as amended from time to time, and
any successor to such Delaware Act.
"DISSOLUTION EVENT" has the meaning specified in Section 11.1 of this
Agreement.
"DUE DILIGENCE EXPENSES" has the meaning specified in Section 6.4(d) of this
Agreement.
"EFFECTIVE DATE" means the date the Registration Statement is declared
effective by the Commission.
"EQUIPMENT" means any equipment and related property acquired by the
Partnership, or in which the Partnership has acquired a direct or indirect
interest, including, but not limited to, the types of equipment referred to in
Section 3.2 of this Agreement and shall also be deemed to include other tangible
and intangible personal property which at any time is subject to, or the
collateral for, a Lease or Financing Transaction.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ESCROW ACCOUNT" means an interest-bearing account established and
maintained by the General Partner with the Escrow Agent, in accordance with the
terms of the Escrow Agreement, for the purpose of holding, pending the
distribution thereof in accordance with the terms of this Agreement, any
Subscription Monies received from subscribers, including Persons who are to be
admitted as Limited Partners as a result of the Closing occurring on the Initial
Closing Date.
"ESCROW AGENT" means The Chase Manhattan Bank N.A. or another United States
banking institution with at least $50,000,000 in assets, which shall be selected
by the General Partner to serve in such capacity pursuant to the Escrow
Agreement.
"ESCROW AGREEMENT" means that certain Escrow Agreement between the General
Partner and the Escrow Agent, substantially in the form thereof filed as an
exhibit to the Registration Statement, as amended and supplemented from time to
time as permitted by the terms thereof.
"FINAL CLOSING DATE" means the last Closing Date on which any Limited
Partner (other than a Substitute Limited Partner) shall be admitted to the
Partnership, which shall be as soon as practicable following the Termination
Date.
"FINANCING TRANSACTION" means any Investment made or acquired representing
an extension of credit or loan to any User, which is secured by a security
interest in tangible or intangible personal property and in any lease of such
property.
"FIRST CASH DISTRIBUTIONS" means, with respect to any Limited Partner, all
distributions made to such Limited Partner by the Partnership during the
Reinvestment Period equal to an eight percent (8%) annual, cumulative return on
the amount of such Limited Partner's Capital Contribution (as reduced by any
amounts of uninvested Capital Contributions distributed to such Limited Partner
pursuant to Section 8.6 and by any amount paid to such Limited Partner in
redemption of such Limited Partner's Units pursuant to Section 10.5).
"FISCAL PERIOD" means any interim accounting period established by the
General Partner within a Fiscal Year.
"FISCAL QUARTER" means, for each Fiscal Year, the three-calendar-month
period which commences on the first day of such Fiscal Year or any of each
subsequent three-calendar-month period.
"FISCAL YEAR" means the Partnership's annual accounting period established
pursuant to Section 12.4 of this Agreement.
"FRONT-END FEES" means fees and expenses paid by any Person for any services
rendered during the Partnership's organizational and offering or acquisition
phases including Sales Commissions, Underwriting Fees, O & O Expense Allowance,
Acquisition Fees and Acquisition Expenses and Leasing Fees, and all other
similar fees however designated.
"FULL-PAYOUT LEASE" means any lease, entered into or acquired from time to
time by the Partnership, pursuant to which the aggregate noncancellable rental
payments due during the initial term of such lease, on a net present value
basis, are at least sufficient to permit the Partnership to recover the Purchase
Price of the Equipment subject to such lease.
"GENERAL PARTNER" means ICON Capital Corp., a Connecticut corporation, and
any Person who subsequently becomes an additional or Substitute General Partner
duly admitted to the Partnership in accordance with this Agreement, in such
Person's capacity as a general partner of the Partnership.
"GROSS ASSET VALUE" means, with respect to any asset of the Partnership, the
asset's adjusted tax basis, except that:
(a) the initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the fair market value of such asset on the date
of contribution;
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(b) the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values at such times as the
Partners' Capital Accounts are adjusted pursuant to Section 5.5(h) hereof;
(c) the Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date of
distribution;
(d) to the extent not otherwise reflected in the Partners' Capital
Accounts, the Gross Asset Values of Partnership assets shall be increased
(or decreased) to appropriately reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code
Section 743(b); and
(e) if on the date of contribution of an asset or a revaluation of an
asset in accordance with (b)-(d) above, the adjusted tax basis of such asset
differs from its fair market value, the Gross Asset Value of such asset
shall thereafter be adjusted by reference to the depreciation method
described in Treas. Reg. Section 1.704-1(b)(2)(iv)(g)(3).
"GROSS OFFERING PROCEEDS" means the aggregate gross amount of Capital
Contributions by Limited Partners.
"GROSS REVENUE" means receipts of the Partnership from any and all sources
including, but not limited to, (a) rental and royalty payments realized under
Leases whether or not pledged to a Lender and including such payments assigned
for direct payment to such Lenders, (b) principal and interest payments realized
under Financing Transactions and (c) interest earned on funds on deposit for the
Partnership (other than Subscription Monies).
"GROSS UNIT PRICE" means $100.00 for each whole Unit, and $.01 for each
1/10,000th Unit, purchased by a Limited Partner (other than an Affiliated
Limited Partner).
"INDEBTEDNESS" means, with respect to any Person as of any date, all
obligations of such Person (other than capital, surplus, deferred income taxes
and, to the extent not constituting obligations, other deferred credits and
reserves) that could be classified as liabilities (exclusive of accrued expenses
and trade accounts payable incurred in respect of property purchased in the
ordinary course of business which are not overdue or which are being contested
in good faith by appropriate proceedings and are not so required to be
classified on such balance sheet as debt) on a balance sheet prepared in
accordance with generally accepted accounting principles as of such date.
"INDEMNITEE" has the meaning specified in Section 6.3(a) of this Agreement.
"INITIAL CLOSING DATE" means the first Closing Date for the Partnership on
which Limited Partners holding in the aggregate Units equal to, or greater than,
the Minimum Offering are admitted to the Partnership.
"INVESTMENT COMMITTEE" means a committee established by the General Partner
to set Investment review policies and procedures, and approve significant
Investments and Investments which differ from the standards and procedures it
has established. The Investment Committee will, at all times, consist of at
least two persons designated by the General Partner.
"INVESTMENTS" means, collectively, the Partnership's portfolio, from time to
time, of Equipment, Leases and Financing Transactions, including any equity
interest of the Partnership therein, whether direct or indirect through a
nominee, Joint Venture or otherwise.
"IRA" means an Individual Retirement Account and its related funding
vehicle.
"IRS" or "SERVICE" means the Internal Revenue Service or any successor
agency thereto.
"INVOLUNTARY WITHDRAWAL" means, with respect to the General Partner, the
removal or involuntary withdrawal of the General Partner from the Partnership
pursuant to Section 9.2 of this Agreement.
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"JOINT VENTURE" means any syndicate, group, pool, partnership, limited
liability company, business trust or other unincorporated organization through
or by means of which the Partnership acts jointly with any Program or with any
non-Affiliated Person to invest in Equipment, Leases or Financing Transactions.
"LEASE" means any Full-Payout Lease and any Operating Lease and any residual
value interest therein.
"LEASING FEES" means the total of all fees and commissions paid by any party
in connection with the initial Lease of Equipment.
"LENDER" means any Person that lends cash or cash equivalents to the
Partnership, including any Person that acquires by purchase, assignment or
otherwise an interest in the future rents payable under any Lease and in the
related Equipment or other assets or in payments due under any Financing
Transaction, and any property securing, any such transaction.
"LESSEE" means a lessee under a Lease.
"LEVERAGE RATE" means the percentage obtained by dividing the amount of the
Partnership's total Indebtedness at any time by the total Purchase Price of the
Investments then held by the Partnership.
"LIMITED PARTNER" means any Person who is the owner of at least one Unit and
who has been admitted to the Partnership as an Limited Partner and any Person
who becomes a Substitute Limited Partner, in accordance with this Agreement, in
such Person's capacity as a Limited Partner of the Partnership.
"LIQUIDATION PERIOD" means the period commencing on the first day following
the end of the Reinvestment Period and continuing for the amount of time deemed
necessary by the General Partner for orderly termination of its operations and
affairs and liquidation or disposition of the Partnership's Investments and
other assets and the realization of the maximum proceeds therefor, which period
is expected to continue not less than twelve (12), and not more than thirty six
(36), months beyond the end of the Reinvestment Period and which, in any event,
will end no later than eleven (11) years after the Final Closing Date.
"MAJORITY" or "MAJORITY INTEREST" means Limited Partners owning more than
50% of the aggregate outstanding Units.
"MANAGEMENT FEES" means, for any Fiscal Year, a fee in an amount equal to
the lesser of (a) the sum of (i) an amount equal to 5% of annual Gross Revenues
realized under Operating Leases, (ii) an amount equal to 2% of annual Gross
Revenues realized under Full-Payout Leases that are Net Leases, (iii) an amount
equal to 2% of annual Gross Revenues realized in connection with Financing
Transactions and (iv) an amount equal to 7% of annual Gross Revenues from
Equipment owned and operated by the Partnership in the manner contemplated by
the NASAA Guidelines (I.E., the General Partner provides both asset management
and additional services relating to the continued and active operation of such
Equipment, such as on-going marketing or re-leasing of Equipment, hiring or
arranging for the hiring of crews or operating personnel for such Equipment and
similar services), and (b) the amount of reasonable management fees customarily
paid to non-affiliated third parties rendering similar services in the same
geographic location and for similar types of equipment.
"MAXIMUM OFFERING" means receipt and acceptance by the Partnership of
subscriptions by Persons eligible to purchase a total of 750,000 Units of
Partnership Interest on or before the Final Closing Date.
"MINIMUM OFFERING" means receipt and acceptance by the Partnership of
subscriptions for not less than 12,000 Units (excluding the ten (10) Units
subscribed for by the Original Limited Partner and any Units in excess of 600
Units collectively subscribed for by the General Partner or any Affiliate of the
General Partner).
"NASAA GUIDELINES" means the Statement of Policy regarding Equipment
Programs adopted by the North American Securities Administrators
Association, Inc., as in effect on the date of the Prospectus.
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"NASD" means the National Association of Securities Dealers, Inc.
"NET LEASE" means a Lease under which the Lessee assumes responsibility for,
and bears the cost of, insurance, taxes, maintenance, repair and operation of
the leased asset and where the noncancellable rental payments pursuant to such
Lease are absolutely net to the Partnership.
"NET OFFERING PROCEEDS" means the Gross Offering Proceeds minus Underwriting
Fees, Sales Commissions and the O & O Expense Allowance payable by the
Partnership.
"NET UNIT PRICE" means the Gross Unit Price less an amount equal to 8% of
the Gross Unit Price (equivalent to Sales Commissions) for each Unit or fraction
thereof purchased by an Affiliated Limited Partner.
"NET WORTH" means, with respect to any Person as of any date, the excess, on
such date, of assets over liabilities, as such items would appear on the balance
sheet of such Person in accordance with generally accepted accounting
principles.
"NOTICE" means a writing containing the information required by this
Agreement to be communicated to any Person, personally delivered to such Person
or sent by registered, certified or regular mail, postage prepaid, to such
Person at the last known address of such Person.
"O & O EXPENSE ALLOWANCE" has the meaning specified in Section 6.4(e) of
this Agreement.
"OFFERING" means the offering of Units pursuant to the Prospectus.
"OFFERING PERIOD" means the period from the Effective Date to the
Termination Date.
"OPERATING EXPENSES" means (a) all costs of personnel (including officers or
employees of the General Partner or its Affiliates other than Controlling
Persons) involved in the business of the Partnership, allocated PRO RATA to
their services performed on behalf of the Partnership, but excluding overhead
expenses attributable to such personnel); (b) all costs of borrowed money, taxes
and assessments on Investments and other taxes applicable to the Partnership;
(c) legal, audit, accounting, brokerage, appraisal and other fees;
(d) printing, engraving and other expenses and taxes incurred in connection with
the issuance, distribution, transfer, registration and recording of documents
evidencing ownership of an interest in the Partnership or in connection with the
business of the Partnership; (e) fees and expenses paid to independent
contractors, bankers, brokers and services, leasing agents and sales personnel
consultants and other equipment management personnel, insurance brokers and
other agents (all of which shall only be billed directly by, and be paid
directly to, the provider of such services); (f) expenses (including the cost of
personnel as described in (a) above) in connection with the disposition,
replacement, alteration, repair, refurbishment, leasing, licensing, re-leasing,
re-licensing, financing, refinancing and operation of Equipment and Financing
Transactions (including the costs and expenses of insurance premiums, brokerage
and leasing and licensing commissions, if any, with respect to its Investments
and the cost of maintenance of its Equipment; (g) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership;
(h) expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping and clerical work necessary in maintaining
relations with, its Limited Partners, including the costs of printing and
mailing to such Person evidences of ownership of Units and reports of meetings
of the Partners and of preparation of proxy statements and solicitations of
proxies in connection therewith; (i) expenses in connection with preparing and
mailing reports required to be furnished to the Limited Partners for investor,
tax reporting or other purposes, and reports which the General Partner deems it
to be in the best interests of the Partnership to furnish to the Limited
Partners and to their sales representatives; (j) any accounting, computer,
statistical or bookkeeping costs necessary for the maintenance of the books and
records of the Partnership (including an allocable portion of the Partnership's
costs of acquiring and owning computer equipment used in connection with the
operations and reporting activities of the Partnership and any other investment
programs sponsored by the General Partner or any of its Affiliates, the
Partnership's interest in which equipment shall be liquidated in connection with
the
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Partnership's liquidation); (k) the cost of preparation and dissemination of the
informational material and documentation relating to potential sale, refinancing
or other disposition of Equipment and Financing Transactions; (l) the costs and
expenses incurred in qualifying the Partnership to do business in any
jurisdiction, including fees and expenses of any resident agent appointed by the
Partnership; and (m) the costs incurred in connection with any litigation or
regulatory proceedings in which the Partnership is involved.
"OPERATING LEASE" means any lease, entered into or acquired from time to
time by the Partnership, pursuant to which the aggregate noncancellable rental
payments during the initial term of such lease, on a net present value basis,
are not sufficient to recover the Purchase Price of the Equipment leased
thereby.
"OPERATIONS" means all operations and activities of the Partnership except
Sales.
"ORGANIZATIONAL AND OFFERING EXPENSES" means (a) all costs and expenses
incurred in connection with, and in preparing the Partnership for, qualification
under federal and state securities laws, and subsequently offering and
distributing the Units to the public (except for Sales Commissions and
Underwriting Fees payable to the General Partner, the Dealer-Manager or any
Selling Dealer), including but not limited to, (i) printing costs,
(ii) registration and filing fees, (iii) attorneys', accountants' and other
professional fees and (iv) Due Diligence Expenses and (b) the direct costs of
salaries to and expenses (including costs of travel) of officers and directors
of the General Partner or any of its Affiliates while engaged in organizing the
Partnership and registering the Units.
"ORIGINAL LIMITED PARTNER" means Thomas W. Martin.
"PARTICIPANT LIST" means a list, in alphabetical order by name, setting
forth the name, address and business or home telephone number of, and number of
Units held by, each Limited Partner, which list shall be printed on white paper
in a readily readable type size (in no event smaller than 10-point type) and
shall be updated at least quarterly to reflect any changes in the information
contained therein.
"PARTNER" means the General Partner (including any Substitute General
Partner) and any Limited Partner (including the Original Limited Partner and any
Substitute Limited Partner).
"PARTNER NONRECOURSE DEBT" means any Partnership nonrecourse liability for
which any Partner bears the economic risk of loss within the meaning of Treas.
Reg. Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning specified in Treas.
Reg. Section 1.704-2(i)(3), and such additional amount as shall be treated as
Partner Nonrecourse Minimum Gain pursuant to Treas. Reg.
Section 1.704-2(j)(1)(iii).
"PARTNER NONRECOURSE DEDUCTIONS" shall consist of those deductions and in
those amounts specified in Treas. Reg. Sections 1.704-2(i)(2) and (j).
"PARTNERSHIP" means ICON Income Fund Eight B L.P., the limited partnership
formed pursuant to, and governed by the terms of, this Agreement.
"PARTNERSHIP LOAN" means any loan made to the Partnership by the General
Partner or any of its Affiliates in accordance with Section 6.2(d) of this
Agreement.
"PARTNERSHIP MINIMUM GAIN" has the meaning specified in Treas. Reg.
Sections 1.704-2(b)(2) and (d) and such additional amount as shall be treated as
Partnership Minimum Gain pursuant to Treas. Reg. Section 1.704-2(j)(1)(iii).
"PARTNERSHIP NONRECOURSE DEDUCTIONS" shall consist of those deductions and
in those amounts specified in Treas. Reg. Sections 1.704-2(c) and (j).
"PAYOUT" means the time when the aggregate amount of cash distributions to a
Limited Partner equals the amount of such Limited Partner's Capital Contribution
plus an amount equal to an eight (8%) percent annual cumulative return on such
Capital Contribution, compounded daily from a date not later than the
A-49
<PAGE>
last day of the calendar quarter in which such Capital Contribution is made
(determined by treating distributions actually made to a Limited Partner as
first being applied to satisfy such 8% return on capital which has accrued and
has not been paid and applying any excess distributions as a return of such
Limited Partner's Capital Contribution). Income earned on escrowed funds and
distributed to Limited Partners may be used to satisfy the cumulative return
requirement.
"PERSON" shall mean any natural person, partnership, limited liability
company, trust, corporation, association or other legal entity, including, but
not limited to, the General Partner and any of its Affiliates.
"PROFITS" or "LOSSES" means, for any Fiscal Year, the Partnership's taxable
income or loss for such Fiscal Year, determined in accordance with Code section
703(a) (for this purpose, all items of income, gain, loss or deduction required
to be stated separately pursuant to Code section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses shall be
applied to increase such taxable income or reduce such loss;
(b) any expenditure of the Partnership described in Code section
705(a)(2)(B), or treated as such pursuant to Treas. Reg.
Section1.704-1(b)(2)(iv)(i) and not otherwise taken into account in
computing Profits and Losses shall be applied to reduce such taxable income
or increase such loss;
(c) gain or loss resulting from a taxable disposition of any asset of
the Partnership shall be computed by reference to the Gross Asset Value of
such asset and the special depreciation calculations described in Treas.
Reg. Section1.704-1(b)(2)(iv)(g), notwithstanding that the adjusted tax
basis of such asset may differ from its Gross Asset Value;
(d) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss for
such Fiscal Year, there shall be taken into account depreciation,
amortization or other cost recovery determined pursuant to the method
described in Treas. Reg. Section1.704-1(b)(2)(iv)(g)(3); and
(e) any items which are specially allocated pursuant to Section 8.2(f)
shall not be taken into account in computing Profits or Losses.
"PROGRAM" means a limited or general partnership, joint venture, limited
liability company, unincorporated association or similar organization, formed
and/or operated by the General Partner or any of its Affiliates for the primary
purpose of investment in and the operation of or gain from an interest in
equipment.
"PROSPECTUS" means the prospectus included as part of the Registration
Statement on Form S-1 (No. 333-54011) in the final form in which such prospectus
is filed with the Commission pursuant to Rule 424(b) under the Securities Act
and as thereafter supplemented or amended pursuant to Rule 424(c) under the
Securities Act.
"PURCHASE PRICE" means, with respect to any Investment, the price paid by,
or on behalf of, the Partnership, including the cash paid, indebtedness incurred
or assumed, and the amount of the related Acquisition Fees on such item of
Equipment, Lease or Financing Transaction, plus that portion of the reasonable,
necessary and actual expenses incurred by the General Partner or any of its
Affiliates in acquiring Investments on an arm's length basis with a view to
transferring such Investments to the Partnership, which is allocated to the
Investments in question in accordance with allocation procedures employed by the
General Partner or such Affiliate from time to time and within generally
accepted accounting principles. Purchase Price shall also mean, with respect to
options to acquire Equipment or any interest therein, the sum of the exercise
price and the price to acquire the option.
A-50
<PAGE>
"QUALIFIED PLAN" means a pension, profit-sharing or stock bonus plan,
including Keogh Plans, meeting the requirements of Sections 401 et seq. of the
Code, as amended, and its related trust.
"QUALIFIED SUBSCRIPTION ACCOUNT" means the interest-bearing account
established and maintained by the Partnership for the purpose of holding,
pending the distribution thereof in accordance with the terms of this Agreement,
of Subscription Monies received from Persons who are to be admitted as Limited
Partners as a result of Closings to be held subsequent to the Initial Closing
Date.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1 (No.
333-54011) filed with the Commission under the Securities Act in the form in
which such Registration Statement is declared to be effective.
"REINVESTMENT PERIOD" means the period commencing with the Initial Closing
Date and ending five (5) years after the Final Closing Date; PROVIDED that such
period may be extended at the sole and absolute discretion of the General
Partner for a further period of not more than an additional 36 months.
"RESERVES" means reserves established and maintained by the Partnership for
working capital and contingent liabilities, including repairs, replacements,
contingencies, accruals required by lenders for insurance, compensating balances
required by lenders and other appropriate items, in an amount not less than (a)
during the Reinvestment Period, 1.0% of Gross Offering Proceeds and (b) during
the Liquidation Period, the lesser of (1) 1% of Gross Offering Proceeds and (2)
1% of the Partnership's aggregate Adjusted Capital Accounts.
"ROLL-UP" means any transaction involving the acquisition, merger,
conversion, or consolidation, either directly or indirectly, of the Partnership
and the issuance of securities of a Roll-Up Entity. Such term does not include
(a) a transaction involving securities of the Partnership if they have been
listed on a national securities exchange or traded through the National
Association of Securities Dealers Automated Quotation National Market System for
at least 12 months; or (b) a transaction involving the conversion of only the
Partnership to corporate, limited liability company, trust or association form
if, as a consequence of such transaction, there will be no significant adverse
change in (i) the Limited Partner's voting rights; (ii) the term of existence of
the Partnership; (iii) the General Partner and its Affiliates' compensation; or
(iv) the Partnership's investment objectives.
"ROLL-UP ENTITY" means any partnership, limited liability company,
corporation, trust, or other entity that is created by, or surviving after, the
successful completion of a proposed Roll-Up transaction.
"SALE" means the sale, exchange, involuntary conversion, foreclosure,
condemnation, taking, casualty (other than a casualty followed by refurbishing
or replacement), or other disposition of any of the Partnership's Investments.
"SALES COMMISSIONS" has the meaning specified in Section 6.4(c) of this
Agreement.
"SCHEDULE A" means Schedule A attached to and made a part of, this
Agreement, which sets forth the names, addresses, Capital Contributions and
number of Units owned by the Partners, as amended or supplemented from time to
time to add or delete, as the case may be, such information with respect to any
Partner.
"SECONDARY MARKET" has the meaning specified in Section 10.2(c) of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING DEALER" means each member firm of the National Association of
Securities Dealers, Inc. which has been selected by the General Partner or the
Dealer-Manager to offer and sell Units and which has entered into a Selling
Dealer Agreement with the General Partner or the Dealer-Manager.
A-51
<PAGE>
"SELLING DEALER AGREEMENT" means each of the agreements entered into between
the General Partner or the Dealer-Manager and any Seller Dealer, each
substantially in the respective form thereof filed as an exhibit to the
Registration Statement.
"SUBORDINATED REMARKETING FEE" means, with respect to any Investment, a fee
in the amount equal to the lesser of (a) 3% of the contract sales price
applicable to such Investment, or (b) one-half of that brokerage fee that is
reasonable, customary and competitive in light of the size, type and location of
such Investment.
"SUBSCRIPTION AGREEMENT" means the Subscription Agreement substantially in
the form thereof filed as an exhibit to the Prospectus.
"SUBSCRIPTION MONIES" means the funds received from a subscriber in respect
of Units.
"SUBSTITUTE GENERAL PARTNER" means any successor to the General Partner
admitted to the Partnership in accordance with Section 9.5 of the Agreement.
"SUBSTITUTE LIMITED PARTNER" means any Assignee of Units who is admitted to
the Partnership as a Limited Partner pursuant to Section 10.3 of this Agreement.
"TAX COUNSEL" means Greene Radovsky Maloney & Share LLP, San Francisco,
California, or such other tax counsel acceptable to the General Partner.
"TAX MATTERS PARTNER" means the Person designated pursuant to
Section 6231(a)(7) of the Code to manage administrative and judicial tax
proceedings conducted at the Partnership level by the Internal Revenue Service
with respect to Partnership matters. The General Partner is designated Tax
Matters Partner for the Partnership in Section 12.9 of this Agreement.
"TERMINATION DATE" means the earliest of (a) the date on which the
Maximum Offering has been sold, (b) twelve (12) months following the
Effective Date PROVIDED that such twelve-month period may be extended at the
sole and absolute discretion of the General Partner for a further period of
not more than an additional 12 months and (c) the termination of the Offering
by the General Partner at any time.
"TREASURY REGULATION" or "TREAS. REG." means final or temporary
regulations issued by the United States Treasury Department pursuant to the
Code.
"UNDERWRITING FEES" has the meaning specified in Section 6.4(b) of this
Agreement.
"UNIT" means a limited partnership interest in the Partnership.
"UNPAID CUMULATIVE RETURN" means, as to any Limited Partner, the amount
of such Limited Partner's Cumulative Return calculated through the date as of
which such Unpaid Cumulative Return is being calculated, reduced (but not
below zero) by the aggregate distributions theretofore made to such Limited
Partner by the Partnership pursuant to Sections 8.1(c) and 11.3 of this
Agreement which are deemed to be a reduction of such Limited Partner's Unpaid
Cumulative Return pursuant to Section 8.3(d)(i).
"UNPAID TARGET DISTRIBUTION" means, as to any Limited Partner, as of any
given date, the sum of such Partner's Adjusted Capital Contribution plus such
Limited Partner's Unpaid Cumulative Return.
"USER" means any equipment user to whom the Partnership provides
financing pursuant to a Financing Transaction.
"VOLUNTARY WITHDRAWAL" means, with respect to the General Partner, the
voluntary withdrawal from the Partnership of the General Partner as the
General Partner of the Partnership, or the voluntary sale, assignment,
encumbrance or other disposition of all of the General Partner's Units
pursuant to Section 9.1 of this Agreement.
"WITHDRAWAL" means, with respect to the General Partner, the Voluntary or
Involuntary Withdrawal of such General Partner.
A-52
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
GENERAL PARTNER: ORIGINAL LIMITED PARTNER:
ICON CAPITAL CORP.
/s/ PAUL B. WEISS /s/ THOMAS W. MARTIN
------------------------------- ---------------------------
PAUL B. WEISS, PRESIDENT THOMAS W. MARTIN
By: By:
A-53
<PAGE>
SCHEDULE A
NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS OF PARTNERS
<TABLE>
<CAPTION>
NAME AND ADDRESS CAPITAL CONTRIBUTIONS MADE
---------------- --------------------------
<S> <C>
I. GENERAL PARTNER
ICON Capital Corp. $1,000
111 Church Street
White Plains, New York 10601
II. ORIGINAL LIMITED PARTNER
Thomas W. Martin $1,000
31 Milk Street
Suite 1111
Boston, MA 02109
</TABLE>
A-54
<PAGE>
EXHIBIT B
PRIOR PERFORMANCE TABLES
FOR THE PRIOR PUBLIC PROGRAMS
------------------------------
Prior performance is not an indication of future results.
PRIOR PERFORMANCE TABLES
The following unaudited tables disclose certain information relating to
the performance, operations and investment for seven of the General Partner's
previous publicly-offered income-oriented programs, ICON Cash Flow Partners,
L.P., Series A ("Series A"), ICON Cash Flow Partners, L.P., Series B ("Series
B"), ICON Cash Flow Partners, L.P., Series C ("Series C"), ICON Cash Flow
Partners, L.P., Series D ("Series D"), ICON Cash Flow Partners, L.P., Series
E ("Series E"), ICON Cash Flow Partners L.P. Six ("LP Six"), ICON Cash Flow
Partners L.P. Seven ("LP Seven"), collectively the "Prior Public Programs")
and ICON Income Fund Eight A L.P. ("Fund 8A") through December 31, 1999.
PURCHASERS OF THE UNITS OF LIMITED PARTNERSHIP INTEREST IN ICON INCOME FUND
EIGHT B L.P. (THE "PARTNERSHIP") BEING OFFERED BY THIS PROSPECTUS WILL NOT
ACQUIRE ANY OWNERSHIP INTEREST IN ANY OF THE PRIOR PUBLIC PROGRAMS AND SHOULD
NOT ASSUME THAT THEY WILL EXPERIENCE INVESTMENT RESULTS OR RETURNS, IF ANY,
COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE PRIOR PUBLIC PROGRAMS.
Additional information concerning the Prior Public Programs will be
contained in Form 10-K Annual Reports for each such Program which may be
obtained (after their respective filing dates) without charge by contacting
ICON Capital Corp., 111 Church Street, White Plains, NY 10601-1505. Such Form
10-K Annual Reports will also be available upon request at the office of the
Securities and Exchange Commission, Washington, D.C. The results of the Prior
Public Programs should not be considered indicative of the likely results of
the Partnership. Moreover, the information presented below should not be
considered indicative of the extent to which the Prior Public Programs will
achieve their objectives, because this will in large part depend upon facts
which cannot now be determined or predicted.
See "Our Other Programs" in this Prospectus for a narrative discussion of
the general investment objectives of the Prior Public Programs and a
narrative discussion of the data concerning the Prior Public Programs
contained in these Tables.
<TABLE>
<CAPTION>
TABLE DESCRIPTION PAGE
--------------------- ----------- --------
<S> <C> <C>
I Experience in Raising and Investing Funds................... B-2
II Compensation to the General Partner and Affiliates.......... B-4
III Operating Results of Prior Public Programs
*Series B................................................... B-5
*Series C................................................... B-6
*Series D................................................... B-7
*Series E................................................... B-8
*LP Six..................................................... B-9
*LP Seven................................................... B-10
*Fund 8A.................................................... B-11
IV Results of Completed Prior Public Programs.................. B-12
V Sales or Disposition of Equipment by Prior Public Programs
*Series A................................................... B-13
*Series B................................................... B-15
*Series C................................................... B-21
*Series D................................................... B-25
*Series E................................................... B-31
*LP Six..................................................... B-40
*LP Seven................................................... B-46
VI Acquisition of Equipment by Prior Public Programs
Series A.................................................... B-47
Series B.................................................... B-49
Series C.................................................... B-56
Series D.................................................... B-62
Series E.................................................... B-72
LP Six...................................................... B-100
LP Seven.................................................... B-112
Fund 8A..................................................... B-116
</TABLE>
--------------------------
Prior performance is not an indication of future results.
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED)
The following table sets forth certain information, as of December 31,
1999, concerning the experience of the General Partner in raising and
investing limited partners' funds in its Prior Public Programs:
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C SERIES D
---------------------- ---------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Dollar amount offered........ $40,000,000 $20,000,000 $20,000,000 $ 40,000,000
=========== =========== =========== ============
Dollar amount raised......... $ 2,504,500 100.0% $20,000,000 100.0% $20,000,000 100.0% $ 40,000,000 100.0%
Less: Offering expenses:
Selling commissions........ 262,973 10.5% 1,800,000 9.0% 2,000,000 10.0% 4,000,000 10.0%
Organization and offering
expenses paid to General
Partner or its
Affiliates............... 100,180 4.0% 900,000 4.5% 600,000 3.0% 1,400,000 3.5%
Reserves................... 25,045 1.0% 200,000 1.0% 200,000 1.0% 400,000 1.0%
----------- ----- ----------- ----- ----------- ----- ------------ -----
Offering proceeds available
for investment............. $ 2,116,302 84.5% $17,100,000 85.5% $17,200,000 86.0% $ 34,200,000 85.5%
=========== ===== =========== ===== =========== ===== ============ =====
Debt proceeds................ $ 4,190,724 $46,092,749 $50,355,399 $ 71,712,589
=========== =========== =========== ============
Total equipment acquired..... $ 7,576,758 $65,580,973 $70,257,280 $132,771,421
=========== =========== =========== ============
Acquisition fees paid to
General Partner and its
affiliates................. $ 206,710 $ 2,219,998 $ 2,396,810 $ 4,539,336
=========== =========== =========== ============
Equipment acquisition costs
as a percentage of amount
raised:
Purchase price............... 81.84% 82.23% 82.70% 82.19%
Acquisition fees paid to
General Partner or its
Affiliates................. 2.66 3.27 3.30 3.31
----------- ----------- ----------- ------------
Percent invested............. 84.5% 85.5% 86.0% 85.5%
=========== =========== =========== ============
Percent leveraged (debt
proceeds divided by total
equipment acquired)........ 55.31% 70.28% 71.67% 54.01%
Date offering commenced...... 1/9/87 7/18/89 12/7/90 8/23/91
Original offering period (in
months).................... 24 18 18 18
Actual offering period (in
months).................... 24 17 7 10
Months to invest 90% of
amount available for
investment (measured from
the beginning of
offering).................. 24 18 10 4
</TABLE>
------------------------------
Prior performance is not an indication of future results.
B-2
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED)
The following table sets forth certain information, as of December 31,
1999, concerning the experience of the General Partner in raising and
investing limited partners' funds in its Prior Public Programs:
<TABLE>
<CAPTION>
SERIES E L.P. SIX L.P. SEVEN FUND 8A
----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Dollar amount offered..... $ 80,000,000 $120,000,000 $100,000,000 $ 75,000,000
============ ============ ============ ============
Dollar amount raised...... $ 61,041,151 100.0% $ 38,385,712 100.0% 99,999,682 100.0% 59,518,458 100.0%
Less: Offering expenses:
Selling commissions..... 6,104,115 10.0% 3,838,571 10.0% 9,999,968 10.0% 5,951,846 10.0%
Organization and
offering expenses paid
to General Partner or
its Affiliates........ 2,136,440 3.5% 1,343,500 3.5% 3,499,989 3.5% 1,862,961 3.1%
Reserves................ 610,412 1.0% 383,857 1.0% 999,997 1.0% 595,184 1.0%
------------ ----- ------------ ----- ------------ ----- ------------ -----
Offering proceeds
available for
investment.............. $ 52,190,184 85.5% $ 32,819,784 85.5% $ 85,499,728 85.5% $ 51,108,467 85.9%
============ ===== ============ ===== ============ ===== ============ =====
Debt proceeds............. $181,626,869 $128,138,104 $253,427,329 $ 87,790,864
============ ============ ============ ============
Total equipment
acquired................ $272,303,562 $161,721,728 $302,214,015 $136,275,272
============ ============ ============ ============
Acquisition fees paid to
General Partner and its
affiliates.............. $ 7,021,906 $ 4,390,033 $ 9,547,487 $ 3,744,932
============ ============ ============ ============
Equipment acquisition
costs as a percentage of
amount raised:
Purchase price............ 82.99% 82.86% 82.54% 83.15%
Acquisition fees paid to
General Partner or its
Affiliates.............. 2.51 2.64 2.96 2.75
------------ ------------ ------------ ------------
Percent invested.......... 85.5% 85.5% 85.5% 85.9%
============ ============ ============ ============
Percent leveraged
(non-recourse debt
financing divided by
total purchase price)... 66.91% 79.23% 83.86%
Date offering commenced... 6/5/92 11/12/93 11/9/95 10/5/98
Maximum offering period
(in months)............. 24 24 36 24
Actual offering period (in
months)................. 13 24 34 20
Months to invest 90% of
amount available for
investment (measured
from the beginning of
offering)............... 9 16 14 --
</TABLE>
------------------------------
Prior performance is not an indication of future results.
B-3
<PAGE>
TABLE II
COMPENSATION TO THE GENERAL PARTNER AND AFFILIATES
(UNAUDITED)
The following table sets forth certain information, as of December 31,
1999, concerning the compensation derived by the General Partner and its
affiliates from its Prior Public Programs:
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C SERIES D SERIES E LP SIX LP SEVEN
---------- ----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Date offering commenced........... 1/9/87 7/18/89 12/7/90 8/23/91 6/5/92 11/12/93 11/9/95
Date offering closed.............. 1/8/89 11/16/90 6/20/91 6/5/92 7/31/93 11/8/95 9/16/98
Dollar amount raised.............. $2,504,500 $20,000,000 $20,000,000 $40,000,000 $ 61,041,151 $38,385,712 $99,999,682
========== =========== =========== =========== ============ =========== ===========
Amounts paid to the General
Partner and its Affiliates from
proceeds of the offering:
Underwriting commissions.......... $ 37,568 $ 200,000 $ 400,000 $ 800,000 $ 1,220,823 $ 767,714 $ 1,999,994
========== =========== =========== =========== ============ =========== ===========
Organization and offering
reimbursements.................. $ 100,180 $ 900,000 $ 600,000 $ 1,400,000 $ 2,136,440 $ 1,343,500 $ 3,499,989
========== =========== =========== =========== ============ =========== ===========
Acquisition fees.................. $ 206,710 $ 2,219,998 $ 2,396,810 $ 4,539,336 $ 7,021,906 $ 4,390,033 $ 9,547,487
========== =========== =========== =========== ============ =========== ===========
Dollar amount of cash generated
from operations before deducting
such payments/accruals to the
General Partner and
Affiliates...................... $4,880,566 $22,188,677 $23,049,467 $41,451,111 $110,636,171 $39,631,132 $ 3,376,801
========== =========== =========== =========== ============ =========== ===========
Amount paid or accrued to General
Partner and Affiliates:
Management fee.................... $ 308,910 $ 2,782,287 $ 2,685,205 $ 4,856,426 $ 7,590,910 $ 4,264,017 $ 4,727,365
========== =========== =========== =========== ============ =========== ===========
Administrative expense
reimbursements.................. $ 109,962 $ 708,793 $ 588,966 $ 1,845,178 $ 4,017,943 $ 2,149,605 $ 2,033,341
========== =========== =========== =========== ============ =========== ===========
FUND 8A
-----------
Date offering commenced........... 10/5/98
Date offering closed.............. --
Dollar amount raised.............. $59,518,458
===========
Amounts paid to the General
Partner and its Affiliates from
proceeds of the offering:
Underwriting commissions.......... $ 1,190,369
===========
Organization and offering
reimbursements.................. $ 1,862,961
===========
Acquisition fees.................. $ 3,744,932
===========
Dollar amount of cash generated
from operations before deducting
such payments/accruals to the
General Partner and
Affiliates...................... $ 3,435,796
===========
Amount paid or accrued to General
Partner and Affiliates:
Management fee.................... $ 931,546
===========
Administrative expense
reimbursements.................. $ 346,314
===========
</TABLE>
------------------------------
Prior performance is not an indication of future results.
B-4
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--SERIES B
(UNAUDITED)
The following table summarizes the operating results of Series B. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue..................................................... $102,994 $ 211,742 $ 333,775 $ 342,739 $ 715,841
Net gain (loss) on sales or remarketing of equipment...... 51,284 188,876 228,875 176,924 480,681
-------- ---------- ---------- ---------- ----------
Gross revenue............................................. 154,278 400,618 562,650 519,663 1,196,522
Less:
Interest expense.......................................... 35,206 77,673 106,868 45,619 182,419
General and administrative................................ 60,332 75,656 59,847 102,721 102,334
Administrative expense reimbursement--General Partner..... 12,653 20,288 39,609 50,841 85,848
Management fees--General Partner(3)....................... -- -- -- (228,906) 84,811
Depreciation expense...................................... -- -- -- -- 54,799
Amortization of initial direct costs...................... -- -- -- 4 33,433
Provision for (reversal of) bad debts(2).................. -- (36,892) -- -- 25,000
-------- ---------- ---------- ---------- ----------
Net income--GAAP............................................ $ 46,087 $ 263,893 $ 356,326 $ 549,384 $ 627,878
======== ========== ========== ========== ==========
Net income--GAAP--allocable to limited partners............. $ 45,626 $ 261,254 $ 352,763 $ 543,890 $ 621,599
======== ========== ========== ========== ==========
Taxable income from operations(1)........................... $ (2,598) $ 103,673 $ 44,995 $ 740,381 $2,363,289
======== ========== ========== ========== ==========
Cash generated from operations.............................. $253,244 $ 761,619 $ 879,014 $1,002,547 $ 999,015
Cash generated from sales of equipment...................... 153,880 321,104 544,232 600,737 2,148,030
Cash generated from refinancing............................. -- -- 1,500,000 -- --
-------- ---------- ---------- ---------- ----------
Cash generated from operations, sales and refinancing....... 407,124 1,082,723 2,923,246 1,603,284 3,147,045
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 199,794 682,648 1,798,200 1,798,200 1,799,763
Cash distributions to General Partner from operations,
sales and refinancing................................... 2,017 6,895 18,164 18,164 18,180
-------- ---------- ---------- ---------- ----------
Cash generated from (used by) operations, sales and
refinancing after cash distributions...................... $205,313 $ 393,180 $1,106,882 $ (213,080) $1,329,102
======== ========== ========== ========== ==========
Tax data and distributions per $1,000 limited partner
investment
Federal income tax results:
Taxable income from operations(1)......................... $ (.13) $ 5.14 $ 2.23 $ 36.69 $ 116.99
======== ========== ========== ========== ==========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 2.28 $ 13.09 $ 17.73 $ 27.23 $ 31.08
Return of capital....................................... $ 7.72 $ 21.11 $ 72.27 $ 62.78 $ 58.92
Source (on Cash basis)
--Operations............................................ $ 10.00 $ 34.20 $ 44.00 $ 50.18 $ 49.96
--Sales................................................. $ -- $ -- $ 27.24 $ 30.07 $ 40.04
--Refinancing........................................... $ -- $ -- $ 18.76 -- --
--Other................................................. $ -- $ -- -- $ 9.75 --
Weighted average number of limited partnership ($100) units
outstanding............................................... 199,800 199,800 199,800 199,800 199,986
======== ========== ========== ========== ==========
</TABLE>
------------------------------
(1) The difference between Net income (loss)--GAAP and Taxable income from
operations is due to different methods of calculating depreciation and
amortization, the use of the reserve method for providing for possible
doubtful accounts under GAAP and different methods of recognizing revenue on
Direct Finance Leases.
(2) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience. In 1998, the Partnership reversed $36,892 of amounts previously
included in the allowance for doubtful accounts.
(3) The Partnership's original reinvestment period was to expire on
November 15, 1995, five years after the final closing date. The General
Partner distributed a definitive consent statement to the limited partners
to solicit approval of two amendments to the Partnership agreement. A
majority of the limited partnership units outstanding responded
affirmatively and the amendments were adopted. These amendments are
effective from and after November 15, 1995 and include: (1) extending the
reinvestment period for a maximum of four additional years and likewise
delaying the start and end of the liquidation period, and (2) eliminating
the Partnership's obligation to pay the General Partner $241,652 of the
$368,652 accrued and unpaid management fees as of December 31, 1996 and all
additional management fees which would otherwise accrue. The remaining
$127,000 of unpaid management fees was paid to the General Partner and
subsequently remitted back to the Partnership in the form of an additional
capital contribution by the General Partner in 1999.
------------------------------
Prior performance is not an indication of future results.
B-5
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--SERIES C
(UNAUDITED)
The following table summarizes the operating results of Series C. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues.................................................... $ 162,803 $ 291,197 $ 455,472 $ 659,218 $ 964,104
Net gain (loss) on sales or remarketing of equipment...... 51,752 465,144 175,860 511,331 95,250
----------- ---------- ---------- ---------- ----------
Gross revenue............................................. 214,555 756,341 631,332 1,170,549 1,059,354
Less:
General and administrative................................ 69,463 103,231 60,248 37,247 107,419
Administrative expense reimbursement--General Partner..... 16,589 29,415 59,126 93,494 130,482
Interest expense.......................................... -- -- 4,888 16,809 253,143
Management fees--General Partner(3)....................... -- -- (471,463) 92,360 128,533
Amortization of initial direct costs...................... -- -- -- 6,912 38,892
Depreciation expense...................................... -- -- -- -- --
Provision for/(reversal of) bad debt(2)................... -- (150,000) -- -- --
----------- ---------- ---------- ---------- ----------
Net income--GAAP............................................ $ 128,503 $ 773,695 $ 978,533 $ 923,727 $ 400,885
=========== ========== ========== ========== ==========
Net income--GAAP--allocable to limited partners............. $ 127,218 $ 765,958 $ 968,748 $ 914,490 $ 396,876
=========== ========== ========== ========== ==========
Taxable income (loss) from operations(1).................... $ 212,882 $ 361,361 $ 274,376 $1,768,103 $ (649,775)
=========== ========== ========== ========== ==========
Cash generated from operations.............................. $ 373,704 $ 952,528 $2,038,710 $1,987,290 $ 391,072
Cash generated from sales of equipment...................... 178,551 646,783 621,621 1,289,421 3,058,969
Cash generated from refinancing............................. -- -- -- -- --
----------- ---------- ---------- ---------- ----------
Cash generated from operations, sales and refinancing....... 552,255 1,599,311 2,660,331 3,276,711 3,450,041
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 1,707,724 1,782,770 1,784,993 1,786,992 1,796,363
Cash distributions to General Partner from operations,
sales and refinancing................................... 17,247 18,017 18,030 18,050 18,144
----------- ---------- ---------- ---------- ----------
Cash generated from operations, sales and refinancing after
cash distributions........................................ $(1,172,716) $ (201,476) $ 857,308 $1,471,669 $1,635,534
=========== ========== ========== ========== ==========
Tax data and distributions per $1,000 limited partner
investment................................................
Federal income tax results:
Taxable income from operations(1)......................... $ 10.75 $ 18.06 $ 13.70 $ 88.16 $ (32.24)
=========== ========== ========== ========== ==========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 6.42 $ 38.67 $ 48.85 $ 46.06 $ 19.87
Return of capital....................................... $ 79.81 $ 51.33 $ 41.15 $ 43.94 $ 70.13
Source (on Cash basis)
--Operations............................................ $ 18.87 $ 48.09 $ 90.00 $ 90.00 $ 19.59
--Sales................................................. 9.02 32.65 -- -- $ 70.41
--Refinancing........................................... -- -- -- -- --
--Other................................................. 56.34 9.26 -- -- --
Weighted average number of limited partnership ($100) units
outstanding............................................... 198,037 198,087 198,332 198,551 199,558
=========== ========== ========== ========== ==========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income from operations
is due to different methods of calculating depreciation and amortization,
the use of the reserve method for providing for possible doubtful accounts
under GAAP and different methods of recognizing revenue on Direct Finance
Leases.
(2) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience. In 1998 the Partnership reversed $150,000 of amounts previously
included in the allowance for doubtful accounts.
(3) The Partnership's original reinvestment period was to expire on June 19,
1996, five years after the final closing date. The General Partner
distributed a definitive consent statement to the limited partners to
solicit approval of two amendments to the Partnership agreement. A majority
of the limited partnership units outstanding responded affirmatively and the
amendments were adopted accordingly. These amendments are effective from and
after June 19, 1996 and include: (1) extending the reinvestment period for a
maximum of four and one half additional years and likewise delayed the start
and end of the liquidation period, and (2) eliminating the Partnership's
obligation to pay the General Partner $529,125 of the $634,125 accrued and
unpaid management fees as of December 31, 1997 and all additional management
fees which would otherwise accrue. The remaining $105,000 of unpaid
management fees was paid to the General Partner and subsequently remitted
back to the Partnership in the form of an additional capital contribution by
the General Partner in 1999.
------------------------------
Prior performance is not an indication of future results.
B-6
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--SERIES D
(UNAUDITED)
The following table summarizes the operating results of Series D. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues.................................................... $2,303,583 $2,612,993 $ 3,084,705 $ 3,619,457 $3,270,722
Net gain on sales or remarketing of equipment............. 354,424 183,820 452,706 2,391,683 1,931,333
---------- ---------- ----------- ----------- ----------
Gross revenue............................................. 2,658,007 2,796,813 3,537,411 6,011,140 5,202,055
Less:
Interest expense.......................................... 602,920 782,539 1,121,197 1,651,940 621,199
Depreciation expense...................................... 682,185 664,121 356,417 -- --
Management fees--General Partner.......................... 193,017 397,171 548,400 685,103 594,623
Administrative expense reimbursement--General Partner..... 113,548 218,158 271,829 301,945 257,401
General and administrative................................ 214,256 268,346 199,751 217,378 273,663
Amortization of initial direct costs...................... 28,406 178,117 363,087 614,441 511,427
Provision for bad debts(2)................................ -- (400,000) -- -- 150,000
---------- ---------- ----------- ----------- ----------
Net income--GAAP............................................ $ 823,675 $ 688,361 $ 676,730 $ 2,540,333 $2,793,742
========== ========== =========== =========== ==========
Net income--GAAP--allocable to limited partners............. $ 815,438 $ 681,477 $ 669,963 $ 2,514,930 $2,765,805
========== ========== =========== =========== ==========
Taxable income from operations(1)........................... $1,081,987 $ 86,365 $ 3,483,507 $ 3,097,307 $1,641,323
========== ========== =========== =========== ==========
Cash generated from operations.............................. 584,985 $3,315,260 $ 8,409,703 $ 1,621,624 $2,756,354
Cash generated from sales of equipment...................... 3,946,052 1,394,199 9,741,651 15,681,303 6,776,544
Cash generated from refinancing............................. -- 750,000 2,700,000 5,250,000 4,148,838
---------- ---------- ----------- ----------- ----------
Cash generated from operations, sales and refinancing....... 4,531,037 5,459,459 20,851,354 22,552,927 13,681,736
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 2,461,219 4,074,331 7,882,867 5,588,508 5,589,207
Cash distributions to General Partner from operations,
sales and refinancing................................... 24,840 41,155 79,648 56,450 56,457
---------- ---------- ----------- ----------- ----------
Cash generated from (used by) operations, sales and
refinancing after cash distributions.................... $2,044,978 $1,343,973 $12,888,839 $16,907,969 $8,039,072
========== ========== =========== =========== ==========
Tax data and distributions per $1,000 limited partner
investment................................................
Federal income tax results:
Taxable income from operations(1)......................... $ 27.11 $ 2.14 $ 86.40 $ 76.82 $ 40.70
========== ========== =========== =========== ==========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 20.43 $ 17.08 $ 16.79 $ 63.00 $ 69.28
Return of capital....................................... $ 41.24 $ 85.02 $ 180.71 $ 77.00 $ 70.72
Source (on Cash basis)
--Operations............................................ $ 14.66 $ 83.08 $ 197.50 $ 40.62 $ 69.04
--Sales................................................. 47.01 19.02 -- 99.38 $ 70.96
--Refinancing........................................... -- -- -- -- --
--Other................................................. -- -- -- -- --
Weighted average number of limited partnership ($100) units
outstanding............................................... 399,118 399,118 399,138 399,179 399,229
========== ========== =========== =========== ==========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income from operations
is due to different methods of calculating depreciation and amortization,
the use of the reserve method for providing for possible doubtful accounts
under GAAP and different methods of recognizing revenue on Direct Finance
Leases.
(2) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience. In 1998 the Partnership reversed $400,000 of amounts previously
included in the allowance for doubtful accounts.
------------------------------
Prior performance is not an indication of future results.
B-7
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--SERIES E
(UNAUDITED)
The following table summarizes the operating results of Series E. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues.................................................... $ 9,302,860 $ 9,435,503 $ 6,401,873 $ 7,907,175 $10,570,473
Net gain on sales or remarketing of equipment............. 901,005 652,164 1,209,420 1,942,041 1,610,392
----------- ----------- ----------- ----------- -----------
Gross revenue............................................. 10,203,865 10,087,667 7,611,293 9,849,216 12,180,865
Less:
Interest expense.......................................... 4,106,569 4,495,629 2,471,045 2,957,534 4,377,702
Management fees--General Partner.......................... 928,946 1,207,760 919,728 1,120,336 1,596,569
Administrative expense reimbursement--General Partner..... 539,853 657,327 486,253 563,107 784,775
Provision for bad debts(2)................................ 1,000,000 1,275,089 -- 400,000 600,000
Amortization of initial direct costs...................... 33,195 235,302 461,620 887,960 1,530,505
Depreciation.............................................. 587,211 545,503 475,619 1,061,711 1,061,712
General and administrative................................ 685,647 558,525 370,705 608,293 638,362
Minority interest in joint venture........................ 79,754 64,826 57,738 6,392 5,438
----------- ----------- ----------- ----------- -----------
Net income--GAAP............................................ $ 2,242,510 $ 1,047,706 $ 2,368,585 $ 2,243,883 $ 1,585,802
=========== =========== =========== =========== ===========
Net income--GAAP--allocable to limited partners............. $ 2,220,085 $ 1,037,229 $ 2,344,899 $ 2,221,444 $ 1,569,944
=========== =========== =========== =========== ===========
Taxable income (loss) from operations(1).................... $ 2,343,870 $ 1,688,176 $ 981,575 $(3,280,008) $ 1,700,386
=========== =========== =========== =========== ===========
Cash generated from operations.............................. 11,671,010 $12,745,950 $21,638,350 $13,210,339 $ 8,768,414
Cash generated from sales of equipment...................... 3,776,513 2,476,110 15,313,194 10,358,637 7,419,261
Cash generated from refinancing............................. -- 61,878,918 20,765,451 13,780,000 7,400,000
----------- ----------- ----------- ----------- -----------
Cash generated from operations, sales and refinancing....... 15,447,523 77,100,978 57,716,995 37,348,976 23,587,675
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 4,381,933 7,755,553 7,768,316 7,771,164 7,773,082
Cash distributions to General Partner from operations,
sales and refinancing................................... 44,258 78,338 78,468 78,496 78,512
----------- ----------- ----------- ----------- -----------
Cash generated from operations, sales and refinancings after
cash distributions........................................ $11,021,332 $69,267,087 $49,870,211 $29,499,316 $15,736,081
=========== =========== =========== =========== ===========
Tax and distribution data per $1,000 limited partner
investment
Federal Income Tax results:
Taxable income (loss) from operations(1).................. $ 38.56 $ 27.48 $ 15.95 $ (53.28) $ 27.61
=========== =========== =========== =========== ===========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 36.52 $ 17.05 $ 38.49 $ 36.45 $ 25.75
Return of capital....................................... $ 35.57 $ 110.45 $ 89.01 $ 91.05 $ 101.75
Source (on cash basis)
--Operations............................................ $ 72.09 $ 127.50 $ 127.50 $ 127.50 $ 127.50
--Sales................................................. -- -- -- -- --
--Refinancings.......................................... -- -- -- -- --
--Other................................................. -- -- -- -- --
Weighted average number of limited partnership ($100) units
outstanding............................................... 607,856 608,273 609,211 609,503 609,650
=========== =========== =========== =========== ===========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income (loss) from
operations is due to different methods of calculating depreciation and
amortization, the use of the reserve method for providing for possible
doubtful accounts under GAAP and different methods of recognizing revenue on
Direct Finance Leases.
(2) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience.
------------------------------
Prior performance is not an indication of future results.
B-8
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--L.P. SIX
(UNAUDITED)
The following table summarizes the operating results of L.P. Six. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues.................................................... $ 4,597,536 $ 5,327,322 $ 6,452,409 $ 9,238,182 $ 6,622,180
Net gain on sales or remarketing of equipment............. 438,622 835,048 58,523 338,574 107,733
----------- ----------- ----------- ----------- -----------
Gross revenue............................................. 5,036,158 6,162,370 6,510,932 9,576,756 6,729,913
Less:
Interest expense.......................................... 1,686,377 2,164,887 2,648,557 4,330,544 3,003,633
Management fees--General Partner.......................... 675,025 969,546 1,092,714 1,333,394 696,096
Amortization of initial direct costs...................... 175,600 893,953 1,071,656 1,349,977 828,154
Depreciation.............................................. 625,199 736,793 745,275 848,649 636,487
Administrative expense reimbursement--General Partner..... 345,569 485,391 547,382 642,276 381,471
Provision for bad debts(3)................................ -- 52,997 183,274 750,000 570,000
General and administrative................................ 298,031 384,414 178,464 657,470 360,235
Minority interest in joint venture........................ 9,337 6,750 7,990 31,413 177,769
----------- ----------- ----------- ----------- -----------
Net income (loss)--GAAP..................................... $ 1,221,020 $ 467,639 $ 35,620 $ (366,967) $ 76,068
=========== =========== =========== =========== ===========
Net income (loss)--GAAP--allocable to limited partners...... $ 1,208,810 $ 462,963 $ 35,264 $ (363,297) $ 75,307
=========== =========== =========== =========== ===========
Taxable income (loss) from operations(1).................... $(1,672,942) $(3,616,045) $(1,154,365) $ (574,054) $ 2,239,753
=========== =========== =========== =========== ===========
Cash generated from operations.............................. 2,684,592 $ 3,543,778 $12,075,547 $ 9,923,936 $ 8,776,203
Cash generated from sales of equipment...................... 6,120,773 4,473,161 4,336,675 8,684,744 1,016,807
Cash generated from refinancing............................. -- -- -- 9,113,081 33,151,416
----------- ----------- ----------- ----------- -----------
Cash generated from operations, sales and refinancing....... 8,805,365 8,016,939 16,412,222 27,721,761 42,944,426
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 4,075,766 4,085,189 4,102,940 4,119,354 2,543,783
Cash distributions to General Partner from operations,
sales and refinancing................................... 41,178 41,261 41,444 41,613 25,694
----------- ----------- ----------- ----------- -----------
Cash generated from operations, sales and refinancing after
cash distributions........................................ $ 4,116,944 $ 3,890,489 $12,267,838 $23,560,794 $40,374,949
=========== =========== =========== =========== ===========
Tax data and distributions per $1,000 limited partner
investment
Federal income tax results:
Taxable income (loss) from operations(1).................. $ (44.12) $ (94.21) $ (29.94) $ (14.83) $ 85.13
=========== =========== =========== =========== ===========
Cash distributions to investors(2)
Source (on GAAP basis)
Investment income....................................... $ 31.88 $ 12.18 $ .86 $ -- $ 2.89
Return of capital....................................... $ 75.61 $ 95.32 $ 106.64 $ 107.50 $ 94.78
Source (on cash basis)
--Operations............................................ $ 70.80 $ 93.25 $ 107.50 $ 107.50 $ 97.67
--Sales................................................. 36.69 14.25 -- -- --
--Refinancing........................................... -- -- -- -- --
--Other................................................. -- -- -- -- --
Weighted average number of limited partnership ($100) units
outstanding............................................... 379,187 379,984 381,687 383,196 260,453
=========== =========== =========== =========== ===========
</TABLE>
------------------------------
(1) The difference between Net income (loss)--GAAP and Taxable income (loss)
from operations is due to different methods of calculating depreciation and
amortization, the use of the reserve method for providing for possible
doubtful accounts under GAAP and different methods of recognizing revenue
on Direct Finance Leases.
(2) The program held its initial closing on March 31, 1994. Taxable income from
operations per $1,000 limited partner investment is calculated based on the
weighted average number of limited partnership units outstanding during the
period.
(3) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience.
------------------------------
Prior performance is not an indication of future results.
B-9
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--L.P. SEVEN
(UNAUDITED)
The following table summarizes the operating results of L.P. Seven. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues.................................................... $16,456,830 $16,513,507 $ 8,000,454 $1,564,069
Net gain on sales or remarketing of equipment............. 115,427 694,111 1,748,790 --
----------- ----------- ----------- ----------
Gross revenue............................................. 16,572,257 17,207,618 9,749,244 1,564,069
Less:
Interest expense.......................................... 6,333,011 8,050,315 3,652,517 398,200
Management fees--General Partner.......................... 3,066,929 2,337,112 1,522,045 264,784
Amortization of initial direct costs...................... 1,651,154 1,929,906 932,123 230,785
Administrative expense reimbursement--General Partner..... 1,158,866 1,005,354 652,319 117,809
Provision for bad debts(3)................................ 200,000 700,000 150,000 75,000
General and administrative................................ 642,961 491,239 186,280 72,040
Minority interest in joint venture........................ 4,900 4,516 4,380 --
----------- ----------- ----------- ----------
Net income--GAAP............................................ $ 3,514,436 $ 2,689,176 $ 2,649,580 $ 405,451
=========== =========== =========== ==========
Net income--GAAP--allocable to limited partners............. $ 3,479,291 $ 2,662,284 $ 2,623,084 $ 401,396
=========== =========== =========== ==========
Taxable income (loss) from operations(1).................... $(6,341,090) $(5,506,497) $ 2,335,939 $ 146,726
=========== =========== =========== ==========
Cash generated from operations.............................. 844,971 535,582 $ 2,855,330 $ 973,899
Cash generated from sales of equipment...................... 4,750,000 4,903,647 7,315,408 --
Cash generated from refinancing............................. 19,010,000 -- -- --
----------- ----------- ----------- ----------
Cash generated from operations, sales and refinancing....... 24,604,971 5,439,229 10,170,738 973,899
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 10,677,316 8,692,479 4,147,829 1,361,099
Cash distributions to General Partner from operations,
sales and refinancing................................... 107,872 87,803 41,125 13,749
----------- ----------- ----------- ----------
Cash generated from (used by) operations, sales and
refinancing after cash distributions...................... $13,819,783 $(3,341,053) $ 5,981,784 $ (400,949)
=========== =========== =========== ==========
Tax data and distributions per $1,000 limited partner
investment
Federal income tax results:
Taxable income from operations(2)......................... $ (63.64) $ (67.41) $ 55.90 $ 9.30
=========== =========== =========== ==========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 35.05 $ 32.92 $ 67.94 $ 31.71
Return of capital....................................... 72.51 $ 74.58 $ 39.56 $ 75.79
Source (on cash basis)
--Operations............................................ 8.51 $ 6.62 $ 73.96 $ 76.97
--Sales................................................. 47.85 $ 60.64 $ 33.54 --
--Refinancing........................................... 51.20 -- -- --
--Other................................................. $ -- $ 40.24 -- $ 30.53
Weighted average number of limited partnership ($100) units
outstanding............................................... 992,719 808,650 413,677 156,222
=========== =========== =========== ==========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income from operations
is due to different methods of calculating depreciation and amortization,
the use of the reserve method for providing for possible doubtful accounts
under GAAP and different methods of recognizing revenue on Direct Finance
Leases.
(2) The program held its initial closing on January 19, 1996. Taxable income
from operations per $1,000 limited partner investment is calculated based
on the weighted average number of limited partnership units outstanding
during the period.
(3) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience.
------------------------------
Prior performance is not an indication of future results.
B-10
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PUBLIC PROGRAMS--FUND 8A
(UNAUDITED)
The following table summarizes the operating results of Fund 8A. The
Program's records are maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenue..................................................... $ 9,131,846 $ 46,998
Net gain (loss) on sales or remarketing of equipment...... -- --
----------- -----------
Gross revenue............................................. 9,131,846 46,998
Less:
Interest expense.......................................... 4,397,728 4,590
General and administrative................................ 313,181 10,673
Administrative expense reimbursement--General Partner..... 345,358 956
Management fees--General Partner.......................... 931,151 395
Depreciation expense...................................... 594,308 --
Amortization of initial direct costs...................... 885,106 3,179
Provision for (reversal of) bad debts(3).................. 385,000 --
Minority interest expense................................. 17,874 --
----------- -----------
Net income--GAAP............................................ $ 1,262,140 $ 27,205
=========== ===========
Net income--GAAP--allocable to limited partners............. $ 1,249,519 $ 26,933
=========== ===========
Taxable income from operations(1)........................... $(5,704,747) $(1,970,909)
=========== ===========
Cash generated from operations.............................. $ 1,825,719 $ 1,610,077
Cash generated from sales of equipment...................... 10,753,855 --
Cash generated from refinancing............................. -- --
----------- -----------
Cash generated from operations, sales and refinancing....... 12,579,574 1,610,077
Less:
Cash distributions to investors from operations, sales and
refinancing............................................. 3,632,817 64,728
Cash distributions to General Partner from operations,
sales and refinancing................................... 37,282 654
----------- -----------
Cash generated from (used by) operations, sales and
refinancing after cash distributions...................... $ 8,909,475 $ 1,544,695
=========== ===========
Tax data and distributions per $1,000 limited partner
investment
Federal income tax results:
Taxable income from operations(1)......................... $ (168.81) $ (206.95)
=========== ===========
Cash distributions to investors
Source (on GAAP basis)
Investment income....................................... $ 36.98 $ 2.83
Return of capital....................................... $ 70.52 $ 3.97
Source (on Cash basis)
--Operations............................................ $ 54.03 $ 6.80
--Sales................................................. -- --
--Refinancing........................................... 53.47 --
--Other................................................. -- --
Weighted average number of limited partnership ($100) units
outstanding............................................... 337,936 95,236
=========== ===========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income from operations
is due to different methods of calculating depreciation and amortization,
the use of the reserve method for providing for possible doubtful accounts
under GAAP and different methods of recognizing revenue on Direct Finance
Leases.
------------------------------
Prior performance is not an indication of future results.
B-11
<PAGE>
TABLE IV
RESULTS OF COMPLETED PRIOR PUBLIC PROGRAMS--SERIES A
(UNAUDITED)
The following table summarizes the operating results of Series A.
Series A's records were maintained in accordance with Generally Accepted
Accounting Principles ("GAAP") for financial statement purposes.
<TABLE>
<S> <C>
Dollar Amount Raised........................................ $2,504,500
Number of Properties Purchased.............................. 60
Date of Closing of Offering................................. February 1, 1989
Date of First Sale of Property.............................. June 1990
Date of Final Sale of Property.............................. May 1999
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------
1999 1998 1997 1996 1995 1994
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues............................................... $ 297 $ 4,439 $ 40,359 $ 53,041 $128,935 $188,148
Net gain (loss) on sales or remarketing of
equipment.......................................... (1,245) 76,227 82,576 142,237 74,970 87,985
-------- -------- -------- -------- -------- --------
Gross revenue........................................ (954) 80,666 122,935 195,278 203,905 276,133
Less:
Administrative expense reimbursement--General
Partner............................................ 84 1,878 4,521 7,133 9,690 11,404
General and administrative........................... 3,457 18,043 34,565 32,252 36,641 34,468
Management fees--General Partner..................... 45 1,004 2,553 4,055 5,951 13,607
Interest expense..................................... -- -- 7,875 15,092 39,350 63,423
Provision for (reversal of) bad debts(2)............. (1,864) (22,242) (17,000) -- 10,000 33,500
Depreciation expense................................. -- -- -- -- 18,236 46,330
Amortization of initial direct costs................. -- -- -- -- -- 27
-------- -------- -------- -------- -------- --------
Net income (loss)--GAAP................................ $ (2,676) $ 81,983 $ 90,421 $136,746 $ 84,037 $ 73,374
======== ======== ======== ======== ======== ========
Net income (loss)--GAAP--allocable to limited
partners............................................. $ (2,542) $ 77,884 $ 85,900 $129,909 $ 79,835 $ 69,705
======== ======== ======== ======== ======== ========
Taxable income from operations(1)...................... $ (2,500) $ 57,520 $ 62,818 $198,523 $ 94,532 $111,397
======== ======== ======== ======== ======== ========
Cash generated from operations......................... $ (6,979) $ 24,760 $109,929 $210,327 $268,467 $301,679
Cash generated from sales of equipment................. 5,000 94,160 112,356 202,787 136,363 216,200
Cash generated from refinancing........................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Cash generated from operations, sales and
refinancing.......................................... (1,979) 118,920 222,285 413,114 404,830 517,879
Less:
Cash distributions to investors from operations,
sales and refinancing.............................. 12,523 181,576 225,405 225,405 225,533 233,651
Cash distributions to General Partner from
operations, sales and refinancing.................. 659 9,557 11,863 11,863 11,867 12,297
-------- -------- -------- -------- -------- --------
Cash generated from (used by) operations, sales and
refinancing after cash distributions................. $(15,161) $(72,213) $(14,983) $175,846 $167,430 $271,931
======== ======== ======== ======== ======== ========
Tax data and distributions per $1,000 limited partner
investment
Federal income tax results:
Taxable income from operations(1).................... $ (5.00) $ 21.82 $ 23.82 $ 37.65 $ 35.86 $ 42.25
======== ======== ======== ======== ======== ========
Cash distributions to investors
Source (on GAAP basis)
Investment income.................................. $ .14 $ 31.10 $ 34.30 $ 38.13 $ 31.88 $ 27.83
Return of capital.................................. $ 5.00 $ 41.40 $ 55.70 $ 51.87 $ 58.18 $ 65.46
Source (on Cash basis)
--Operations....................................... -- $ 9.89 $ 43.89 $ 83.98 $ 90.06 $ 93.29
--Sales............................................ 2.00 $ 37.60 $ 44.87 $ 6.02 -- --
--Refinancing...................................... -- -- -- -- -- --
--Other............................................ $ 3.00 $ 25.01 $ 1.24 -- -- --
Weighted average number of limited partnership ($500)
units outstanding.................................... 5,009 5,009 5,009 5,009 5,009 5,009
======== ======== ======== ======== ======== ========
</TABLE>
------------------------------
(1) The difference between Net income--GAAP and Taxable income from operations
is due to different methods of calculating depreciation and amortization,
the use of the reserve method for providing for possible doubtful accounts
under GAAP and different methods of recognizing revenue on Direct Finance
Leases.
(2) The Partnership records a provision for bad debts to provide for estimated
credit losses in the portfolio. This policy is based on an analysis of the
aging of the Partnership's portfolio, a review of the non-performing
receivables and leases, prior collection experience and historical loss
experience. In 1997, 1998 and for the first half of 1999, the Partnership
reversed $17,000, $22,242 and $1,864, respectively, of amounts previously
included in the allowance for doubtful accounts.
------------------------------
Prior performance is not an indication of future results.
B-12
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P., Series A for the nine years ended December 31,
1999. Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers......................... 1988 1990 $ 32,352 $ 13,859 $ 16,955 $ 3,096 $ 1,064
Office Copier..................... 1988 1990 $180,922 $ 52,504 $ 52,504 $ 0 $(30,400)
Agriculture....................... 1988 1991 $ 19,032 $ 8,921 $ 7,225 $ (1,696) $ (2,214)
Computers......................... 1988 1991 $ 8,450 $ 0 $ 465 $ 465 $ 0
Computers......................... 1989 1991 $363,540 $ 28,027 $ 56,077 $ 28,050 $ 14,962
Telecommunications................ 1990 1991 $827,804 $ 49,393 $ 0 $(49,393) $ 0
Medical........................... 1988 1991 $ 29,756 $ 0 $ 0 $ 0 $(10,626)
Copiers........................... 1988 1991 $235,863 $ 0 $ 0 $ 0 $(18,115)
Agriculture....................... 1988 1992 $ 61,200 $ 25,810 $ 24,152 $ (1,658) $ 0
Computers......................... 1988 1992 $ 51,353 $ 0 $ 0 $ 0 $ 0
Copiers........................... 1988 1992 $195,875 $ 0 $ 0 $ 0 $ 0
Material Handling................. 1988 1992 $ 78,321 $ 0 $ 0 $ 0 $ 0
Medical........................... 1988 1992 $ 50,433 $ 15,250 $ 7,000 $ (8,250) $ 34,389
Computers......................... 1989 1992 $ 41,058 $ 4,553 $ 6,606 $ 2,053 $(13,951)
Copiers........................... 1989 1992 $ 81,913 $ 6,495 $ 6,495 $ 0 $ 1,114
Office Equipment.................. 1989 1992 $ 81,986 $ 2,821 $ 12,298 $ 9,477 $(28,695)
Computers......................... 1991 1992 $ 3,607 $ 3,196 $ 4,142 $ 946 $ 1,076
Furniture And Fixtures............ 1992 1992 $ 4,325 $ 4,430 $ 4,390 $ (40) $ 65
Computers......................... 1988 1993 $ 71,813 $ 0 $ 0 $ 0 $ 0
Furniture......................... 1988 1993 $350,000 $ 0 $ 0 $ 0 $ 0
Medical........................... 1988 1993 $221,191 $ 182 $ 2,382 $ 2,200 $ 2,341
Agriculture....................... 1989 1993 $ 57,975 $ 2,050 $ 2,932 $ 882 $ (1,724)
Printing.......................... 1989 1993 $126,900 $ 5,661 $ 7,800 $ 2,139 $(10,729)
Reprographics..................... 1989 1993 $112,500 $ 115 $ 115 $ 0 $(12,079)
Computers......................... 1990 1993 $ 79,043 $ 0 $ 0 $ 0 $ 0
Reprographics..................... 1990 1993 $ 71,805 $ 8,391 $ 12,528 $ 4,137 $ 0
Retail............................ 1990 1993 $198,513 $(32,916) $ 67,894 $100,810 $ 0
Video Production.................. 1990 1993 $341,796 $ 67,965 $161,615 $ 93,650 $ 24,507
Computers......................... 1991 1993 $135,380 $ 6,540 $ 20,134 $ 13,594 $(50,622)
Fixture........................... 1992 1993 $ 2,267 $ 1,635 $ 1,824 $ 189 $ 11
Telecommunications................ 1992 1993 $ 20,000 $ 11,840 $ 11,200 $ (640) $ (4,800)
Video Production.................. 1992 1993 $ 3,362 $ 1,110 $ 592 $ (518) $ (2,867)
Manufacturing & Production........ 1993 1993 $ 22,660 $ 0 $ 0 $ 0 $ 0
Agriculture....................... 1988 1994 $ 30,000 $ 288 $ 288 $ 0 $ 0
Medical........................... 1988 1994 $ 46,050 $ 6,438 $ 6,438 $ 0 $ 0
Computers......................... 1989 1994 $ 71,152 $ 6,942 $ 500 $ (6,442) $ (1,449)
Computers......................... 1991 1994 $156,552 $ 6,882 $ 16,611 $ 9,729 $(41,137)
Material Handling................. 1991 1994 $ 7,013 $ 1,973 $ 2,203 $ 230 $ (604)
Medical........................... 1991 1994 $ 40,556 $(11,278) $ 1,460 $ 12,738 $ 375
Fixture........................... 1992 1994 $ 3,396 $ 751 $ 845 $ 94 $ (1,192)
Manufacturing & Production........ 1992 1994 $ 17,103 $ (199) $ 0 $ 199 $ (5,443)
Furniture......................... 1993 1994 $ 26,868 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production........ 1993 1994 $ 27,096 $ 10,139 $ 11,054 $ 915 $ 0
Agriculture....................... 1989 1994 $ 14,191 $ 350 $ 350 $ 0 $ 0
Printing.......................... 1993 1994 $ 24,112 $ 24,030 $ 27,061 $ 3,031 $ 0
</TABLE>
B-13
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers......................... 1991 1995 $ 17,200 $ 173 $ 3,522 $ 3,349 $ 1,594
Copiers........................... 1991 1995 $ 49,081 $ 7,350 $ 7,423 $ 73 $ (3,044)
Sanitation........................ 1991 1995 $ 21,452 $ 560 $ 4,818 $ 4,258 $ 3,010
Agriculture....................... 1992 1995 $ 7,828 $ 462 $ 737 $ 275 $ (1,901)
Computers......................... 1993 1995 $ 64,391 $ 36,094 $ 5,863 $(30,231) $ 0
Manufacturing & Production........ 1993 1995 $ 28,557 $ 8,752 $ 8,912 $ 160 $ 0
Retail............................ 1993 1995 $ 28,507 $ (9) $ 697 $ 706 $ 0
Computers......................... 1991 1996 $ 35,618 $ 1,502 $ 20,150 $ 18,648 $ 19,571
Copiers........................... 1991 1996 $117,238 $ 17,784 $ 32,380 $ 14,596 $ 28,006
Material Handling................. 1991 1996 $ 14,996 $ 843 $ 3,223 $ 2,380 $ 3,432
Sanitation........................ 1991 1996 $ 35,854 $ 5,946 $ 5,649 $ (297) $ 5,260
Computers......................... 1993 1996 $ 72,479 $ (573) $ 515 $ 1,088 $ 0
Furniture......................... 1993 1996 $ 9,978 $ (2) $ 0 $ 2 $ 0
Material Handling................. 1993 1996 $ 11,824 $ 0 $ 0 $ 0 $ 0
1993 1996 $ 33,190 $ 400 $ 403 $ 3 $ 0
Retail............................ 1993 1996 $ 44,673 $ (5) $ 0 $ 0 $ 0
Sanitation........................ 1993 1996 $ 5,822 $ 0 $ 0 $ 0 $ 0
Video Production.................. 1993 1996 $ 41,465 $ 12,099 $ 12,441 $ 342 $ 0
Medical........................... 1994 1996 $ 12,166 $ 960 $ 2,000 $ 1,040 $ (4,259)
Computers......................... 1991 1997 $ 75,602 $ 4,349 $ 15,753 $ 11,403 $ 19,783
Computers......................... 1993 1997 $ 39,593 $ 6,013 $ 0 $ (6,013) $ 0
Retail............................ 1993 1997 $158,276 $ 16,960 $ 23,438 $ 23,423 $ 5,373
Video............................. 1993 1997 $ 27,273 $ 0 $ 0 $ 0 $ 0
Sanitation........................ 1996 1997 $ 3,571 $ 43 $ 1,380 $ 1,337 $ 0
Computers......................... 1991 1998 $ 5,018 $ 0 $ 614 $ 614 $ 1,143
Computers......................... 1993 1998 $178,752 $ 0 $ 187 $ 187 $ 0
Manufacturing & Production........ 1993 1998 $157,173 $ 394 $ 706 $ 311 $ 0
Material Handling................. 1993 1998 $ 27,258 $ 0 $ 669 $ 669 $ 0
Medical........................... 1993 1998 $ 12,963 $ 0 $ 0 $ 0 $ 0
Printing.......................... 1993 1998 $ 33,033 $ 0 $ 772 $ 772 $ 0
Reprographics..................... 1993 1998 $ 53,149 $ 0 $ 2,501 $ 2,501 $ (6,941)
Retail............................ 1993 1998 $ 99,794 $ 0 $ 37,856 $ 37,856 $ 37,435
Telecommunications................ 1993 1998 $ 26,238 $ 591 $ 605 $ 14 $ 0
Video............................. 1993 1998 $ 16,975 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production........ 1995 1998 $ 14,356 $ 0 $ 0 $ 0 $ 0
Telecommunications................ 1996 1998 $ 15,297 $ 0 $ 0 $ 0 $ 0
Computers......................... 1997 1998 $ 9,289 $ 3,136 $ 0 $ (3,136) $ 0
Telecommunications................ 1995 1999 $ 27,000 $ 6,245 $ 5,000 $ (1,245) $ 0
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
B-14
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P., Series B for the nine years ended December 31,
1999. Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Manufacturing & Production....... 1990 1990 $ 31,129 $ 28,288 $ 34,142 $ 5,854 $ 3,013
Mining........................... 1990 1990 $ 145,227 $ 120,804 $ 120,804 $ 0 $ 0
Video Production................. 1990 1990 $ 10,201 $ 8,006 $ 9,086 $ 1,080 $ 671
Agriculture...................... 1989 1991 $ 5,986 $ 4,003 $ 0 $ (4,003) $ 0
Computers........................ 1989 1991 $ 76,899 $ 52,134 $ 7,492 $ (44,642) $ 0
Construction..................... 1989 1991 $ 48,299 $ 43,554 $ 7,784 $ (35,770) $ (7,007)
Copiers.......................... 1989 1991 $ 7,469 $ 4,997 $ 16 $ (4,981) $ 0
Environmental.................... 1989 1991 $ 10,609 $ 11,546 $ 0 $ (11,546) $ 0
Furniture........................ 1989 1991 $ 86,965 $ 62,229 $ 19,339 $ (42,890) $ 0
Manufacturing & Production....... 1989 1991 $ 55,125 $ 34,435 $ 12,807 $ (21,628) $ 0
Medical.......................... 1989 1991 $ 9,447 $ 7,643 $ 0 $ (7,643) $ 0
Office Equipment................. 1989 1991 $ 25,171 $ 24,586 $ 64 $ (24,522) $ (1,985)
Retail........................... 1989 1991 $ 4,405 $ 4,792 $ 0 $ (4,792) $ 0
Sanitation....................... 1989 1991 $ 15,448 $ 17,983 $ 0 $ (17,983) $ 0
Telecommunications............... 1989 1991 $ 2,238 $ 0 $ 60 $ 60 $ 0
Transportation................... 1989 1991 $ 9,474 $ 10,801 $ 0 $ (10,801) $ 0
Video Production................. 1989 1991 $ 11,925 $ 1,762 $ 7 $ (1,755) $ 0
Agriculture...................... 1990 1991 $ 35,245 $ 4,694 $ 0 $ (4,694) $ (5,210)
Computers........................ 1990 1991 $2,671,588 $ 601,346 $ 136,169 $(465,177) $ (476,397)
Construction..................... 1990 1991 $ 64,544 $ 29,979 $ 24,379 $ (5,600) $ (9,949)
Copiers.......................... 1990 1991 $ 30,699 $ 18,760 $ 911 $ (17,849) $ 0
Environmental.................... 1990 1991 $ 14,658 $ 15,434 $ 0 $ (15,434) $ 0
Fixture.......................... 1990 1991 $ 29,510 $ 27,027 $ 808 $ (26,219) $ 0
Furniture........................ 1990 1991 $ 53,420 $ 34,771 $ 3,598 $ (31,173) $ (5,953)
Manufacturing & Production....... 1990 1991 $ 526,568 $ 504,823 $ 226,978 $(277,845) $ (47,036)
Material Handling................ 1990 1991 $ 112,075 $ 59,977 $ 34,758 $ (25,219) $ 0
Medical.......................... 1990 1991 $ 93,771 $ 47,016 $ 0 $ (47,016) $ (19,410)
Mining........................... 1990 1991 $ 221,706 $ 0 $ 0 $ 0 $ (82,375)
Miscellaneous.................... 1990 1991 $ 29,443 $ 28,179 $ 0 $ (28,179) $ 0
Office Equipment................. 1990 1991 $ 44,560 $ 34,289 $ 760 $ (33,529) $ 0
Restaurant....................... 1990 1991 $ 97,304 $ 45,062 $ 18,564 $ (26,498) $ (24,787)
Retail........................... 1990 1991 $ 43,751 $ 18,362 $ 9,230 $ (9,132) $ (12,624)
Sanitation....................... 1990 1991 $ 171,345 $ 66,074 $ 77,146 $ 11,072 $ (78,222)
Telecommunications............... 1990 1991 $ 980,613 $ 119,372 $ 0 $(119,372) $ (11,618)
Transportation................... 1990 1991 $ 13,434 $ 13,858 $ 0 $ (13,858) $ 0
Material Handling................ 1991 1991 $ 109,115 $ 108,512 $ 113,482 $ 4,970 $ 0
Agriculture...................... 1989 1992 $ 89,766 $ 19,058 $ 21,912 $ 2,854 $ (12,999)
Computers........................ 1989 1992 $ 60,747 $ 1,659 $ 2,593 $ 934 $ 0
Copiers.......................... 1989 1992 $ 79,556 $ 10,817 $ 10,839 $ 22 $ (9,798)
Furniture........................ 1989 1992 $ 35,512 $ 2,418 $ 2,911 $ 493 $ 0
Manufacturing & Production....... 1989 1992 $ 117,236 $ 1,924 $ 1,936 $ 12 $ 0
Material Handling................ 1989 1992 $ 16,058 $ 670 $ 789 $ 119 $ (7,845)
Medical.......................... 1989 1992 $ 31,701 $ 7,548 $ 1,967 $ (5,580) $ 0
Office Equipment................. 1989 1992 $ 19,981 $ 1,381 $ 1,427 $ 46 $ 0
Printing......................... 1989 1992 $ 25,000 $ 3,510 $ 2,510 $ (1,000) $ (8,247)
Telecommunications............... 1989 1992 $ 18,779 $ 1,910 $ 2,012 $ 102 $ 0
Video Production................. 1989 1992 $ 21,849 $ 3,275 $ 3,283 $ 8 $ 0
</TABLE>
B-15
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Agriculture...................... 1990 1992 $ 46,968 $ 2,847 $ 3,463 $ 617 $ (4,451)
Computers........................ 1990 1992 $3,872,456 $ 671,632 $ 342,387 $(329,245) $(1,086,408)
Construction..................... 1990 1992 $ 23,493 $ 1,229 $ 1,229 $ 0 $ 0
Copiers.......................... 1990 1992 $ 19,240 $ 2,165 $ 3,524 $ 1,358 $ (8,884)
Environmental.................... 1990 1992 $ 7,195 $ 1,164 $ 1,164 $ 0 $ (4,683)
Fixture.......................... 1990 1992 $ 55,869 $ 7,661 $ 9,096 $ 1,436 $ (34,594)
Furniture........................ 1990 1992 $ 58,095 $ 7,193 $ 7,719 $ 525 $ (26,836)
Manufacturing & Production....... 1990 1992 $ 192,143 $ 47,665 $ 43,213 $ (4,452) $ (45,657)
Material Handling................ 1990 1992 $ 104,852 $ 23,011 $ 7,775 $ (15,236) $ (15,648)
Medical.......................... 1990 1992 $ 88,537 $ 12,382 $ 13,393 $ 1,011 $ (38,945)
Miscellaneous.................... 1990 1992 $ 4,999 $ 1,313 $ 1,236 $ (77) $ (2,804)
Office Equipment................. 1990 1992 $1,203,666 $ 179,190 $ 2,513 $(176,678) $ (6,351)
Restaurant....................... 1990 1992 $ 83,624 $ 194 $ 6,850 $ 6,657 $ (12,961)
Retail........................... 1990 1992 $ 63,030 $ 35,999 $ 581 $ (35,419) $ (1,296)
Sanitation....................... 1990 1992 $ 200,642 $ 12,623 $ 13,101 $ 478 $ (14,846)
Telecommunications............... 1990 1992 $ 64,899 $ 11,997 $ 4,965 $ (7,032) $ (18,620)
Transportation................... 1990 1992 $ 7,610 $ 1 $ 1 $ 0 $ 0
Video Production................. 1990 1992 $ 18,558 $ 3,521 $ 4,302 $ 781 $ (7,177)
Furniture........................ 1991 1992 $ 25,909 $ 28,313 $ 0 $ (28,313) $ 0
Manufacturing & Production....... 1991 1992 $ 51,311 $ 47,497 $ 57,487 $ 9,990 $ 0
Material Handling................ 1991 1992 $ 10,023 $ 10,462 $ 10,595 $ 133 $ 0
Office Equipment................. 1991 1992 $ 15,789 $ 0 $ 0 $ 0 $ 0
Sanitation....................... 1991 1992 $ 18,840 $ 10,122 $ 10,516 $ 394 $ 0
Agriculture...................... 1989 1993 $ 31,500 $ 4,370 $ 10,095 $ 5,725 $ 1,431
Computers........................ 1989 1993 $ 93,554 $ 267 $ 661 $ 394 $ 0
Copiers.......................... 1989 1993 $ 168,679 $ 19,448 $ 23,072 $ 3,624 $ (26,046)
Furniture........................ 1989 1993 $ 116,287 $ 17,152 $ 19,536 $ 2,384 $ (9,084)
Manufacturing & Production....... 1989 1993 $ 14,804 $ 2,832 $ 3,541 $ 709 $ 0
Material Handling................ 1989 1993 $ 20,725 $ 0 $ 1,650 $ 1,650 $ 0
Office Equipment................. 1989 1993 $ 81,777 $ 990 $ 17,490 $ 16,500 $ (4,999)
Telecommunications............... 1989 1993 $ 2,524 $ 0 $ 0 $ 0 $ 0
Video Production................. 1989 1993 $ 22,321 $ 0 $ 0 $ 0 $ 0
Agriculture...................... 1990 1993 $ 132,350 $ 11,556 $ 11,963 $ 407 $ (42,903)
Automotive....................... 1990 1993 $ 75,730 $ 45,795 $ 51,888 $ 6,093 $ (3,043)
Computers........................ 1990 1993 $1,069,393 $ 140,198 $ 164,423 $ 24,225 $ (267,270)
Construction..................... 1990 1993 $ 41,779 $ 5,058 $ 5,075 $ 17 $ (9,774)
Copiers.......................... 1990 1993 $ 23,318 $ 3,058 $ 2,505 $ (553) $ (7,670)
Fixture.......................... 1990 1993 $ 73,038 $ 10,235 $ 10,235 $ 0 $ (22,303)
Furniture........................ 1990 1993 $ 118,834 $ 11,204 $ 11,509 $ 305 $ (10,168)
Manufacturing & Production....... 1990 1993 $1,120,324 $ 139,342 $ 186,899 $ 47,557 $ (271,929)
Material Handling................ 1990 1993 $ 210,922 $ 20,462 $ 29,157 $ 8,695 $ (51,481)
Medical.......................... 1990 1993 $ 380,749 $ 56,711 $ 37,821 $ (18,890) $ (68,880)
Office Equipment................. 1990 1993 $ 69,232 $ 8,695 $ 9,275 $ 580 $ (18,731)
Printing......................... 1990 1993 $ 6,061 $ 1,431 $ 1,050 $ (381) $ (1,388)
Reprographics.................... 1990 1993 $ 82,000 $ 8,200 $ 40,000 $ 31,800 $ 7,109
Restaurant....................... 1990 1993 $ 121,682 $ 10,330 $ 11,517 $ 1,187 $ (28,626)
Retail........................... 1990 1993 $ 11,280 $ 813 $ 1,797 $ 984 $ (2,806)
Sanitation....................... 1990 1993 $ 43,697 $ 5,148 $ 5,152 $ 4 $ (10,588)
Telecommunications............... 1990 1993 $ 278,193 $ 20,246 $ 22,616 $ 2,370 $ (58,857)
Miscellaneous.................... 1990 1993 $ 595,538 $ (98,697) $ 203,595 $ 302,292 $ 0
Video Production................. 1990 1993 $ 7,981 $ 374 $ 374 $ 0 $ (1,484)
Computers........................ 1991 1993 $ 248,090 $ 36,021 $ 36,834 $ 813 $ (9,175)
</TABLE>
B-16
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction..................... 1991 1993 $ 10,590 $ 869 $ 1,875 $ 1,006 $ (4,480)
Furniture........................ 1991 1993 $ 73,541 $ (66) $ 603 $ 669 $ (7,311)
Manufacturing & Production....... 1991 1993 $ 12,951 $ 0 $ 0 $ 0 $ 0
Material Handling................ 1991 1993 $ 43,408 $ 20,390 $ 23,147 $ 2,757 $ (1,015)
Medical.......................... 1991 1993 $ 9,425 $ 5,708 $ 6,513 $ 805 $ 858
Sanitation....................... 1991 1993 $ 37,743 $ 16,285 $ 15,506 $ (779) $ 0
Computers........................ 1992 1993 $ 79,557 $ 38,668 $ 38,668 $ 0 $ (36,961)
Material Handling................ 1992 1993 $ 30,692 $ 149 $ 6,578 $ 6,429 $ (17,976)
Computers........................ 1989 1994 $ 468,870 $ 109,719 $ 109,720 $ 1 $ 102,026
Copiers.......................... 1989 1994 $ 13,461 $ 30 $ 30 $ 0 $ 0
Furniture........................ 1989 1994 $ 218,655 $ 79,000 $ 79,000 $ 0 $ 80,901
Manufacturing & Production....... 1989 1994 $ 90,725 $ (13) $ 0 $ 13 $ 0
Medical.......................... 1989 1994 $ 97,017 $ 699 $ 1,141 $ 441 $ 0
Office Equipment................. 1989 1994 $ 2,796 $ 0 $ 126 $ 126 $ 0
Printing......................... 1989 1994 $ 14,123 $ 0 $ 0 $ 0 $ 0
Telecommunications............... 1989 1994 $ 10,950 $ (2) $ 127 $ 129 $ 0
Agriculture...................... 1990 1994 $ 73,503 $ 11,518 $ 12,258 $ 740 $ (3,345)
Computers........................ 1990 1994 $3,937,366 $ 957,935 $ 959,231 $ 1,295 $ 367,292
Construction..................... 1990 1994 $ 141,052 $ 16,265 $ 16,265 $ 0 $ (14,659)
Fixture.......................... 1990 1994 $ 100,514 $ 10,959 $ 10,959 $ 0 $ (6,640)
Furniture........................ 1990 1994 $ 282,115 $ 89,792 $ 94,919 $ 5,127 $ 43,164
Manufacturing & Production....... 1990 1994 $ 443,855 $ 121,619 $ 137,376 $ 15,757 $ (8,207)
Material Handling................ 1990 1994 $ 411,986 $ 20,972 $ 20,972 $ 0 $ (33,402)
Medical.......................... 1990 1994 $ 462,679 $ 42,572 $ 62,365 $ 19,792 $ 805
Mining........................... 1990 1994 $9,631,966 $1,298,813 $1,298,813 $ 0 $ (689,039)
Office Equipment................. 1990 1994 $ 34,402 $ 3,434 $ 3,434 $ 0 $ (8,258)
Reprographics.................... 1990 1994 $ 16,482 $ 4,547 $ 4,547 $ 0 $ 904
Restaurant....................... 1990 1994 $ 297,355 $ 32,327 $ 33,776 $ 1,449 $ (29,158)
Retail........................... 1990 1994 $ 841,977 $ 440,914 $ 440,914 $ 0 $ 668,569
Sanitation....................... 1990 1994 $ 7,147 $ 0 $ 0 $ 0 $ 0
Telecommunications............... 1990 1994 $ 261,049 $ (6,700) $ 30,311 $ 37,011 $ 11,248
Video Production................. 1990 1994 $ 45,804 $ 5,357 $ 5,365 $ 8 $ (4,684)
Agriculture...................... 1991 1994 $ 15,633 $ 625 $ 629 $ 4 $ 0
Computers........................ 1991 1994 $ 684,631 $ 59,296 $ 59,296 $ 0 $ (213,947)
Copiers.......................... 1991 1994 $ 39,270 $ 2,598 $ 648 $ (1,950) $ (15,152)
Environmental.................... 1991 1994 $ 44,016 $ 864 $ 904 $ 41 $ 0
Furniture........................ 1991 1994 $ 20,546 $ 906 $ 923 $ 17 $ 0
Material Handling................ 1991 1994 $ 66,497 $ 2,470 $ 2,642 $ 172 $ (5,750)
Medical.......................... 1991 1994 $ 602,400 $ 306,415 $ 373,385 $ 66,970 $ 139,985
Sanitation....................... 1991 1994 $ 83,638 $ 4,459 $ 4,634 $ 174 $ 0
Telecommunications............... 1991 1994 $ 11,188 $ 898 $ 1,146 $ 248 $ (3,419)
Manufacturing & Production....... 1993 1994 $ 81,735 $ (61) $ 34 $ 95 $ 0
Material Handling................ 1993 1994 $ 6,578 $ 3,110 $ 3,600 $ 490 $ 0
Sanitation....................... 1994 1994 $ 7,320 $ 0 $ 0 $ 0 $ 0
Computers........................ 1989 1995 $ 24,831 $ 1,574 $ 13 $ (1,561) $ 0
Manufacturing & Production....... 1989 1995 $ 11,262 $ 4,128 $ 0 $ (4,128) $ 0
Computers........................ 1990 1995 $3,151,688 $ 784,267 $ 578,324 $(205,942) $ 61,278
Construction..................... 1990 1995 $ 397,553 $ 139,680 $ 93,172 $ (46,508) $ 2,914
Copiers.......................... 1990 1995 $ 26,920 $ 6,048 $ (0) $ (6,048) $ 0
Furniture........................ 1990 1995 $ 64,010 $ 5,908 $ 4,760 $ (1,148) $ 5,171
Material Handling................ 1990 1995 $ 108,329 $ 7,629 $ 6,899 $ (730) $ (15)
</TABLE>
B-17
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical.......................... 1990 1995 $ 919,987 $ 320,531 $ 260,980 $ (59,551) $ 56,955
Manufacturing & Production....... 1990 1995 $ 846,718 $ 211,207 $ 244,937 $ 33,730 $ 243,103
Office Equipment................. 1990 1995 $ 38,014 $ 4,192 $ 2,111 $ (2,081) $ 1,950
Reprographics.................... 1990 1995 $ 102,003 $ 1 $ 1 $ 0 $ 0
Restaurant....................... 1990 1995 $ 63,437 $ 4,636 $ 1,896 $ (2,740) $ 897
Retail........................... 1990 1995 $2,703,611 $ 349,429 $ 193,032 $(156,397) $ 184,637
Sanitation....................... 1990 1995 $ 58,070 $ 4,110 $ 1,738 $ (2,372) $ 1,518
Video Production................. 1990 1995 $ 3,404 $ 773 $ 0 $ (773) $ 0
Agriculture...................... 1991 1995 $ 23,262 $ 7,034 $ 7,449 $ 415 $ 1,921
Computers........................ 1991 1995 $2,712,345 $ 677,342 $ 648,479 $ (28,863) $ 126,108
Construction..................... 1991 1995 $ 25,214 $ 1,539 $ 2,727 $ 1,188 $ (2,122)
Furniture........................ 1991 1995 $ 62,471 $ 16,192 $ 5,091 $ (11,101) $ (4,400)
Material Handling................ 1991 1995 $ 34,473 $ 12,502 $ 12,105 $ (397) $ 0
Manufacturing & Production....... 1991 1995 $ 132,184 $ 5,116 $ 50,110 $ 44,993 $ 27,132
Office Equipment................. 1991 1995 $ 48,350 $ 7,177 $ 9,506 $ 2,329 $ (2,320)
Restaurant....................... 1991 1995 $ 73,807 $ 3,637 $ 2,910 $ (728) $ (1,107)
Telecommunications............... 1991 1995 $ 52,499 $ 3,093 $ 7,262 $ 4,169 $ (3,403)
Audio............................ 1992 1995 $ 128,455 $ 98,566 $ 122,689 $ 24,123 $ 32,942
Computers........................ 1992 1995 $ 76,900 $ 2,447 $ 15,248 $ 12,801 $ (10,269)
Furniture........................ 1992 1995 $ 188,807 $ 19,652 $ 19,652 $ 0 $ (57,369)
Telecommunications............... 1992 1995 $ 64,731 $ 47,017 $ 55,634 $ 8,616 $ 23,500
Video Production................. 1992 1995 $ 382,790 $ 247,199 $ 298,045 $ 50,846 $ 122,650
Copiers.......................... 1993 1995 $ 35,000 $ 0 $ 0 $ 0 $ 0
Computers........................ 1994 1995 $1,043,007 $ 346,471 $ 739,181 $ 392,710 $ 661,239
Furniture........................ 1994 1995 $ 204,779 $ 171,324 $ 181,605 $ 10,281 $ 0
Medical.......................... 1994 1995 $ 23,671 $ 2,015 $ 2,015 $ 0 $ 0
Manufacturing & Production....... 1994 1995 $ 21,038 $ 17,225 $ 18,733 $ 1,509 $ 1,436
Computers........................ 1995 1995 $ 17,231 $ 16,864 $ 2,383 $ (14,481) $ 0
Telecommunications............... 1989 1996 $ 20,339 $ 0 $ 1,566 $ 1,566 $ 0
Computers........................ 1990 1996 $1,056,724 $ 123,220 $ 88,594 $ (34,626) $ 94,675
Fixtures......................... 1990 1996 $ 19,989 $ 1,285 $ 250 $ (1,034) $ (1,034)
Furniture........................ 1990 1996 $ 34,265 $ 10,881 $ 0 $ (10,881) $ (10,881)
Medical.......................... 1990 1996 $ 49,882 $ 3,282 $ 332 $ (2,949) $ (2,357)
Manufacturing & Production....... 1990 1996 $ 72,805 $ 2,611 $ 1,588 $ (1,023) $ 3,342
Printing......................... 1990 1996 $ 26,691 $ 728 $ 0 $ (728) $ (728)
Reprographics.................... 1990 1996 $ 77,770 $ 5,381 $ 1,037 $ (4,345) $ 0
Retail........................... 1990 1996 $1,332,608 $ 149,542 $ 230,752 $ 81,210 $ 238,200
Telecommunications............... 1990 1996 $ 71,300 $ 4,781 $ 895 $ (3,886) $ 0
Computers........................ 1991 1996 $ 70,789 $ 2,113 $ 1,000 $ (1,113) $ (1,113)
Construction..................... 1991 1996 $ 24,724 $ 3,791 $ 3,857 $ 66 $ 2,506
Furniture........................ 1991 1996 $ 281,079 $ 24,453 $ 28,755 $ 4,302 $ 3,424
Material Handling................ 1991 1996 $ 45,771 $ 7,124 $ 3,307 $ (3,817) $ 0
Restaurant....................... 1991 1996 $ 16,013 $ 1,663 $ 2,152 $ 489 $ 1,976
Video Production................. 1991 1996 $ 56,632 $ 4,245 $ 4,245 $ 0 $ 538
Printing......................... 1993 1996 $ 15,733 $ 3,714 $ 3,814 $ 100 $ 0
Computers........................ 1994 1996 $ 21,284 $ 13,176 $ 0 $ (13,176) $ (13,176)
Fixtures......................... 1994 1996 $ 20,045 $ 0 $ 0 $ 0 $ (14,238)
Manufacturing & Production....... 1994 1996 $ 16,349 $ 6,081 $ 6,191 $ 109 $ (7,085)
Computers........................ 1995 1996 $ 36,894 $ 21,698 $ 0 $ (21,698) $ (29,812)
Fixtures......................... 1994 1996 $ 28,449 $ 25,882 $ 0 $ (25,882) $ (25,882)
Furniture........................ 1994 1996 $ 20,000 $ 0 $ 0 $ 0 $ 0
</TABLE>
B-18
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers........................ 1990 1997 $ 84,679 $ 10,369 $ 0 $ (10,369) $ 0
Computers........................ 1993 1997 $ 31,527 $ 1,238 $ 1,492 $ 254 $ 0
Retail........................... 1993 1997 $1,811,259 $ 166,382 $ 231,762 $ 65,380 $ (165,810)
Computers........................ 1994 1997 $ 106,912 $ 689 $ 1,493 $ 804 $ (41,957)
Manufacturing & Production....... 1994 1997 $ 43,759 $ 2,460 $ 3,548 $ 1,089 $ (15,221)
Telecommunications............... 1994 1997 $ 64,781 $ 1,953 $ 3,990 $ 2,037 $ (11,293)
Computers........................ 1995 1997 $ 9,584 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production....... 1995 1997 $ 74,770 $ 0 $ 0 $ 0 $ 0
Restaurant....................... 1995 1997 $ 12,030 $ 0 $ 0 $ 0 $ (7,218)
Video Production................. 1995 1997 $ 27,067 $ 4,971 $ 0 $ (4,971) $ 0
Computers........................ 1996 1997 $ 16,033 $ 15,371 $ 1,768 $ (13,604) $ 0
Printing......................... 1996 1997 $ 48,047 $ 36,903 $ 42,713 $ 5,811 $ 0
Audio............................ 1993 1998 $ 24,542 $ 0 $ 0 $ (0) $ 0
Computers........................ 1993 1998 $ 39,709 $ 0 $ 903 $ 896 $ 0
Manufacturing & Production....... 1993 1998 $ 52,813 $ 0 $ 56 $ 48 $ 0
Retail........................... 1993 1998 $ 119,662 $ 0 $ 89,793 $ 89,793 $ (107,696)
Furniture........................ 1994 1998 $ 314,806 $ 0 $ 0 $ (1) $ (10,625)
Manufacturing & Production....... 1994 1998 $ 70,492 $ 14,244 $ 8,999 $ (5,245) $ (63,443)
Telecommunications............... 1994 1998 $ 10,910 $ 331 $ 934 $ 603 $ 0
Computers........................ 1995 1998 $ 134,603 $ 280 $ 317 $ 35 $ 0
Fixtures......................... 1995 1998 $ 39,968 $ 0 $ 332 $ 332 $ 0
Furniture........................ 1995 1998 $ 26,533 $ 0 $ 1 $ 1 $ 0
Manufacturing & Production....... 1995 1998 $ 32,728 $ 10,823 $ 11,551 $ 728 $ 0
Medical.......................... 1995 1998 $ 30,287 $ 0 $ 0 $ (0) $ (27,258)
Printing......................... 1995 1998 $ 23,947 $ 358 $ 3,693 $ 3,335 $ (12,109)
Restaurant....................... 1995 1998 $ 18,770 $ 0 $ 0 $ (12) $ 0
Video Production................. 1995 1998 $ 19,080 $ 0 $ 0 $ (8) $ 0
Furniture........................ 1996 1998 $ 5,808 $ 12 $ 0 $ (12) $ 0
Telecommunications............... 1997 1998 $ 136,762 $ 90,209 $ 131,929 $ 41,720 $ (123,086)
Computers........................ 1998 1998 $ 29,409 $ 0 $ 0 $ (1) $ 0
Computers........................ 1993 1999 $ 29,329 $ 0 $ 0 $ 0 $ 0
Medical.......................... 1995 1999 $ 17,085 $ 0 $ 0 $ (0) $ 0
Restaurant....................... 1995 1999 $ 15,388 $ 3,849 $ 4,318 $ 469 $ (2,419)
Restaurant....................... 1996 1999 $ 12,417 $ 0 $ 883 $ 883 $ (495)
Telecommunications............... 1996 1999 $ 14,867 $ 508 $ 0 $ (508) $ 0
VIDEO PROD....................... 1994 1999 $ 21,919 $ 185 $ 185 $ 0 $ (104)
COMPUTERS........................ 1994 1999 $ 26,405 $ 365 $ 0 $ (365) $ 0
MNFCTRG.......................... 1994 1999 $ 17,333 $ 243 $ 265 $ 22 $ (149)
PRINTING......................... 1994 1999 $ 12,811 $ 82 $ 202 $ 120 $ (113)
PRINTING......................... 1994 1999 $ 21,765 $ 271 $ 272 $ 1 $ (152)
MEDICAL.......................... 1994 1999 $ 18,728 $ 191 $ 191 $ (0) $ (107)
PRINTING......................... 1995 1999 $ 20,534 $ 100 $ 453 $ 353 $ (254)
M & P............................ 1995 1999 $ 17,355 $ 551 $ 524 $ (27) $ (294)
MNFCTRG.......................... 1995 1999 $ 38,583 $ 335 $ 383 $ 48 $ (215)
AUTOMOTIVE....................... 1995 1999 $ 11,619 $ 1,266 $ 1,450 $ 184 $ (812)
FURNITURE........................ 1995 1999 $ 5,211 $ 1,070 $ 1,070 $ 0 $ (600)
FURNITURE........................ 1995 1999 $ 9,677 $ 819 $ 986 $ 167 $ (552)
MNFCTRG.......................... 1996 1999 $ 13,053 $ 3 $ 304 $ 307 $ (171)
MNFCTRG.......................... 1996 1999 $ 28,253 $ 0 $ 0 $ 0 $ 0
MNFCTRG.......................... 1996 1999 $ 28,292 $ 22 $ 300 $ 278 $ (168)
M & P............................ 1997 1999 $ 18,357 $ 615 $ 615 $ 0 $ (345)
</TABLE>
B-19
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXTURE.......................... 1997 1999 $ 16,352 $ 25 $ 0 $ (25) $ 0
TELECOM.......................... 1997 1999 $ 33,636 $ 3,597 $ 4,649 $ 1,052 $ (2,605)
OFFC.EQUIP....................... 1997 1999 $ 14,569 $ 0 $ 0 $ 0 $ 0
COMPUTERS........................ 1997 1999 $ 19,035 $ 238 $ 238 $ 0 $ (133)
RETAIL........................... 1997 1999 $ 10,982 $ 5,390 $ 6,679 $ 1,288 $ (3,742)
RESTAURANT....................... 1997 1999 $ 49,262 $ 22,810 $ 24,592 $ 1,782 $ (13,779)
TELECOM.......................... 1997 1999 $ 15,031 $ 3,530 $ 3,000 $ (530) $ (1,681)
TELECOM.......................... 1997 1999 $ 136,756 $ 40,586 $ 10,131 $ 50,717 $ (5,676)
TELECOMM......................... 1997 1999 $ 47,970 $ 14,835 $ 10,722 $ (4,112) $ (6,008)
TELECOMM......................... 1997 1999 $ 3,382 $ 1,979 $ 1,159 $ (820) $ (650)
MNFCTRG.......................... 1997 1999 $ 37,594 $ 1 $ 0 $ 1 $ 0
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
(4) Federal Taxable Gain (Loss) information not yet available for 1999.
B-20
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P., Series C for the eight years ended December 31,
1999. Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Agriculture...................... 1991 1991 $ 2,942 $ 0 $ 0 $ 0 $ 0
Computers........................ 1991 1991 $ 1,389 $ 0 $ 31 $ 31 $ 31
Construction..................... 1991 1991 $ 906 $ 102 $ 256 $ 154 $ 154
Material Handling................ 1991 1991 $ 1,383 $ 0 $ 269 $ 269 $ 269
Office Equipment................. 1991 1991 $ 1,233 $ 0 $ 0 $ 0 $ 0
Printing......................... 1991 1991 $ 19,967 $ 0 $ 6 $ 6 $ 6
Retail........................... 1991 1991 $ 6,714 $ 557 $ 639 $ 83 $ 83
Sanitation....................... 1991 1991 $ 167,899 $ 168,591 $ 172,406 $ 3,815 $ 3,815
Agriculture...................... 1991 1992 $ 7,013 $ 1,133 $ 300 $ (834) $ (773)
Computers........................ 1991 1992 $ 451,724 $ 57,141 $ 55,313 $ (1,828) $ (38,009)
Construction..................... 1991 1992 $ 233,875 $ 115,470 $ 119,943 $ 4,473 $ (49,808)
Copiers.......................... 1991 1992 $ 4,634 $ (1,798) $ 336 $ 2,134 $ 0
Fixture.......................... 1991 1992 $10,326,838 $1,421,047 $ 614 $(1,420,433) $ 0
Furniture........................ 1991 1992 $ 3,478 $ 1 $ 1 $ 0 $ 0
Material Handling................ 1991 1992 $ 25,677 $ 10,492 $ 11,432 $ 940 $ (3,074)
Medical.......................... 1991 1992 $ 12,817 $ 100 $ 100 $ 0 $ (10,859)
Manufacturing & Production....... 1991 1992 $ 43,629 $ (1,124) $ 1,754 $ 2,878 $ (32,166)
Office Equipment................. 1991 1992 $ 8,342 $ 8,593 $ 3,261 $ (5,332) $ 0
Printing......................... 1991 1992 $ 16,961 $ 790 $ 944 $ 154 $ (9,907)
Restaurant....................... 1991 1992 $ 35,504 $ 22,369 $ 8,777 $ (13,592) $ 0
Retail........................... 1991 1992 $ 118,527 $ 273,200 $ 10,583 $ (262,617) $ (69,026)
Sanitation....................... 1991 1992 $ 253,845 $ 111,627 $ 115,785 $ 4,158 $ 0
Telecommunications............... 1991 1992 $ 12,916 $ 7,936 $ 9,356 $ 1,420 $ (2,588)
Miscellaneous.................... 1991 1992 $ 53,827 $ 21,578 $ 13,932 $ (7,646) $ 1,797
Agriculture...................... 1991 1993 $ 57,287 $ 7,456 $ 9,998 $ 2,542 $ (18,745)
Automotive....................... 1991 1993 $ 6,266 $ 1,328 $ 1,427 $ 99 $ (2,344)
Computers........................ 1991 1993 $ 1,051,652 $ 162,294 $ 207,909 $ 45,615 $ (325,207)
Construction..................... 1991 1993 $ 464,100 $ 55,261 $ 78,501 $ 23,240 $ (73,626)
Fixture.......................... 1991 1993 $ 2,403 $ 0 $ 0 $ 0 $ (15,392)
Furniture........................ 1991 1993 $ 99,455 $ 25,656 $ 15,551 $ (10,105) $ (138,905)
Medical.......................... 1991 1993 $ 1,313,194 $ 708,948 $ 710,991 $ 2,043 $ (81,725)
Manufacturing & Production....... 1991 1993 $ 207,168 $ 25,494 $ 33,904 $ 8,410 $ (2,771)
Office Equipment................. 1991 1993 $ 50,397 $ 10,621 $ 11,360 $ 739 $ (12,948)
Reprographics.................... 1991 1993 $ 3,898 $ 464 $ 464 $ 0 $ (12,279)
Restaurant....................... 1991 1993 $ 52,281 $ 8,374 $ 11,424 $ 3,050 $ (45,442)
Retail........................... 1991 1993 $ 107,672 $ 6,184 $ 14,538 $ 8,354 $ (5,137)
Sanitation....................... 1991 1993 $ 369,044 $ 58,844 $ 72,766 $ 13,922 $ (3,854)
Telecommunications............... 1991 1993 $ 13,462 $ 609 $ 995 $ 386 $ (1,686)
Transportation................... 1991 1993 $ 3,762 $ 271 $ 612 $ 341 $ 0
Construction..................... 1992 1993 $ 14,788 $ (961) $ 0 $ 961 $ 0
Retail........................... 1992 1993 $ 4,093 $ (139) $ 396 $ 535 $ (2,058)
Agriculture...................... 1991 1994 $ 37,987 $ 10,692 $ 14,276 $ 3,584 $ (1,742)
Automotive....................... 1991 1994 $ 54,591 $ 161 $ 190 $ 29 $ 0
Computers........................ 1991 1994 $ 3,845,015 $ 145,861 $ 176,290 $ 30,428 $ (761,570)
Construction..................... 1991 1994 $ 144,438 $ 8,068 $ 10,874 $ 2,806 $ (2,060)
Copiers.......................... 1991 1994 $ 2,041 $ (0) $ 89 $ 89 $ 0
</TABLE>
B-21
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Environmental.................... 1991 1994 $ 213,173 $ 94,203 $ 123,051 $ 28,848 $ (38,471)
Fixture.......................... 1991 1994 $ 234,136 $ 31,188 $ 32,228 $ 1,040 $ (64,973)
Furniture........................ 1991 1994 $ 544,084 $ (33,508) $ 42,733 $ 76,241 $ (111,133)
Material Handling................ 1991 1994 $ 27,610 $ 9,861 $ 12,180 $ 2,320 $ (8,523)
Medical.......................... 1991 1994 $ 166,398 $ 1,386 $ 15,777 $ 14,391 $ 490
Manufacturing & Production....... 1991 1994 $ 351,497 $ 31,295 $ 56,139 $ 24,844 $ (79,430)
Office Equipment................. 1991 1994 $ 30,245 $ 0 $ 126 $ 125 $ 0
Printing......................... 1991 1994 $ 1,066,789 $ 210,962 $ 210,962 $ 0 $ (222,154)
Restaurant....................... 1991 1994 $ 70,707 $ (339) $ 796 $ 1,136 $ (10,709)
Retail........................... 1991 1994 $ 1,381,039 $ 152,323 $ 153,469 $ 1,146 $ (361,934)
Sanitation....................... 1991 1994 $ 173,772 $ 2,892 $ 4,374 $ 1,482 $ 0
Video............................ 1991 1994 $ 8,139 $ (1) $ 327 $ 328 $ 0
Fixture.......................... 1992 1994 $ 15,450 $ 1,223 $ 1,552 $ 328 $ (8,169)
Manufacturing & Production....... 1992 1994 $ 122,247 $ 21,475 $ 31,910 $ 10,435 $ (37,107)
Furniture........................ 1994 1994 $ 65,659 $ 69,225 $ 73,420 $ 4,195 $ 0
Computers........................ 1991 1995 $14,393,689 $1,892,673 $1,681,499 $ (211,174) $ (60,114)
Construction..................... 1991 1995 $ 238,913 $ 14,433 $ 27,420 $ 12,987 $ (149,560)
Copiers.......................... 1991 1995 $ 39,507 $ 3,456 $ 4,077 $ 621 $ 13,504
Fixtures......................... 1991 1995 $ 804,453 $ 113,148 $ 89,760 $ (23,388) $ (16,463)
Furniture........................ 1991 1995 $ 603,534 $ 29,758 $ 76,781 $ 47,023 $ 0
Medical.......................... 1991 1995 $ 3,713,348 $1,692,752 $2,084,752 $ 392,000 $ (260,046)
Manufacturing & Production....... 1991 1995 $ 3,123,635 $ 917,619 $ 768,141 $ (149,478) $(1,022,443)
Office Equipment................. 1991 1995 $ 347,197 $ 17,431 $ 17,435 $ 5 $ (3,502)
Retail........................... 1991 1995 $ 1,765,207 $ 206,416 $ 117,745 $ (88,670) $ 854,893
Sanitation....................... 1991 1995 $ 26,224 $ 6,541 $ (655) $ (7,196) $ 0
Telecommunications............... 1991 1995 $ 373,595 $ 37,285 $ 38,143 $ 858 $ (103,967)
Video Production................. 1991 1995 $ 192,070 $ 4,450 $ 23,511 $ 19,062 $ 55,805
Furniture........................ 1993 1995 $ 54,942 $ 42,999 $ 23,436 $ (19,562)
Material Handling................ 1993 1995 $ 46,931 $ 13,325 $ 13,753 $ 428 $ 0
Restaurant....................... 1994 1995 $ 436,966 $ 379,595 $ 411,179 $ 31,584 $ (17,421)
Retail........................... 1994 1995 $ 35,025 $ 10,101 $ 10,120 $ 19
Telecommunications............... 1994 1995 $ 19,591 $ 11,665 $ 1,542 $ (10,123) $ (13,275)
Fixtures......................... 1995 1995 $ 25,958 $ 26,768 $ 26,866 $ 99
Agriculture...................... 1991 1996 $ 7,362 $ 365 $ 0 $ (365) $ (365)
Computers........................ 1991 1996 $ 3,287,984 $ 417,743 $ 317,557 $ (100,185) $ 469,256
Fixtures......................... 1991 1996 $ 142,743 $ 1,011 $ 0 $ (1,011) $ (1,011)
Furniture........................ 1991 1996 $ 1,670,320 $ (155,540) $ 83,650 $ 239,190 $ 303,948
Medical.......................... 1991 1996 $ 2,023,960 $ 774,664 $ 377,555 $ (397,109) $ 459,686
Manufacturing & Production....... 1991 1996 $ 160,029 $ 4,540 $ 1,849 $ (2,691) $ (812)
Restaurant....................... 1991 1996 $ 85,715 $ (780) $ 7,296 $ 8,077 $ 11,319
Retail........................... 1991 1996 $ 71,310 $ 8,481 $ 1,150 $ (7,331) $ 1,390
Sanitation....................... 1991 1996 $ 4,363 $ 433 $ 0 $ (433) $ (433)
Telecommunications............... 1991 1996 $ 95,843 $ 6,362 $ 9,248 $ 2,886 $ 7,641
Transportation................... 1991 1996 $ 815,481 $ 30,308 $ 85,288 $ 54,980 $ 86,899
Video............................ 1991 1996 $ 180,577 $ 3,186 $ 12,790 $ 9,604 $ 17,915
Automotive....................... 1992 1996 $ 97,543 $ 11,860 $ 12,140 $ 278 $ 0
Environmental.................... 1992 1996 $ 157,907 $ 3,659 $ 8,533 $ 4,874 $ (11,597)
Retail........................... 1992 1996 $ 53,003 $ 3,147 $ 3,897 $ 750 $ 0
Telecommunications............... 1992 1996 $ 362,250 $ (28,983) $ 4,851 $ 33,834 $ (21,366)
Manufacturing & Production....... 1993 1996 $ 16,123 $ 0 $ 0 $ 0 $ 0
Computers........................ 1994 1996 $ 18,698 $ 216 $ 441 $ 255 $ (11,060)
</TABLE>
B-22
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction..................... 1994 1996 $ 14,015 $ 1,020 $ 1,020 $ 0 $ 0
Medical.......................... 1994 1996 $ 18,685 $ 15,364 $ 3,000 $ (12,364) $ (9,364)
Manufacturing & Production....... 1994 1996 $ 35,203 $ 0 $ 0 $ 0 $ (21,180)
Office Equipment................. 1994 1996 $ 17,293 $ 596 $ 596 $ 0 $ 0
Telecommunications............... 1994 1996 $ 4,820 $ 0 $ 0 $ 0 $ 0
Computer......................... 1991 1997 $ 5,327 $ 94 $ 3,865 $ 3,771 $ 4,461
Medical.......................... 1991 1997 $ 2,499,782 $ 258,686 $ 258,686 $ 0 $ 258,686
Retail........................... 1991 1997 $ 30,855 $ 0 $ 2,500 $ 2,500 $ 3,475
Retail........................... 1992 1997 $ 97,767 $ 1 $ 79 $ 78 $ 0
Sanitation....................... 1992 1997 $ 147,542 $ 0 $ 1,640 $ 1,640 $ 0
Video Production................. 1992 1997 $ 66,253 $ 11,586 $ 12,305 $ 719 $ 3,869
Computers........................ 1993 1997 $ 21,303 $ 0 $ 11 $ 11 $ 0
Manufacturing & Production....... 1993 1997 $ 36,069 $ (0) $ 736 $ 736 $ 0
Restaurant....................... 1993 1997 $ 25,794 $ 784 $ 1,400 $ 616 $ 0
Retail........................... 1993 1997 $ 1,442,919 $ 134,489 $ 182,728 $ 48,239 $ (136,145)
Automotive....................... 1994 1997 $ 16,431 $ 5,412 $ 6,561 $ 1,149 $ (376)
Computers........................ 1994 1997 $ 24,615 $ 1,159 $ 1,350 $ 191 $ (4,988)
Fixtures......................... 1994 1997 $ 16,090 $ 872 $ 726 $ (146) $ (5,244)
Furniture........................ 1994 1997 $ 12,814 $ 2,514 $ 0 $ (2,514) $ 0
Manufacturing & Production....... 1994 1997 $ 86,687 $ 26 $ 1,462 $ 1,436 $ (26,470)
Material Handling................ 1994 1997 $ 15,324 $ 0 $ 242 $ 242 $ (5,888)
Medical.......................... 1994 1997 $ 485,541 $ 43,278 $ 31,102 $ (12,176) $ 12,051
Telecommunications............... 1994 1997 $ 28,364 $ 1,496 $ 2,201 $ 705 $ (9,751)
Manufacturing & Production....... 1995 1997 $ 25,764 $ 323 $ 1,349 $ 1,025 $ 0
Restaurant....................... 1995 1997 $ 15,364 $ (0) $ 0 $ 0 $ (9,219)
Telecommunications............... 1995 1997 $ 34,104 $ 22,816 $ 0 $ (22,816) $ 0
Audio............................ 1996 1997 $ 46,335 $ 0 $ 0 $ 0 $ 0
Automotive....................... 1996 1997 $ 19,219 $ 602 $ 2,799 $ 2,197 $ 0
Computers........................ 1996 1997 $ 81,936 $ 30,716 $ 32,590 $ 1,873 $ 0
Restaurant....................... 1996 1997 $ 14,346 $ 13,996 $ 16,964 $ 2,968 $ 0
Telecommunications............... 1996 1997 $ 50,797 $ 886 $ 886 $ 0 $ 0
Construction..................... 1991 1998 $ 13,317 $ 1,046 $ 1,244 $ 198 $ 0
Restaurant....................... 1993 1998 $ 12,233 $ 0 $ 0 $ (0) $ 0
Retail........................... 1993 1998 $ 1,191,185 $ 112,046 $ 166,375 $ 54,329 $(1,119,715)
Computers........................ 1994 1998 $ 34,227 $ 398 $ 1,256 $ 858 $ 0
Furniture........................ 1994 1998 $ 330,381 $ 2,281 $ 3,432 $ 1,152 $ (28,476)
Manufacturing & Production....... 1994 1998 $ 86,801 $ 2,833 $ 1,036 $ (1,796) $ (39,369)
Restaurant....................... 1994 1998 $ 12,802 $ 0 $ 1,452 $ 1,452 $ 0
Computers........................ 1995 1998 $ 107,763 $ 0 $ 2,368 $ 2,368 $ 0
Manufacturing & Production....... 1995 1998 $ 123,207 $ 0 $ 1,069 $ 1,069 $ 0
Restaurant....................... 1995 1998 $ 60,183 $ 0 $ 3,116 $ 3,116 $ 0
Telecommunications............... 1995 1998 $ 16,828 $ 0 $ 0 $ 0 $ 0
Automotive....................... 1996 1998 $ 22,278 $ 0 $ 2,245 $ 2,245 $ 0
Computers........................ 1996 1998 $ 33,537 $ 0 $ 0 $ 0 $ 0
Furniture........................ 1996 1998 $ 470,368 $ 22,468 $ 396,938 $ 374,470 $ (489,183)
Manufacturing & Production....... 1996 1998 $ 13,260 $ 0 $ 445 $ 445 $ 0
Video Prodroduction.............. 1996 1998 $ 53,372 $ 622 $ 624 $ 2 $ 0
Computers........................ 1991 1999 $ 12,981 $ 84 $ 0 $ (84) $ 0
Telecommunications............... 1991 1999 $ 17,935 $ 0 $ 1,300 $ 1,300 $ 539
Computers........................ 1994 1999 $ 15,606 $ 0 $ 1,993 $ 1,993 $ 826
Manufacturing & Production....... 1994 1999 $ 26,567 $ 156 $ 336 $ 180 $ 139
</TABLE>
B-23
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical.......................... 1994 1999 $ 15,008 $ 1,383 $ 1,757 $ 374 $ 728
Restaurant....................... 1994 1999 $ 29,171 $ 2,850 $ 1,552 $ (1,297) $ 643
Retail........................... 1995 1999 $ 16,346 $ 0 $ 1 $ 1 $ 1
Computers........................ 1996 1999 $ 44,246 $ 0 $ 1,521 $ 1,521 $ 630
Construction..................... 1996 1999 $ 29,353 $ 1,024 $ 1,774 $ 749 $ 735
Furniture........................ 1996 1999 $ 51,853 $ 0 $ 0 $ 0 $ 0
Medical.......................... 1996 1999 $ 11,554 $ 0 $ 0 $ 0 $ 0
Computers........................ 1991 1999 $ 22,151 $ 262 $ 0 $ (262) $ 0
M & P............................ 1994 1999 $ 18,111 $ 3,810 $ 0 $ (3,810) $ 0
M & P............................ 1994 1999 $ 20,823 $ 208 $ 208 $ (0) $ 86
Computers........................ 1994 1999 $ 16,107 $ 24 $ 487 $ 463 $ 202
Computers........................ 1994 1999 $ 21,282 $ 24 $ 1,071 $ 1,047 $ 444
Restaurant....................... 1994 1999 $ 17,531 $ 182 $ 183 $ 1 $ 76
Video Products................... 1994 1999 $ 59,696 $ 0 $ 500 $ 500 $ 207
Telecommunications............... 1994 1999 $ 28,289 $ 0 $ 1,475 $ 1,475 $ 611
Fixture.......................... 1994 1999 $ 25,973 $ 0 $ 0 $ (0) $ 0
Fixture.......................... 1994 1999 $ 15,912 $ 700 $ 160 $ (540) $ 66
Mnfctrg.......................... 1994 1999 $ 13,786 $ 142 $ 781 $ 639 $ 324
Restaurant....................... 1994 1999 $ 525,049 $ 32,753 $ 68,282 $ 35,529 $ 28,303
Computers........................ 1995 1999 $ 19,978 $ 0 $ 935 $ 935 $ 387
Fixture.......................... 1995 1999 $ 19,087 $ 598 $ 842 $ 244 $ 349
M & P............................ 1995 1999 $ 19,166 $ 3,426 $ 4,100 $ 674 $ 1,699
Computers........................ 1995 1999 $ 36,088 $ 0 $ 0 $ 0 $ 0
Computers........................ 1995 1999 $ 167,544 $ 0 $ 7,000 $ 7,000 $ 2,901
Computers........................ 1995 1999 $ 37,362 $ 0 $ 0 $ 0 $ 0
M & P............................ 1995 1999 $ 14,800 $ 0 $ 0 $ 0 $ 0
Restaurant....................... 1996 1999 $ 13,455 $ 0 $ 2,150 $ 2,305 $ 891
Computers........................ 1996 1999 $ 20,856 $ 0 $ 0 $ 16 $ 0
Retail........................... 1996 1999 $ 12,334 $ 360 $ 1,147 $ 787 $ 476
Telecommunications............... 1996 1999 $ 10,758 $ 0 $ 0 $ 10 $ 0
Printing......................... 1996 1999 $ 14,228 $ 0 $ 0 $ 1 $ 0
Construction..................... 1996 1999 $ 28,878 $ 0 $ 0 $ 0 $ 0
Computers........................ 1996 1999 $ 40,010 $ 0 $ 0 $ 2 $ 0
M & P............................ 1997 1999 $ 12,825 $ 0 $ 0 $ 0 $ 0
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
B-24
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P., Series D for the eight years ended December 31,
1999. Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical......................... 1991 1992 $ 48,364 $ 0 $ 0 $ 0 $ 0
Medical......................... 1992 1992 $ 422,800 $ 406,812 $ 180,617 $ (226,195) $ (21,855)
Manufacturing & Production...... 1992 1992 $ 922,806 $ 0 $ 0 $ 0 $ 0
Telecommunications.............. 1991 1992 $ 2,965 $ 3,153 $ 0 $ (3,153) $ 0
Telecommunications.............. 1992 1992 $ 9,287 $ 2,960 $ 19,223 $ 16,262 $ 9,564
Video Production................ 1992 1992 $ 66,253 $ 0 $ 0 $ 0 $ 0
Medical......................... 1991 1993 $ 1,473,719 $ 767,962 $ 767,962 $ 0 $ (367,414)
Manufacturing & Production...... 1991 1993 $ 729,750 $ 554,748 $ 690,006 $ 135,258 $ 230,288
Restaurant...................... 1991 1993 $ 10,967 $ 9,300 $ 12,098 $ 2,798 $ 5,185
Computers....................... 1992 1993 $ 804,823 $ 52,481 $ 51,141 $ (1,340) $ (28,781)
Construction.................... 1992 1993 $ 4,788 $ 1,071 $ 1,076 $ 5 $ (2,902)
Copiers......................... 1992 1993 $ 3,464 $ 1,071 $ 1,072 $ 1 $ (1,699)
Furniture....................... 1992 1993 $ 38,333 $ 847 $ 4,245 $ 3,398 $ (26,422)
Manufacturing & Production...... 1992 1993 $ 1,659,018 $ 235,971 $ 239,336 $ 3,365 $ (108,394)
Material Handling............... 1992 1993 $ 4,261 $ 1,826 $ 1,826 $ 0 $ (1,617)
Medical......................... 1992 1993 $ 1,053,825 $ 421,329 $ 499,671 $ 78,342 $ (312,299)
Office Equipment................ 1992 1993 $ 7,692 $ 968 $ 2,919 $ 1,951 $ (3,263)
Sanitation...................... 1992 1993 $ 9,167 $ 1,457 $ 1,457 $ 0 $ (6,364)
Telecommunications.............. 1992 1993 $ 210,033 $ 97,163 $ 97,355 $ 192 $ (118,167)
Medical......................... 1993 1993 $ 190,018 $ 27,839 $ 31,758 $ 3,919 $ (15,146)
Computers....................... 1991 1994 $ 5,918,285 $ 1,988,610 $1,988,610 $ 0 $ 364,917
Medical......................... 1991 1994 $ 4,337,672 $ 1,324,650 $1,325,089 $ 440 $ 275,632
Manufacturing & Production...... 1991 1994 $ 564,133 $ 135,237 $ 139,295 $ 4,058 $ (4,466)
Mining.......................... 1991 1994 $ 6,882,703 $ 1,911,959 $1,911,959 $ 0 $ (335,688)
Telecommunications.............. 1991 1994 $ 4,457 $ 0 $ 207 $ 207 $ 0
Agriculture..................... 1992 1994 $ 14,661 $ 308 $ 392 $ 84 $ (5,218)
Automotive...................... 1992 1994 $ 2,180 $ 596 $ 596 $ 0 $ (752)
Computers....................... 1992 1994 $ 1,742,271 $ 515,871 $ 517,638 $ 1,767 $ (202,085)
Construction.................... 1992 1994 $ 6,320 $ 1,583 $ 1,511 $ (72) $ (575)
Copiers......................... 1992 1994 $ 27,272 $ 3,088 $ 3,088 $ 0 $ (6,206)
Environmental................... 1992 1994 $ 18,502 $ 3,377 $ 3,334 $ (43) $ (8,169)
Fixtures........................ 1992 1994 $ 30,123 $ 4,000 $ 4,966 $ 966 $ 0
Furniture....................... 1992 1994 $ 128,339 $ 33,457 $ 34,909 $ 1,452 $ (45,840)
Material Handling............... 1992 1994 $ 1,292,595 $ 1,131,118 $1,129,165 $ (1,953) $ (7,118)
Manufacturing & Production...... 1992 1994 $ 160,816 $ 85,334 $ 89,861 $ 4,527 $ (30,668)
Office Equipment................ 1992 1994 $ 15,083 $ 3,869 $ 3,866 $ (3) $ (5,979)
Photography..................... 1992 1994 $ 3,696 $ 747 $ 747 $ 0 $ (1,651)
Printing........................ 1992 1994 $ 12,680 $ 728 $ 728 $ 0 $ (2,409)
Restaurant...................... 1992 1994 $ 85,349 $ 4,717 $ 3,740 $ (977) $ (7,665)
Retail.......................... 1992 1994 $ 14,260 $ 1,686 $ 1,686 $ 0 $ (3,106)
Sanitation...................... 1992 1994 $ 2,333 $ 707 $ 707 $ 0 $ 0
Telecommunications.............. 1992 1994 $ 10,655 $ 3,409 $ 3,569 $ 160 $ (3,119)
Transportation.................. 1992 1994 $ 2,452 $ 716 $ 442 $ (274) $ (1,046)
Video Production................ 1992 1994 $ 6,320 $ 2,055 $ 1,755 $ (301) $ (2,283)
Medical......................... 1993 1994 $ 99,286 $ 21,595 $ 21,772 $ 178 $ 0
Restaurant...................... 1994 1994 $ 287,433 $ 276,973 $ 296,218 $ 19,245 $ 0
</TABLE>
B-25
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers....................... 1991 1995 $ 54,716 $ 6,105 $ 8,769 $ 2,664 $ 66,761
Fixtures........................ 1991 1995 $ 20,592 $ 6,858 $ 466 $ (6,391) $ (5,577)
Furniture....................... 1991 1995 $ 671,313 $ 182,750 $ 320,524 $ 137,774 $ (6,770)
Medical......................... 1991 1995 $ 4,238,594 $ 737,052 $ 700,553 $ 17,535 $ (71,628)
Manufacturing & Production...... 1991 1995 $ 27,177 $ 1,358 $ 0 $ (1,358) $ (1,358)
Retail.......................... 1991 1995 $ 130,096 $ 31,986 $ 65,301 $ 33,315 $ (1,749)
Sanitation...................... 1991 1995 $ 74,519 $ 8,525 $ 40,968 $ 32,443 $ (3,429)
Agriculture..................... 1992 1995 $ 61,210 $ 12,058 $ 12,959 $ 1,475 $ (15,540)
Audio........................... 1992 1995 $ 15,467 $ 2,721 $ 0 $ (1,964) $ (1,964)
Automotive...................... 1992 1995 $ 21,561 $ 11,527 $ (0) $ (1,840) $ (1,840)
Computers....................... 1992 1995 $ 212,151 $ 24,123 $ 20,948 $ (2,754) $ (21,058)
Construction.................... 1992 1995 $ 39,933 $ 7,207 $ 6,398 $ 0 $ 38
Furniture....................... 1992 1995 $ 12,485 $ 1,209 $ 0 $ (1,209) $ (1,209)
Material Handling............... 1992 1995 $ 2,697,355 $ 3,586,072 $3,969,642 $1,139,585 $ (724,447)
Medical......................... 1992 1995 $ 3,348,398 $ 714,943 $ 494,343 $ (220,601) $(1,322,760)
Manufacturing & Production...... 1992 1995 $ 1,101,940 $ 268,754 $ 269,476 $ 4,782 $ (67,950)
Office Equipment................ 1992 1995 $ 2,469 $ 0 $ 198 $ 198 $ 0
Restaurant...................... 1992 1995 $ 21,586 $ 3,710 $ 3,732 $ 22 $ 0
Retail.......................... 1992 1995 $ 160,369 $ 29,643 $ 26,957 $ 1,227 $ (751)
Sanitation...................... 1992 1995 $ 6,460 $ 1,545 $ 1,497 $ (48) $ 0
Telecommunications.............. 1992 1995 $ 224,337 $ 37,338 $ 70,923 $ 33,585 $ (718)
Video Production................ 1992 1995 $ 95,387 $ 25,897 $ 30,829 $ 5,442 $ (428)
Medical......................... 1993 1995 $ 426,311 $ 0 $ 0 $ 0 $ 0
Material Handling............... 1993 1995 $ 26,836 $ 19,079 $ 0 $ (19,079) $ (19,078)
Agriculture..................... 1994 1995 $ 16,304 $ 9,913 $ 10,262 $ 348 $ 0
Computers....................... 1994 1995 $ 16,175 $ 15,485 $ 0 $ (15,485) $ (15,485)
Medical......................... 1994 1995 $ 30,222 $ 5,772 $ 8,996 $ 3,225 $ 0
Manufacturing & Production...... 1994 1995 $ 17,817 $ 14,606 $ 15,678 $ 1,072 $ 0
Restaurant...................... 1994 1995 $ 312,000 $ 247,116 $ 271,401 $ 24,285 $ 0
Medical......................... 1995 1995 $ 10,146 $ 1,999 $ 2,000 $ 1 $ 0
Computers....................... 1991 1996 $ 16,882 $ (2) $ 105 $ 107 $ 0
Fixtures........................ 1991 1996 $ 25,308 $ 1,210 $ 3,244 $ 2,034 $ 4,404
Printing........................ 1991 1996 $ 20,891 $ (95) $ 556 $ 650 $ 1,280
Audio........................... 1992 1996 $ 16,137 $ 1,887 $ 1,905 $ 18 $ (1,367)
Automotive...................... 1992 1996 $ 33,805 $ 5,441 $ 2,000 $ (3,441) $ (722)
Computers....................... 1992 1996 $ 280,451 $ 31,923 $ 10,348 $ (21,575) $ (20,806)
Construction.................... 1992 1996 $ 50,624 $ 5,797 $ 6,467 $ 670 $ (1,915)
Copiers......................... 1992 1996 $ 11,160 $ 1,449 $ 0 $ (1,449) $ (845)
Environmental................... 1992 1996 $ 6,810 $ 936 $ 0 $ (936) $ 0
Fixtures........................ 1992 1996 $ 99,216 $ 11,745 $ 20,000 $ 8,255 $ (1,825)
Furniture....................... 1992 1996 $ 20,459 $ 3,706 $ 0 $ (3,706) $ (70)
Material Handling............... 1992 1996 $20,615,957 $10,585,846 $12,476,033 $1,891,187 $ 303,725
Medical......................... 1992 1996 $ 2,462,850 $ 252,786 $ 243,792 $ (8,994) $ (167,648)
Manufacturing & Production...... 1992 1996 $ 1,414,399 $ 117,455 $ 59,071 $ (58,384) $ (74,762)
Office Equipment................ 1992 1996 $ 60,154 $ 9,886 $ 9,300 $ (586) $ (531)
Photography..................... 1992 1996 $ 7,252 $ 1,286 $ 0 $ (1,286) $ 0
Printing........................ 1992 1996 $ 16,757 $ 2,390 $ 0 $ (2,390) $ (2,390)
Restaurant...................... 1992 1996 $ 108,729 $ 13,773 $ 6,318 $ (7,455) $ (3,765)
Retail.......................... 1992 1996 $ 14,165 $ 609 $ 768 $ 159 $ 0
Sanitation...................... 1992 1996 $ 44,503 $ 6,313 $ 4,821 $ (1,491) $ (5,206)
Telecommunications.............. 1992 1996 $ 427,770 $ 44,812 $ 157,751 $ 112,939 $ 72,457
Video Production................ 1992 1996 $ 21,426 $ 3,259 $ 2,455 $ (804) $ 0
</TABLE>
B-26
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical......................... 1993 1996 $ 133,170 $ 4,221 $ 61,949 $ 57,728 $ 6,191
Manufacturing & Production...... 1993 1996 $ 36,441 $ (484) $ 0 $ 484 $ 0
Office Equipment................ 1993 1996 $ 24,195 $ (4) $ 0 $ 4 $ 0
Telecommunications.............. 1993 1996 $ 24,949 $ (4) $ 881 $ 885 $ 0
Computers....................... 1994 1996 $ 252,860 $ 4,417 $ 58,071 $ 53,654 $ 14,037
Fixtures........................ 1994 1996 $ 12,057 $ 0 $ 781 $ 781 $ (6,175)
Furniture....................... 1994 1996 $ 27,035 $ 23,539 $ 26,106 $ 2,567 $ 5,735
Restaurant...................... 1994 1996 $ 16,307 $ 13,051 $ 4,750 $ (8,301) $ (8,301)
Telecommunications.............. 1994 1996 $ 15,157 $ 10,262 $ 11,572 $ 1,310 $ (7,857)
Computers....................... 1995 1996 $ 6,916 $ 201 $ 750 $ 549 $ (4,753)
Fixtures........................ 1995 1996 $ 15,241 $ 9,204 $ 9,796 $ 593 $ 0
Medical......................... 1995 1996 $ 6,162 $ 1,353 $ 19 $ 0 $ 0
Manufacturing & Production...... 1995 1996 $ 26,538 $ 25,942 $ 0 $ (25,942) $ (25,942)
Restaurant...................... 1995 1996 $ 508,782 $ 434,244 $ 487,909 $ 53,665 $ 0
Manufacturing & Production...... 1996 1996 $ 51,625 $ 44,861 $ 48,959 $ 4,098 $ 0
Medical......................... 1991 1997 $ 1,149,504 $ 276,606 $ 96,118 $ 0 $ 188,884
Automotive...................... 1992 1997 $ 24,515 $ 4,367 $ 3,040 $ (1,328) $ 1,981
Computers....................... 1992 1997 $ 347,614 $ 11,917 $ 19,814 $ 7,898 $ 36,824
Copiers......................... 1992 1997 $ 9,748 $ 976 $ 976 $ 0 $ 850
Fixture......................... 1992 1997 $ 104,162 $ 0 $ 0 $ 0 $ 0
Furniture....................... 1992 1997 $ 32,575 $ 5,708 $ 2,170 $ (3,538) $ 1,208
Manufacturing & Production...... 1992 1997 $ 141,478 $ 11,341 $ 7,043 $ (4,298) $ 6,046
Medical......................... 1992 1997 $ 954,760 $ 103,649 $ 109,333 $ 6,185 $ 84,846
Printing........................ 1992 1997 $ 85,513 $ 7,321 $ 5,849 $ (1,472) $ 5,523
Retail.......................... 1992 1997 $ 362,443 $ 60,710 $ 84,800 $ 24,090 $ 79,536
Sanitation...................... 1992 1997 $ 32,997 $ 3,983 $ 0 $ (3,983) $ (0)
Telecommunications.............. 1992 1997 $ 18,803 $ 2,524 $ 0 $ (2,524) $ 0
Video Production................ 1992 1997 $ 20,356 $ 3,472 $ 3,494 $ 22 $ 2,691
Computers....................... 1993 1997 $ 39,800 $ 7,443 $ 7,997 $ 554 $ 0
Fixture......................... 1993 1997 $ 79,718 $ 3,455 $ 3,455 $ 0 $ (12,386)
Furniture....................... 1993 1997 $ 23,436 $ 0 $ 1,307 $ 1,307 $ 0
Manufacturing & Production...... 1993 1997 $ 77,698 $ 421 $ 9,876 $ 9,455 $ 1,527
Restaurant...................... 1993 1997 $ 17,005 $ (3) $ 0 $ 3 $ 0
Retail.......................... 1993 1997 $ 42,786 $ 5,800 $ 32 $ (5,769) $ 0
Telecommunications.............. 1993 1997 $ 76,929 $ 2,509 $ 2,622 $ 113 $ 0
Video Production................ 1993 1997 $ 233,785 $ 52,954 $ 32,076 $ (20,879) $ 0
Computers....................... 1994 1997 $ 125,746 $ 3,499 $ 8,344 $ 4,845 $ (14,285)
Fixture......................... 1994 1997 $ 90,785 $ 6,445 $ 9,149 $ 2,704 $ (33,609)
Manufacturing & Production...... 1994 1997 $ 13,760 $ 962 $ 1,381 $ 419 $ (3,712)
Restaurant...................... 1994 1997 $ 51,400 $ 488 $ 2,198 $ 1,710 $ (18,580)
Retail.......................... 1994 1997 $ 1,501,983 $ 319,666 $ 256,568 $ 2 $ (295,191)
Telecommunications.............. 1994 1997 $ 56,505 $ 546 $ 1,770 $ 1,224 $ (8,729)
Computers....................... 1995 1997 $ 1,754,928 $ 299,886 $ 568,598 $ 1,619 $ 983,173
Manufacturing & Production...... 1995 1997 $ 1,732,267 $ 0 $ 570,337 $ 235,733 $ (603,350)
Medical......................... 1995 1997 $ 88,444 $ 784 $ 4,806 $ 4,022 $ 0
Printing........................ 1995 1997 $ 549,350 $ 58,767 $ 451,179 $ 0 $ 597,439
Retail.......................... 1995 1997 $ 20,061 $ 11,468 $ 11,761 $ 292 $ 0
Computers....................... 1996 1997 $ 36,872 $ 34,667 $ 400 $ (34,267) $ 0
Fixture......................... 1996 1997 $ 51,207 $ 40,982 $ 0 $ (32,982) $ 0
Manufacturing & Production...... 1996 1997 $ 14,123 $ 12,443 $ 1,500 $ (10,943) $ 0
Printing........................ 1996 1997 $ 3,795 $ 0 $ 0 $ 0 $ 0
Computers....................... 1997 1997 $ 20,254 $ 17,290 $ 0 $ (17,290) $ 0
</TABLE>
B-27
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurant...................... 1997 1997 $ 53,637 $ 55,316 $ 64,495 $ 9,179 $ 0
Computers....................... 1991 1998 $ 27,771 $ 1,876 $ 0 $ (1,876) $ 0
Computers....................... 1992 1998 $ 23,813 $ 3,045 $ 0 $ (3,045) $ 2,289
Manufacturing & Production...... 1992 1998 $ 2,008,734 $ 531,576 $ 129,842 $ (401,734) $ 527,709
Medical......................... 1992 1998 $ 168,385 $ 17,866 $ 18,654 $ 788 $ 29,525
Computers....................... 1993 1998 $ 26,738 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1993 1998 $ 128,488 $ 5,953 $ 499 $ (5,454) $ 0
Office Equipment................ 1993 1998 $ 17,197 $ 0 $ 0 $ 0 $ 0
Retail.......................... 1993 1998 $ 14,272 $ 1,396 $ 0 $ (1,396) $ 0
Computers....................... 1994 1998 $ 72,515 $ 19,396 $ 817 $ (18,578) $ (3,808)
Fixtures........................ 1994 1998 $ 39,714 $ 6,382 $ 7,542 $ 1,160 $ (4,350)
Manufacturing & Production...... 1994 1998 $ 34,966 $ 230 $ 0 $ (230) $ (6,866)
Medical......................... 1994 1998 $ 47,024 $ 249 $ 968 $ 719 $ (8,582)
Restaurant...................... 1994 1998 $ 379,600 $ 27,557 $ 27,437 $ (120) $ 0
Retail.......................... 1994 1998 $ 281,194 $ 58,107 $ 39,134 $ (18,973) $ (14,891)
Telecommunications.............. 1994 1998 $ 20,637 $ 1,280 $ 2,088 $ 808 $ 0
Computers....................... 1995 1998 $ 2,164,520 $ 375,864 $ 344,018 $ (31,846) $ (361,280)
Manufacturing & Production...... 1995 1998 $ 24,669 $ 0 $ 0 $ 0 $ 0
Printing........................ 1995 1998 $ 1,491 $ 95 $ 573 $ 478 $ (24)
Restaurant...................... 1995 1998 $ 356,338 $ 249,255 $ 8,877 $ (240,378) $ 0
Telecommunications.............. 1995 1998 $ 17,306 $ 1,015 $ 2,260 $ 1,244 $ (4,677)
Video Production................ 1995 1998 $ 21,548 $ 0 $ 0 $ 0 $ 0
Computers....................... 1996 1998 $ 332,919 $ 3,286 $ 30,165 $ 26,879 $ (108,434)
Furniture....................... 1996 1998 $ 7,100 $ 305 $ 1,000 $ 695 $ (3,135)
Manufacturing & Production...... 1996 1998 $ 786,344 $ 45,860 $ 205,208 $ 159,348 $ (240,751)
Office Equipment................ 1996 1998 $ 32,350 $ 1,990 $ 11,837 $ 9,847 $ (6,957)
Computers....................... 1997 1998 $ 34,562 $ 32,385 $ 0 $ (32,385) $ 0
Fixtures........................ 1997 1998 $ 12,088 $ 8,697 $ 0 $ (8,697) $ 0
Manufacturing & Production...... 1997 1998 $ 62,069 $ 41,960 $ 51,209 $ 9,249 $ 0
Medical......................... 1997 1998 $ 6,606 $ 2,481 $ 2,545 $ 63 $ (4,132)
Restaurant...................... 1998 1998 $ 274,771 $ 263,404 $ 0 $ (263,404) $ 0
Computers....................... 1994 1999 $ 136,015 $ 674 $ 6,876 $ 6,202 $ (746)
Computers....................... 1994 1999 $ 484,152 $ 49,621 $ 77,274 $ 27,653 $ (8,379)
Manufacturing & Production...... 1994 1999 $ 12,534 $ 0 $ 908 $ 908 $ (98)
Manufacturing & Production...... 1994 1999 $ 25,719 $ 7,292 $ 7,701 $ 409 $ (835)
Telecommunications.............. 1994 1999 $ 12,190 $ 0 $ 0 $ 0 $ 0
Computers....................... 1996 1999 $ 3,812,276 $ 579,496 $ 837,009 $ 257,513 $ (90,758)
Manufacturing & Production...... 1996 1999 $ 8,961 $ 490 $ 1,550 $ 1,060 $ (168)
Medical......................... 1997 1999 $ 17,800 $ 0 $ 0 $ 0 $ 0
Telecommunications.............. 1997 1999 $ 263,816 $ 187,162 $ 0 $ (187,162) $ 0
Video Production................ 1997 1999 $ 20,226 $ 7,940 $ 6,640 $ (1,300) $ (720)
Medical......................... 1992 1999 $ 5,233 $ 1,102 $ 551 $ (551) $ (60)
M & P........................... 1992 1999 $ 1,341,720 $ 818,979 $ 818,979 $ 0 $ (88,803)
Computers....................... 1993 1999 $ 95,784 $ 12,594 $ 12,500 $ (94) $ (1,355)
Retail.......................... 1994 1999 $ 2,899 $ 1,335 $ 355 $ (980) $ (38)
Restaurant...................... 1994 1999 $ 12,592 $ 0 $ 124 $ 124 $ (13)
Restaurant...................... 1994 1999 $ 26,211 $ 0 $ 195 $ 195 $ (21)
Restaurant...................... 1994 1999 $ 11,043 $ (739) $ 0 $ 739 $ 0
Computers....................... 1994 1999 $ 10,966 $ 149 $ 54 $ (94) $ (6)
Fixtures........................ 1994 1999 $ 27,203 $ 2,693 $ 5,527 $ 2,834 $ (599)
M & P........................... 1994 1999 $ 15,526 $ 0 $ 0 $ 0 $ 0
Computers....................... 1994 1999 $ 345,122 $ (23,209) $ 5,916 $ 29,125 $ (641)
</TABLE>
B-28
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers....................... 1994 1999 $ 121,522 $ (7,903) $ 2,084 $ 9,987 $ (226)
Furniture....................... 1994 1999 $ 192,549 $ 22,516 $ 19,963 $ (2,553) $ (2,165)
Furniture....................... 1994 1999 $ 285,432 $ 44,461 $ 47,079 $ 2,618 $ (5,105)
Computers....................... 1994 1999 $ 13,011 $ (4) $ 51 $ 55 $ (6)
Furniture....................... 1994 1999 $ 41,055 $ 2,886 $ 3,518 $ 632 $ (381)
Computers....................... 1994 1999 $ 98,851 $ 2,552 $ 0 $ (2,552) $ 0
Computers....................... 1994 1999 $ 12,588 $ 2,732 $ 0 $ (2,732) $ 0
Computers....................... 1994 1999 $ 10,114 $ 0 $ 268 $ 268 $ (29)
Telecommunications.............. 1994 1999 $ 15,316 $ (668) $ 17 $ 685 $ (2)
Telecommunications.............. 1994 1999 $ 13,186 $ (2) $ 0 $ 2 $ 0
Telecommunications.............. 1994 1999 $ 12,405 $ (1) $ 301 $ 302 $ (33)
M & P........................... 1994 1999 $ 26,735 $ 559 $ 1,268 $ 709 $ (137)
Manufacturing & Production...... 1994 1999 $ 22,535 $ 0 $ 12 $ 12 $ (1)
Computers....................... 1995 1999 $ 26,257 $ (0) $ 0 $ 0 $ 0
M & P........................... 1995 1999 $ 24,145 $ 5,627 $ 0 $ (5,627) $ 0
Computers....................... 1995 1999 $ 32,228 $ 7,850 $ 0 $ (7,850) $ 0
Computers....................... 1995 1999 $ 12,729 $ 269 $ 305 $ 35 $ (33)
Computers....................... 1995 1999 $ 12,729 $ 269 $ 293 $ 23 $ (32)
Computers....................... 1995 1999 $ 37,862 $ 986 $ 0 $ (986) $ 0
Agriculture..................... 1995 1999 $ 19,492 $ 0 $ 464 $ 471 $ (50)
Manufacturing & Production...... 1995 1999 $ 33,425 $ 1,544 $ 1,775 $ 231 $ (192)
Restaurant...................... 1995 1999 $ 225,088 $ 39,338 $ 42,474 $ 3,136 $ (4,605)
Restaurant...................... 1995 1999 $ 53,838 $ 8,206 $ 10,000 $ 1,794 $ (1,084)
Computers....................... 1995 1999 $ 8,879 $ 4,011 $ 4,011 $ 0 $ (435)
Computers....................... 1995 1999 $ 4,433 $ 3,909 $ 3,909 $ 0 $ (424)
Computers....................... 1995 1999 $ 7,313 $ 988 $ 988 $ 0 $ (107)
Computers....................... 1995 1999 $ 51,748 $ 4,285 $ 4,285 $ 0 $ (465)
Computers....................... 1995 1999 $ 37,957 $ 8,603 $ 8,603 $ 0 $ (933)
Computers....................... 1995 1999 $ 99,621 $ 12,587 $ 141,303 $ 128,716 $ (15,322)
Computers....................... 1995 1999 $ 2,766 $ 1,984 $ 1,984 $ 0 $ (215)
Computers....................... 1995 1999 $ 2,572 $ 325 $ 3,315 $ 2,990 $ (359)
Computers....................... 1995 1999 $ 14,972 $ 4,187 $ 4,187 $ 0 $ (454)
Computers....................... 1995 1999 $ 80,255 $ 10,603 $ 10,603 $ 0 $ (1,150)
Computers....................... 1995 1999 $ 6,018 $ 1,368 $ 1,368 $ 0 $ (148)
Computers....................... 1995 1999 $ 1,044 $ 35 $ 35 $ 0 $ (4)
Computers....................... 1995 1999 $ 28,593 $ 7,644 $ 7,644 $ 0 $ (829)
Computers....................... 1995 1999 $ 35,996 $ 4,891 $ 4,891 $ 0 $ (530)
Computers....................... 1995 1999 $ 54,948 $ 16,725 $ 16,725 $ 0 $ (1,814)
Computers....................... 1995 1999 $ 4,607 $ 600 $ 600 $ 0 $ (65)
Computers....................... 1995 1999 $ 873 $ 304 $ 304 $ 0 $ (33)
Computers....................... 1995 1999 $ 9,886 $ 1,159 $ 1,159 $ 0 $ (126)
Computers....................... 1995 1999 $ 3,859 $ 1,438 $ 1,438 $ 0 $ (156)
Computers....................... 1995 1999 $ 162,298 $ 106,709 $ 106,709 $ 0 $ (11,571)
Computers....................... 1995 1999 $ 10,096 $ 749 $ 749 $ 0 $ (81)
Computers....................... 1995 1999 $ 23,597 $ 2,613 $ 2,613 $ 0 $ (283)
Computers....................... 1995 1999 $ 104,315 $ 15,579 $ 77,013 $ 61,434 $ (8,351)
Computers....................... 1995 1999 $ 26,421 $ 29,728 $ 29,967 $ 238 $ (3,249)
Manufacturing & Production...... 1995 1999 $ 28,593 $ 23,191 $ 23,191 $ 0 $ (2,515)
Furniture....................... 1995 1999 $ 35,524 $ 0 $ 984 $ 984 $ (107)
Computers....................... 1995 1999 $ 73 $ 9 $ 9 $ 0 $ (1)
M & P........................... 1995 1999 $ 2,547,035 $ 2,000,000 $2,000,000 $ 0 $ (216,863)
Computers....................... 1996 1999 $ 2,092 $ 269 $ 269 $ 0 $ (29)
</TABLE>
B-29
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers....................... 1996 1999 $ 185 $ 24 $ 24 $ 0 $ (3)
Computers....................... 1996 1999 $ 28,927 $ 4,903 $ 4,903 $ 0 $ (532)
M & P........................... 1996 1999 $ 17,944 $ 6,464 $ 6,464 $ 0 $ (701)
M & P........................... 1996 1999 $ 5,334 $ 1,885 $ 1,885 $ 0 $ (204)
M & P........................... 1996 1999 $ 35,132 $ 10,123 $ 10,123 $ 0 $ (1,098)
M & P........................... 1996 1999 $ 1,820 $ 223 $ 223 $ 0 $ (24)
Manufacturing & Production...... 1996 1999 $ 12,132 $ 758 $ 1,500 $ 742 $ (163)
Telecommunications.............. 1996 1999 $ 1,458 $ 178 $ 178 $ 0 $ (19)
Telecommunications.............. 1996 1999 $ 32,016 $ 13,128 $ 13,128 $ 0 $ (1,423)
Telecommunications.............. 1997 1999 $ 53,548 $ 100 $ 100 $ 0 $ (11)
Computers....................... 1997 1999 $ 45,888 $ 0 $ 0 $ 0 $ 0
M & P........................... 1997 1999 $ 1,074,631 $ 0 $ 15,955 $ 15,955 $ (1,730)
Manufacturing & Production...... 1997 1999 $ 51,296 $ 1,715 $ 2,028 $ 314 $ (220)
M & P........................... 1997 1999 $ 40,986 $ 1,667 $ 2,000 $ 333 $ (217)
Aircraft........................ 1997 1999 $ 3,417,411 $ 0 $ 0 $ 0 $ 0
Aircraft........................ 1997 1999 $ 3,401,839 $ 175,290 $ 183,025 $ 7,735 $ (19,846)
Manufacturing & Production...... 1995 1999 $ 34,893 $ 5,775 $ 5,775 $ 0 $ (626)
Furniture....................... 1997 1999 $ 58,248 $ 38,793 $ 0 $ 0 $ 0
Medical......................... 1997 1999 $ 11,145 $ 9,875 $ 0 $ 0 $ 0
Manufacturing & Production...... 1994 1999 $ 14,501 $ 145 $ 32 $ (113) $ (3)
Manufacturing & Production...... 1994 1999 $ 20,524 $ 0 $ 0 $ (0) $ 0
Printing........................ 1994 1999 $ 19,964 $ 641 $ 496 $ (145) $ (54)
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
(4) Federal Taxable Gain (Loss) information not yet available for 1999.
B-30
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P., Series E for the seven years ended December 31,
1999. Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Automotive....................... 1992 1993 $ 78,708 $ 20,578 $ 21,261 $ 683 $ (1,297)
Computers........................ 1992 1993 $ 215,949 $ 106,608 $ 109,268 $ 2,660 $ 2,490
Construction..................... 1992 1993 $ 19,166 $ 19,167 $ 19,758 $ 591 $ 2,748
Copiers.......................... 1992 1993 $ 20,119 $ 15,801 $ 16,186 $ 385 $ 2,162
Fixture.......................... 1992 1993 $ 34,015 $ 9,860 $ 11,228 $ 1,368 $ (3,366)
Furniture........................ 1992 1993 $ 35,126 $ 19,425 $ 19,425 $ 0 $ 0
Material Handling................ 1992 1993 $ 10,885 $ 6,689 $ 6,261 $ (428) $ (3,371)
Medical.......................... 1992 1993 $ 64,989 $ 4,223 $ 7,894 $ 3,671 $ (22,951)
Manufacturing & Production....... 1992 1993 $ 214,901 $ 175,434 $ 180,435 $ 5,001 $ 7,349
Office Equipment................. 1992 1993 $ 56,763 $ 43,220 $ 45,905 $ 2,685 $ 2,491
Photography...................... 1992 1993 $ 26,342 $ 21,122 $ 21,730 $ 608 $ (2,163)
Printing......................... 1992 1993 $ 5,275 $ 3,153 $ 3,153 $ 0 $ (1,923)
Restaurant....................... 1992 1993 $ 409,680 $ 272,826 $ 287,325 $ 14,499 $ 12,819
Sanitation....................... 1992 1993 $ 16,288 $ 15,857 $ 16,556 $ 699 $ 2,098
Telecommunications............... 1992 1993 $ 61,395 $ 61,417 $ 62,977 $ 1,560 $ 8,481
Video Production................. 1992 1993 $ 17,990 $ 14,524 $ 15,710 $ 1,186 $ 1,867
Miscellaneous.................... 1993 1993 $ 120,994 $ 77,602 $ 83,587 $ 5,985 $ 0
Agriculture...................... 1993 1993 $ 116,298 $ 66,730 $ 83,866 $ 17,136 $ (13,187)
Automotive....................... 1993 1993 $ 271,300 $ 116,885 $ 117,399 $ 514 $ 0
Computers........................ 1993 1993 $ 195,697 $ 48,654 $ 56,378 $ 7,724 $ 0
Construction..................... 1993 1993 $ 38,791 $ 21,486 $ 25,834 $ 4,348 $ (5,210)
Copiers.......................... 1993 1993 $ 80,019 $ 9,877 $ 13,724 $ 3,847 $ 0
Environmental.................... 1993 1993 $ 14,991 $ 0 $ 0 $ 0 $ 0
Fixture.......................... 1993 1993 $ 111,120 $ 93,400 $ 109,342 $ 15,942 $ 0
Furniture........................ 1993 1993 $ 25,242 $ 19,885 $ 18,203 $ (1,682) $ 0
Material Handling................ 1993 1993 $ 176,632 $ 155,737 $ 183,099 $ 27,362 $ (1,077)
Medical.......................... 1993 1993 $ 71,355 $ 57,939 $ 61,890 $ 3,951 $ 3,111
Manufacturing & Production....... 1993 1993 $ 26,412 $ 13,095 $ 15,580 $ 2,485 $ 0
Office Equipment................. 1993 1993 $ 14,703 $ 6,487 $ 7,422 $ 935 $ 0
Printing......................... 1993 1993 $ 60,010 $ 12,274 $ 14,636 $ 2,362 $ 1,433
Restaurant....................... 1993 1993 $ 63,908 $ 27,607 $ 31,424 $ 3,817 $ 0
Retail........................... 1993 1993 $ 6,477 $ 1 $ 0 $ (1) $ 0
Sanitation....................... 1993 1993 $ 2,107 $ 82 $ 88 $ 6 $ (1,893)
Telecommunications............... 1993 1993 $ 6,178,527 $5,799,650 $7,119,747 $1,320,097 $1,417,499
Transportation................... 1993 1993 $ 324,407 $ 260,480 $ 292,416 $ 31,936 $ 34,565
Video Production................. 1993 1993 $ 20,683 $ 20,683 $ 25,715 $ 5,032 $ 0
Agriculture...................... 1992 1994 $ 49,841 $ 10,474 $ 10,474 $ 0 $ (6,108)
Audio............................ 1992 1994 $ 32,788 $ 7,383 $ 7,782 $ 399 $ 0
Automotive....................... 1992 1994 $ 126,970 $ 11,657 $ 12,272 $ 615 $ 0
Computers........................ 1992 1994 $ 198,376 $ 8,722 $ 8,549 $ (172) $ (14,333)
Construction..................... 1992 1994 $ 54,843 $ 17,730 $ 17,730 $ 0 $ (4,433)
Copiers.......................... 1992 1994 $ 15,376 $ 1,775 $ 1,775 $ 0 $ (1,079)
Environmental.................... 1992 1994 $ 31,995 $ 0 $ 0 $ 0 $ 0
Fixture.......................... 1992 1994 $ 20,674 $ 164 $ 1,064 $ 900 $ (9,736)
Furniture........................ 1992 1994 $ 61,625 $ 5,370 $ 5,636 $ 266 $ 0
Manufacturing & Production....... 1992 1994 $ 101,122 $ 13,969 $ 14,432 $ 463 $ (21,582)
Material Handling................ 1992 1994 $ 2,734,334 $2,174,030 $2,212,133 $ 38,103 $ 0
Medical.......................... 1992 1994 $ 314,509 $ 34,726 $ 59,635 $ 24,909 $ (113,150)
</TABLE>
B-31
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Office Equipment................. 1992 1994 $ 2,540 $ 118 $ 118 $ 0 $ 0
Photography...................... 1992 1994 $ 47,692 $ 6,973 $ 6,973 $ 0 $ (16,375)
Printing......................... 1992 1994 $ 48,147 $ 36,679 $ 36,679 $ 0 $ 16,360
Restaurant....................... 1992 1994 $ 474,258 $ 92,399 $ 94,557 $ 2,158 $ (10,127)
Retail........................... 1992 1994 $ 8,087 $ 878 $ 274 $ (604) $ (2,014)
Sanitation....................... 1992 1994 $ 103,149 $ 38,401 $ 39,685 $ 1,284 $ (358)
Telecommunications............... 1992 1994 $ 66,815 $ 26,524 $ 27,991 $ 1,468 $ (1,110)
Video Production................. 1992 1994 $ 12,663 $ 1,074 $ 1,074 $ 0 $ (663)
Agriculture...................... 1993 1994 $ 43,840 $ 19,762 $ 20,825 $ 1,063 $ 0
Automotive....................... 1993 1994 $ 786,378 $ 155,107 $ 163,558 $ 8,450 $ (634)
Computers........................ 1993 1994 $ 771,516 $ 130,886 $ 181,111 $ 50,226 $ (3,077)
Construction..................... 1993 1994 $ 274,175 $ 30,496 $ 38,465 $ 7,969 $ (55,502)
Copiers.......................... 1993 1994 $ 82,454 $ 24,366 $ 26,172 $ 1,806 $ 0
Fixture.......................... 1993 1994 $ 77,419 $ 302 $ 303 $ 1 $ 0
Furniture........................ 1993 1994 $ 280,317 $ 46,066 $ 50,280 $ 4,214 $ 0
Material Handling................ 1993 1994 $ 192,609 $ 37,782 $ 45,441 $ 7,659 $ (11,521)
Medical.......................... 1993 1994 $ 77,005 $ 27,502 $ 29,111 $ 1,609 $ 0
Manufacturing & Production....... 1993 1994 $ 173,000 $ 18,644 $ 22,629 $ 3,986 $ (2,632)
Miscellaneous.................... 1993 1994 $ 10,796 $ 2,469 $ 2,469 $ 0 $ 0
Office Equipment................. 1993 1994 $ 43,986 $ 4,723 $ 5,910 $ 1,187 $ (975)
Photography...................... 1993 1994 $ 4,929 $ 292 $ 293 $ 1 $ 0
Printing......................... 1993 1994 $ 77,122 $ 8,529 $ 8,530 $ 1 $ (10,269)
Restaurant....................... 1993 1994 $ 626,431 $ 287,444 $ 335,720 $ 48,276 $ (340)
Retail........................... 1993 1994 $ 103,594 $ 3,848 $ 4,856 $ 1,008 $ (412)
Telecommunications............... 1993 1994 $ 3,820,321 $ 919,560 $1,253,601 $ 334,040 $ (102,561)
Transportation................... 1993 1994 $ 287,586 $ 42,283 $ 51,224 $ 8,941 $ 0
Computers........................ 1994 1994 $ 534,310 $ (4,957) $ 0 $ 4,957 $ 0
Telecommunications............... 1994 1994 $ 1,787 $ 74 $ 95 $ 22 $ 0
Audio............................ 1992 1995 $ 67,722 $ 9,191 $ 8,143 $ (1,048) $ (8,721)
Automotive....................... 1992 1995 $ 245,537 $ 55,390 $ 30,876 $ (24,514) $ (62,029)
Computers........................ 1992 1995 $ 670,255 $ 143,868 $ 69,402 $ (74,466) $ (139,420)
Construction..................... 1992 1995 $ 91,856 $ 12,337 $ 11,839 $ (498) $ (12,399)
Copiers.......................... 1992 1995 $ 68,193 $ 17,372 $ 8,598 $ (8,775) $ (14,211)
Fixtures......................... 1992 1995 $ 191,523 $ 41,188 $ 15,314 $ (25,874) $ (49,304)
Furniture........................ 1992 1995 $ 321,142 $ 35,203 $ 22,974 $ (12,230) $ (28,301)
Material Handling................ 1992 1995 $ 34,982 $ 10,003 $ 10,666 $ 662 $ (1,678)
Medical.......................... 1992 1995 $ 89,384 $ 3,814 $ 4,681 $ 867 $ (11,772)
Manufacturing & Production....... 1992 1995 $ 315,323 $ 29,833 $ 26,162 $ (3,671) $ (53,473)
Office Equipment................. 1992 1995 $ 33,105 $ 17,344 $ 13,159 $ (4,185) $ (4,487)
Photography...................... 1992 1995 $ 84,703 $ 13,769 $ 11,838 $ (1,931) $ (17,573)
Printing......................... 1992 1995 $ 73,624 $ 14,780 $ 12,386 $ (2,394) $ (19,388)
Restaurant....................... 1992 1995 $ 712,329 $ 90,616 $ 75,578 $ (15,038) $ (124,260)
Retail........................... 1992 1995 $ 32,891 $ 10,703 $ 8,863 $ (1,840) $ (2,270)
Sanitation....................... 1992 1995 $ 38,998 $ 767 $ 174 $ (594) $ (5,619)
Telecommunications............... 1992 1995 $ 79,770 $ 15,518 $ 12,517 $ (3,001) $ (14,459)
Video Production................. 1992 1995 $ 49,130 $ 2,010 $ 3,312 $ 1,302 $ (6,072)
Agriculture...................... 1993 1995 $ 30,211 $ 1 $ 0 $ (1) $ 0
Automotive....................... 1993 1995 $ 4,282,836 $ 349,513 $ 264,887 $ (84,626) $ (136,043)
Computers........................ 1993 1995 $ 2,229,596 $ 188,186 $ 300,197 $ 112,011 $ (168,156)
Construction..................... 1993 1995 $ 156,808 $ 13,060 $ 13,838 $ 778 $ (4,890)
Copiers.......................... 1993 1995 $ 182,402 $ 34,023 $ 41,091 $ 7,068 $ (10,107)
Environmental.................... 1993 1995 $ 72,193 $ 5,272 $ 10,169 $ 4,897 $ (6,179)
</TABLE>
B-32
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixtures......................... 1993 1995 $ 46,183 $ 4,458 $ 11,658 $ 7,200 $ 0
Furniture........................ 1993 1995 $ 188,312 $ 22,536 $ 30,392 $ 7,856 $ (2,545)
Material Handling................ 1993 1995 $ 215,464 $ 49,495 $ 47,550 $ (1,945) $ (8,613)
Medical.......................... 1993 1995 $ 321,168 $ 95,551 $ 62,632 $ (32,918) $ (11,098)
Manufacturing & Production....... 1993 1995 $ 214,562 $ 27,462 $ 18,400 $ (9,062) $ (10,793)
Office Equipment................. 1993 1995 $ 139,093 $ 6,376 $ 8,860 $ 2,485 $ (240)
Printing......................... 1993 1995 $ 86,115 $ 4,822 $ 7,457 $ 2,635 $ (13,293)
Restaurant....................... 1993 1995 $ 409,084 $ 48,198 $ 13,030 $ (35,168) $ (34,988)
Retail........................... 1993 1995 $ 1,611,420 $1,042,917 $1,159,756 $ 116,839 $ 229,970
Telecommunications............... 1993 1995 $ 4,286,056 $ 743,382 $ 725,892 $ (17,490) $ (498,634)
Transportation................... 1993 1995 $ 492,417 $ 107,360 $ 20,019 $ (87,341) $ (41,603)
Video Production................. 1993 1995 $ 44,694 $ 834 $ 2,186 $ 1,353 $ (38)
Computers........................ 1994 1995 $ 87,124 $ 6,538 $ 6,681 $ 143 $ (23,642)
Manufacturing & Production....... 1994 1995 $ 4,274,389 $3,282,651 $3,920,390 $ 637,739 $ 197,449
Restaurant....................... 1994 1995 $ 328,731 $ 249,347 $ 279,689 $ 30,342 $ (13,335)
Telecommunications............... 1994 1995 $ 216,656 $ 23,994 $ 131,743 $ 107,749 $ (34,910)
Computers........................ 1995 1995 $ 36,958 $ 33,442 $ 33,448 $ 6 $ 0
Copiers.......................... 1995 1995 $ 7,609 $ 6,148 $ 6,493 $ 346 $ 0
Medical.......................... 1995 1995 $ 2,583 $ 1,128 $ 2,188 $ 1,059 $ 0
Manufacturing & Production....... 1995 1995 $ 6,457 $ 2,849 $ 2,850 $ 1 $ 0
Agriculture...................... 1992 1996 $ 31,460 $ 0 $ 0 $ 0 $ (682)
Audio............................ 1992 1996 $ 92,826 $ (2,059) $ 3,806 $ 5,865 $ 3,870
Automotive....................... 1992 1996 $ 287,713 $ 6,658 $ 17,197 $ 10,540 $ (3,064)
Boats and Barges................. 1992 1996 $11,212,811 $5,847,446 $6,484,930 $ 997,484 $1,494,529
Computers........................ 1992 1996 $ 898,409 $ 25,742 $ 43,694 $ 17,952 $ (13,007)
Construction..................... 1992 1996 $ 123,305 $ 14,286 $ 8,278 $ (6,008) $ (16,199)
Copiers.......................... 1992 1996 $ 68,955 $ (1,779) $ 1,015 $ 2,794 $ (1,081)
Environmental.................... 1992 1996 $ 40,826 $ 3,783 $ 0 $ (3,783) $ (4,085)
Fixtures......................... 1992 1996 $ 111,866 $ 6,089 $ 3,401 $ (2,688) $ (6,541)
Furniture........................ 1992 1996 $ 146,474 $ 3,363 $ 5,462 $ 2,100 $ (2,755)
Material Handling................ 1992 1996 $ 21,393 $ 8,813 $ 2,100 $ (6,713) $ (2,452)
Medical.......................... 1992 1996 $ 146,946 $ 11,947 $ 9,110 $ (2,837) $ (6,459)
Manufacturing & Production....... 1992 1996 $ 667,197 $ 65,774 $ 45,284 $ (20,490) $ (46,664)
Mining........................... 1992 1996 $ 578,501 $ 170,022 $ 185,000 $ 14,978 $ 60,364
Office Equipment................. 1992 1996 $ 16,072 $ 569 $ 689 $ 120 $ (602)
Photography...................... 1992 1996 $ 141,810 $ 15,166 $ 6,252 $ (8,914) $ (14,371)
Printing......................... 1992 1996 $ 145,378 $ 11,275 $ 15,431 $ 4,156 $ 6,849
Restaurant....................... 1992 1996 $ 884,581 $ 44,176 $ 26,729 $ (17,446) $ (44,464)
Retail........................... 1992 1996 $ 96,493 $ 3,602 $ 6,900 $ 3,298 $ (1,170)
Sanitation....................... 1992 1996 $ 98,510 $ 3,375 $ 493 $ (2,882) $ (2,914)
Telecommunications............... 1992 1996 $ 761,258 $ 59,641 $ 98,290 $ 38,650 $ 47,869
Video Production................. 1992 1996 $ 121,200 $ 6,149 $ 7,489 $ 1,339 $ (3,760)
Agriculture...................... 1993 1996 $ 21,432 $ 0 $ 70 $ 70 $ 0
Automotive....................... 1993 1996 $ 4,857,549 $ 272,271 $ 189,368 $ (82,903) $ (162,026)
Computers........................ 1993 1996 $ 3,479,468 $ 395,869 $ 645,770 $ 249,901 $ (677,445)
Construction..................... 1993 1996 $ 96,756 $ 7,966 $ 30,293 $ 22,327 $ 16,919
Copiers.......................... 1993 1996 $ 106,667 $ 7,311 $ 9,624 $ 2,313 $ (303)
Environmental.................... 1993 1996 $ 247,777 $ 17,423 $ 5,377 $ (12,046) $ (30,332)
Fixtures......................... 1993 1996 $ 105,895 $ 0 $ 1,315 $ 1,315 $ 0
Furniture........................ 1993 1996 $ 279,345 $ 35,048 $ 49,121 $ 14,073 $ (29,464)
Material Handling................ 1993 1996 $ 101,226 $ 2,241 $ 3,333 $ 1,092 $ (104)
Medical.......................... 1993 1996 $ 540,339 $ 7,760 $ 17,215 $ 9,455 $ 1,594
</TABLE>
B-33
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Manufacturing & Production....... 1993 1996 $ 726,873 $ 36,559 $ 63,956 $ 27,397 $ (15,009)
Miscellaneous.................... 1993 1996 $ 109,700 $ (5) $ 3,135 $ 3,141 $ 0
Office Equipment................. 1993 1996 $ 325,028 $ 3,026 $ 12,953 $ 9,927 $ (53,619)
Printing......................... 1993 1996 $ 185,965 $ 10,656 $ 20,955 $ 10,299 $ (4,786)
Restaurant....................... 1993 1996 $ 280,383 $ 6,137 $ 12,560 $ 6,424 $ (704)
Retail........................... 1993 1996 $ 440,090 $ 71,872 $ 57,200 $ (14,672) $ (36,991)
Sanitation....................... 1993 1996 $ 18,319 $ 3,870 $ 14,042 $ 10,172 $ 7,122
Telecommunications............... 1993 1996 $ 3,379,187 $ 417,507 $ 467,241 $ 49,735 $ (193,057)
Transportation................... 1993 1996 $ 87,016 $ 8,588 $ 27,917 $ 19,330 $ 14,920
Video Production................. 1993 1996 $ 113,063 $ 9,869 $ 472 $ (9,397) $ (31,337)
Computers........................ 1994 1996 $ 145,099 $ 18,104 $ 33,695 $ 15,591 $ (51,596)
Fixtures......................... 1994 1996 $ 5,701 $ (248) $ 15 $ 263 $ 0
Furniture........................ 1994 1996 $ 43,911 $ 5,660 $ 0 $ (5,660) $ (13,787)
Material Handling................ 1994 1996 $ 40,874 $ 4,719 $ 8,180 $ 3,462 $ 265,046
Medical.......................... 1994 1996 $ 600,290 $ 58,047 $ 64,059 $ 6,012 $ (285,307)
Manufacturing & Production....... 1994 1996 $ 119,549 $ 31,979 $ 25,267 $ (6,712) $ (42,424)
Printing......................... 1994 1996 $ 39,622 $ 6,853 $ 4,000 $ (2,853) $ (15,129)
Restaurant....................... 1994 1996 $ 27,415 $ 14,772 $ 0 $ (14,772) $ (16,490)
Telecommunications............... 1994 1996 $ 15,173 $ (6) $ 302 $ 308 $ 0
Computers........................ 1995 1996 $ 173,672 $ 29,108 $ 20,133 $ (8,975) $ (7,703)
Copiers.......................... 1995 1996 $ 5,041 $ 0 $ 378 $ 378 $ 0
Fixtures......................... 1995 1996 $ 44,435 $ 9,918 $ 7,530 $ (2,389) $ (2,388)
Furniture........................ 1995 1996 $ 11,279 $ 0 $ 0 $ 0 $ (9,023)
Material Handling................ 1995 1996 $ 3,725 $ 125 $ 420 $ 295 $ 0
Medical.......................... 1995 1996 $ 104,042 $ 82,701 $ 37,325 $ (45,376) $ (45,738)
Manufacturing & Production....... 1995 1996 $ 213,504 $ 115,772 $ 77,296 $ (38,476) $ (36,655)
Printing......................... 1995 1996 $ 6,610 $ 2,807 $ 2,967 $ 160 $ 0
Restaurant....................... 1995 1996 $ 69,892 $ 66,077 $ 36,359 $ (29,718) $ (29,718)
Retail........................... 1995 1996 $ 623,532 $ 524,555 $ 584,336 $ 59,781 $ 0
Telecommunications............... 1995 1996 $ 57,101 $ 3,218 $ 1,541 $ (1,677) $ (1,867)
Video Production................. 1995 1996 $ 25,738 $ 12,618 $ 13,408 $ 790 $ 0
Computers........................ 1996 1996 $ 24,535 $ 7,962 $ 0 $ (7,962) $ (7,962)
Manufacturing & Production....... 1996 1996 $ 52,320 $ 52,930 $ 0 $ 52,930 $ 0
Restaurant....................... 1996 1996 $ 7,247 $ 114 $ 1,500 $ 1,386 $ (1,312)
Automotive....................... 1992 1997 $ 35,277 $ 0 $ 10,419 $ 10,419 $ 13,003
Computers........................ 1992 1997 $ 74,483 $ 0 $ 9,165 $ 9,165 $ 13,519
Construction..................... 1992 1997 $ 22,030 $ 4,101 $ 2,891 $ (109) $ 1,200
Environmntal..................... 1992 1997 $ 12,565 $ 2,224 $ 2,225 $ 0 $ 1,893
Fixture.......................... 1992 1997 $ 28,886 $ 0 $ 0 $ 0 $ 2,401
Furniture........................ 1992 1997 $ 31,271 $ 1,531 $ 1,109 $ (422) $ 2,063
Manufacturing & Production....... 1992 1997 $ 6,943 $ 819 $ 1,311 $ 0 $ 1,072
Material Handling................ 1992 1997 $ 4,110,891 $ 925,806 $1,116,242 $ 0 $ 858,263
Mining........................... 1992 1997 $ 217,414 $ 71,977 $ 20,000 $ 0 $ 20,000
Photography...................... 1992 1997 $ 31,894 $ 4,950 $ 3,622 $ 0 $ 2,338
Printing......................... 1992 1997 $ 168,741 $ 18,014 $ 12,537 $ (1,610) $ 11,395
Restaurant....................... 1992 1997 $ 26,616 $ 0 $ 0 $ 0 $ 2,847
Sanitation....................... 1992 1997 $ 9,361 $ 0 $ 0 $ 0 $ 2,119
Telecommunications............... 1992 1997 $ 412,360 $ 39,967 $ 49,682 $ 12,232 $ 52,607
Agriculture...................... 1993 1997 $ 40,194 $ 0 $ 0 $ 0 $ 0
Automotive....................... 1993 1997 $ 888,312 $ 47,663 $ 24,773 $ (22,890) $ 0
Computers........................ 1993 1997 $ 734,252 $ 93,839 $ 90,756 $ (3,083) $ 3,687
Construction..................... 1993 1997 $ 63,042 $ 9,790 $ 10,459 $ 670 $ 0
</TABLE>
B-34
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Copiers.......................... 1993 1997 $ 63,037 $ 0 $ 0 $ 0 $ 0
Environmntal..................... 1993 1997 $ 32,236 $ 4,298 $ 4,796 $ 497 $ 0
Fixtures......................... 1993 1997 $ 9,044,378 $1,170,547 $1,443,061 $ 504,440 $ 743,528
Furniture........................ 1993 1997 $ 315,502 $ 66,485 $ 67,421 $ 936 $ 0
Install Chgs..................... 1993 1997 $ 1,837 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production....... 1993 1997 $ 536,057 $ 69,376 $ 86,814 $ 17,438 $ (4,079)
Miscellaneous.................... 1993 1997 $ 11,404 $ 0 $ 262 $ 262 $ 0
Material Handling................ 1993 1997 $ 208,966 $ 8,685 $ 6,409 $ (2,276) $ 0
Medical.......................... 1993 1997 $ 980,345 $ 14,745 $ 9,015 $ (5,730) $ (4,502)
Office Equipment................. 1993 1997 $ 293,902 $ 39,096 $ 48,162 $ 9,066 $ (10,334)
Photography...................... 1993 1997 $ 106,420 $ 25,078 $ 25,359 $ 281 $ 0
Printing......................... 1993 1997 $ 69,600 $ 1,744 $ 2,253 $ 508 $ 0
Restaurant....................... 1993 1997 $ 1,033,639 $ 178,664 $ 193,503 $ 14,838 $ (13,767)
Retail........................... 1993 1997 $ 801,808 $ 81,489 $ 108,377 $ 26,888 $ (56,651)
Sanitation....................... 1993 1997 $ 38,711 $ 10,814 $ 1,093 $ (9,721) $ 0
Telecommunications............... 1993 1997 $ 2,215,528 $ 167,220 $ 191,182 $ 38,463 $ 73,235
Transportation................... 1993 1997 $ 155,270 $ 27,237 $ 31,561 $ 4,324 $ 2,810
Video Production................. 1993 1997 $ 30,290 $ 0 $ 0 $ 0 $ 0
Agriculture...................... 1994 1997 $ 16,669 $ 2,080 $ 1,356 $ (724) $ 0
Automotive....................... 1994 1997 $ 17,497 $ 2,193 $ 4,453 $ 2,260 $ (2,429)
Computers........................ 1994 1997 $ 246,517 $ 23,978 $ 19,260 $ (201) $ (50,581)
Furniture........................ 1994 1997 $ 77,796 $ 8,383 $ 13,210 $ 4,827 $ (18,169)
Manufacturing & Production....... 1994 1997 $ 770,651 $ 221,135 $ 156,719 $ (4,256) $ (168,342)
Medical.......................... 1994 1997 $ 97,293 $ 13,074 $ 17,107 $ 4,033 $ (15,151)
Printing......................... 1994 1997 $ 33,526 $ 0 $ 0 $ 0 $ 0
Restaurant....................... 1994 1997 $ 17,087 $ 346 $ 2,314 $ 1,968 $ (4,605)
Telecommunications............... 1994 1997 $ 17,862 $ 228 $ 0 $ (228) $ 0
Video Production................. 1994 1997 $ 43,569 $ 0 $ 70 $ 70 $ 0
Audio............................ 1995 1997 $ 24,180 $ 0 $ 0 $ 0 $ 0
Computers........................ 1995 1997 $ 370,580 $ 19,725 $ 21,722 $ 1,997 $ 0
Copiers.......................... 1995 1997 $ 10,564 $ 1,482 $ 0 $ (1,482) $ 0
Fixture.......................... 1995 1997 $ 18,012 $ 0 $ 518 $ 518 $ 0
Furniture........................ 1995 1997 $ 25,418 $ 7,293 $ 8,354 $ 1,061 $ 0
Manufacturing & Production....... 1995 1997 $ 399,479 $ 78,533 $ 35,135 $ (43,397) $ (10,332)
Medical.......................... 1995 1997 $ 131,557 $ 30,567 $ 30,135 $ 1,728 $ 0
Office Equipment................. 1995 1997 $ 12,041 $ 0 $ 1 $ 1 $ 0
Printing......................... 1995 1997 $ 10,883 $ 0 $ 523 $ 523 $ 0
Restaurant....................... 1995 1997 $ 41,979 $ 6,944 $ 7,090 $ 145 $ 0
Telecommunications............... 1995 1997 $ 32,044 $ 644 $ 2,025 $ 1,382 $ 0
Transport........................ 1995 1997 $ 9,915 $ 0 $ 0 $ 0 $ 0
Video Production................. 1995 1997 $ 5,116 $ 1,434 $ 1,619 $ 185 $ 0
Aircraft......................... 1996 1997 $ 5,690,161 $5,231,289 $5,305,164 $ 73,875 $ 0
Computers........................ 1996 1997 $ 69,115 $ 64,613 $ 28,495 $ (36,118) $ 0
Manufacturing & Production....... 1996 1997 $ 112,286 $2,317,341 $2,316,413 $ (929) $ 0
Printing......................... 1996 1997 $ 30,867 $ 24,284 $ 0 $ (24,284) $ 0
Restaurant....................... 1996 1997 $ 21,703 $ 19,339 $ 0 $ (16,339) $ 0
Retail........................... 1996 1997 $ 28,814 $ 24,695 $ 0 $ (24,695) $ 0
Telecommunications............... 1996 1997 $ 646,908 $ 204,268 $ 81,062 $ (123,206) $ (261,441)
Video Production................. 1996 1997 $ 53,503 $ 41,768 $ 45,625 $ 3,857 $ 0
Computers........................ 1997 1997 $ 42,221 $ 41,673 $ 0 $ (37,673) $ 0
Manufacturing & Production....... 1997 1997 $ 56,217 $ 54,750 $ 89,370 $ 34,620 $ 0
Manufacturing & Production....... 1992 1998 $ 25,735 $ 2,404 $ 2,380 $ (24) $ 4,850
</TABLE>
B-35
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical.......................... 1992 1998 $ 28,945 $ 0 $ 0 $ 0 $ 18,473
Office Equipment................. 1992 1998 $ 3,486 $ 0 $ 0 $ 0 $ 3,786
Photography...................... 1992 1998 $ 11,376 $ 1,738 $ 0 $ (1,738) $ 1,094
Telecommunications............... 1992 1998 $ 11,597 $ 0 $ 200 $ 200 $ 9,370
Automotive....................... 1993 1998 $ 87,673 $ 762 $ 2,624 $ 1,863 $ 0
Computers........................ 1993 1998 $ 1,733,507 $ 276,113 $ 396,546 $ 120,433 $ 344,388
Manufacturing & Production....... 1993 1998 $ 7,678,431 $1,706,779 $1,242,850 $ (463,929) $2,449,451
Material Handling................ 1993 1998 $ 118,051 $ 11,071 $ 15,836 $ 4,765 $ 16,121
Medical.......................... 1993 1998 $ 136,260 $ 2,133 $ 953 $ (1,180) $ 0
Restaurant....................... 1993 1998 $ 191,987 $ 1,006 $ 106 $ (899) $ 0
Retail........................... 1993 1998 $ 809,816 $ 71,096 $ 33,937 $ (37,159) $ 23,068
Sanitation....................... 1993 1998 $ 48,315 $ 0 $ 0 $ 0 $ 0
Telecommunications............... 1993 1998 $ 648,906 $ 35,408 $ 88,877 $ 53,470 $ 88,042
Computers........................ 1994 1998 $ 22,525 $ 51 $ 300 $ 249 $ (2,099)
Furniture........................ 1994 1998 $ 74,536 $ 7,513 $ 14,995 $ 7,482 $ (1,269)
Manufacturing & Production....... 1994 1998 $ 1,690,014 $ 416,684 $ 293,613 $ (123,071) $ 513,768
Medical.......................... 1994 1998 $ 25,617 $ 6,948 $ 2,500 $ (4,448) $ 0
Automotive....................... 1995 1998 $ 8,961 $ 3,900 $ 0 $ (3,900) $ 0
Computers........................ 1995 1998 $ 212,327 $ 2,422 $ 644 $ (1,778) $ 0
Furniture........................ 1995 1998 $ 22,787 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production....... 1995 1998 $ 166,073 $ 2,638 $ 3,103 $ 465 $ 0
Medical.......................... 1995 1998 $ 117,168 $ 37,769 $ 0 $ (37,769) $ 0
Restaurant....................... 1995 1998 $ 23,799 $ 0 $ 0 $ 0 $ 0
Retail........................... 1995 1998 $ 89,814 $ 8,074 $ 388 $ (7,686) $ 0
Telecommunications............... 1995 1998 $ 43,490 $ 0 $ 486 $ 486 $ 0
Transportation................... 1995 1998 $ 36,258 $ 0 $ 0 $ 0 $ 0
Audio............................ 1996 1998 $ 81,517 $ 53,784 $ 1,542 $ (52,242) $ 0
Computers........................ 1996 1998 $ 37,165 $ 28,795 $ 37 $ (28,758) $ 0
Furniture........................ 1996 1998 $ 229,124 $ 10,974 $ 239,050 $ 228,076 $ 90,603
Manufacturing & Production....... 1996 1998 $ 2,966 $ 0 $ 0 $ 0 $ 0
Material Handling................ 1996 1998 $ 286,251 $ 4,475 $ 64,731 $ 60,256 $ (111,494)
Restaurant....................... 1996 1998 $ 71,473 $ 41,524 $ 47,985 $ 6,461 $ 0
Telecommunications............... 1996 1998 $ 517,760 $ 236,581 $ 90,230 $ (146,351) $ (222,673)
Audio............................ 1997 1998 $ 146,675 $ 108,896 $ 180 $ (108,716) $ 0
Automotive....................... 1997 1998 $ 23,941 $ 19,776 $ 8,082 $ (11,694) $ 0
Computers........................ 1997 1998 $ 339,493 $ 286,269 $ 34,750 $ (251,518) $ 0
Fixtures......................... 1997 1998 $ 127,298 $ 76,956 $ 76,000 $ (956) $ 0
Manufacturing & Production....... 1997 1998 $ 114,968 $ 114,482 $ 24,589 $ (89,893) $ 0
Material Handling................ 1997 1998 $ 358,411 $ 139,980 $ 54,400 $ (85,580) $ (228,965)
Medical.......................... 1997 1998 $ 55,017 $ 56,277 $ 0 $ (56,277) $ 0
Printing......................... 1997 1998 $ 38,468 $ 37,049 $ 0 $ (37,049) $ 0
Restaurant....................... 1997 1998 $ 11,438 $ 9,679 $ 10,753 $ 1,074 $ 0
Telecommunications............... 1997 1998 $ 37,484 $ 1 $ 1 $ 0 $ 0
Video Production................. 1997 1998 $ 120,470 $ 75,218 $ 39,134 $ (36,083) $ 0
Automotive....................... 1998 1998 $ 19,096 $ 18,410 $ 18,579 $ 170 $ 0
Computers........................ 1998 1998 $ 40,204 $ 32,477 $ 27,445 $ (5,032) $ 0
Construction..................... 1998 1998 $ 24,935 $ 0 $ 0 $ 0 $ 0
Copiers.......................... 1998 1998 $ 2,561 $ 1,732 $ 2,104 $ 371 $ 0
Fixtures......................... 1998 1998 $ 135,089 $ 225,413 $ 226,995 $ 1,582 $ 0
Medical.......................... 1998 1998 $ 8,700 $ 38 $ 0 $ (38) $ 0
Other............................ 1998 1998 $ 17,851 $ 17,281 $ 0 $ (17,281) $ 0
Restaurant....................... 1998 1998 $ 19,584 $ 18,504 $ 0 $ (18,504) $ 0
</TABLE>
B-36
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Video Production................. 1998 1998 $ 47,564 $ 44,703 $ 2,049 $ (42,654) $ 0
Medical.......................... 1992 1999 $ 28,789 $ 827 $ 0 $ (827) $ 0
Computers........................ 1993 1999 $ 17,922 $ 3,464 $ 2 $ (3,462) $ (1)
Retail........................... 1993 1999 $ 19,648 $ 1,016 $ 0 $ (1,016) $ 0
Telecommunications............... 1993 1999 $ 105,620 $ 1,722 $ 2,627 $ 905 $ (987)
Manufacturing & Production....... 1994 1999 $ 5,398,842 $ 417,078 $ 317,300 $ 734,378 $ (119,226)
Retail........................... 1994 1999 $ 1,902,683 $ 332,716 $ 258,913 $ (73,803) $ (97,287)
Manufacturing & Production....... 1995 1999 $ 50,812 $ 2,513 $ 4,224 $ 1,711 $ (1,587)
Audio............................ 1996 1999 $ 59,239 $ 46,600 $ 0 $ (46,600) $ 0
Telecommunications............... 1996 1999 $ 50,887 $ 5,547 $ 4,080 $ (1,467) $ (1,533)
Automotive....................... 1997 1999 $ 15,937 $ 12,294 $ 7,110 $ (5,183) $ (2,672)
Computers........................ 1997 1999 $ 6,768 $ 0 $ 0 $ 0 $ 0
Fixtures......................... 1997 1999 $ 46,838 $ 36,603 $ 38,428 $ 1,825 $ (14,439)
Mining........................... 1997 1999 $ 558,796 $ 502,086 $ 6,109 $ (495,978) $ (2,295)
Automotive....................... 1998 1999 $ 27,718 $ 23,800 $ 14,000 $ (9,800) $ (5,261)
Computers........................ 1998 1999 $ 17,300 $ 7,287 $ 7,844 $ 557 $ (2,947)
Copiers.......................... 1998 1999 $ 6,001 $ 750 $ 743 $ (6) $ (279)
Restaurant....................... 1998 1999 $ 24,567 $ 532 $ 403 $ (129) $ (152)
Telecommunications............... 1998 1999 $ 23,155 $ 16,595 $ 19,332 $ 2,736 $ (7,264)
Medical.......................... 1993 1999 $ 40,440 $ 573 $ 0 $ (573) $ 0
Telecommunications............... 1993 1999 $ 3,602 $ 0 $ 0 $ 4 $ 0
Telecommunications............... 1993 1999 $ 3,302 $ 0 $ 0 $ 2 $ 0
Telecommunications............... 1993 1999 $ 6,463 $ 0 $ 0 $ 7 $ 0
Telecommunications............... 1993 1999 $ 10,189 $ 583 $ 357 $ (226) $ (134)
Telecommunications............... 1993 1999 $ 20,913 $ 0 $ 0 $ 11 $ 0
Telecommunications............... 1993 1999 $ 0 $ 0 $ 0 $ 1 $ 0
Telecommunications............... 1993 1999 $ 16,025 $ 0 $ 156 $ 157 $ (59)
Telecommunications............... 1993 1999 $ 8,077 $ 0 $ 1,260 $ 1,260 $ (473)
Telecommunications............... 1993 1999 $ 9,356 $ 205 $ 425 $ 220 $ (160)
Telecommunications............... 1993 1999 $ 7,887 $ 0 $ 0 $ 2 $ 0
Telecommunications............... 1993 1999 $ 9,739 $ 0 $ 0 $ 9 $ 0
Telecommunications............... 1993 1999 $ 28,879 $ 5,028 $ 3,486 $ (1,541) $ (1,310)
Telecommunications............... 1993 1999 $ 8,356 $ 329 $ 458 $ 129 $ (172)
Telecommunications............... 1993 1999 $ 27,250 $ 282 $ 735 $ 454 $ (276)
Telecommunications............... 1993 1999 $ 44,312 $ 509 $ 0 $ (509) $ 0
Telecommunications............... 1993 1999 $ 32,975 $ 1,170 $ 1,861 $ 690 $ (699)
Telecommunications............... 1993 1999 $ 55,711 $ 8,149 $ 9,700 $ 1,551 $ (3,645)
M & P............................ 1994 1999 $ 427,524 $ 98,964 $ 81,776 $ (17,188) $ (30,728)
M & P............................ 1994 1999 $ 75,587 $ 18,632 $ 12,386 $ (6,246) $ (4,654)
M & P............................ 1994 1999 $ 88,523 $ 17,632 $ 14,253 $ (3,379) $ (5,356)
Restaurant....................... 1994 1999 $ 652,404 $ 39,445 $ 12,049 $ 51,494 $ (4,527)
Restaurant....................... 1994 1999 $ 526,016 $ 59,699 $ 92,475 $ 32,775 $ (34,747)
Retail........................... 1994 1999 $ 31,606 $ 3,077 $ 7,544 $ 4,466 $ (2,835)
Restaurant....................... 1994 1999 $ 427,214 $ 66,712 $ 90,741 $ 24,029 $ (34,096)
Restaurant....................... 1994 1999 $ 412,517 $ 64,593 $ 80,000 $ 15,407 $ (30,060)
Computers........................ 1994 1999 $ 1,027,069 $ 199,621 $ 579,434 $ 379,813 $ (217,723)
Computers........................ 1994 1999 $ 7,079 $ 1,236 $ 2,959 $ 1,724 $ (1,112)
Computers........................ 1994 1999 $ 14,237 $ 2,435 $ 5,951 $ 3,516 $ (2,236)
Computers........................ 1994 1999 $ 966,993 $ 203,165 $ 277,193 $ 74,028 $ (104,156)
Retail........................... 1994 1999 $ 2,219 $ 586 $ 646 $ 60 $ (243)
Retail........................... 1994 1999 $ 2,337 $ 362 $ 675 $ 312 $ (253)
Retail........................... 1994 1999 $ 2,727 $ 423 $ 788 $ 365 $ (296)
</TABLE>
B-37
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail........................... 1994 1999 $ 2,726 $ 423 $ 788 $ 365 $ (296)
Retail........................... 1994 1999 $ 2,337 $ 362 $ 676 $ 313 $ (254)
Retail........................... 1994 1999 $ 2,339 $ 363 $ 677 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,340 $ 363 $ 677 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,727 $ 423 $ 789 $ 366 $ (296)
Retail........................... 1994 1999 $ 2,340 $ 363 $ 677 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,727 $ 423 $ 789 $ 366 $ (296)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 1,948 $ 302 $ 564 $ 262 $ (212)
Retail........................... 1994 1999 $ 3,324 $ 543 $ 968 $ 425 $ (364)
Retail........................... 1994 1999 $ 2,221 $ 471 $ 647 $ 176 $ (243)
Retail........................... 1994 1999 $ 2,217 $ 362 $ 646 $ 283 $ (243)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 2,338 $ 362 $ 676 $ 314 $ (254)
Retail........................... 1994 1999 $ 1,848 $ 302 $ 538 $ 236 $ (202)
Retail........................... 1994 1999 $ 2,217 $ 362 $ 646 $ 283 $ (243)
Retail........................... 1994 1999 $ 2,217 $ 362 $ 646 $ 283 $ (243)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 1,845 $ 302 $ 535 $ 233 $ (201)
Retail........................... 1994 1999 $ 2,583 $ 423 $ 749 $ 327 $ (282)
Retail........................... 1994 1999 $ 1,845 $ 302 $ 535 $ 233 $ (201)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,025 $ 431 $ 582 $ 151 $ (219)
Retail........................... 1994 1999 $ 1,993 $ 374 $ 573 $ 199 $ (215)
Retail........................... 1994 1999 $ 2,583 $ 434 $ 749 $ 316 $ (282)
Retail........................... 1994 1999 $ 2,215 $ 363 $ 643 $ 280 $ (241)
Retail........................... 1994 1999 $ 1,847 $ 302 $ 536 $ 234 $ (201)
Retail........................... 1994 1999 $ 2,215 $ 353 $ 363 $ 10 $ (136)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 2,215 $ 633 $ 643 $ 10 $ (241)
Retail........................... 1994 1999 $ 1,846 $ 543 $ 536 $ (7) $ (201)
Retail........................... 1994 1999 $ 2,215 $ 756 $ 643 $ (113) $ (241)
Retail........................... 1994 1999 $ 2,214 $ 362 $ 642 $ 280 $ (241)
Retail........................... 1994 1999 $ 2,259 $ 370 $ 656 $ 286 $ (246)
Retail........................... 1994 1999 $ 2,262 $ 370 $ 656 $ 286 $ (247)
Retail........................... 1994 1999 $ 2,413 $ 472 $ 576 $ 103 $ (216)
Retail........................... 1994 1999 $ 2,058 $ 311 $ 489 $ 179 $ (184)
Retail........................... 1994 1999 $ 2,671 $ 434 $ 643 $ 209 $ (242)
Retail........................... 1994 1999 $ 2,289 $ 372 $ 551 $ 179 $ (207)
Retail........................... 1994 1999 $ 3,052 $ 495 $ 734 $ 239 $ (276)
</TABLE>
B-38
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail........................... 1994 1999 $ 2,290 $ 634 $ 551 $ (83) $ (207)
Retail........................... 1994 1999 $ 2,289 $ 427 $ 551 $ 124 $ (207)
Retail........................... 1994 1999 $ 2,289 $ 681 $ 551 $ (130) $ (207)
Retail........................... 1994 1999 $ 2,289 $ 681 $ 551 $ (130) $ (207)
Retail........................... 1994 1999 $ 2,289 $ 558 $ 551 $ (7) $ (207)
Retail........................... 1994 1999 $ 2,289 $ 681 $ 551 $ (130) $ (207)
Retail........................... 1994 1999 $ 2,289 $ 542 $ 551 $ 9 $ (207)
Retail........................... 1994 1999 $ 2,289 $ 571 $ 551 $ (20) $ (207)
Retail........................... 1994 1999 $ 2,288 $ 372 $ 604 $ 233 $ (227)
Retail........................... 1994 1999 $ 2,290 $ 372 $ 551 $ 179 $ (207)
Retail........................... 1994 1999 $ 371 $ 53 $ 0 $ (53) $ 0
Furniture........................ 1994 1999 $ 350,643 $ 56,311 $ 75,103 $ 18,792 $ (28,220)
Restaurant....................... 1994 1999 $ 449,614 $ 77,298 $ 100,738 $ 23,440 $ (37,852)
Furniture........................ 1994 1999 $ 420,016 $ 75,170 $ 86,817 $ 11,647 $ (32,622)
Computers........................ 1995 1999 $ 39,169 $ 0 $ 0 $ 0 $ 0
Manufacturing.................... 1995 1999 $ 17,107 $ 2,992 $ 3,637 $ 646 $ (1,367)
Telecommunications............... 1995 1999 $ 43,769 $ (16) $ 0 $ 16 $ 0
Manufacturing.................... 1995 1999 $ 29,329 $ 6,299 $ 6,922 $ 623 $ (2,601)
Computers........................ 1995 1999 $ 18,277 $ 130 $ 130 $ 0 $ (49)
Computers........................ 1995 1999 $ 15,532 $ 0 $ 0 $ 0 $ 0
Retail........................... 1996 1999 $ 10,762 $ 0 $ 0 $ 0 $ 0
M & P............................ 1996 1999 $ 22,476 $ (1) $ 0 $ 1 $ 0
Medical.......................... 1996 1999 $ 29,814 $ 16,707 $ 19,500 $ 2,793 $ (7,327)
Telecommunications............... 1996 1999 $ 11,717 $ 1,796 $ 1,625 $ (171) $ (611)
Telecommunications............... 1996 1999 $ 20,676 $ 6,575 $ 6,355 $ (220) $ (2,388)
Telecommunications............... 1996 1999 $ 84,131 $ 63,935 $ 4,900 $ 68,835 $ (1,841)
Telecommunications............... 1997 1999 $ 247,947 $ 6,099 $ 48,504 $ 42,406 $ (18,225)
Fixtures......................... 1998 1999 $ 57,681 $ 30,036 $ 24,380 $ (5,656) $ (9,161)
Telecommunications............... 1998 1999 $ 55,949 $ 29,322 $ 31,000 $ 1,678 $ (11,648)
Telecommunications............... 1998 1999 $ 76,511 $ 24,996 $ 22,277 $ (2,719) $ (8,371)
Telecommunications............... 1998 1999 $ 50,941 $ 20,693 $ 21,216 $ 523 $ (7,972)
Telecommunications............... 1998 1999 $ 46,177 $ 14,100 $ 3,221 $ 17,321 $ (1,210)
Telecommunications............... 1998 1999 $ 46,701 $ 14,506 $ 3,221 $ 17,728 $ (1,210)
Telecommunications............... 1998 1999 $ 6,200 $ 6,535 $ 11,947 $ 5,412 $ (4,489)
Fixtures......................... 1998 1999 $ 18,814 $ 0 $ 0 $ 0 $ 0
Restaurant....................... 1999 1999 $ 289,146 $ 49,078 $ 64,517 $ 15,439 $ (24,242)
Computers........................ 1997 1999 $ 39,743 $ 0 $ 1,519 $ 1,520 $ (571)
Telecommunications............... 1993 1999 $ 17,874 $ 0 $ 385 $ 387 $ (144)
Material......................... 1996 1999 $ 46,177 $ 0 $ 1,621 $ 1,621 $ (609)
Restaurant....................... 1996 1999 $ 22,040 $ 2,571 $ 3,300 $ 729 $ (1,240)
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
(4) Federal Taxable Gain (Loss) information not yet available for 1999.
B-39
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P. Six for the five years ended December 31, 1999.
Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurant...................... 1994 1995 $ 326,412 $ 274,229 $ 292,998 $ 18,770 $ (8,364)
Computers....................... 1995 1995 $ 40,355 $ 36,171 $ 4,310 $ (31,861) $ 0
Manufacturing & Production...... 1995 1995 $ 107,995 $ 70,846 $ 13,253 $ (57,593) $ (6,821)
Printing........................ 1995 1995 $ 1,820,770 $ 1,218,354 $ 847,650 $(370,703) $(189,624)
Computers....................... 1994 1996 $ 18,446 $ 5,353 $ 3,560 $ (1,793) $ (10,985)
Manufacturing & Production...... 1994 1996 $ 17,177 $ 8,953 $ 9,433 $ 480 $ 0
Telecommunications.............. 1994 1996 $ 24,655 $ 18,456 $ 20,460 $ 2,004 $ 0
Computers....................... 1995 1996 $ 1,347,917 $ 329,160 $ 125,734 $(203,426) $(541,146)
Construction.................... 1995 1996 $22,064,270 $16,995,923 $16,995,923 $ 0 $(623,361)
Medical......................... 1995 1996 $ 103,056 $ 44,801 $ 50,884 $ 6,083 $ 0
Manufacturing & Production...... 1995 1996 $ 1,409,938 $ 812,883 $ 444,921 $(367,962) $(374,116)
Printing........................ 1995 1996 $ 5,442,336 $ 2,288,789 $ 1,412,324 $(876,465) $(414,037)
Restaurant...................... 1995 1996 $ 268,961 $ 253,439 $ 269,638 $ 16,199 $ 0
Telecommunications.............. 1995 1996 $ 1,650,391 $ 1,200,958 $ 1,315,148 $ 114,190 $ 0
Automotive...................... 1994 1997 $ 27,829 $ 14,749 $ 0 $ (14,749) $ 0
Computers....................... 1994 1997 $ 180,776 $ 66,976 $ 75,905 $ 8,929 $ (13,291)
Construction.................... 1994 1997 $ 32,848 $ 17,140 $ 0 $ (17,140) $ 0
Fixture......................... 1994 1997 $ 45,846 $ 1,789 $ 2,750 $ 961 $ (15,349)
Restaurant...................... 1994 1997 $ 94,554 $ 47,563 $ 52,007 $ 4,444 $ 0
Retail.......................... 1994 1997 $ 26,897 $ 0 $ 1,936 $ 1,936 $ (8,598)
Computers....................... 1995 1997 $ 3,262,279 $ 489,867 $ 501,756 $(140,124) $ 185,069
Fixture......................... 1995 1997 $ 29,651 $ 18,427 $ 0 $ (18,427) $ 0
Manufacturing & Production...... 1995 1997 $ 1,890,353 $ 255,830 $ 887,316 $ 28,163 $ 191,708
Medical......................... 1995 1997 $ 88,067 $ 1,722 $ 2,461 $ 739 $ 0
Office Equipment................ 1995 1997 $ 27,724 $ 0 $ 0 $ 0 $ 0
Printing........................ 1995 1997 $ 4,015,970 $ 898,332 $ 821,964 $ (50,660) $ (50,886)
Restaurant...................... 1995 1997 $ 39,793 $ 28,957 $ 0 $ (28,957) $ 0
Telecommunications.............. 1995 1997 $ 19,948 $ 2,353 $ 2,428 $ 75 $ 0
Transport....................... 1995 1997 $ 12,332 $ 541 $ 544 $ 2 $ 0
Furniture....................... 1996 1997 $ 52,450 $ 51,399 $ 3,919 $ (27,979) $ 0
Manufacturing & Production...... 1996 1997 $ 640,182 $ 81,744 $ 128,607 $ (27,601) $(216,682)
Printing........................ 1996 1997 $ 349,511 $ 243,488 $ 223,338 $ (20,150) $ 0
Restaurant...................... 1996 1997 $ 30,415 $ 0 $ 99 $ 99 $ 0
Telecommunications.............. 1996 1997 $ 216,401 $ 118,544 $ 3,044 $ 3,044 $ (7,459)
Computers....................... 1994 1998 $ 1,081,272 $ 182,678 $ 297,047 $ 114,369 $ 90,134
Furniture....................... 1994 1998 $ 152,405 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1994 1998 $ 196,353 $ 28,664 $ 21,290 $ (7,374) $ (8,364)
Retail.......................... 1994 1998 $ 312,317 $ 15,946 $ 29,399 $ 13,453 $ (20,149)
Video Production................ 1994 1998 $ 14,310 $ 100 $ 112 $ 12 $ (2,802)
Computers....................... 1995 1998 $ 5,253,429 $ 626,894 $ 984,318 $ 357,424 $(814,270)
Furniture....................... 1995 1998 $ 71,673 $ 0 $ 1,415 $ 1,415 $ 0
Manufacturing & Production...... 1995 1998 $ 545,660 $ 60,803 $ 121,399 $ 60,595 $ 34,751
Material Handling............... 1995 1998 $ 33,158 $ 37 $ 2,001 $ 1,964 $ 0
Medical......................... 1995 1998 $ 155,914 $ 3,994 $ 5,211 $ 1,217 $ 0
Printing........................ 1995 1998 $ 829,320 $ 43,449 $ 31,748 $ (11,701) $ (13,168)
</TABLE>
B-40
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurant...................... 1995 1998 $ 10,838 $ 0 $ 0 $ 0 $ 0
Retail.......................... 1995 1998 $ 23,389 $ 13,568 $ 5,300 $ (8,268) $ 0
Telecommunications.............. 1995 1998 $ 17,883 $ 542 $ 1,250 $ 708 $ (1,743)
Aircraft........................ 1996 1998 $20,183,834 $ 1,762,606 $2,647,482 $ 884,876 $(656,362)
Computers....................... 1996 1998 $ 37,213 $ 2,027 $ 1,834 $ (192) $ (4,673)
Copiers......................... 1996 1998 $ 231,614 $ 11,051 $ 59,407 $ 48,356 $ (75,808)
Manufacturing & Production...... 1996 1998 $ 95,165 $ 19,874 $ 45,403 $ 25,529 $ 9,868
Printing........................ 1996 1998 $ 39,424 $ 0 $ 562 $ 562 $ 0
Telecommunications.............. 1996 1998 $ 1,123,203 $ 516,251 $ 256,378 $(259,873) $ (28,268)
Manufacturing & Production...... 1997 1998 $ 24,349 $ 0 $ 0 $ 0 $ 0
Printing........................ 1997 1998 $ 56,805 $ 45,916 $ 25,273 $ (20,643) $ 0
Telecommunications.............. 1997 1998 $ 60,692 $ 47,285 $ 11,465 $ (35,820) $ (45,497)
Printing........................ 1998 1998 $ 33,213 $ 660 $ 0 $ (660) $ 0
Furniture....................... 1994 1999 $ 136,766 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1994 1999 $ 499,451 $ 79,381 $ 99,772 $ 20,391 $ (17,023)
Telecommunications.............. 1994 1999 $ 35,338 $ 6,642 $ 8,030 $ 1,388 $ (1,370)
Video Production................ 1994 1999 $ 82,844 $ 845 $ 4,262 $ 3,417 $ (727)
Agriculture..................... 1995 1999 $ 37,934 $ 0 $ 0 $ 0 $ 0
Computers....................... 1995 1999 $ 1,902,926 $ 324,701 $ 267,998 $ (56,703) $ (45,726)
Manufacturing & Production...... 1995 1999 $ 153,515 $ 4,045 $ 5,189 $ 1,145 $ (885)
Medical......................... 1995 1999 $ 132,951 $ 3,102 $ 4,302 $ 1,200 $ (734)
Printing........................ 1995 1999 $ 163,911 $ 7,469 $ 7,797 $ 328 $ (1,330)
Retail.......................... 1995 1999 $ 33,425 $ 0 $ 0 $ 0 $ 0
Computers....................... 1996 1999 $ 3,801,570 $ 587,657 $ 690,917 $ 103,260 $(117,884)
Manufacturing & Production...... 1996 1999 $ 24,096 $ 4,052 $ 6,285 $ 2,232 $ (1,072)
Telecommunications.............. 1996 1999 $ 167,339 $ 39,719 $ 44,185 $ 4,467 $ (7,539)
Material Handling............... 1998 1999 $ 3,801,108 $ 116,045 $ 116,045 $ 0 $ (19,799)
Printing........................ 1998 1999 $ 19,039 $ 0 $ 0 $ 0 $ 0
Computers....................... 1995 1999 $ 12,799 $ 193 $ 218 $ 25 $ (37)
Computers....................... 1994 1999 $ 25,320 $ 2,252 $ 2,628 $ 376 $ (448)
Retail.......................... 1994 1999 $ 27,117 $ 2,922 $ 3,184 $ 262 $ (543)
Fixtures........................ 1994 1999 $ 41,088 $ 933 $ 935 $ 2 $ (160)
Computers....................... 1994 1999 $ 23,517 $ 0 $ 29 $ 29 $ (5)
M & P........................... 1994 1999 $ 18,153 $ 0 $ 0 $ 0 $ 0
Computers....................... 1994 1999 $ 12,332 $ 0 $ 0 $ 0 $ 0
Computers....................... 1994 1999 $ 13,898 $ 0 $ 0 $ 0 $ 0
Computers....................... 1994 1999 $ 41,439 $ 1,046 $ 2,839 $ 1,793 $ (484)
Manufacturing & Production...... 1994 1999 $ 15,588 $ 291 $ 291 $ 0 $ (50)
Telecommunications.............. 1994 1999 $ 15,180 $ 295 $ 293 $ (3) $ (50)
Furniture....................... 1994 1999 $ 351,816 $ 1 $ 1 $ 0 $ (0)
Telecommunications.............. 1994 1999 $ 24,538 $ 0 $ 545 $ 545 $ (93)
Restaurant...................... 1994 1999 $ 566,055 $ 65,854 $ 13,441 $ (52,413) $ (2,293)
Computers....................... 1994 1999 $ 25,681 $ 6,182 $ 2,979 $ (3,203) $ (508)
Computers....................... 1994 1999 $ 88,556 $ 0 $ 1,915 $ 1,915 $ (327)
M & P........................... 1994 1999 $ 362,830 $ 55,581 $ 138,217 $ 82,636 $ (23,582)
M & P........................... 1994 1999 $ 101,989 $ 20,330 $ 29,495 $ 9,165 $ (5,032)
M & P........................... 1994 1999 $ 10,052 $ 2,109 $ 1,379 $ (730) $ (235)
M & P........................... 1994 1999 $ 31,269 $ 5,149 $ 3,589 $ (1,560) $ (612)
M & P........................... 1994 1999 $ 12,409 $ 2,042 $ 3,281 $ 1,239 $ (560)
Manufacturing & Production...... 1995 1999 $ 27,427 $ (0) $ 0 $ 0 $ 0
Printing........................ 1995 1999 $ 30,291 $ 0 $ 0 $ 0 $ 0
Printing........................ 1995 1999 $ 15,345 $ 5,199 $ 0 $ (5,199) $ 0
</TABLE>
B-41
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Printing........................ 1995 1999 $ 35,003 $ 6,991 $ 3,607 $ (3,384) $ (615)
Printing........................ 1995 1999 $ 24,524 $ 2,044 $ 1,849 $ (195) $ (315)
Computers....................... 1995 1999 $ 316,006 $ 72,902 $ 99,350 $ 26,448 $ (16,951)
Computers....................... 1995 1999 $ 316,006 $ 72,902 $ 27,808 $ (45,094) $ (4,745)
Computers....................... 1995 1999 $ 316,006 $ 72,902 $ 44,108 $ (28,794) $ (7,526)
Computers....................... 1995 1999 $ 2,320 $ 449 $ 399 $ (51) $ (68)
Computers....................... 1995 1999 $ 15,410 $ 2,090 $ 2,946 $ 857 $ (503)
Computers....................... 1995 1999 $ 21,055 $ 2,467 $ 5,619 $ 3,152 $ (959)
Computers....................... 1995 1999 $ 103,037 $ 22,626 $ 20,423 $ (2,203) $ (3,485)
Computers....................... 1995 1999 $ 103,037 $ 22,626 $ 17,132 $ (5,494) $ (2,923)
Computers....................... 1995 1999 $ 14,476 $ 3,595 $ 2,638 $ (957) $ (450)
M & P........................... 1995 1999 $ 10,950 $ 1,696 $ 1,407 $ (289) $ (240)
M & P........................... 1995 1999 $ 5,014 $ 776 $ 669 $ (107) $ (114)
M & P........................... 1995 1999 $ 2,908 $ 427 $ 295 $ (132) $ (50)
M & P........................... 1995 1999 $ 182,824 $ 28,725 $ 13,485 $ (15,240) $ (2,301)
M & P........................... 1995 1999 $ 5,873 $ 886 $ 400 $ (485) $ (68)
M & P........................... 1995 1999 $ 42,095 $ 6,493 $ 2,693 $ (3,800) $ (459)
M & P........................... 1995 1999 $ 121,599 $ 16,642 $ 23,000 $ 6,358 $ (3,924)
M & P........................... 1995 1999 $ 121,599 $ 16,643 $ 21,313 $ 4,670 $ (3,636)
M & P........................... 1995 1999 $ 19,402 $ 2,655 $ 4,019 $ 1,364 $ (686)
Manufacturing & Production...... 1995 1999 $ 5,850 $ 1,027 $ 967 $ (60) $ (165)
Manufacturing & Production...... 1995 1999 $ 5,218 $ 917 $ 893 $ (24) $ (152)
Manufacturing & Production...... 1995 1999 $ 8,281 $ 1,406 $ 1,374 $ (33) $ (234)
Manufacturing & Production...... 1995 1999 $ 4,046 $ 710 $ 669 $ (41) $ (114)
Manufacturing & Production...... 1995 1999 $ 5,588 $ 913 $ 895 $ (18) $ (153)
Manufacturing & Production...... 1995 1999 $ 9,778 $ 1,597 $ 3,141 $ 1,544 $ (536)
Telecommunications.............. 1995 1999 $ 39,384 $ 3,572 $ 0 $ (3,572) $ 0
M & P........................... 1995 1999 $ 7,877 $ 1,220 $ 1,045 $ (174) $ (178)
M & P........................... 1995 1999 $ 5,182 $ 803 $ 672 $ (130) $ (115)
M & P........................... 1995 1999 $ 5,670 $ 878 $ 690 $ (187) $ (118)
M & P........................... 1995 1999 $ 14,882 $ 2,305 $ 1,901 $ (404) $ (324)
M & P........................... 1995 1999 $ 4,594 $ 674 $ 469 $ (205) $ (80)
Restaurant...................... 1995 1999 $ 214,686 $ 29,357 $ 29,975 $ 618 $ (5,114)
Computers....................... 1995 1999 $ 4,459 $ 1,029 $ 354 $ (675) $ (60)
Computers....................... 1995 1999 $ 1,495 $ 389 $ 116 $ (273) $ (20)
Computers....................... 1995 1999 $ 1,485 $ 332 $ 180 $ (152) $ (31)
Computers....................... 1995 1999 $ 3,934 $ 838 $ 421 $ (417) $ (72)
Computers....................... 1995 1999 $ 1,382 $ 295 $ 148 $ (147) $ (25)
Computers....................... 1995 1999 $ 3,990 $ 793 $ 774 $ (20) $ (132)
Computers....................... 1995 1999 $ 8,529 $ 1,634 $ 2,006 $ 372 $ (342)
Computers....................... 1995 1999 $ 1,038 $ 209 $ 36 $ (173) $ (6)
Computers....................... 1995 1999 $ 1,038 $ 209 $ 138 $ (71) $ (24)
Computers....................... 1995 1999 $ 1,260 $ 254 $ 146 $ (108) $ (25)
Computers....................... 1995 1999 $ 1,133 $ 229 $ 223 $ (6) $ (38)
Computers....................... 1995 1999 $ 1,257 $ 254 $ 247 $ (7) $ (42)
Computers....................... 1995 1999 $ 1,035 $ 209 $ 138 $ (71) $ (24)
Computers....................... 1995 1999 $ 1,117 $ 225 $ 141 $ (84) $ (24)
Computers....................... 1995 1999 $ 1,034 $ 209 $ 138 $ (71) $ (24)
Computers....................... 1995 1999 $ 1,823 $ 368 $ 267 $ (101) $ (46)
Computers....................... 1995 1999 $ 1,607 $ 307 $ 379 $ 72 $ (65)
Computers....................... 1995 1999 $ 3,988 $ 762 $ 645 $ (117) $ (110)
Computers....................... 1995 1999 $ 216,772 $ 10,180 $ 15,468 $ 5,289 $ (2,639)
</TABLE>
B-42
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers....................... 1995 1999 $ 8,262 $ 426 $ 800 $ 374 $ (136)
Computers....................... 1995 1999 $ 156,801 $ 7,925 $ 17,888 $ 9,963 $ (3,052)
Computers....................... 1995 1999 $ 25,475 $ 2,703 $ 4,000 $ 1,297 $ (682)
Computers....................... 1995 1999 $ 84,471 $ 8,964 $ 16,205 $ 7,241 $ (2,765)
Computers....................... 1995 1999 $ 30,039 $ 3,192 $ 5,758 $ 2,566 $ (982)
Computers....................... 1995 1999 $ 56,406 $ 5,993 $ 11,137 $ 5,144 $ (1,900)
Computers....................... 1995 1999 $ 1,712 $ 346 $ 163 $ (183) $ (28)
Computers....................... 1995 1999 $ 1,117 $ 225 $ 41 $ (184) $ (7)
Computers....................... 1995 1999 $ 1,038 $ 275 $ 138 $ (137) $ (24)
Computers....................... 1995 1999 $ 4,534 $ 1,011 $ 666 $ (345) $ (114)
Computers....................... 1995 1999 $ 386,611 $ 69,952 $ 62,154 $ (7,798) $ (10,605)
M & P........................... 1995 1999 $ 1,066 $ 247 $ 251 $ 3 $ (43)
Printing........................ 1995 1999 $ 1,071 $ 252 $ 117 $ (135) $ (20)
Printing........................ 1995 1999 $ 1,046 $ 211 $ 136 $ (75) $ (23)
Printing........................ 1995 1999 $ 653 $ 132 $ 124 $ (8) $ (21)
Printing........................ 1995 1999 $ 801 $ 162 $ 129 $ (32) $ (22)
Printing........................ 1995 1999 $ 815 $ 164 $ 130 $ (35) $ (22)
Printing........................ 1995 1999 $ 1,109 $ 224 $ 141 $ (83) $ (24)
Printing........................ 1995 1999 $ 1,976 $ 358 $ 617 $ 259 $ (105)
Printing........................ 1995 1999 $ 1,138 $ 254 $ 50 $ (204) $ (9)
Printing........................ 1995 1999 $ 1,598 $ 289 $ 12,889 $ 12,600 $ (2,199)
Telecommunications.............. 1995 1999 $ 1,081 $ 195 $ 285 $ 90 $ (49)
Retail.......................... 1995 1999 $ 121,497 $ 0 $ 0 $ 0 $ 0
Restaurant...................... 1995 1999 $ 134,614 $ 25,235 $ 29,508 $ 4,273 $ (5,035)
Audio........................... 1995 1999 $ 42,338 $ 0 $ 2,400 $ 2,400 $ (409)
Computers....................... 1995 1999 $ 22,277 $ 749 $ 719 $ (30) $ (123)
Computers....................... 1995 1999 $ 14,089 $ 0 $ 0 $ 0 $ 0
Computers....................... 1905 1999 $ 25,445 $ 681 $ 0 $ (681) $ 0
Computers....................... 1995 1999 $ 13,180 $ 0 $ 0 $ 0 $ 0
Computers....................... 1995 1999 $ 45,421 $ 598 $ 146 $ (453) $ (25)
Computers....................... 1995 1999 $ 16,625 $ 81 $ 81 $ 0 $ (14)
Computers....................... 1995 1999 $ 37,172 $ 12 $ 925 $ 913 $ (158)
Computers....................... 1995 1999 $ 26,446 $ 54 $ 176 $ 122 $ (30)
Computers....................... 1995 1999 $ 43,361 $ 0 $ 1,217 $ 1,217 $ (208)
Computers....................... 1995 1999 $ 34,556 $ 952 $ 963 $ 11 $ (164)
Computers....................... 1995 1999 $ 22,931 $ (0) $ 1,173 $ 1,173 $ (200)
Computers....................... 1995 1999 $ 11,093 $ 0 $ 15 $ 15 $ (3)
Fixture......................... 1995 1999 $ 19,249 $ 0 $ 1,531 $ 1,531 $ (261)
M & P........................... 1995 1999 $ 6,837 $ 0 $ 37 $ 37 $ (6)
M & P........................... 1995 1999 $ 28,490 $ 0 $ 2,870 $ 2,870 $ (490)
M & P........................... 1995 1999 $ 52,753 $ 13,109 $ 13,578 $ 469 $ (2,317)
M & P........................... 1995 1999 $ 21,079 $ 2,108 $ 2,109 $ 1 $ (360)
M & P........................... 1995 1999 $ 10,959 $ 203 $ 206 $ 3 $ (35)
M & P........................... 1995 1999 $ 9,772 $ 49 $ 49 $ 0 $ (8)
Material Handling............... 1995 1999 $ 19,973 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 40,587 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 20,868 $ 0 $ 3 $ 3 $ (0)
Medical......................... 1995 1999 $ 17,843 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 13,774 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 29,369 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 36,383 $ 0 $ 108 $ 108 $ (18)
Medical......................... 1995 1999 $ 31,437 $ 0 $ 0 $ 0 $ 0
</TABLE>
B-43
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical......................... 1995 1999 $ 39,831 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 33,233 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 21,284 $ 942 $ 2,854 $ 1,912 $ (487)
Medical......................... 1995 1999 $ 26,383 $ (0) $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 10,151 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 30,945 $ 13 $ 1,652 $ 1,639 $ (282)
Medical......................... 1995 1999 $ 21,394 $ 300 $ 871 $ 571 $ (149)
Medical......................... 1995 1999 $ 26,170 $ 0 $ 0 $ 0 $ 0
Medical......................... 1995 1999 $ 28,983 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1995 1999 $ 25,979 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1995 1999 $ 10,164 $ 2 $ 263 $ 261 $ (45)
Manufacturing & Production...... 1995 1999 $ 35,148 $ 0 $ 89 $ 89 $ (15)
Manufacturing & Production...... 1995 1999 $ 23,164 $ 0 $ 0 $ 0 $ 0
Manufacturing & Production...... 1995 1999 $ 43,800 $ (0) $ 103 $ 104 $ (18)
Manufacturing & Production...... 1995 1999 $ 29,316 $ 0 $ 0 $ 0 $ 0
Office Equipment................ 1995 1999 $ 37,951 $ 0 $ 0 $ 0 $ 0
Retail.......................... 1995 1999 $ 17,373 $ 1,262 $ 1 $ (1,261) $ (0)
Retail.......................... 1995 1999 $ 44,441 $ 0 $ 0 $ 0 $ (0)
Telecommunications.............. 1995 1999 $ 11,321 $ 0 $ 0 $ 0 $ 0
Telecommunications.............. 1995 1999 $ 36,167 $ 30 $ 867 $ 837 $ (148)
Telecommunications.............. 1995 1999 $ 16,277 $ 0 $ 7,059 $ 7,059 $ (1,204)
Telecommunications.............. 1995 1999 $ 9,953 $ 307 $ 0 $ (307) $ 0
M & P........................... 1995 1999 $ 25,752 $ 8,668 $ 9,680 $ 1,012 $ (1,652)
M & P........................... 1995 1999 $ 21,432 $ 7,618 $ 8,559 $ 942 $ (1,460)
Retail.......................... 1995 1999 $ 124,946 $ 95 $ 508 $ 413 $ (87)
Restaurant...................... 1995 1999 $ 41,426 $ 0 $ 0 $ 0 $ 0
Computers....................... 1996 1999 $ 88,930 $ 18,549 $ 9,000 $ (9,549) $ (1,536)
Computers....................... 1996 1999 $ 19,032 $ 4,486 $ 1,046 $ (3,440) $ (179)
Computers....................... 1996 1999 $ 124,579 $ 29,117 $ 0 $ (29,117) $ 0
Computers....................... 1996 1999 $ 626,615 $ 115,317 $ 145,953 $ 30,636 $ (24,902)
Furniture....................... 1996 1999 $ 75,691 $ 7,785 $ 24,318 $ 16,533 $ (4,149)
M & P........................... 1996 1999 $ 11,819 $ 9,137 $ 11,819 $ 2,682 $ (2,017)
M & P........................... 1996 1999 $ 129,226 $ 14,503 $ 17,719 $ 3,216 $ (3,023)
M & P........................... 1996 1999 $ 25,347 $ 2,914 $ 6,543 $ 3,628 $ (1,116)
M & P........................... 1996 1999 $ 437,254 $ 62,508 $ 80,129 $ 17,621 $ (13,671)
Telecommunications.............. 1996 1999 $ 144,827 $ 17,391 $ 30,747 $ 13,356 $ (5,246)
Printing........................ 1996 1999 $ 25,566 $ 3,504 $ 0 $ (3,504) $ 0
Telecommunications.............. 1996 1999 $ 3,709,436 $ 1,084,255 $1,160,332 $ 76,077 $(197,975)
Telecommunications.............. 1996 1999 $ 1,448,798 $ 601,061 $ 647,290 $ 46,229 $(110,440)
Telecommunications.............. 1996 1999 $ 479,613 $ 270,551 $ 285,120 $ 14,569 $ (48,647)
Telecommunications.............. 1996 1999 $ 1,446,711 $ 470,054 $ 491,851 $ 21,797 $ (83,919)
Telecommunications.............. 1996 1999 $ 1,194,614 $ 585,711 $ 620,669 $ 34,958 $(105,898)
Telecommunications.............. 1996 1999 $ 821,135 $ 271,192 $ 300,742 $ 29,550 $ (51,312)
Telecommunications.............. 1996 1999 $ 14,277 $ 761 $ 978 $ 217 $ (167)
Telecommunications.............. 1997 1999 $ 46,349 $ 8,384 $ 16,768 $ 8,384 $ (2,861)
Telecommunications.............. 1997 1999 $ 218,545 $ 140,426 $ 170,357 $ 29,931 $ (29,066)
Printing........................ 1997 1999 $ 54,194 $ (0) $ 0 $ 0 $ 0
Printing........................ 1997 1999 $ 4,993 $ 189 $ 191 $ 2 $ (33)
Telecommunications.............. 1997 1999 $ 146,997 $ 33,095 $ 56,384 $ 23,289 $ (9,620)
Medical......................... 1997 1999 $ 16,213 $ 7 $ 736 $ 729 $ (126)
Printing........................ 1998 1999 $ 17,641 $ 6 $ 84 $ 77 $ (14)
Restaurant...................... 1998 1999 $ 27,916 $ 0 $ 0 $ 0 $ 0
</TABLE>
B-44
<PAGE>
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Computers....................... 1995 1999 $ 13,160 $ 0 $ 0 $ 0 $ 0
Computers....................... 1995 1999 $ 30,342 $ 0 $ 0 $ 0 $ 0
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
(4) Federal Taxable Gain (Loss) information not yet available for 1999.
B-45
<PAGE>
TABLE V
SALES OR DISPOSITIONS OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table summarizes the sales or dispositions of equipment for
ICON Cash Flow Partners, L.P. Seven for the three years ended December 31, 1999.
Each of the Programs' records are maintained in accordance with Generally
Accepted Accounting Principles ("GAAP").
<TABLE>
<CAPTION>
TOTAL FEDERAL
TYPE OF YEAR OF YEAR OF ACQUISITION NET BOOK NET GAAP TAXABLE
EQUIPMENT ACQUISITION DISPOSITION COST(1) VALUE(2) PROCEEDS(3) GAIN (LOSS) GAIN (LOSS)
--------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction..................... 1996 1997 $ 50,702 $ 47,778 $ 0 $ (47,778) $ 0
Computers........................ 1996 1997 $2,048,220 $1,660,987 $1,774,347 $ 18,900 $ 0
Telecommunications............... 1996 1997 $ 52,104 $ 13,681 $ 22,837 $ 0 $ (23,396)
Vessels.......................... 1997 1997 $9,561,865 $4,154,528 $5,864,138 $1,709,610 $ 2,448,874
Computers........................ 1996 1998 $ 977,492 $ 71,299 $ 92,059 $ 20,760 $ (343,764)
Fixture.......................... 1996 1998 $ 598,654 $ 289 $ 289 $ 0 $ 0
Material Handling................ 1996 1998 $4,691,459 $3,443,875 $3,992,681 $ 548,806 $ 1,214,939
Telecommunications............... 1996 1998 $3,190,537 $ 881,952 $ 991,695 $ 109,743 $ 187,918
Telecommunications............... 1997 1998 $ 82,378 $ 56,553 $ 22,593 $ (33,960) $ (63,983)
Fixture.......................... 1998 1998 $ 291,620 $ 284,022 $ 0 $ (284,022) $ 0
Audio............................ 1996 1999 $ 53,561 $ 34,837 $ 34,000 $ (837) $ (27,940)
Computers........................ 1996 1999 $3,558,330 $ 478,483 $ 647,015 $ 168,532 $ (531,702)
Computers........................ 1996 1999 $ 1,666 $ 244 $ 362 $ 118 $ (297)
Computers........................ 1996 1999 $ 16,893 $ 1,751 $ 8,639 $ 6,888 $ (7,099)
Computers........................ 1996 1999 $ 18,489 $ 1,318 $ 9,636 $ 8,318 $ (7,919)
Computers........................ 1996 1999 $ 50,926 $ 7,084 $ 24,280 $ 17,196 $ (19,952)
Computers........................ 1996 1999 $ 13,893 $ 2,391 $ 6,338 $ 3,948 $ (5,209)
Computers........................ 1996 1999 $ 5,930 $ 290 $ 59 $ (232) $ (48)
Computers........................ 1996 1999 $ 2,512 $ 491 $ 384 $ (108) $ (315)
Computers........................ 1996 1999 $ 2,512 $ 351 $ 399 $ 47 $ (328)
Computers........................ 1996 1999 $ 2,388 $ 327 $ 382 $ 55 $ (314)
Computers........................ 1996 1999 $ 5,107 $ 690 $ 0 $ (690) $ 0
Computers........................ 1996 1999 $ 10,727 $ 1,449 $ 50 $ (1,399) $ (41)
Computers........................ 1996 1999 $ 7,142 $ 963 $ 1,123 $ 160 $ (923)
Telecommunications............... 1996 1999 $ 439,385 $ 59,516 $ 8,939 $ (50,577) $ (7,346)
Telecommunications............... 1996 1999 $ 476,718 $ 253,519 $ 264,888 $ 11,370 $ (217,679)
Telecommunications............... 1996 1999 $ 39,469 $ 8,959 $ 300 $ (8,659) $ (247)
Telecommunications............... 1997 1999 $ 10,373 $ 1,563 $ 721 $ (842) $ (593)
Telecommunications............... 1997 1999 $ 235,938 $ 191,900 $ 154,040 $ (37,860) $ (126,586)
</TABLE>
------------------------------
(1) Acquisition cost includes Acquisition Fee.
(2) Represents the total acquisition cost less accumulated depreciation and
other reserves, calculated on a GAAP Basis.
(3) Cash received and/or principal amount of debt reduction less any direct
selling cost.
(4) Federal Taxable Gain (Loss) information not yet available for 1999.
B-46
<PAGE>
TABLE VI
ACQUISITION OF EQUIPMENT--PRIOR PUBLIC PROGRAMS
(UNAUDITED)
The following table sets forth the aggregate equipment acquisition, leasing
and financing information for ICON Cash Flow Partners, L.P., Series A at
December 31, 1999
<TABLE>
<CAPTION>
ORIGINAL LESSEE DATE TOTAL CASH ACQUISITION
OR EQUIPMENT USER LOCATION EQUIPMENT PURCHASED FINANCING(1) EXPENDED(2) COST(3)
----------------- ----------------- ------------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Campbell Soup Company......... Sacramento, CA Computers Sep-91 $ 0 $ 27,411 $ 27,411
Center For The Media Arts..... New York, NY Audio Visual Nov-88 0 377,126 377,126
Center For The Media Arts..... New York, NY Audio Visual Mar-90 0 82,204 82,204
Chesebrough Ponds............. Westport, CT Material Handling Jun-88 23,058 4,475 27,533
Chesebrough Ponds............. Westport, CT Material Handling Jun-88 0 54,508 54,508
Ciba-Geigy Corp............... Greensboro, NC Copiers Sep-91 0 49,081 49,081
Ciba-Geigy Corp............... Greensboro, NC Computers Sep-91 0 74,389 74,389
Ciba-Geigy Corp............... Summit, NJ Computers Sep-91 0 39,459 39,459
Corporate Mailings, Inc....... Whippany, NJ Office Copier Jun-88 130,113 29,440 159,553
Data Broadcasting Vienna, VA Computers Jun-90 771,520 56,283 827,803
Corporation.................
Doran & Doran PC.............. Ames, IA Medical Jun-88 25,642 4,115 29,757
First Boston Corp............. New York, NY Copiers Feb-89 73,438 8,475 81,913
First Hudson Equipment Leasing
Corp........................ White Plains, NY Computer Jun-88 0 75,224 75,224
Godiva Chocolatier, Inc....... Reading, PA Computers Sep-91 0 32,561 32,561
Gould, Inc.................... Ft. Lauderdale, Office Copier Jun-88 34,982 14,857 49,839
FL
Hospital Authority Of Lawrenceville, GA Medical Jun-88 49,274 7,117 56,391
Gwinnett....................
Ingalls Same Day Surgery...... Tinley Park, IL Medical Jun-88 71,572 9,490 81,062
Ingersoll-Rand Company........ Mayfield, KY Copiers Sep-91 0 117,238 117,238
Intelligent Light............. Fairlawn, NJ Computers Jun-88 46,131 7,662 53,793
Internal Revenue Service...... Philadelphia, PA Office Equipment May-89 0 83,114 83,114
Ivan C. Namihas MD............ Las Vegas, NV Medical Jun-88 0 29,784 29,784
L & H Abstracts............... White Plains, NY Telecommunications Jul-89 0 41,229 41,229
Laclede Steel Company......... St. Louis, MO Computers Jun-89 69,618 2,513 72,131
Ladera Heights Hospital....... Los Angeles, CA Computers May-89 0 271,415 271,415
Liverpool Blueprint, Inc...... Liverpool, NY Commercial Copier May-89 0 114,048 114,048
Liverpool Blueprint, Inc...... Liverpool, NY Reprographics Jul-93 0 53,149 53,149
Marvin Sugarman Productions... Valencia, CA Audio Visual Aug-90 179,379 4,617 183,996
Massachusetts General Life.... Englewood, CO Computers Dec-89 327,971 19,220 347,191
Mcginn Tool & Engineering Franklin, IN Manufacturing & Jun-95 0 27,000 27,000
Co.......................... Production
Medical Center Of Independence, MO Medical Jun-88 59,838 8,192 68,030
Independence................
New York Telephone............ New York, NY Copiers Jun-88 173,024 32,155 205,179
Newark Beth Israel Medical Newark, NJ Medical Sep-91 0 40,556 40,556
Ctr.........................
Pandick Technologies, Inc..... New York, NY Office Copier Jun-88 184,910 44,661 229,571
Payless Cashways/Parctec...... New York, NY Retail Dec-93 141,791 7,365 149,156
Professional Blueprinters..... Norfolk, VA Commercial Copier Mar-89 0 120,682 120,682
Quality Plants................ Manorville, NY Agriculture May-89 0 37,991 37,991
Rainbow Abstracts............. White Plains, NY Office Copier Jul-88 0 107,503 107,503
Ralph's Foods................. Edroy, TX Printing May-89 0 83,027 83,027
Richman Gordman Stores, Inc... Omaha, NE Retail Dec-90 172,690 25,823 198,513
Richman Gordman Stores, Inc... Omaha, NE Retail Dec-93 0 39,887 39,887
Ridgebury Equestrian Center... New Hampton, NY Agriculture Sep-88 0 27,968 27,968
S.J.C. Video Corporation...... Valencia, CA Video Production Aug-90 0 341,796 341,796
Santangelo dba Valley Derby, CT Agriculture Dec-88 0 31,425 31,425
Shopping....................
Sparta, Inc................... La Jolla, CA Computer Jun-88 33,587 7,593 41,180
Stamford Lithographics........ Stamford, CT Printing Feb-89 0 50,258 50,258
Staten Island Ob & Gyn Staten Island, NY Medical Jun-88 0 26,215 26,215
Assoc.......................
Taco Amigo.................... Audubon, NJ Restaurant Mar-89 0 103,459 103,459
</TABLE>
B-47
<PAGE>
TABLE VI
ACQUISITION OF EQUIPMENT--PRIOR PUBLIC PROGRAMS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
ORIGINAL LESSEE DATE TOTAL CASH ACQUISITION
OR EQUIPMENT USER LOCATION EQUIPMENT PURCHASED FINANCING(1) EXPENDED(2) COST(3)
----------------- ----------------- ------------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Texas Instruments, Inc........ Dallas, TX Computers Jun-88 $ 175,382 $ 35,954 $ 211,336
The Guardian Life Insurance
Company..................... Spokane, WA Office Copier Jun-88 221,181 46,190 267,371
Triangle Reproductions, Houston, TX Commercial Copier Dec-90 0 74,677 74,677
Inc.........................
Tucker Anthony................ New York, NY Office Copier Jun-88 22,813 7,083 29,896
V. Bruce Mccord............... Gardiner, NY Agriculture Sep-88 0 36,139 36,139
Wakefern Food Corp............ Elizabeth, NJ Office Copier Jun-88 41,749 22,756 64,505
William F. Hineser Dpm, Arvada, CO Medical Jun-88 0 25,695 25,695
P.C.........................
Total Equipment transactions less than $25,000..... 266,061 1,385,490 1,651,551
---------- ---------- - 
