Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-1
Registration Statement
Under
The Securities Act of 1933
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ATEL CAPITAL EQUIPMENT FUND IX, LLC
(Exact name of registrant as specified in governing instruments)
California 7394 94-3375584
(State or other juris- (Primary standard (IRS Employer
diction of organization) industrial classification Identification number)
code number)
235 Pine Street, 6th Floor
San Francisco, California 94104
(415) 989-8800
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
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DEAN L. CASH
235 Pine Street, 6th Floor
San Francisco, California 94104
(415) 989-8800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With a copy to:
PAUL J. DERENTHAL, ESQ.
Derenthal & Dannhauser
One Post Street, Suite 575
San Francisco, California 94104
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Approximate date of commencement of proposed
sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Title of Each Proposed Proposed
Class of Maximum Maximum Amount of
Securities to Amount to Offering Price Aggregate Registration
Be Registered Be Registered Per Unit Offering Price Fee
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Units of Limited
Liability Company
Interest 15,000,000 $10.00 $150,000,000 $39,600
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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ATEL CAPITAL EQUIPMENT FUND IX, LLC
Limited Liability Company Units
ATEL Capital Equipment Fund IX, LLC will buy a diversified portfolio of
primarily low-technology equipment and lease the equipment to corporations. ATEL
Financial Corporation is its Manager. The Fund will collect lease payments and
eventually sell the equipment. Its objective will be to distribute to investors
the lease payments and sales proceeds remaining after it pays its expenses and
fees. The Fund intends to use approximately 86% of the capital it raises from
the sale of Units to purchase its investments in equipment. At least an
additional one-half of one percent of its initial capital will be held as
reserves. Of the remaining capital, 9.5% will be used to pay selling commissions
and up to 3.5% will be used to pay other offering expenses.
A purchase of Units involves risks. See "Risk Factors" on page 9. Risks include:
- Investors must rely on ATEL to manage the Fund;
- The Fund will pay ATEL substantial fees;
- The Fund has not specified all its equipment investments;
- The Fund's performance is subject to the risk of lessee defaults;
- The Fund will borrow to buy equipment;
- An investor's ability to sell his Units is limited; and
The Fund is offering a total of 15,000,000 of its Units of limited liability
company interest for a price of $10 per Unit. An investor must purchase a
minimum of 250 Units, except that an Individual Retirement Account or other
retirement plan can purchase a minimum of 200 Units. No Units will be sold
unless a minimum of $1,200,000 in cash is received within one year from the
start of the offering. The Fund will deposit its subscriptions in a bank escrow
account until that amount is received. The brokers selling the Units are not
required to sell any specific number of Units, but will use their best efforts
to sell Units.
- The Fund does not guarantee its distributions or the return of investors'
capital.
Price to Selling Proceeds to
Public Commissions Fund
------ ----------- ----
Per Unit $10 $0.95 $9.05 THE DATE OF THIS PROSPECTUS
Total IS ___________, 2000
Minimum $1,200,000 $114,000 $1,086,000
Total
Maximum $150,000,000 $14,250,000 $135,750,000
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities
nor has any state securities commission passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
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TABLE OF CONTENTS
Page
SUMMARY OF THE OFFERING.................................................... 6
The Fund............................................................... 6
Management............................................................. 6
Risk Factors........................................................... 6
Who Should Invest...................................................... 6
Use of Capital......................................................... 7
ATEL's Fees............................................................ 7
Income, Losses and Distributions....................................... 7
Income Tax Consequences................................................ 7
Summary of the Operating Agreement..................................... 8
Plan of Distribution................................................... 9
RISK FACTORS............................................................... 9
Equipment Leasing Risks................................................ 9
Risks Inherent in the Structure of the Fund............................ 12
Risks Relating to Tax Matters.......................................... 14
Risks Relating to ERISA Matters........................................ 15
WHO SHOULD INVEST.......................................................... 16
ESTIMATED USE OF PROCEEDS.................................................. 18
MANAGEMENT COMPENSATION.................................................... 20
Summary Table.......................................................... 20
Narrative Description of Compensation.................................. 21
Limitations on Fees.................................................... 22
Defined Terms Used in Description of Compensation...................... 25
INVESTMENT OBJECTIVES AND POLICIES......................................... 27
Principal Investment Objectives........................................ 27
General Policies....................................................... 27
Types of Equipment..................................................... 30
Prior Program Diversification.......................................... 34
Borrowing Policies..................................................... 34
Description of Lessees................................................. 36
Foreign Leases......................................................... 37
Description of Leases.................................................. 37
Venture Equipment Leasing and Financing................................ 39
Competition............................................................ 40
Joint Venture Investments.............................................. 41
General Restrictions................................................... 42
Changes in Investment Objectives and Policies.......................... 42
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CONFLICTS OF INTEREST...................................................... 42
ORGANIZATIONAL DIAGRAM..................................................... 45
FIDUCIARY DUTY OF THE MANAGER.............................................. 45
MANAGEMENT................................................................. 46
The Manager............................................................ 46
Selection and Management of Investments................................ 49
Management Compensation................................................ 49
Changes in Management.................................................. 49
The Dealer Manager..................................................... 50
PRIOR PERFORMANCE SUMMARY.................................................. 50
INCOME, LOSSES AND DISTRIBUTIONS........................................... 53
Allocations of Net Income and Net Loss................................. 53
Timing of Distributions................................................ 53
Allocations of Distributions........................................... 53
Reinvestment........................................................... 54
Return of Unused Capital............................................... 55
Cash from Reserve Account.............................................. 55
Sources of Distributions - Accounting Matters.......................... 55
CAPITALIZATION............................................................. 56
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION................................................... 56
Year 2000 Compliance................................................... 57
FEDERAL INCOME TAX CONSEQUENCES............................................ 58
Opinion of Derenthal & Dannhauser...................................... 59
Classification as a Partnership........................................ 59
Allocations of Profits and Losses...................................... 61
Income Recognition..................................................... 62
Taxation of Investors.................................................. 63
Limitation on Deduction of Losses...................................... 63
Tax Basis.............................................................. 63
Tax Status of Leases................................................... 65
Cost Recovery.......................................................... 65
Tax Consequences Respecting Equity Interests........................... 66
Deductibility of Management Fees....................................... 67
Tax Liability in Later Years........................................... 67
Sales or Exchanges of Fund Equipment................................... 67
Disposition of Units................................................... 68
Liquidation of the Fund................................................ 68
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Fund Elections......................................................... 69
Treatment of Gifts of Units............................................ 69
Investment by Qualified Retirement Plans and IRAs...................... 69
Individual Tax Rates................................................... 70
Alternative Minimum Tax................................................ 70
Fund Tax Returns and Tax Information................................... 73
Interest and Penalties................................................. 73
Audit of Tax Returns................................................... 74
Registration Provisions................................................ 75
Miscellaneous Fund Tax Aspects......................................... 75
Foreign Tax Considerations of U.S. Investors........................... 75
U.S. Taxation of Foreign Persons....................................... 76
Future Federal Income Tax Changes...................................... 76
State and Local Taxes.................................................. 76
Need for Independent Advice............................................ 77
ERISA CONSIDERATIONS....................................................... 77
Prohibited Transactions Under ERISA and the Code....................... 77
Plan Assets............................................................ 77
Other ERISA Considerations............................................. 78
SUMMARY OF THE OPERATING AGREEMENT......................................... 79
The Duties of the Manager.............................................. 79
Liability of Holders................................................... 79
Term and Dissolution................................................... 80
Voting Rights of Members............................................... 80
Dissenters' Rights and Limitations on Mergers and Roll-ups............. 81
Meetings............................................................... 81
Books of Account and Records........................................... 81
Status of Units........................................................ 82
Transferability of Units............................................... 82
Repurchase of Units.................................................... 84
Indemnification of the Manager......................................... 85
PLAN OF DISTRIBUTION....................................................... 86
Distribution........................................................... 86
Selling Compensation and Certain Expenses.............................. 86
Escrow Arrangements.................................................... 87
Investments by Certain Persons......................................... 88
State Requirements..................................................... 88
REPORTS TO HOLDERS......................................................... 89
SUPPLEMENTAL SALES MATERIAL................................................ 90
LEGAL OPINIONS............................................................. 91
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EXPERTS.................................................................... 91
ADDITIONAL INFORMATION..................................................... 91
GLOSSARY................................................................... 91
FINANCIAL STATEMENTS....................................................... F-1
Exhibit A - Prior Performance Information.................................. A-1
Exhibit B - Operating Agreement............................................ B-1
Exhibit C - Subscription Instructions and Documents........................ C-1
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SUMMARY OF THE OFFERING
This summary outlines the main points of the offering. The summary does
not replace the more detailed information found in the remainder of this
Prospectus. All prospective investors are urged to read this Prospectus in its
entirety.
The Fund: The Fund is a California limited liability company
which intends to invest in a variety of types of
equipment and to lease the equipment to corporations.
The Fund expects to acquire mostly low-technology
equipment such as the basic equipment used by
companies in the manufacturing, mining, and
transportation industries. The portfolio may also
include some more high-technology equipment, such as
communications equipment, medical equipment and
office equipment. The Fund will seek to buy equipment
and leases that will produce lease payments and
eventual sales prices which will provide a favorable
return on its investments and cash distributions to
its investors. The Fund will invest most of its
capital in equipment to be leased to major publicly
owned corporations. Some of its capital may be used
to provide leasing and secured financing of capital
equipment for venture stage companies, emerging
growth companies and established privately held
companies without publicly traded securities, and to
acquire equity interests and warrants and rights to
purchase equity interests in these companies.
Management: The Manager of the Fund is ATEL Financial
Corporation. ATEL and its family of related ATEL
companies will provide various services to the Fund,
including asset management and company
administration. ATEL will be responsible for
supervising all of the Fund's business and affairs.
ATEL will act as a fiduciary to the Fund, and,
consequently, is required to exercise good faith and
integrity in all dealings with respect to Fund
affairs. The offices of the Fund and ATEL are located
at 235 Pine Street, 6th Floor, San Francisco,
California 94104, and its telephone numbers are
(415) 989-8800 and (800) 543-ATEL (2835).
Risk Factors: An investment in Units involves risks, including the
following:
- Investors must rely on ATEL to manage the Fund's
business.
- The Fund will pay ATEL substantial fees.
- The Fund has not specified all its equipment
investments;
- The Fund's performance is subject to the risk of
lessee defaults;
- The Fund will borrow to buy equipment
investments;
- An investor's ability to sell his Units is
limited; and
- The Fund does not guarantee its distributions or
the return of investors' capital.
Who Should Invest: The Units are a long-term investment, with a primary
objective of regular cash distributions. Investors
must satisfy minimum net worth and income
requirements which require, generally, that
investors have either:
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- an annual gross income of at least $45,000 and a
net worth (exclusive of home, home furnishings and
automobiles) of at least $45,000; or
- a net worth (determined with the same exclusions)
of at least $150,000.
Use of Capital: The Fund expects to invest approximately
86% of its capital in the cash portion of the
purchase price of equipment. It intends to retain an
additional 0.5% as reserves for general working
capital purposes, and to use the balance to pay
selling commissions equal to 9.5%, and other offering
and organization expenses in the estimated amount of
from 2.5% to 3.5% .
ATEL's Fees: The Fund will pay ATEL and its family of
related companies substantial fees and compensation
in connection with this offering and the operation of
the Fund's business, including the following:
- ATEL Securities Corporation organize and
manage the group of broker-dealers selling
the Units. It will receive selling
commissions most of which will pay to the
participating broker dealers. ATEL
Securities Corporation may retain up to 1.5%
of the sale price of Units.
- The Fund will pay ATEL an annual asset
management fee equal to 4.5% of the revenues
from leases and sales of the Fund's
equipment, subject to fee limits.
- ATEL will have an interest equal to 7.5% of all
of the Fund's income, loss and cash
distributions.
The Fund will also reimburse ATEL for offering
expenses and administrative expenses ATEL incurs on
behalf of the Fund, subject to some limitations.
Income, Losses
and Distributions: Fund income and loss for tax purposes and cash
distributions will be allocated 92.5% to investors
and 7.5% to ATEL. The Fund intends to distribute all
cash revenues remaining after the Fund
- pays its expenses, including fees paid to ATEL,
- establishes or restores its capital reserves, and
- to the extent permitted, sets aside amounts for
reinvestment in additional equipment.
Until the end of a six-year period following the end
of the offering of Units, the Fund may invest its
revenues in additional equipment. Before it can
reinvest its revenues, though, it must first satisfy
conditions which include distributions to each
investor for the year equal to at least 8% of the
purchase price of the Units.
Income Tax
Consequences: This Prospectus has a discussion of federal income
tax consequences relating to an investment in Units
under the caption "Federal Income Tax Consequences".
Investors should consult with their tax and financial
advisors to determine whether an investment in Units
is suitable for their portfolio.
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Summary of the
Operating Agreement: The Operating Agreement that will govern
the relationship between the investors and ATEL is a
complex legal document. The following is a brief
summary of certain provisions of the Operating
Agreement discussed in greater detail under "Summary
of the Operating Agreement."
- Voting Rights of Members. Each investor will
become a member of the Fund, and will be
entitled to cast one vote for each Unit
owned as of the date record date for any
vote of all the members. The members are
entitled to vote on only certain fundamental
organizational matters affecting the Fund,
and have no voice in Fund operations or
policies.
- Meetings. ATEL or Members holding 10% or
more of the total outstanding Units may call
a meeting of the Members or a vote of the
Members without a meeting, on matters on
which they are entitled to vote.
- Dissenters' Rights and Limitations on
Mergers and Roll-ups. The Operating
Agreement provides Members with protection
in a proposed reorganization in which the
investors would be issued new securities in
the resulting entity.
- Transferability of Units. ATEL may condition
any proposed transfer of Units on, among
other things, legal opinions confirming that
the proposed transfer is does not violate
securities laws and will not result in
adverse tax consequences to the Fund. The
Fund will not permit any transfer which does
not follow the rules in the Operating
Agreement.
- Liability of Investors. Under the Operating
Agreement and California law, an investor
complying with the Operating Agreement will
not personally be liable for any debt of the
Fund..
- Status Of Units. Under the Operating
Agreement, each Unit will be fully paid and
nonassessable and all Units have equal
voting and other rights, except there are
limitations on the voting of Units held by
ATEL.
- Term and Dissolution. The Fund intends to
begin selling its assets and distributing
all available cash to its Members beginning
after the end of the sixth full year
following the end of the offering, with the
final distribution expected approximately
ten to eleven years after the termination of
the offering. In any event, the Fund must
end no later than December 31, 2020.
- Books of Account and Records. ATEL is
responsible under the Operating Agreement
for keeping books of account and records of
the Fund showing all of the contributions to
the capital of the Fund and all of the
expenses and transactions of the Fund. These
books of account and records will be kept at
the principal place of business of the Fund
in the State of California, and each Member
and his authorized representatives shall
have, at all times during reasonable
business hours, free access to and the right
to inspect and copy at their expense the
books of the Fund, and each Member shall
have the right to compel the Fund to deliver
copies of certain of these records on
demand.
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- Indemnification of ATEL. The Operating
Agreement provides that ATEL and its related
companies who perform services for the Fund
will be indemnified against certain
liabilities.
Plan of Distribution: The Units will be offered through ATEL Securities
Corporation, the dealer manager, who will
organize a group of other broker-dealers who are
members of the National Association of Securities
Dealers, Inc. ("NASD").
Until subscriptions for a total of 120,000 Units are
received and accepted, all offering proceeds will be
deposited in an escrow account. Upon receipt and
acceptance of subscriptions to a minimum of 120,000
Units, the subscription proceeds will be released to
the Fund. The offering will terminate not later than
two years from the date of this Prospectus.
RISK FACTORS
The purchase of Units involves various risks. Therefore, investors
should consider the following factors, among others discussed in this
Prospectus, before making a decision to purchase Units.
Equipment Leasing Risks
The success of the Fund will be subject to risks inherent in the
equipment leasing business. A number of factors may threaten the Fund's ability
to operate profitably. These include:
- the quality of the equipment the Fund buys and leases,
- the continuing strength of the Equipment manufacturers,
- the timing of purchases and the ability to forecast technological
advances for equipment,
- technological and economic obsolescence,
- defaults by lessees, and
- increases in Fund expenses(including energy, labor, taxes and insurance
expenses).
The Fund may be harmed if a lessee defaults on its lease. If a lessee
does not make lease payments to the Fund when they are due under its lease or
violates the terms of its lease contract in another important way, the Fund may
be forced to cancel the lease and recover the equipment. The Fund may do this at
a time when the Manager may be unable to arrange for a new lease or the sale of
such Equipment right away. The Fund would then lose the expected lease revenues
and might not be able to recover the entire amount of the its original
investment. If a lessee files for protection under the bankruptcy laws, the Fund
may experience difficulties and delays in recovering the equipment from the
defaulting lessee. The Equipment may be returned in poor condition and the Fund
may be unable to enforce important lease provisions against an insolvent lessee,
including the contract provisions that require the lessee to return the
equipment in good condition. In some cases, a lessee's deteriorating financial
condition may make trying to recover what the lessee owes the Fund impractical.
The costs of recovering equipment upon a lessee's default, enforcing the
lessee's obligations under the lease, and transporting, storing, repairing and
finding a new lessee or purchaser for the Equipment may be high and may affect
the Fund's profits.
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The amount of the Fund's profit will depend in part on the value of its
equipment when the leases end. In general, leased equipment loses value over a
lease term. In negotiating leases, the Manager will assume a value for the
equipment at the end of the lease. The Manager will seek lease payments plus
equipment value at the end of the lease which is enough to return the Fund's
investment in the equipment and provide a profit. The value of the equipment at
the end of a lease will depend on a number of factors, including:
- the condition of the equipment;
- the cost of similar new equipment; and
- whether the Equipment has become obsolete.
The Fund cannot assure that its value assumptions will be accurate or that the
equipment will not lose value more rapidly than anticipated.
The Fund may lease equipment outside of the United States. The Fund may
lease equipment to foreign subsidiaries of United States corporations and to
foreign lessees. The Fund may also lease equipment to U.S. lessees which is to
be used outside the United States. The Manager will seek to limit the Fund's
total cash investment in equipment under foreign leases or used primarily
outside the United States to not more than 20% of its capital. The laws, courts
and tax authorities of a foreign country may govern the Fund's equipment leased
or used in that country. The Fund will attempt to require foreign lessees to
consent to the jurisdiction of U.S. courts if disputes should arise under the
lease. Even if the Fund is successful in this effort, if a foreign lessee
defaults the Fund may find it difficult or impossible to enforce judgments
against foreign lessees, recover leased equipment or enforce the Fund's rights
under the lease. Also, the use and operation of equipment in foreign countries
may result in unanticipated taxes or confiscation without fair compensation. The
Fund will attempt to negotiate lease provisions which require:
- payment in U.S. currency;
- reimbursement for any foreign taxes billed to the Fund; and
- insurance covering the risk of confiscation.
If lease payments or other lease terms involve payments in foreign currency, the
Fund will be subject to the risk of currency exchange rate fluctuations, which
could reduce the Fund's overall profit on an investment. Many countries also
have laws regulating the transfer and exchange of currencies, and these laws may
affect a foreign lessee's ability to comply with lease terms. Finally, certain
depreciation or cost recovery methods used in calculating taxable income may not
be available for equipment leased by a foreign lessee or "used predominantly
outside the United States."
Demand for equipment fluctuates. The Fund's ability to keep the
equipment leased and the terms of its purchase, lease and sale of equipment
depend on various factors, many of which neither the Manager nor the Fund can
control. Factors which have an effect on the demand for equipment include the
effects of inflation or recession, and fluctuations in supply and demand
resulting from, among other things, technological and economic obsolescence.
The equipment leasing industry is highly competitive. Equipment
manufacturers, corporations, partnerships and others offer users an alternative
to the purchase of most types of equipment with payment terms which vary widely
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depending on the lease term and type of equipment. In seeking leases, the Fund
will compete with financial institutions, manufacturers and public and private
leasing companies, many of which may have greater financial resources than the
Fund.
Risks of leases that depend for profit on equipment value at the end of
the lease. Most of the Fund's leases will provide for total lease payments which
are less than the original price of the equipment. At the end of these leases,
the Fund must either renew the lease, find a new lessee or sell the equipment to
cover its investment and make a profit.
Equipment may be damaged or lost. Fire, weather, accident, theft or
other events can cause the damage or loss of equipment. Not all potential
casualties can be insured, and, if insured, the insurance proceeds may not be
sufficient to cover a loss.
Some types of equipment are under special government regulation. The
use, maintenance and ownership of certain types of equipment are regulated by
federal, state and/or local authorities. Regulations may impose restrictions and
financial burdens on the Fund's ownership and operation of equipment. Changes in
government regulations, industry standards or deregulation may also affect the
ownership, operation and resale value of equipment.
In addition, certain types of equipment, such as railcars, marine
vessels and aircraft, are subject to extensive safety and operating regulations
imposed by government and/or industry organizations. These agencies or
organizations may require changes or improvements to equipment and the Fund may
have to spend its own capital to comply. These changes may also require the
equipment to be removed from service for a period of time. The terms of leases
may provide for rent reductions if the equipment must remain out of service for
an extended period or is removed from service. The Fund may then have reduced
operating revenues from the leases for these items of equipment. If the Fund did
not have the capital to make a required change, it might be required to sell the
affected equipment or to sell other items of its equipment in order to obtain
the necessary cash; in either event, the Fund could suffer a loss on its
investment and might lose future revenues, and the Fund might also have adverse
tax consequences.
A portion of the Fund's equipment portfolio will consist of financing
provided to entities without substantial operating histories or records of
profitability. The Fund will primarily lease equipment to large and established
corporations. However, the Fund may invest up to 20% of its capital in providing
financing to companies which do not have substantial operating histories or
records of profitability, and which are developing products or services prior to
bringing them to market, including development of some new and untested
technologies. Because of their stage of development and the types of products
and technologies they are seeking to develop, these companies will be more
subject to changes and fluctuations in financial, technology and product
markets. These lessees and borrowers therefore will involve greater risks of
default than financing, and investment in, more established, profitable or
investment grade entities.
Risks Relating to Lending Activities. In addition to credit risks, the
Fund may be subject to other risks in equipment financing transactions in which
it is deemed to be a lender. Some courts have held that certain loan features
such as equity interests constitute additional interest. State laws determine
what rates of interest are deemed usurious, when the applicable rate of interest
is determined and how it is calculated. Although the Fund will generally seek
assurances and or opinions to the effect that its transactions do not violate
applicable usury laws, a finding that an equity interest is additional interest
could result in a court determining that the rate of interest charged by the
Fund is usurious, the "interest" obligation under the Fund's loan could be
declared void, and the Fund could be deemed liable for damages or penalties
under the applicable state law.
The Fund will be subject to the risk of claims asserting theories of
"lender liability". Various common law and statutory theories have been advanced
to hold lenders liable to their borrowers. The general principle underlying this
theory of liability is that lenders have a form of duty to their borrowers,
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regardless of the terms of the loan agreements and other financing
documents. Breach of that duty by the lender can lead to liability for damages
to the borrower. The Fund and its Manager intend to act in good faith in all
dealings with the Fund's borrowers and in a manner designed to mitigate any
potential for such liability. Nevertheless, this area of law is rapidly changing
and their can be no assurance that actions the Fund believes are appropriate to
take in protecting the Fund's interests as lender might not cause it to be
liable for a deemed breach of a duty to a borrower.
The Fund may not be able to register aircraft or marine vessels. The
Fund may invest in aircraft or marine vessels. Aircraft or marine vessels
operated in the United States must be registered with the Federal Aviation
Administration ("FAA") or the U.S. Coast Guard ("USCG"), which limit
registration to aircraft or marine vessels owned by U.S. Citizens and Resident
Aliens. The FAA's and USCG's Rules are not clear on the status of certain forms
of entity which own aircraft or marine vessels. The Fund will acquire aircraft
or marine vessels only if they are appropriately registered. If registration
were later revoked for any reason, the aircraft or marine vessel could not be
operated in the United States airspace or territorial waters, and the Fund would
be subject to resulting risks, including a possible forced sale of the aircraft
or marine vessel, possible uninsured casualties, the loss of benefits of the
central recording system under federal law and a breach by the Fund of leases or
financing agreements.
Risks Inherent in the Structure of the Fund
Investors will have limited voting rights and must rely on management
for the success of the Fund. ATEL, as the Manager, will make all decisions in
the management of the Fund. The success of the Fund will, to a large extent,
depend on the quality of its management, particularly decisions on the purchase,
leasing and sale of its equipment. Investors are not permitted to take part in
the management of the Fund and have only limited voting rights. An affirmative
vote by holders of a majority of the Units is required to remove the Manager. No
person should purchase Units unless he is willing to entrust all aspects of
management of the Fund to the Manager and has evaluated the Manager's
capabilities to perform such functions.
The manager will receive substantial compensation. The Fund will pay
substantial fees to the Manager and its related companies before distributions
are paid to investors even if the Fund does not produce profits. The Manager
will also be subject to conflicts of interest in its management of the Fund. In
particular, the Fund expects to borrow up to 50% of the aggregate cost of
equipment, and this will result in higher Asset Management Fees than if less
debt were incurred.
The Fund has not identified all of its equipment and lessees. An
investor cannot assess all of the potential risks of an investment in Units
because all of the equipment to be purchased and the lessees to whom the
equipment will be leased have not been identified. A prospective investor will
not have complete information as to the manufacturers of the Fund's equipment,
the number of leases to be entered into, the specific types and models of
equipment to be acquired, or the identity, financial condition and
creditworthiness of the companies who will lease its Equipment. Investors must
rely upon the judgment and ability of the Manager in its selection of equipment
to purchase, the evaluation of equipment manufacturers, the selection of lessees
and the negotiation of leases.
The Fund will borrow to buy equipment and will bear the risks of
borrowing. The Fund will borrow a portion of the purchase price of its
equipment. The Fund expects to borrow a total amount equal to 50% of the
aggregate cost of its equipment, the maximum permitted under the Operating
Agreement. The Fund can expect to make a profit on equipment purchased with debt
only if the equipment produces more than enough cash from lease payments and
sales price to pay the principal and interest on the debt, recover the purchase
price and cover other operating expenses.
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<PAGE>
The Fund intends to use both:
- debt in which only the asset financed by the lender is collateral
securing the obligation, and
- debt in which all of the Fund's assets or a selected pool of the assets
are collateral securing the obligation.
When a borrower defaults on a secured loan, the lender usually has the
right to immediate payment of the entire debt and to sell the collateral to pay
the debt. In this way, the Fund's borrowing may involve a greater risk of loss
than if no debt were used, because the Fund must meet its fixed payment
obligations regardless of the amount of revenue it receives from the equipment.
At the same time, the use of debt increases the potential size of the Fund's
equipment portfolio, the amount of lease revenues and potential sale proceeds.
Greater amounts of debt would also increase the total fees payable to the
Manager, because its asset management fees are determined as a percentage of the
Fund's total revenues.
The amount and terms of debt available to the Fund for the purchase of
equipment may also determine the amount of cash distributed to investors and the
amount of tax benefits they receive. The Fund has not entered into any loan
agreements, and it cannot guarantee the availability or terms of any possible
debt financing.
The Fund may borrow on terms which provide for a lump sum payment on
the due date. The Fund may have debt which is not repaid in regular installments
over the term of the loan, but requires a large payment of principal and
interest on the final due date. This "balloon payment" debt is riskier than debt
which is repaid in regular installments over the term of the loan, because the
Fund's ability to repay the loan when it becomes due may depend on its ability
to find a new loan or a buyer when the lump sum payment is due. If the economy
is not favorable at that time or the value of the equipment has fallen, the Fund
might default on its loan and lose the equipment.
There are significant limitations on the transferability of Units. The
Manager will take steps to assure that no public trading market develops for the
Units. If a public trading market were to develop, the Fund could suffer a very
unfavorable change in the way it is taxed under the federal tax laws. Investors
will probably not be able to sell their Units for full value if they need to in
an emergency. Units may also not be accepted as collateral for a loan.
Consequently, investors should consder the purchase of Units only as a long-term
investment.
The amount of capital actually raised by the Fund may determine its
diversification and profitability. The Fund's offering will be not less than
$1,200,000 nor more than $150,000,000. If the Fund receives only the minimum
capital, it will be harder to diversify its equipment and lessees, and any
single lease transaction will have a greater impact on its potential profits.
The Fund has no minimum number of lease transactions nor is there any
restriction on the percentage of the minimum capital which it may use to buy
equipment of a single type or equipment leased to a single lessee.
A substantial portion of Fund distributions from lease revenues is
expected to be a return of capital. The amount of cash the Fund will distribute
to investors each year is not the same as the amount of taxable income that is
passed through to the investor. For example, the Fund may have tax deductions
which do not represent direct cash expenses, so the Fund may have more cash
available to distribute than it has taxable income. When an investor receives a
distribution of more cash in a year than his share of income, he will be deemed
to be receiving a return of his invested capital rather than investment income.
Distributions by the Fund may be characterized differently for tax, accounting
and economic purposes as a return of capital, investment income or a portion of
each. The portion of total distributions which will be a return of capital and
the portion which will be investment income at the end of the Fund will depend
on a number of factors in the Fund's operations, and cannot be determined until
all of its equipment is sold and an investor can compare the total amount of all
cash distributions to the total capital invested.
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<PAGE>
The Fund is a newly-formed entity. The Fund was formed in June 2000,
and has no operating history.
A delay in the investment could affect the Fund's ability to meet its
investment objectives. Any overall decline in corporate expansion or demand for
capital goods could delay investment of the Fund's capital, and its production
of lease revenues.
Investment by the Fund in joint ownership of Equipment may involve
risks. Some of the Fund's investments may be owned by joint ventures between the
Fund and unaffiliated third parties or, under certain circumstances, programs
related to the Fund or the Manager, or as co-owners with such parties. The
investment by the Fund in joint ownership of equipment, instead of investing in
the Equipment directly or as the sole owner, may involve risks such as:
- the Fund's co-venturer might become bankrupt,
- the co-venturer may have interests or goals which are inconsistent with
those of the Fund,
- the parties may reach an impasse on joint venture decisions, or
- the co-venturer may be in a position to take action contrary to the
instructions or the requests of the Fund or contrary to the Fund's
policies or objectives, or
- actions by a co-venturer might have the result of subjecting equipment
owned by the joint venture to liabilities in excess of those
contemplated by the terms of the joint venture agreement or might have
other adverse consequences for the Fund.
Risks Relating to Tax Matters
In determining whether to invest in the Units, a prospective investor
should consider possible tax consequences, which may include:
- the Fund could be taxed as a corporation. If so, the yield to an
investor would be substantially reduced.
- the IRS could disallow or reduce the Fund's deductions. If so, Fund
income would increase or Fund losses would decrease.
- the IRS could reallocate Fund income, gain, deduction and loss in a
manner that is different from the provisions of the operating
agreement. If so, an investor's share of such items would be different
from that described in this prospectus.
- a tax-exempt organization will have unrelated business taxable income
from an investment in the Fund. IRAs and
other retirement plans are tax-exempt entities;
- changes in the tax law or regulations may adversely affect the Fund,
the investors and the value of the Fund's equipment;
14
<PAGE>
- the opinion of tax counsel is limited in scope and qualified by certain
assumptions. There can be no assurance that the IRS will not challenge
the Fund's tax positions. An IRS challenge, if successful, could have a
detrimental effect on the Fund's ability to realize its investment
objectives;
- investors may have tax liability greater than their distributions;
- an investor's share of losses incurred by the Fund will be subject to
the passive loss limitation on deductibility. An investor may be unable
to deduct Fund losses until termination of the Fund;
- investors may have tax liability from Fund portfolio income. Portfolio
income may not be offset by passive activity losses;
- an audit of an investor's tax return could result from the audit of the
Fund's return;
- investors may be required to file tax returns and pay state, local
and/or foreign taxes as a result of an investment in the Fund;
- investors may be subject to withholding.
Each investor is urged to consult his tax advisor regarding his own tax
situation and potential changes in the tax law.
Risks Relating to ERISA Matters
In considering an investment of the assets of an IRA, Keogh Plan,
corporate retirement plan or other qualified retirement plan in the Fund, the
plan fiduciary should assess:
- whether the investment is prudent. In this regard it is unlikely that
there will be a secondary market for the sale of the Units;
- whether the investment is made solely in the interest of the
participants in the IRA or qualified retirement plan.
For retirement plans which are subject to ERISA, the fiduciary should
assess whether the investment satisfies the diversification requirements of
Section 404(a)(1)(C) of ERISA.
ERISA may apply a look-through rule when a retirement plan makes an
equity investment in another entity. If it does not apply, the retirement plan's
plan assets consist of the equity investment. If it applies, the retirement
plan's plan assets include the assets of the entity in which it has invested.
For this reason, the Fund is limiting sales to retirement plans to less than 25%
of the Units.
ERISA requires that plan assets be valued at their fair market value as
of the close of the plan year. It may not be possible to value the Units
accurately from year to year. There will not be a secondary market for Units.
Any change in the value of the equipment may not be reflected in the value of
the Units.
15
<PAGE>
WHO SHOULD INVEST
The Units represent a long-term investment, the primary benefit of
which is expected to be cash distributions. A purchase of Units is suitable only
for persons who meet the financial suitability standards described below and who
have no need for liquidity from this investment. In order to subscribe for
Units, each investor must execute a Subscription Agreement, a specimen of which
is attached as Exhibit C. The Subscription Agreement provided to the investor
for execution must be accompanied by a copy of this Prospectus, and each
subscriber has the right to cancel his subscription during a period of five
business days after the subscriber has submitted the executed Subscription
Agreement to the broker-dealer through which the Units are sold. The Fund and/or
the selling broker-dealer will send each investor a written confirmation of the
acceptance of the investor's subscription for Units upon admission to the Fund.
The Fund has established suitability standards which require that an
investor:
- have an annual gross income of at least $45,000 and a net worth
(exclusive of home, home furnishings and automobiles) of at least
$45,000; or
- have a net worth (determined with the same exclusions) of at least
$150,000.
Certain state securities commissioners may establish suitability
standards different from the above for their states, and these different
standards are described under "Plan of Distribution - State Requirements" or
will be included in a supplement. By executing the Subscription Agreement, an
investor represents that he meets the suitability standards applicable to him,
and agrees that such standards may be applied to any proposed transferee of his
Units. Each participating broker-dealer who sells Units has the affirmative
duty, confirmed in the Selected Dealer Agreement entered into with the Dealer
Manager, to determine prior to the sale of Units that an investment in Units is
a suitable investment for its subscribing customer, must execute a
representation in the Subscription Agreement regarding such suitability, and
must maintain information concerning suitability for at least six years
following the date of investment. The selling broker and the sponsor must make
every reasonable effort to determine that the purchase of Units is a suitable
and appropriate investment for each purchaser.
The minimum number of Units which an investor may purchase is 250,
representing a total minimum investment of $2,500, except that an Individual
Retirement Account or a qualified pension plan, profit-sharing plan, stock bonus
plan or Keogh Plan may purchase a minimum of 200 Units ($2,000). Additional
investments may be made in a minimum amount of 50 Units ($500) per subscription,
and minimum additional increments of one Unit ($10). Investors seeking to
acquire additional Units after their initial subscription need not complete a
second subscription agreement. In addition to restrictions on transfer imposed
by the Fund, an investor seeking to transfer his Units after his initial
investment may be subject to the securities or "Blue Sky" laws of the state in
which the transfer is to take place.
Fund income realized by an IRA or a qualified pension plan,
profit-sharing plan, stock bonus plan or Keogh Plan will be taxable to the plan
as "unrelated business taxable income" under the Internal Revenue Code. In
considering an investment in the Fund, plan fiduciaries should consider, among
other things, the diversification requirements of Section 401(a)(1)(C) of the
Internal Revenue Code, additional legal requirements under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the prudent
investment standards generally imposed on plan fiduciaries. Also, in certain
circumstances the assets of an entity in which a Qualified Plan or IRA has made
an equity investment may constitute "plan assets." To the extent necessary to
avoid this result, the Fund will limit the sale and transfer of Units to any IRA
or a qualified pension plan, profit-sharing plan, stock bonus plan or Keogh Plan
so that less than 25% of the total outstanding Units are held by these investors
at all times. Each investor must make a representation at the time of his
subscription as to the record and beneficial ownership of the Units subscribed.
16
<PAGE>
Investors should also note that the Fund is required by the Operating
Agreement to distribute its available cash to the extent necessary to allow a
Holder in a 31% federal income tax bracket to pay the federal income taxes due
on his income from the Fund for the year. So it is possible that a Holder in a
higher tax bracket might not receive enough cash from the Fund to pay his tax
liabilities. However, the Manager is also required to make cash distributions in
certain minimum amounts prior to any reinvestment in equipment and must
distribute all available revenues after the sixth year following the year the
offering closes. The Manager expects distributions will be in amounts which will
exceed the expected tax liabilities resulting from allocations income regardless
of the investors' tax brackets. Distributions to nonresident or foreign
investors may be subject to withholding taxes which would reduce the amount of
cash actually received by such investors.
Under federal law, certain types of equipment, including aircraft and
marine vessels, may not be operated unless they are owned by United States
Citizens or Resident Aliens. To assure that the Fund will not exceed relevant
federal limits on foreign ownership, the Manager will not permit more than 20%
of the outstanding Units to be held by persons other than U.S. Citizens and
Resident Aliens, and may deny or condition any proposed subscription or transfer
in order to comply with such limitation. Furthermore, any Holder who ceases to
be a United States Citizen or Resident Alien may be required to tender his Units
to the Fund for repurchase at a price determined pursuant to the formula
described under "Summary of Operating Agreement - Repurchase of Units." A Unit
holder who fails to conform to his representations about citizenship or
misrepresents his citizenship may forfeit and no longer be entitled to cash
distributions, tax allocations, receipt of reports and voting privileges,
although he may realize proceeds upon the transfer of his Units to an eligible
investor, who would be entitled to the full economic benefits and other
privileges attributable to such units.
17
<PAGE>
ESTIMATED USE OF PROCEEDS
Many of the figures set forth below are estimates, and should not be
relied upon as a prediction of the actual use of the proceeds of this offering.
The Fund expects to commit approximately 87% of the Gross Proceeds of this
offering to the cash portion of the purchase price of Equipment plus capital
reserves.
Minimum Maximum
Offering Offering
Amount Percent Amount Percent
-------- ------- -------- -------
Gross Offering
Proceeds... $1,200,000 100.00% $150,000,000 100.00%
Less Offering and
Organization
Expenses:
Selling
Commissions... 114,000 9.50% 14,250,000 9.50%
Other Offering
and Organization
Expenses... 30,000 2.50% 5,250,000 3.50%
----------- ------ ----------- ------
Net Offering Proceeds 1,056,000 88.00% 130,500,000 87.00%
Capital Reserves... 6,000 0.50% 750,000 0.50%
Amount Available for
Cash Payments for
Equipment... 1,050,000 87.50% 129,750,000 86.50%
----------- ------ ----------- ------
-------------
The Fund will pay selling commissions equal to 9.5% of the selling
price of Units to ATEL Securities Corporation, a subsidiary of the Manager
acting as the dealer manager for the group of selling broker-dealers. ATEL
Securities Corporation will in turn pay to participating broker-dealers selling
commissions equal to 8% of the price of Units sold by them, retaining the
balance of 1.5%. Out of the amounts retained by ATEL Securities Corporation, it
may pay one or more broker-dealers for "wholesaling" services in connection with
the offering. Wholesaling services include coordinating the sales effort of
participating broker-dealers and training their personnel with respect to the
offering. Total selling commissions, disbursements and reimbursements to
participating broker-dealers may not exceed an amount equal to 10% of the Gross
Proceeds, except that an additional 1/2 of 1% of the Gross Proceeds may be paid
for accountable, bona fide due diligence expenses. If the Manager, the Dealer
Manager or the broker-dealers engaged by the Dealer Manager to sell the Units,
or any of their Affiliates or employees, purchase any Units in this offering,
the Dealer Manager, in its discretion, may reimburse to any such purchasers
selling commissions paid with respect to such Units. Sales to any such
purchasers on such terms would be for investment purposes only, and the Fund and
the Manager would not recognize any attempted transfer of such Units unless
certain conditions are satisfied.
Other offering and organization expenses are expenses incurred in the
organization of the Fund, legal, accounting and escrow fees, printing costs,
filing and qualification fees and disbursements and reimbursements to
broker-dealers participating in the sale of Units; but total selling commissions
and payments to participating broker-dealers may not exceed the limitations
described above. The Manager has agreed to pay all Organization and Offering
Expenses which exceed an amount equal to:
- 15% of the offering proceeds up to $25,000,000, and
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<PAGE>
- 14% of the offering proceeds in excess of $25,000,000.
If the Fund's final offering proceeds are less than $2,000,000, the Manager has
agreed to pay all Offering and Organization Expenses which exceed an amount
equal to 12% of the total. Payment of these expenses by the Manager will be
without reimbursement by the Fund.
The Fund will initially establish capital reserves in an amount equal
to 1/2 of 1% of offering proceeds for general working capital purposes. This
amount may fluctuate from time to time as the Manager determines the level of
reserves necessary for the proper operation of the Fund.
The line item for cash payments for equipment is the amount available
to pay the cash portion of the purchase price of equipment plus related
acquisition expenses. The Fund expects to pay acquisition expenses equal to
approximately 0.25% of the offering proceeds.
19
<PAGE>
MANAGEMENT COMPENSATION
Summary Table
The following table includes estimates of the maximum amounts of all
compensation and other payments that the Manager and its Affiliates will
receive, directly or indirectly, in connection with the operations of the Fund,
all of which are described more completely below under "Narrative Description of
Compensation." The terms of the Manager's compensation were not determined by
arm's-length negotiation. The Operating Agreement does not permit the Manager or
its related entities to receive more than the maximum fees or expenses stated
for each type of compensation by reclassifying such items under a different
category.
Estimated Amount
Entity Receiving Assuming Maximum
Compensation Type of Compensation Units Sold
------------ -------------------- ----------------
The Dealer Manager Selling Commissions (Up to 1.5% Total selling
of offering proceeds to be commissions to
retained by the Dealer Manager) be retained by
the Dealer
Manager are not
expected to
exceed $2,250,000.
Manager and Affiliates Reimbursement of Organization $5,250,000
and Offering Expenses (when
added to selling commissions,
not to exceed a total equal
to 15% of all offering proceeds
up to $25 million and 14% of any
additional offering proceeds)
OPERATIONAL STAGE
Manager and Affiliates Asset Management Fee (a fee Not determinable at
equal to 4.5% of Operating this time
Revenues, subject to
limitations based on Fund
operations)
Manager and Affiliates Reimbursement of Operating Not determinable at
Expenses, subject to certain this time
limitations
CARRIED INTEREST IN FUND
Manager and Affiliates Interest equal to 7.5% of all Not determinable at
Fund taxable income, tax losses this time
and cash distributions
20
<PAGE>
Narrative Description of Compensation
Selling Commissions. The Dealer Manager will receive selling
commissions on all sales of Units equal to 9.5% of Gross Proceeds. The Dealer
Manager will reallow to participating broker-dealers 8% of the Gross Proceeds
from Units sold by them, and may use a portion of the retained selling
commissions to compensate certain participating broker- dealers for wholesaling
services or reimburse certain selling expenses. It is not anticipated that the
Dealer Manager or other Affiliates of the Manager will directly effect any sales
of the Units, although the Dealer Manager will provide certain wholesaling
services.
Reimbursement of Organization and Offering Expenses. The Manager and
its Affiliates will be reimbursed for certain expenses in connection with the
organization of the Fund and the offering of Units. Total Organization and
Offering Expenses payable or reimbursable by the Fund, including selling
commissions payable directly by the Fund, may not exceed:
- 15% of all offering proceeds up to $25,000,000 plus
- 14% of all offering proceeds in excess of $25,000,000.
Asset Management Fee. The Fund will pay the Manager an Asset Management
Fee in an amount equal to 4.5% of all:
- revenues from the Equipment, other than security deposits paid by
lessees, and
- cash remaining from the sale or refinancing of any equipment after
payment of all expenses related to the transaction
The Asset Management Fee will be paid on a monthly basis. The amount of the
Asset Management Fee payable in any year will be reduced for that year to the
extent it would otherwise exceed the Asset Management Fee Limit, as described
below. The Asset Management Fee will be paid for services rendered by the
Manager and its Affiliates in determining portfolio and investment strategies
(i.e., establishing and maintaining the composition of the Equipment portfolio
as a whole and the Fund's overall debt structure) and generally managing or
supervising the management of the Equipment. The Manager will supervise
performance of among others activities, collection of lease revenues, monitoring
compliance by lessees with the lease terms, assuring that Equipment is being
used in accordance with all operative contractual arrangements, paying operating
expenses and arranging for necessary maintenance and repair of Equipment in the
event a lessee fails to do so, monitoring property, sales and use tax compliance
and preparation of operating financial data. The Manager intends to delegate all
or a portion of its duties and the Asset Management Fee to one or more of its
Affiliates who are in the business of providing such services.
Reimbursement of Operating Expenses. The Fund will reimburse the Manager
and its Affiliates for expenses it pays on the Fund's behalf. These
reimbursements will include:
- the actual cost to the Manager or its Affiliates of services, goods and
materials used for and by the Fund and obtained from unaffiliated
parties;
- the cost of administrative services necessary to the prudent operation
of the Fund, provided that reimbursement for administrative services
will be at the lower of
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<PAGE>
- the actual cost of such services, or
- the amount which the Fund would be required to pay to
independent parties for comparable services.
Beginning with the first full year after the termination of this
offering, the total amount of Reimbursable Administrative Expenses payable by
the Fund for the remainder of its term will be limited as follows:
- If at least 75% of the maximum offering is raised, the cumulative limit
as of any date will be 0.5% per annum of the total capital raised.
- If less than 75% of the maximum offering is raised, then the cumulative
limit as of any date will be 1% per annum of the total capital raised.
- Beginning with the first full year after the termination of this
offering, the maximum amount of Reimbursable Administrative Expenses
payable by the Fund for any single year shall be limited to 1% of the
total capital raised.
The Manager estimates that the total amount of Reimbursable Administrative
Expenses during the Fund's first full year of operations after completion of the
offering, assuming receipt of the maximum Gross Proceeds, may be approximately
$400,000 to $500,000.
Carried Interest in Fund Net Income, Net Loss and Distributions. The
Fund Manager will have a Carried Interest in the Fund as a Member equal to 7.5%
of all allocations of Net Income, Net Loss and Distributions. The Carried
Interest in the Fund will compensate the Manager for organizing the Fund and
arranging for supervision of Fund administration (i.e., investor communications
and services, regulatory reporting, accounting and transfers of Units).
Limitations on Fees.
The Asset Management Fee will be subject to the Asset Management Fee
Limit, which is an alternative fee schedule. The alternative fee schedule
consists of a group of fees which were designed to comply with state guidelines
limiting compensation to equipment program sponsors. The Fund will use a
simplified fee structure, substituting its one Asset Management Fee for a number
of other fees used in the state guidelines. However, to assure state
administrators that its Asset Management Fee will not result in greater fees
than would the fee schedule used in the guidelines, the Fund will calculate the
hypothetical fees that would have been paid under the state guidelines fee
schedule and guarantee that the fees it will pay the Manager and its Affiliates
will never exceed those under the state guideline fee schedule. The Asset
Management Fee may also be adjusted based on the Front End Fee limitations
imposed by these state securities administrators.
Asset Management Fee Limit. The Asset Management Fee Limit will be
calculated each year during the Fund's term by calculating the total fees that
would be paid to the Manager if the Manager were to be compensated on the basis
of an alternative fee schedule, to include an Equipment Management Fee,
Incentive Management Fee, and Equipment Resale/Re-Leasing Fee, plus the
Manager's Carried Interest, as described below. To the extent that the amount
paid to the Manager as the Asset Management Fee plus its Carried Interest for
any year would exceed the aggregate amount of fees calculated under this
alternative fee schedule for the year, the Asset Management Fee and/or Carried
Interest for that year will be reduced to equal the maximum aggregate fees under
the alternative fee schedule. To the extent any such fees are reduced, the
amount of such reduction will be accrued and deferred, and such accrued and
22
<PAGE>
deferred compensation would be paid to the Manager in a subsequent period, but
only to the extent that the deferred compensation would be within the Asset
Management Fee Limit for that later period. Any deferred fees which cannot be
paid under the applicable limitations through the date of liquidation would be
forfeited by the Manager at liquidation.
Alternative Fee Schedule. For purposes of the Asset Management Fee
Limit, the Fund will calculate an alternative schedule of fees, including a
hypothetical Equipment Management Fee, Incentive Management Fee, Equipment
Resale/Re-Leasing Fee, and Carried Interest as follows:
- An Equipment Management Fee will be calculated to equal the lesser of
- 3.5% of annual Gross Revenues from Operating Leases
and 2% of annual Gross Revenues from Full Payout
Leases which contain Net Lease Provisions), or
- the fees customarily charged by others rendering
similar services as an ongoing public activity in the
same geographic location and for similar types of
equipment.
- If services with respect to certain Operating Leases
are performed by nonaffiliated persons under the
active supervision of the Manager or its Affiliate,
then the amount will be 1% of Gross Revenues from
these Operating Leases.
- An Incentive Management Fee will be calculated to equal
- 4% of Distributions of Cash from Operations until
Holders have received a return of their Original
Invested Capital plus a Priority Distribution, and
- thereafter, to equal a total of 7.5% of Distributions
from all sources, including Sale or Refinancing
Proceeds.
- In subordinating the increase in the Incentive
Management Fee to a cumulative return of a Holder's
Original Invested Capital plus a Priority
Distribution, a Holder would be deemed to have
received Distributions of Original Invested Capital
only to the extent that Distributions to the Holder
exceed the amount of the Priority Distribution.
- An Equipment Resale/Re-Leasing Fee will be calculated in an amount
equal to the lesser of
- 3% of the sale price of the Equipment, or
- one-half the normal competitive equipment sale
commission charged by unaffiliated parties for
resale services.
- Such fee would apply only after the Holders have
received a return of their Original Invested Capital
plus a Priority Distribution.
- In connection with the re-leasing of Equipment to
lessees other than previous lessees or their
Affiliates, the fee would be in an amount equal to
the lesser of
23
<PAGE>
- the competitive rate for comparable services
for similar equipment, or
- 2% of the gross rental payments derived from
the re-lease of such Equipment, payable out
of each rental payment received by the Fund
from such re-lease.
- A Carried Interest equal to 7.5% of all Distributions of Cash
from Operations and Cash from Sales or Refinancing.
Front End Fee Limitations. The compensation payable as described above
will be subject to further adjustment based on the limitations on Front End Fees
imposed under the North American Securities Administrators Association, Inc.
("NASAA") Statement of Policy concerning Equipment Programs, as amended through
October 24, 1991 (referred to herein as the "NASAA Guidelines"). The Manager
will first determine the effect, if any, of the Front End Fee limitations
described below and make any required adjustments to the Asset Management Fee
Limit. Then the Manager will apply the adjusted Asset Management Fee Limit to
the Asset Management Fee and the Manager's Carried Interest.
Under the NASAA Guidelines, the Fund is required to commit a minimum
percentage of the Gross Proceeds to Investment in Equipment, calculated as the
greater of:
- 80% of the Gross Proceeds reduced by 0.0625% for each 1% of
indebtedness encumbering the Fund's Equipment; or
- 75% of such Gross Proceeds.
The Fund intends to incur total indebtedness equal to 50% of the
aggregate cost of its equipment. The Operating Agreement requires the Fund to
commit at least 85.875% of the Gross Proceeds to Investment in Equipment. Based
on the formula in the NASAA Guidelines, the Fund's minimum Investment in
Equipment would equal 76.875% of Gross Proceeds (80% - [50% x .0625%] =
76.875%), and the Fund's minimum Investment in Equipment would therefore exceed
the NASAA Guideline minimum by 9%.
The NASAA Guidelines permit the Manager and its Affiliates to receive
compensation in the form of a carried interest in Fund Net Income, Net Loss and
Distributions equal to 1% for the first 2.5% of excess Investment in Equipment
over the NASAA Guidelines minimum, 1% for the next 2% of such excess, and 1% for
each additional 1% of excess Investment in Equipment. With a minimum Investment
in Equipment of 85.875%, the Manager and its Affiliates may receive an
additional carried interest equal to 6.5% of Net Profit, Net Loss and
Distributions under the foregoing formula (2.5% + 2% + 4.5% = 9%; 1% + 1% + 4.5%
= 6.5%). At the lowest permitted level of Investment in Equipment, the NASAA
Guidelines would permit the Manager and its Affiliates to receive a promotional
interest equal to 5% of Distributions of Cash from Operations and 1% of
Distributions of Sale or Refinancing Proceeds until Members have received total
Distributions equal to their Original Invested Capital plus an 8% per annum
cumulative return on their Adjusted Invested Capital, and, thereafter, the
promotional interest may increase to 15% of all Distributions.
With the additional carried interest calculated as described above, the
maximum aggregate fees payable to the Manager and Affiliates under the NASAA
Guidelines as carried interest and promotional interest would equal 11.5% of
Distributions of Cash from Operations (6.5% + 5% = 11.5%), and 7.5% of
Distributions of Sale or Refinancing Proceeds (6.5% + 1% = 7.5%), before the
subordination level was reached, and 21.5% of all Distributions thereafter. The
maximum amounts to be paid under the terms of the Operating Agreement are
subject to the application of the Asset Fee Limit provided in Section 8.3 of the
Agreement, which limits the annual amount payable to the Manager and its
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Affiliates as the Asset Management Fee and the Carried Interest to an
aggregate not to exceed the total amount of fees that would be payable to the
Manager and its Affiliates under the alternative fee schedule set forth in
Section 8.3. This overall limitation on annual fees will include, in addition to
an Equipment Management Fee and Equipment Resale/Releasing Fee, amounts equal to
11.5% of Distributions of Cash from Operations (4% as an Incentive Management
Fee plus 7.5% as the Carried Interest in Fund Distributions) and 7.5% of
Distributions of Sale or Refinancing Proceeds (as the Fund Manager's 7.5%
Carried Interest) before the Priority Return, and 15% of all Distributions
thereafter (7.5% as an Incentive Management Fee plus 7.5% as the Carried
Interest).
Upon completion of the offering of Units, final commitment of offering
proceeds to acquisition of equipment and establishment of final levels of
permanent portfolio debt, the Manager shall calculate the maximum carried
interest and promotional interest payable to the Manager and its Affiliates
under the NASAA Guidelines and compare such total permitted fees to the total of
the Incentive Management Fees and Manager's Carried Interest. If and to the
extent that the fees calculated under the alternative fee schedule provided in
Section 8.3 as the Incentive Management Fee and the Manager's Carried Interest
should exceed the maximum promotional interest plus carried interest permitted
under the NASAA Guidelines, as described above, the fees payable to the Manager
and its Affiliates shall be reduced. In such event, the Manager will reduce the
amounts calculated for purposes of the Asset Management Fee Limit as the
Incentive Management Fee and/or the Carried Interest by an amount sufficient to
cause the total of such compensation to comply with the limitations in the NASAA
Guidelines on the aggregate of promotional interests and carried interests. The
adjusted Asset Management Fee Limit will then be applied to the Asset Management
Fee and Carried Interest as described above. A comparison of the Front End Fees
actually paid by the Fund and the NASAA Guideline maximums shall be repeated,
and any required adjustments shall be made, at least annually thereafter.
Defined Terms Used in Description of Compensation
Definitions of certain capitalized terms used in the foregoing narrative
description of compensation payable to the Manager, and used in the alternative
fee schedule for purpose of calculating the Asset Management Fee Limitation, are
as follows:
"Adjusted Invested Capital" means, as of any date, the Original Invested Capital
attributable to the Units held by any Person on or before such date, as
decreased (but not below zero) by the amount by which (i) all Distributions with
respect to such Units on or before the date of determination pursuant to any
provision of the Operating Agreement exceed (ii) the Priority Distribution
attributable to such Units for such period.
"Asset Management Fee Limit" means the total fees calculated pursuant to the
alternative fee schedule as set forth under "Limitations on Fees" above, equal
to the aggregate of a hypothetical Equipment Management Fee, Incentive
Management Fee, and Equipment Resale/Re-Leasing Fee, plus the Carried Interest,
determined in the manner described therein.
"Carried Interest" or "Interest in Distributions" shall mean the allocable share
of Fund Distributions of Cash from Operations and Cash from Sales or Refinancing
payable to the Manager, as a Member, pursuant to Sections 10.4 and 10.5 of the
Agreement.
"Cash from Operations" means the excess of Gross Lease Revenues (which excludes
revenues from Equipment sales or refinancing) over cash disbursements (including
an Equipment Management Fee and amounts reinvested by the Fund in Equipment)
without reduction for depreciation and amortization of intangibles such as
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organization and underwriting costs but after a reasonable allowance for
cash for repairs, replacements, contingencies and anticipated obligations, as
determined by the Manager.
"Cash from Sales or Refinancing" means the net cash realized by the Fund from
the sale, refinancing or other disposition of any Equipment after payment of all
expenses related to the transaction (including an Equipment Resale Fee).
"Distributions" means any cash distributed to Holders and the Manager arising
from their respective interests in the Fund. "Full Payout Lease" means a lease
under which the non-cancellable rental payments due during the initial term of
the lease are at least sufficient to cover the purchase price of the Equipment
leased.
"Gross Lease Revenues" means all revenues attributable to the Equipment other
than from security deposits paid by lessees, but excluding revenues from the
sale, refinancing or other disposition of Equipment.
"Net Income" or "Net Loss" means the taxable income or taxable loss of the Fund
as determined for federal income tax purposes, computed by taking into account
each item of Fund income, gain, loss, deduction or credit not already included
in the computation of taxable income and taxable loss, but does not mean
Distributions.
"Operating Lease" means a lease under which the aggregate rental payments due
during the initial term of the lease are less than the purchase price of the
Equipment leased.
"Operating Revenues" means the total for any period of all Gross Lease Revenues
plus all Cash from Sales or Refinancing.
"Original Invested Capital" means the original gross purchase price of the Units
contributed by each Member to the capital of the Fund for his interest in the
Fund, which amount shall be attributed to Units in the hands of a subsequent
Holder.
"Priority Distribution" for any calendar year or other period means, with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during each calendar year multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the initial purchaser of such Units was admitted as a
Holder pursuant to the Operating Agreement and pro rated for any fraction of a
calendar year for which such calculation is made).
"Reimbursable Administrative Expenses" shall mean the ordinary recurring
administration expenses incurred by the Manager and reimbursed by the Fund. Such
expenses shall not include interest, depreciation, equipment maintenance or
repair, third party services or other non-administrative expenses.
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INVESTMENT OBJECTIVES AND POLICIES
Principal Investment Objectives
The Fund's principal objectives are to invest in a diversified
portfolio of primarily low-technology, low- obsolescence Equipment which will
- preserve, protect and return the Fund's invested capital;
- generate regular cash distributions to Unit holders, any
balance remaining after required minimum distributions to be
used to purchase additional equipment during the first six
years after the year the offering terminates; and
- provide additional cash distributions after the end of the
reinvestment period and until all equipment has been sold.
Distributions will be made only if cash is available after payment of
Fund obligations (including payment of administrative expenses, debt service and
the Asset Management Fee) and allowance for necessary reserves. Distributions
are expected to begin as of the quarter in which the minimum offering amount is
achieved. However, there can be no assurance as to the timing of distributions,
or that any specific level of distributions or any other objectives will be
attained.
General Policies
The Fund intends to acquire various types of equipment for lease.
Generally, the Fund expects to acquire newly- manufactured equipment. However,
the Fund may also invest in desirable used equipment and equipment subject to
pre- existing leases under appropriate circumstances and where consistent with
the Fund's overall investment objectives.
The Fund's investment objective is to acquire primarily low-technology,
low-obsolescence equipment such as materials handling equipment, manufacturing
equipment, mining equipment, and transportation equipment. A portion of the
portfolio may include some more technology-dependent equipment such as certain
types of communications equipment, medical equipment, manufacturing equipment
and office equipment, although the Fund will seek to invest in such equipment in
a manner consistent with its primary objective of acquiring equipment which is
generally subject to relatively low rates of technological obsolescence. The
Operating Agreement does not limit the Fund's ability to invest in
high-technology Equipment.
Like most goods, new equipment generally has a higher market value than
comparable used equipment, and capital equipment tends to lose value as it is
used over a period of time. An equipment lessor such as the Fund tries to
negotiate lease terms based in part on its estimate of the value the leased
equipment will have when the lease ends. The lessor will negotiate a lease rate
designed to generate enough rental revenues over the term of the lease so that,
when the total lease payments are added to the estimated value of the equipment
upon lease termination, the lessor will receive both a return of the capital
used to purchase the equipment plus an overall profit on the investment. There
can be no assurance, however, that the Fund's assumptions regarding the residual
value of the equipment will be accurate or that its objective will be achieved.
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The Manager will seek to maintain an appropriate balance and diversity
in the types of equipment acquired and the types of leases entered into by the
Fund. Its guidelines will include the following policies:
- When all the offering proceeds are committed to equipment and
all permanent debt has been put in place, at least a majority
of the equipment, based on the aggregate purchase price, will
be subject to leases with scheduled lease payments returning
at least 90% of the purchase price of the equipment.
- The Manager will seek to invest not more than 20% of the
aggregate purchase price of equipment in Equipment acquired
from a single manufacturer. However, this limitation is a
general guideline only, and the Fund may acquire equipment
from a single manufacturer in excess of the stated percentage
if the Manager deems such a course of action to be in the
Fund's best interest.
A number of factors will determine the actual composition of the Fund's
Equipment portfolio; for example, the amount of offering proceeds actually
received will be a significant factor in determining the Fund's ability to
diversify its portfolio. Furthermore, the Manager cannot anticipate what types
of Equipment will be available and at what prices at the time the Fund is ready
to invest its capital.
In structuring leases, the Fund's lease rate and return on investment
objectives will vary based on
- the type of equipment,
- the terms of the lease,
- the credit quality of the lessee and
- prevailing lease and financial market conditions.
The Manager will commit to a particular lease transaction only if it
believes that, in the context of the Fund's overall equipment portfolio, the
transaction will contribute to the satisfaction of the Fund's investment
objectives. The Fund does not have any specific "minimum rate of return". As
noted above, the Fund's objectives are to acquire a diversified portfolio of
equipment that will generate sufficient net cash flow to permit regular
distributions to investors and additional funds to reinvest in equipment.
Reinvestment of revenues is permitted only after certain minimum rates of
distributions are made.
The Manager will seek to structure a portfolio that is
- diversified as to equipment type, industry, lessee and geographic
location;
- capable of generating sufficient net cash flow to meet the minimum
distribution requirements to permit reinvestment; and
- capable of generating sufficient cash flow to provide funds for
additional investment in equipment.
The rates of return necessary to meet these objectives through the end of the
reinvestment period will depend on a number of variables which cannot be
predicted this far in advance.
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As set forth above under "Principal Investment Objectives," it will be
the Fund's objective to reinvest in additional equipment any revenues remaining
after payment of certain minimum distributions during the reinvestment period.
The Fund will not acquire equipment after the reinvestment period, ending six
years after the end of the year the offering is completed, except if necessary
to satisfy obligations entered into prior to the end of the reinvestment period
or to maintain or improve equipment already owned at that time.
Other than as set forth in any supplement to this Prospectus, the Fund
has not invested in or committed to purchase any Equipment, and, as a result,
there can be no assurance as to when the proceeds from the offering will be
fully invested. Furthermore, prospective investors may not have an opportunity
prior to investing to evaluate all of the equipment to be acquired.
Before completing any acquisition of a single item of equipment which
has a contract purchase price more than $1,000,000, the Fund will obtain a
future value appraisal for the equipment from a qualified independent third
party appraiser. The Manager may also, in its discretion, obtain appraisals for
certain smaller acquisitions if it deems an appraisal to be appropriate because
of the type of equipment, the size of a transaction or otherwise. It should be
noted, however, that appraisals represent only the appraiser's opinion of the
value of the equipment, and do not necessarily represent the actual amount the
Fund might receive on sale of the equipment.
The Manager may purchase equipment in its own name, the name of a
related entity or the name of a nominee, a trust or otherwise and hold title to
the equipment on a temporarily (generally not more than six months) for any
purpose related to the business of the Fund, provided, however that:
- the transaction is in the best interest of the Fund;
- the equipment is purchased by the Fund for a purchase price no greater
than the cost to the Manager or Affiliate (including any out-of-pocket
carrying costs), except for compensation permitted by the Operating
Agreement;
- there is no difference in interest terms of the loans secured by the
equipment at the time acquired by the Manager or Affiliate and the time
acquired by the Fund;
- there is no benefit arising out of such transaction to the Manager or
its Affiliate apart from the compensation otherwise permitted by the
Operating Agreement; and
- all income generated by, and all expenses associated with, Equipment so
acquired shall be treated as belonging to the Fund.
Any offering proceeds received by the Fund during the first twelve
months of the offering which have not been committed to investment in equipment
during by a date eighteen months after the beginning of the offering, and any
offering proceeds received during a second year of the offering which have not
been committed to investment by a date six months after the end of the offering
(except for amounts used to pay operating expenses or required as capital
reserves) will be returned pro rata by the Fund to investors. In addition, in
order to refund to investors the amount of Front End Fees attributable to any
returned capital, the Manager has agreed to contribute to the Fund, and the Fund
shall distribute to investors pro rata, the amount by which (x) the amount of
unused capital so distributed, divided by (y) the percentage of Gross Proceeds
remaining after payment of all Front End Fees, exceeds the unused capital so
distributed. The Fund's capital will be available for general use during the
offering period and may be expended in operating equipment which has been
acquired. Offering proceeds will not be segregated or held separate from other
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<PAGE>
capital of the Fund pending investment, and no interest will be payable to
investors if uninvested offering proceeds are returned to them. Offering
proceeds will be deemed to have been committed to investment and will not be
returned to the Holders to the extent written agreements in principle or letters
of understanding were executed at any time prior to the end of these periods,
regardless of whether the investment is eventually consummated, and also to the
extent any funds have been reserved to make contingent payments in connection
with any equipment, regardless of whether any such payments are ever made.
Types of Equipment
The Fund intends to acquire and lease a diversified portfolio of
equipment. The Fund intends to invest primarily in what it deems to be
relatively low-technology, low-obsolescence types of equipment. These types of
equipment would include a variety of items which are not dependent on
high-technology design or applications for their usefulness to lessees, and are
expected to be less subject to rapid obsolescence than types which are so
dependent.
Equipment acquisition will be subject to the Manager or its agents
obtaining information and reports, and undertaking inspections and surveys the
Manager deems appropriate to determine the probable economic life, reliability
and productivity of the equipment, its competitive position with respect to
other equipment and its suitability and desirability as compared with other
equipment. Purchases of new equipment for lease will typically be made directly
from a manufacturer or its authorized dealers, either under a purchase agreement
for large quantities of such equipment, through lease brokers, or on an ad hoc
basis to meet the needs of a particular lessee. There can be no assurance that
favorable purchase agreements can be negotiated with equipment manufacturers or
their authorized dealers or lease brokers. In addition, the Fund may enter into
sale/leaseback transactions in which the Fund will purchase equipment from
companies which will then simultaneously lease the equipment from the Fund.
The following is a more detailed description of the various types of
equipment which the Fund may purchase and lease. The types of equipment are
listed in alphabetical order, and the discussion is not intended to imply any
order of emphasis in the Fund's acquisition policies. The final mix of equipment
types in the Fund's portfolio will depend on the factors discussed above under
"General Policies."
Aircraft. The Fund may invest in cargo and freight aircraft, corporate
aircraft and aircraft used for medical evacuation and rescue purposes. The
Manager anticipates that the Fund's cash investments in all types of aircraft
will not exceed an amount equal to 20% of the maximum capital. Cargo and freight
aircraft are used by commercial freight carriers and national and international
mail and package delivery services exclusively for the hauling of cargo.
Corporate aircraft, including both helicopters and fixed-wing aircraft, are used
by many businesses to move employees from city to city or to locations without
scheduled air service and for the express delivery of personnel, components and
products at various manufacturing and service facilities. The Fund may invest in
commercial passenger aircraft, but not more than 15% of its maximum capital will
be committed to the purchase of commercial passenger aircraft and any debt used
to acquire or maintain commercial passenger aircraft will either be secured by
the obligations of an "investment grade" lessee, or will not involve the other
assets of the Fund as collateral. Commercial passenger aircraft consist of
aircraft used in the day to day operation of scheduled passenger air carriers.
All domestic corporate and commercial aircraft are registered with the
Federal Aviation Administration ("FAA"). Under the Federal Aviation Act of 1958,
as amended (the "Act"), it is unlawful to operate an unregistered aircraft in
the United States. In order to be eligible for registration, the rules and
regulations of the FAA provide, in effect, that aircraft is eligible for
registration only if it is owned by a United States Citizen or a Resident Alien.
A literal reading of the Act could lead to the conclusion that aircraft in which
the Fund has an interest are not eligible for registration because the term
United States Citizen is defined in the Act to include a partnership in which
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each member is an "individual" who is a citizen of the United States or one
of its possessions, and the Fund has a corporate Manager. The FAA has indicated
informally that it will permit registration of an aircraft under the Federal
Aviation Act of 1958 and the regulations thereunder in the name of a trustee of
a trust in which a partnership is the sole beneficiary if the partnership's
partners are United States Citizens (whether or not they are all individuals) or
Resident Aliens. However, such representations are not binding on the FAA;
therefore, the possibility exists that the FAA would challenge such a
registration. In addition, a registration may be challenged and rendered invalid
if a Member is not, contrary to his representation to the Fund, a United States
Citizen or a Resident Alien or if a Member ceases to be a United States Citizen
or a Resident Alien. Any challenge, if successful, could result in an inability
to operate the aircraft, substantial penalties, the premature sale of the
aircraft, the loss of the benefits of the central recording system under federal
law thereby leaving the aircraft exposed to liens or other interests not of
record with the FAA, and a breach by the Fund of lease agreements entered into
in connection with the aircraft. Accordingly, the Manager will limit the
ownership of Units or interests therein by any persons who are not United States
Citizens or Resident Aliens to not more than 20% of the outstanding Units.
It is anticipated that any aircraft lease will provide, as a condition
precedent to the transaction, that application for registration shall have been
duly made and that the prospective lessee shall have temporary or permanent
authority to operate the aircraft. If such authority were not obtainable because
of failure of registration, the lessee might be entitled to void the transaction
and the lease would not take effect.
Communications Equipment. Communications equipment is used for voice
and data transmission. Its applications include, but are not limited to,
telephone communication, radio and television broadcasting, cable television,
and satellite communications. The Fund may acquire and lease communications
equipment including telephone equipment and systems, data communication
terminals, cables, transmission wires, transmitters, control and amplification
equipment, repeaters, monitoring equipment, teleprinters, connector and
switching equipment, satellite and microwave transmission facilities and support
equipment.
Construction Equipment. Construction equipment includes bulldozers,
haulers, cranes, graders, backhoes, front- end loaders, scrapers and asphalt and
cement spreaders used in a wide variety of applications including building
construction and road, bridge and other civil engineering construction projects.
Energy Equipment. Energy equipment includes cogeneration facilities,
transmission lines, generation facilities, compression and pumping equipment and
other processing and treatment equipment, as well as energy management systems.
General Purpose Plant/Office Equipment. Plant/office equipment includes
racking, shelving, storage bins, portable steel storage sheds, furniture,
fixtures, tables, counters, desks, chairs, cabinets and numerous other items
generally used in manufacturing plants, storage and distribution facilities and
offices.
Graphic Processing Equipment. Graphic processing equipment includes
print setters, printing presses, automatic drafting machines and all equipment
which is used for the visual display of designs, drawings and printed matter.
Printing presses come in a variety of sizes depending on the applications for
which they are used. Some printing presses are of a single color, whereas others
can apply up to eight colors. Phototype setters are used for the setting of type
for publications such as newspapers and magazines. Computerized type-setters
have become common in recent years, as they simplify type-setting, correction of
mistakes and lay-out of printed pages. Automatic drafting machines are computer
controlled visual displays of drawings which enable designers to make changes in
engineering drawings without the time required to make a completely new drawing
by hand.
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Machine Tools and Manufacturing Equipment. Machine tools and
manufacturing equipment include a wide variety of metalworking machinery, such
as lathes, drilling presses, turning mills, grinders, metal bending equipment,
metal slitting equipment and other metal forming equipment used in the
production of a variety of machinery and equipment. Some form of machine tool is
used in virtually every production process of a metal product or component.
While some machine tools and metalworking equipment are built for a particular
end product, the majority of machine tools can be used in a variety of
applications. Manufacturing equipment can also include some high technology
equipment.
Maritime Equipment. Maritime equipment is widely used in shipping
industry as the most cost-effective way of transporting large quantities of
commodities. Such equipment includes dry bulk ships, tankers, supply vessels,
tug boats, hopper barges, tank barges and intermodal containers. Marine vessels
include (i) tankers, which are designed to carry liquid commodities, and (ii)
dry bulk carriers, which are designed to carry homogenous commodities. In
addition, certain vessels have been designed as combination carriers that have
the capacity to carry both liquid and dry cargoes.
Marine vessels may be registered in countries other than the United
States and may operate in international and foreign seas and waterways. Certain
types of marine vessels must be registered prior to operation in the waterways
of the United States. Marine vessel registration can be challenged and rendered
invalid under circumstances similar to those discussed with regard to aircraft
above. Any successful challenge with respect to a marine vessel may result in
substantial penalties, including the forced sale of the vessel, the potential
for uninsured casualties, and a breach by the Partnership of the lease or
financing agreements related to the vessel.
In addition, certain U. S. federal statutes and regulations provide for
the forfeiture to the U. S. Government of transportation equipment, including
marine vessels, found to be used in the transportation of illegal drugs and
other contraband. Upon the acquisition of vessels, the Manager will seek to
cause the vessel owner to enter into the Sea Carrier Initiative Agreement with
the U.S. Customs Service whereby the vessel owner shall agree to take
affirmative steps to deter illegal access to and use of such vessels by those
engaged in trafficking of items deemed to be illegal contraband, including
illegal drugs. The law provides for an exception with respect to the owners of
vessels where the illegal activity has occurred without the owner's knowledge,
consent or willful blindness. However, there can be no assurance that if a
marine vessel owned by the Fund and leased to a third party was found to be
engaged in such illegal activities, that it would not be seized or detained by
the U. S. Government. In that event, insurance coverages of the Fund could
mitigate its loss of income or pecuniary damages.
Materials Handling Equipment. Materials handling equipment includes
many varieties of fork lift trucks. They are either battery-powered or
gas-powered, and are used in warehouses and factories for the movement of
products and materials from one work station to another or from a warehouse to a
truck for shipment, or for the storing of products and materials. The equipment
comes in a variety of styles, depending on the design of the items to be moved
and the design of the shipping or warehouse facility. However, this type of
equipment is generally of standard design and can be used by a variety of
industries.
Medical Equipment. Medical equipment includes a wide variety of testing
and diagnostic equipment including:
Radiology Equipment. This category includes x-ray equipment,
CAT and MRI scanners (i.e., body and head scanners) and other equipment
to be used in the radiology departments of hospitals and clinics.
Laboratory Equipment. This category includes blood analysis
equipment and other automated medical laboratory equipment.
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Other Medical Equipment. This general category includes
equipment using ultrasound technology, patient monitoring systems and a
variety of other equipment used in hospitals, clinics and medical
laboratories.
Photocopying Equipment. The Fund may acquire and lease photocopying
and other document duplicating or reproduction equipment.
Railroad Rolling Stock. Railroad rolling stock includes gondolas, tank
cars, boxcars, hopper cars, flatcars, locomotives and various other equipment
used by railroads in the maintenance of their tracks. Flatcars and boxcars have
a variety of designs, some of which are general purpose and some of which are
special purpose. Special purpose flatcars and boxcars are used for the shipment
of specific products whereas a general purpose car can be used for the shipment
of a wide variety of products. Many electric utilities lease hopper cars for the
shipment of coal from the mine to the generating plant. Tank cars are used to
transport liquids. Locomotives are the engines, generally diesel powered, that
drive trains of railcars from one location to another. Locomotives come in a
variety of designs which vary in the amount of horsepower produced.
Research and Experimentation Equipment. Research and experimentation
equipment include various types of analyzers, spectrometers, oscilloscopes,
measuring instruments, gas and liquid chromatographs, physical testing
centrifuges, graphic plotters and printers, laser equipment, digital-aided
design systems, scanning electron microscopes, dissolution sampling systems, and
other general laboratory instruments and equipment used in businesses for the
development of ongoing research programs.
Tractors, Trailers and Trucks. Tractors, trailers and trucks are used
for the shipment of various products and goods from one location to another.
Tractor-trailer rigs are often used for longer shipments and delivery of larger
pieces; whereas heavy-duty trucks are generally used for the more local delivery
of large products. A "tractor" refers to the power unit of a tractor-trailer
combination. The tractor cab is generally manufactured by one company and the
engine and drive train by another. The engine may use gasoline or diesel fuel.
Trailers are the container portion of a tractor-trailer rig and come in a
variety of sizes and designs depending on the product to be shipped. Trailers
may be designed for intermodal use so they can either be pulled by tractors or
transported on railroad flatcars. Trailers may be up to 45 feet long in most
states and most commonly have a set of twin axles (eight wheels) to carry the
load. A trailer may be enclosed on a flatbed for the shipment of large or
oversized products, and may be refrigerated for the shipment of perishable
products. The Fund intends to invest in trailers that can be used for the
shipment of a wide variety of goods and are not limited to specific
applications. Heavy-duty trucks are large trucks in which the engine and load
carrying components are mounted on a single frame. The trucks can be used for
the local delivery of large products or for the hauling of construction
materials.
Miscellaneous Equipment. The Fund may also acquire various other types
of equipment, including, but not limited to, oil drilling equipment, mining and
ore-processing equipment, electronic test equipment, office automation
equipment, furniture and fixtures, automobiles, dairy production equipment,
video projection and production equipment, store fixtures, display cases,
freezers and equipment used in production facilities.
Incidental Property Acquisitions. Incidental to an acquisition of
equipment, the Fund may acquire certain interests in real property, mineral
rights or other tangible or intangible property or financial instruments. The
Fund may acquire ownership of an item of equipment by acquiring the beneficial
interests of a trust or the equity interest in a special purpose corporation
which holds an asset sought by the Fund. Nothing in the Operating Agreement
prohibits the Fund from acquiring any such incidental property rights or
indirect ownership interest, provided that the primary purpose and objective is
the acquisition and leasing of equipment as described herein, the acquisition of
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the incidental rights does not alter the essential character of the
transaction as an acquisition and lease which otherwise satisfies the investment
objectives and policies of the Fund, and the acquisition does not otherwise
violate or circumvent any provision of the Operating Agreement.
Prior Program Diversification
The prior public equipment leasing programs sponsored by the Manager
and its Affiliates have had equipment portfolio objectives substantially
identical to those of the Fund. The first chart set forth below (Figure 1)
represents the actual equipment portfolio diversification by equipment type for
all prior ATEL public programs as of July 31, 2000; the second chart set forth
below (Figure 2) represents the actual equipment portfolio diversification by
lessee industry for all prior ATEL public programs as of August 31, 1998; and
the third chart set forth below (Figure 3) represents the actual portfolio
diversification by the lessees' geographic location for all prior ATEL public
programs as of July 31, 2000. Diversification of the Fund's portfolio will
depend on a number of variables, including the amount of capital raised and
market conditions, which cannot be predicted in advance. Although there can be
no assurance that the Fund will achieve diversification similar to that of the
prior programs, achieving such diversification will be one of the primary
investment objectives and policies of the Fund.
[Figure 1 - graphic omitted]
[Figure 2 - graphic omitted]
[Figure 3 - graphic omitted]
Borrowing Policies
The Fund expects to incur debt to finance the purchase of a portion of
its equipment portfolio. The amount of borrowing in connection with any
equipment acquisition transaction will be determined by, among other things, the
credit of the lessee, the terms of the lease, the nature of the equipment and
the condition of the money market. There is no limit on the amount of debt which
may be incurred in connection with any single acquisition of equipment. However,
the Fund may not incur aggregate indebtedness in excess of 50% of the total cost
of all equipment as of the date of the final commitment of offering proceeds
and, thereafter, as of the date any subsequent indebtedness is incurred. The
Fund intends to borrow amounts equal to such maximum debt level in order to fund
a portion of its equipment acquisitions. While the Manager maintains short term
lines of credit, there can be no assurance that such short term credit or
permanent financing will be available to the Fund in the amounts desired or on
terms considered reasonable by the Manager at the time the Fund seeks to finance
a specific acquisition.
Financing for the Fund is expected to be a combination of nonrecourse
and recourse debt. The Manager intends to use nonrecourse debt primarily to
finance assets leased to those lessees which, in the opinion of the Manager,
have a relatively higher potential risk of lease default than other lessees of
the Fund's Equipment. This use of nonrecourse debt will mitigate the risk of
loss due to default by such lessees.
Nonrecourse borrowing, in the context of the type of business to be
conducted by the Fund, means that the lender providing the funds would only be
able to look to the equipment purchased with such funds and the proceeds derived
from the leasing or reselling of such equipment as security; neither the Fund
nor any Member (including the Manager) will be liable for repayment of any such
loan, nor will any such loan be secured by other Equipment owned by the Fund.
Investors should note, however, that the presence of nonrecourse financing may
limit an investor's ability to claim losses from the Fund. Furthermore, a
creditor may under some circumstances have recourse to the Fund's assets upon
establishing fraud or misrepresentation by the Fund.
The Fund expects to incur recourse debt in connection with short-term
bridge financing and "asset securitization", as described below. Recourse debt,
in the context of the type of business to be conducted by the Fund, means that
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the lender can look beyond the specific asset financed by the loan to all
of the assets of the borrower, or a specified pool of assets, as collateral for
repayment of its debt obligation.
The Fund expects to incur recourse debt in short-term bridge financing
used to acquire equipment and which is intended to be repaid through a
combination of permanent financing, offering proceeds and/or operating revenues.
In addition, the Fund may participate with other affiliated programs and the
Manager in a common recourse debt facility to provide temporary or short-term
bridge financing of transactions approved for acquisition by the Fund and such
Affiliates. In such instances, lease transactions may be held in the name of an
Affiliate of ATEL for convenience, notwithstanding that the transaction has been
approved for one or more participants. The ultimate acquisition of the financed
transaction will depend on many factors, including without limitation, the
Fund's available cash, portfolio makeup, and investment objectives at the time
of closing.
The Fund may also incur long-term recourse debt in the form of asset
securitization transactions in order to obtain lower interest rates or other
more desirable terms than may be available for individual nonrecourse debt
transactions. In an "asset securitization", the lender would receive a security
interest in a specified pool of "securitized" Fund assets or a general lien
against all of the otherwise unencumbered assets of the Fund. It is the
intention of the Manager to use asset securitization primarily to finance assets
leased to those credits which, in the opinion of the Manager, have a relatively
lower potential risk of lease default than those lessees with equipment financed
with nonrecourse debt. The Manager expects that an asset securitization
financing would involve borrowing at a variable interest rate based on an
established reference rate. The Manager would seek to limit the Fund's exposure
to increases in the interest rate by engaging in hedging transactions that would
effectively fix the interest rate obligation of the Fund.
Other than short-term bridge financing or asset securitization
financing, the Manager will seek to avoid borrowing under terms which provide
for a rate of interest which may vary with the prime or reference rate of
interest of a lender. The Manager will attempt to limit any other variable
interest rate borrowing to those instances in which the lessee agrees to bear
the cost of any increase in the interest rate. If such debt is incurred without
a corresponding variable lease payment obligation, the Fund's interest
obligations could increase while lease revenues remain fixed. Accordingly, a
rise in the prime or reference rate may increase borrowing costs and reduce the
amount of income and cash available for distributions. Historically, the prime
rates charged by major banks have fluctuated; as a result, the precise amount of
interest which the Fund may be charged under such circumstances cannot be
predicted.
In the case of any recourse bridge financing or asset securitization,
the lender would not be entitled to look to the individual assets of any
investor, or, in many cases, of the Manager, for repayment of such loans. If,
under tax principles, it is determined that the Manager or one of its Affiliates
bears the economic risk of loss for such recourse debt, then the recourse debt
will be allocated to the Manager or its Affiliate for tax basis purposes and all
deductions attributable to the recourse debt will be allocated to the Manager or
its Affiliate.
Fund indebtedness may provide for amortization of the principal balance
over the term of the loan through regular payments of principal and interest or
may provide that all or a substantial portion of the principal due will be
payable in a single "balloon payment" upon maturity. Such balloon payment
indebtedness involves greater risks than fully amortizing debt.
In the event that the Fund does not have sufficient funds to purchase
an item of equipment at the time it is acquired, the Fund may borrow from third
parties on a short-term basis, and repay the loans out of the proceeds from the
subsequent sale of Units. Any short-term loans may be unsecured or secured by
the assets acquired and/or other assets of the Fund.
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Although the Operating Agreement does not prohibit the Manager or its
related entities from lending to the Fund, the Fund does not have any intention
or arrangements to borrow from these parties. If the Fund were to borrow from
the manager or its related companies, the terms may not permit the Manager or
its affiliates to receive a rate of interest or other terms which are more
favorable than those generally available from commercial lenders under the
circumstances. Neither the Manager nor its affiliates may provide financing to
the Fund with a term in excess of twelve months.
Description of Lessees
The Fund will only purchase equipment for which a lease exists or for
which a lease will be entered into at the time of purchase.
The Fund's objective is to lease a minimum of 75% of the equipment (by
cost) acquired with the Net Proceeds to lessees which
- have an average credit rating by Moody's Investor Service, Inc. of
"Baa" or better, or the credit equivalent as determined by the Manager,
with the average rating weighted to account for the original Equipment
cost for each item leased; or
- are established hospitals with histories of profitability or
municipalities.
The Manager may determine that the credit equivalent of a Moody's Baa
rating applies to those lessees which are not rated by Moody's, but which
- have comparable credit ratings as determined by other nationally
recognized credit rating services;
- although not rated by nationally recognized credit rating services, are
believed by the Manager to have comparable creditworthiness; or
- in the Manager's opinion, as a result of guarantees provided,
collateral given, deposits made or other security interests granted,
have provided such safeguards of the Fund's interest in the Equipment
that the risk is equivalent to that involved in a lease to a company
with a credit rating of Baa.
The remaining 25% of the initial equipment portfolio may include
equipment leased to lessees which, although deemed creditworthy by the Manager,
would not satisfy the specific credit criteria for the portfolio described
above. Included in this 25% of the portfolio may be one or more venture leasing
investments, which are described below under "Venture Equipment Leasing and
Financing". No more than 20% of the initial portfolio, by cost, will consist of
these venture leasing investments, and the Fund's objective will be to invest
approximately 15% of its capital in these investments.
In arranging lease transactions on behalf of corporate investors and
securing institutional financing for such transactions, the Manager and its
Affiliates have been required to analyze and evaluate the creditworthiness of
potential lessees. However, neither the Manager nor any of its Affiliates is in
the business of regularly providing credit rating analyses as an independent
activity. In order to analyze whether a prospective lessee's credit risk is
comparable or equivalent to a Moody's Baa rating, the Manager will attempt to
apply the standards applicable to securities qualifying for the Baa rating. Such
securities are generally deemed to be of "investment grade," neither highly
protected nor poorly secured, with earnings and asset protection which appear
adequate at present but which may be questionable over any
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<PAGE>
great length of time. Notwithstanding the Manager's best efforts to assure the
lessees' creditworthiness, there can be no assurance that lease defaults will
not occur.
It is not anticipated that the Fund's lessees will be located primarily
in any given geographic area. The Manager will use its best efforts to diversify
lessees by geography and industry, and will apply the following policies:
- The Manager will seek to limit the amount invested in equipment leased
to any single lessee to not more than 20% of the aggregate purchase
price of equipment owned at any time during the reinvestment period;
and
- In no event will the Fund's equity investment in equipment leased to a
single lessee exceed an amount equal to 20% of the maximum capital from
the sale of Units (or $30,000,000).
Foreign Leases
There is no limit on the amount of equipment which may be leased to
foreign subsidiaries of United States corporations, to foreign lessees or which
may otherwise be permitted to be used predominantly outside the United States.
The Manager does not have any specific objective with regard to the amount of
Equipment to be subject to foreign leases, but intends to pursue desirable
foreign leasing opportunities for the Fund to the extent consistent with the
Fund's overall investment objectives.
Of the total purchase price of equipment leased to foreign lessees, the
Manager will require that a minimum of 75% must represent Equipment leased to
lessees which have a credit risk equivalent to a credit rating by Moody's
Investor Service, Inc. of "Baa" (investment grade) or better, as determined by a
credit rating agency which is generally recognized in the financial services
industry or, if no such credit rating is available, as determined by the
Manager. Any leases to foreign lessees which do not meet the foregoing credit
standard will either be guaranteed by a U.S. parent company of the lessee, or
will involve lessees which have assets located in the United States with a value
equal to or greater than the original purchase cost of the equipment subject to
the lease.
The Manager will seek to limit the aggregate amount of the Fund's
equity invested in all equipment leased to foreign lessees or which is otherwise
to be used primarily outside the United States to not more than 20% of the Gross
Proceeds. For this purpose, a lessee under a lease guaranteed by a United States
corporation will not be deemed a foreign lessee.
Description of Leases
Generally, in a lease involving new equipment, the lessee will express
an interest in lease financing for equipment and the Manager will attempt to
create a lease package for the prospective lessee. In formulating the lease
package, the Manager will consider the following factors, among others:
- the type of equipment;
- the anticipated residual value of the equipment;
- the business of the lessee;
- the lessee's credit rating;
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- the cost of alternative financing services, and
- competitive pricing and other market factors.
The initial lease terms will vary as to the type of equipment, but will
generally be for 36 months to 84 months. The Fund may lease some equipment to
federal, state or local governments, or agencies thereof. Many of such leases
will be subject to renewal each year, because many governmental lessees must
obtain appropriations for funds for their leases on an annual basis. In
addition, the Fund may, under appropriate circumstances, engage in other
short-term or "per diem" leases when the Manager deems it in the best interests
of the Fund and consistent with its overall objectives.
The equipment will be leased to third parties primarily pursuant to
leases with scheduled rents which will return less than the purchase price of
the equipment during the initial term of the lease. These include leases where
rental payments are based upon equipment usage. However, as of the date the
final offering proceeds are committed and all permanent debt is placed, a
majority of the leases, based on equipment purchase price, will provide for
lease payments and other payments by the lessee equal to at least 90% of the
original equipment purchase price. Lease rentals during comparable terms are
ordinarily higher under leases that provide rents that are less than the full
purchase price than those that return the full purchase price to the lessor. As
a result, the Manager believes that well-structured leases of this type may help
the Fund satisfy its investment objectives.
The Fund's will seek initial lease terms during which a lessee may not
cancel the lease or avoid the lease obligation. However, where the Manager deems
it to be in the Fund's best interests, because of favorable lease terms,
anticipated high demand for particular items of equipment or otherwise, it may
permit an appropriate cancellation clause.
The Manager believes that the Fund will be able to lease or sell its
equipment profitably after the initial lease terms although no assurances can be
given that it will. The Fund's ability to renew or extend the terms of its
leases or to re-lease or sell the equipment on expiration of the initial lease
terms is dependent on many factors, including possible economic or technological
obsolescence of the Equipment, competitive practices and conditions and
generally prevailing economic conditions.
The Fund's leases will generally be "net leases," which provide that
the lessee must bear the risk of loss of the equipment, provide adequate
insurance, pay taxes on the equipment, maintain the equipment and indemnify the
Fund against any liability which may arise from any act or omission by the
lessee or its agents. In some leases, the Fund may be responsible for certain of
these obligations, such as certain insurance and maintenance expenses, but
generally only during a period when the equipment is not under lease.
Most of the Fund's lease agreements will require the lessees
- to maintain casualty insurance in an amount equal to the greater of the
full value of the equipment or a specified amount set forth in the
lease, and
- to maintain liability insurance naming the Fund as an additional
insured with a minimum limit of $1,000,000 in coverage.
The Fund may enter into remarketing agreements with manufacturers of
equipment on terms which are customary in the industry. A remarketing agreement
is an agreement whereby the manufacturer agrees with the lessor to assist the
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<PAGE>
lessor in finding a new lessee at the termination of the original lease. The
Manager will determine, in its sole discretion, whether to enter into such
agreements and with which manufacturers to do so. Most remarketing agreements
call for the manufacturer to find a second user only on a "best efforts" basis.
Thus, a remarketing agreement does not assure the lessor that the equipment can
or will be re-leased at the end of the initial lease term. The monthly rental
payments under a new lease or the sale price of such equipment would be subject
to the final approval of the Manager. Under a remarketing agreement, the
manufacturer would participate with the Fund in revenues on an incentive basis.
The manufacturer would typically receive a percentage of the revenue derived by
the Fund from the equipment under the agreement, which would increase after the
Fund received a specified return on its investment.
Venture Equipment Leasing and Financing
At least 75% of the Fund's equipment portfolio, by cost, will consist
of transactions financing equipment for lessees with investment grade or
equivalent credit status. In the rest of its portfolio, the Fund intends to
finance some equipment for non-public companies, some of which may be in their
early capitalization stages, and to obtain terms from lessees and borrowers that
may include, as consideration to the party providing financing, the granting of
warrants, options or other rights to purchase equity securities of the lessee or
borrower, or the opportunity to purchase such equity securities outright (such
rights to purchase equity interests and direct equity investments are referred
to in this Memorandum as the "equity interests"). Growing young companies often
have more difficulty obtaining financing for equipment essential to the
development and growth of their business, and, as a result, must offer lessors
and lenders substantial cash deposits, equity participations or other
extraordinary consideration to obtain financing for the equipment. The Fund
intends to focus approximately 15% of its initial capital on this market to
achieve investment returns from both its direct lease and loan revenues and
gains it may realize from the equity interests.
The Manager will look for those companies which show solid potential
for consistent profitability within a specific time period, and which have
obtained or are expected to attract sufficient equity venture capital to finance
their operations through expected profitability. The Manager will seek to
identify potential lessees which are at an early enough stage in their
capitalization to require "venture equipment financing" solutions, but which
demonstrate the potential to both satisfy their lease terms and provide
attractive equity participation to the Fund as lessor. The Manager will also
seek to identify more mature, privately-held companies that seek creative
financing solutions involving the granting of equity interests to the Fund.
The Fund will only acquire equity interests in conjunction with the
financing of equipment by the Fund, including leases and loans to the issuer of
the equity interests or to a parent, subsidiary or affiliate of the issuer. In
many cases, the Fund expects to acquire equity interests, such as warrants and
options to purchase securities, in consideration of its equipment financing and
without any other cash investment by the Fund at the time it acquires such
rights (such rights granted as part of the financing transaction are referred to
here as "warrant coverage"). In such cases, cash investment by the Fund would be
made upon exercise of the rights, and the Fund expects to use operating cash
flow to fund such exercises. In other cases, the Fund may obtain the right to
make a direct cash investment in the lessee's or borrower's securities at the
time the equipment financing is provided, for which the Fund would use proceeds
from the offering of Shares. In order to assure that the Fund will not be deemed
an "investment company" under the Investment Company Act of 1940, the Manager
will in no event during the life of the Fund permit the aggregate value of the
equity interests and any other investment securities held by the Fund to exceed
40% of the value of the Fund's total assets.
In addition to true lease financing, the Fund's venture leasing
investments may be in the form of "leases intended for security" and secured
loan transactions with equipment as the collateral. In a true lease transaction,
the Fund as lessor would be considered the owner of the Equipment for tax
purposes, and is therefore entitled to cost recovery deductions
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<PAGE>
allocable to the equipment. A "lease intended for security" or finance lease may
be nominally structured as a lease, but is analogous to an installment sale
contract or loan agreement, and is treated as a loan for tax purposes, with the
"lessor" as lender and the "lessee" as the borrower. In a secured loan
agreement, the Fund would be the lender and the user of the Equipment would be
the borrower. In each case, the borrower would be deemed the owner of the
Equipment for tax purposes and would retain, as part of the economic structure
of the lease, all of the rights to cost recovery deductions and other tax
aspects of ownership. In these transactions, the borrower will typically have an
obligation to make fixed periodic installments of principal and interest over a
specified term. The Manager will attempt to structure these transactions so that
the payments of principal and interest, together with any equity interests
involved, will return the Fund's investment and provide a desirable rate of
return on investment in view of the associated financing risks.
In finance leases and secured loans, the Fund will have a security
interest in the Equipment financed in the transaction, as well as receivables
and proceeds under any lease or rental agreement relating to the Equipment or
other assets. The Fund's security interest may be a senior lien on the financed
assets, providing the Fund with the right, on any default under the financing
arrangement, to foreclose on the assets which are collateral, and to take
possession and or sell the assets in order to satisfy the borrower's obligation.
The Fund may also provide financing as a junior or subordinate lender under
appropriate circumstances. In such cases, the Fund's right to enforce its
obligations against the collateral would be subject to the priority of any
senior lender's rights.
In conjunction with its lease of equipment to lessees, the Fund will
negotiate the acquisition from the lessees, or their parents or affiliates,
rights to purchase the equity securities of such entities, or, in some cases,
the securities themselves. The equity interests may be in the form of warrants
or options to purchase equity securities, common shares, preferred shares,
convertible equity, convertible debt, or any other form of interest which is
structured to give the Fund the right to benefit from growth in the market value
of the lessee's equity capital. At some time in the future, typically at the
time of, or soon after, the lessee's equity securities become publicly
registered or tradeable, generally through an initial public offering, merger or
reorganization, the Fund would exercise its rights represented by the equity
interests, acquire the lessee's publicly-traded securities and seek to dispose
of the securities at a profit. The equity interests may also mature upon the
negotiated sale of the lessee through the sale of all of the lessee's equity
securities or a sale of all its assets and liquidation of the proceeds to the
equity holders.
The Fund's management will determine when and whether to exercise
rights to convert or acquire securities subject to the equity interests. To
exercise warrant or option rights the Fund will pay an exercise price, which may
be financed out of the disposition proceeds to be realized upon an immediate
resale of the purchased securities. There can be no assurance that the issuers
of the equity interests will achieve capital growth and that the equity
interests will generate any profit, or that such growth and profits will be
achieved during the Fund's anticipated holding period.
Competition
Leasing has become one of the major methods by which American
businesses finance their capital equipment needs. See Figure 4 below for a
graphic-presentation of the dollar amount of equipment investment and equipment
lease financing in the United States for each year since 1982 (according to the
Equipment Leasing Association, a leasing industry trade association). Please
note that this chart reflects the growth of equipment lease financing from all
sources, including manufacturers, financial institutions and private and public
lease financing companies, and not just public equipment leasing programs such
as the Fund. Public programs like the Fund represent only a relatively small
portion of the total lease financing industry.
[Figure 4 - graphic omitted]
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In obtaining lessees the Fund will compete with manufacturers of
equipment which provide leasing programs and with established leasing companies
and equipment brokers. Manufacturers of equipment may offer certain incentives
including maintenance services and trade-in or replacement privileges which the
Fund cannot offer. The Fund may also be competing with manufacturers and others
who offer leases that provide for longer terms and lower rates than leases which
the Fund will offer. There are numerous other potential entities, including
entities organized and managed similarly to the Fund, seeking to purchase
equipment subject to leases.
Joint Venture Investments
The Fund may purchase certain of its equipment by acquiring a
controlling interest in a partnership, equipment trust or other form of joint
venture with a non-Affiliate which owns the equipment. The controlling interest
requirement may be satisfied by ownership of more than 50% of the venture's
capital or profits or from provisions in the governing agreement giving the Fund
certain basic rights. For example, control may take the form of the right to
make or veto certain management decisions or provide for certain predetermined
benefits for the Fund in the event that any other party to the venture should
decide to sell, refinance or change the assets owned by the venture. The Fund
may not acquire equipment jointly with others unless
- the joint venture agreement does not authorize or require the Fund to
do anything with respect to the equipment which the Fund, or the
Manager, could not do directly because of the policies set forth in the
Operating Agreement, and
- the transaction does not result in payment of duplicate fees.
The Fund may also acquire equipment by joint venture or as co-owner
with an Affiliate if the following conditions are met:
- the Affiliate will be required to have substantially identical
investment objectives to those of the Fund;
- there are no duplicate fees;
- the Affiliate must make its investment on substantially the same terms
and conditions as the Fund;
- the Affiliate must have a compensation structure substantially
identical to that of the Fund;
- the venture must be entered into in order to obtain
diversification or to relieve the Manager or Affiliates from
commitments entered into under Section 15.2.15 of the Operating
Agreement or similar provisions governing the Affiliate; and
- the Fund has a right of first refusal should a co-venturer decide to
sell the property owned by the venture.
Because both the Fund and its Affiliate will be required to approve
decisions pertaining to the equipment, a management impasse may develop. If one
party, but not the other, wishes to sell the equipment, the party not desiring
to sell will have a right of first refusal to purchase the other party's
interest in the equipment. The Fund may not, however, be able to exercise its
right of first refusal unless it has the financial resources to do so, and there
can be no assurances that it will.
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General Restrictions
The Fund will not:
- issue any Units after the offering terminates or issue Units in
exchange for property,
- make loans to the Manager or its Affiliates,
- invest in or underwrite the securities of other issuers,
- operate in such a manner as to be classified as an "investment company"
for purposes of the Investment Company Act of 1940,
- except as set forth herein, purchase or lease any equipment from nor
sell or lease property to the Manager or its Affiliates, or
- except as expressly provided herein, grant the Manager or any of its
Affiliates any rebates or give-ups or participate in any reciprocal
business arrangements with such parties which would circumvent the
restrictions in the Operating Agreement, including the restrictions
applicable to transactions with Affiliates.
The Manager and its Affiliates, including their officers and directors,
may engage in other businesses or ventures that own, finance, lease, operate,
manage, broker or develop equipment, as well as businesses unrelated to
equipment leasing.
Changes in Investment Objectives and Policies
Unit holders have no right to vote on the establishment or
implementation of the investment objectives and policies of the Fund, all of
which are the responsibility of the Manager. However, the Manager cannot make
any material changes in the investment objectives and policies described above
without first obtaining the written consent or approval of Members owning more
than 50% of the total outstanding Units entitled to vote.
CONFLICTS OF INTEREST
The Fund is subject to various conflicts of interest arising out of its
relationship with the Manager and Affiliates of the Manager. These conflicts
include, but are not limited to, the following:
The Manager engages in other, potentially competing, activities. The
Manager serves in the capacity of manager or general partner in other public
programs engaged in the equipment leasing business, and it and its Affiliates
also engage in the business of purchasing and selling equipment and arranging
leases for their own account and for the accounts of others. The Manager will
have conflicts of interest in allocating management time, services and functions
among the prior programs, the Fund, any future investment programs and
activities for its own account. The Manager believes that it has or can employ
sufficient staff, equipment and other resources to discharge fully their
responsibilities to each such activity.
In addition, as a general partner of prior programs, the Manager will
be contingently liable for obligations of these programs, except nonrecourse
indebtedness relating to the acquisition of equipment. Such obligations are
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<PAGE>
expected to consist primarily of normal operating and other current
expenses, and the Manager does not believe this responsibility will affect its
ability to satisfy its responsibilities to the Fund.
Competition for Investments. The Manager will have conflicts of
interest to the extent that its prior or future investment programs may compete
with the Fund for opportunities in the acquisition and leasing of equipment.
Prior public programs currently in operation include: ATEL Cash Distribution
Fund III, L.P. ("ACDF III"), ATEL Cash Distribution Fund IV, L.P. ("ACDF IV"),
ATEL Cash Distribution Fund V, L.P. ("ACDF V"); ATEL Cash Distribution Fund VI,
L.P. ("ACDF VI"); ATEL Capital Equipment Fund VII, L.P. ("ACEF VII"); and ATEL
Capital Equipment Fund VIII, LLC ("ACEF VIII") (together collectively referred
to as the "Prior Programs"). The Prior Programs have investment objectives
substantially identical to those of the Fund and may have funds available for
investment in additional equipment at a time when the Fund is also active in
seeking to invest or reinvest in Equipment. Certain of the equipment owned and
to be acquired by the Prior Programs and the Fund may be similar and may be
purchased from the same manufacturers. Furthermore, the Manager and its
Affiliates may in the future form additional investment programs having similar
objectives, and accordingly, the Fund may be in competition with any such future
programs formed by the Manager.
Any time two or more investment programs (including the Fund)
affiliated with the Manager have capital available to acquire and lease the same
types of equipment, conflicts of interest may arise as to which of the programs
should proceed to acquire available items of equipment. In such situations, the
Manager will analyze the equipment already purchased by, and investment
objectives of, each program involved, and will determine which program will
purchase the equipment based upon such factors, among others, as
- the amount of cash available in each program for such acquisition and
the length of time such funds have been available,
- the current and long-term liabilities of each program,
- the effect of such acquisition on the diversification of each program's
equipment portfolio,
- the estimated income tax consequences to the investors in each program
from such acquisition, and
- the cash distribution objectives of each program.
If after analyzing the foregoing and any other appropriate factors, the Manager
determines that such acquisition would be equally suitable for more than one
program, then the Manager shall purchase such equipment for the programs on the
basis of rotation with the order of priority determined by the length of time
each program has had funds available for investment, with the available
equipment allocated first to the program which has had funds available for
investment the longest.
The Manager and Affiliates will receive substantial fees and other
compensation. Fund operations will result in certain compensation to the Manager
and its Affiliates. The Manager has absolute discretion in all decisions on Fund
operations. Because the amount of such fees may depend, in part, on the debt
structure of equipment acquisitions and the timing of these transactions, the
Manager and its Affiliates may have conflicts of interest. For example, the
acquisition, retention, re-lease or sale of equipment and the terms of a
proposed transaction may be less favorable to the Fund and more favorable to the
Manager under certain circumstances. It should be noted that the Manager intends
to cause the Fund to incur aggregate acquisition debt in an amount approximately
equal to 50% of the total cost of equipment.
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In all cases where the Manager or its Affiliate may have a conflict of
interest in determining the terms or timing of a transaction by the Fund, it
will exercise its discretion strictly in accordance with its fiduciary duty to
the Fund and the Holders.
Agreements are not Arm's-Length. Agreements between the Fund and the
Manager or any of its Affiliates are not the result of arm's-length negotiations
and performance by the Manager and its Affiliates will not be supervised or
enforced at arm's-length.
No independent managing underwriter has been engaged for the
distribution of the Units. ATEL Securities Corporation is an Affiliate of the
Manager and will perform wholesaling services for the Fund. It may not be
expected to have performed due diligence in the same manner as an independent
broker-dealer. The Dealer Manager has acted in the same capacity in prior
offerings sponsored by the Manager and its Affiliates and is expected to do so
in any future offerings that the Manager and its Affiliates may conduct.
The Fund, the Manager and prospective Holders have not been represented
by separate counsel. In the formation of the Fund, drafting of the Operating
Agreement and the offering of Units, the attorneys, accountants and other
professionals who perform services for the Fund all perform similar services for
the Manager and its Affiliates. The Fund expects that this dual representation
will continue in the future. However, should a dispute arise between the Fund
and the Manager, the Manager will cause the Fund to retain separate counsel.
The Fund may enter into joint ventures with programs managed by the
Manager or its Affiliates. The Manager may face conflicts of interest as it may
control and owe fiduciary duties to both the Fund and the affiliated
co-venturer. For example, because of the differing financial positions of the
co-venturers, it may be in the best interest of one entity to sell the
jointly-held equipment at a time when it is in the best interest of the other to
hold the equipment. Nevertheless, these joint ventures are restricted to
circumstances where the co-venturer's investment objectives are comparable to
the Fund's, the Fund's investment is on substantially the same terms as the
co-venturer and the compensation to be received by the Manager and its
Affiliates from each co-venturer is substantially identical.
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ORGANIZATIONAL DIAGRAM
The following diagram (Figure 5) shows the relationships among the
Fund, the Manager and certain of Affiliates of the Manager which may perform
services for the Fund (solid lines denote ownership and dotted lines denote
other relationships).
Figure 5
[GRAPHICS OMITTED]
ATEL Capital Group ("ACG")
ATEL Equipment ATEL Financial ATEL Investor ATEL Leasing
Corporation ("AEC") Corporation Services ("AIS") Corporation
("Manager" or "AFC") ("ALC")
ATEL Securities Corporation
(the "Dealer Manager")
ATEL CAPITAL EQUIPMENT FUND IX, LLC
(the "Fund")
ATEL Capital Group's voting stock is owned 75% by A.J. Batt and 25% by
Dean L. Cash. ATEL Capital Group owns 100% of the outstanding capital stock of
each of the Manager, ALC, AIS and AEC. The Manager owns 100% of the outstanding
capital stock of the Dealer Manager.
FIDUCIARY DUTY OF THE MANAGER
The Manager is accountable to the Fund as a fiduciary and,
consequently, is required to exercise good faith and integrity in all dealings
with respect to Fund affairs.
Under California law and subject to certain conditions, a Member may
file a lawsuit on behalf of the Fund (a derivative action) to recover damages
from a third party or to recover damages resulting from a breach by a Manager of
its fiduciary duty. In addition, a Member may sue on behalf of himself and all
other Members (a class action) to recover damages for a breach by a Manager of
its fiduciary duty, subject to class action procedural rules. This area of the
law is complex and rapidly changing, and investors who have questions regarding
the duties of a Manager and the remedies available to Members should consult
with their counsel.
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The Operating Agreement does not excuse the Manager from liability or
provide it with any defenses for breaches of its fiduciary duty. However, the
fiduciary duty owed by a Manager is similar in many respects to the fiduciary
duty owed by directors of a corporation to its shareholders, and is subject to
the same rule, commonly referred to as the "business judgment rule," that
directors are not liable for mistakes in the good faith exercise of honest
business judgment or for losses incurred in the good faith performance of their
duties when performed with such care as an ordinarily prudent person would use.
As a result of the business judgement rule, a Manager may not be held liable for
mistakes made or losses incurred in the good faith exercise of reasonable
business judgment. Accordingly, provision has been made in the Operating
Agreement that the Manager shall have no liability to the Fund for losses
arising out of any act or omission by the Manager, provided that the Manager
determined in good faith that its conduct was in the best interest of the Fund
and, provided further, that its conduct did not constitute fraud, negligence or
misconduct. As a result, purchasers of Units may have a more limited right of
action in certain circumstances than they would in the absence of such a
provision in the Operating Agreement specifically defining the Manager's
standard of care.
The Operating Agreement also provides that, to the extent permitted by
law, the Fund shall indemnify the Manager and its Affiliates providing services
to the Fund against liability and related expenses (including attorneys' fees)
incurred in dealings with third parties, provided that the conduct of the
Manager is consistent with the standards described in the preceding paragraph. A
successful claim for such indemnification would deplete Fund assets by the
amount paid. The Manager shall not be indemnified against any liabilities
arising under the Securities Act of 1933. The Fund shall not pay for any
insurance covering liability of the Manager or any other persons for actions or
omissions for which indemnification is not permitted by the Operating Agreement.
Subject to the fiduciary relationship, the Manager has broad
discretionary powers to manage the affairs of the Fund under the terms of the
Operating Agreement and under the California Act. Generally, actions taken by
the Manager are not subject to vote or review by the Holders, except to the
limited extent provided in the Operating Agreement and under California law.
MANAGEMENT
The Manager
The Manager is ATEL Financial Corporation (the "Manager" or "AFC"), a
California corporation formed in 1977 under the name All Type Equipment Leasing,
Inc. The Manager's offices are located at 235 Pine Street, 6th Floor, San
Francisco, California 94104, and its telephone numbers are 415/989-8800 and
800/543-ATEL. Its officers have extensive experience with transactions involving
the acquisition, leasing, financing and disposition of equipment, as more fully
described below and in Exhibit A hereto. The Manager and its Affiliates are
sometimes collectively referred to below as "ATEL" for convenience.
Since its organization in 1977, ATEL has been active in several areas
within the equipment leasing industry, including:
- originating and financing leveraged and single investor lease
transactions for corporate investors,
- acting as a broker/packager by arranging equity and debt participants
for equipment lease transactions originated by other leasing companies,
and
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- consulting on the pricing and structuring of equipment lease
transactions for banks, leasing companies and corporations.
The Manager has organized eight prior public limited partnerships to
acquire and lease equipment. During the past 18 years, ATEL has participated in
structuring and/or arranging lease transactions involving aggregate equipment
costs in excess of $1 billion.
All of the outstanding stock of ATEL Financial Corporation is held by
ATEL Capital Group ("ACG"). The outstanding voting stock of ATEL Capital Group
is owned 75% by A.J. Batt and 25% by Dean L. Cash. Each of ATEL Leasing
Corporation ("ALC"), ATEL Equipment Corporation ("AEC") and ATEL Investor
Services ("AIS") is a wholly- owned subsidiary of ATEL Capital Group which will
perform services for the Fund under the direction of the Manager. Acquisition
services will be performed for the Fund by ALC, equipment management and asset
disposition services will be performed by AEC, and AIS will perform partnership
management, administration and investor services. Finally, the Dealer Manager,
ATEL Securities Corporation ("ASC"), is a wholly-owned subsidiary of ATEL
Financial Corporation.
The officers and directors of ATEL Capital Group, ATEL Financial
Corporation and their Affiliates are as follows:
Name Positions
---- ---------
A.J. Batt ........... Chairman of the Board of Directors of ACG, AFC, AVI, AEC,
AIS and ASC; President and Chief Executive Officer of ACG,
AFC, and AEC
Dean L. Cash ........ Director, Executive Vice President and Chief Operating
Officer of ACG, AFC and AEC; Director, President and Chief
Executive Officer of AVI, AIS and ASC
Paritosh K. Choksi... Director, Senior Vice President and Chief Financial
Officer of ACG, AFC, AVI, AIS and AEC
Donald E. Carpenter.. Controller of ACG, AFC, AVI, AEC and AIS; Chief Financial
Officer of ASC
Vasco H. Morais...... Senior Vice President and General Counsel for ACG, AFC,
AVI, AIS and AEC
John P. Scarcella.... Senior Vice President of ASC
A. J. Batt, age 62, founded ATEL in 1977 and has been its president and
chairman of the board of directors since its inception, and a director of the
Dealer Manager since its organization in October, 1985. From 1973 to 1977, he
was employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in equipment
financing for major corporations. From 1967 to 1973 Mr. Batt was a senior
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technical representative for General Electric Corporation, involved in
sales and support services for computer time- sharing applications for
corporations and financial institutions. Prior to that time, he was employed by
North American Aviation as an engineer involved in the Apollo project. Mr. Batt
received a B.Sc. degree with honors in mathematics and physics from the
University of British Columbia in 1961. Mr. Batt is qualified as a registered
principal with the NASD.
Dean L. Cash, age 48, joined ATEL as director of marketing in 1980 and
has been a vice president since 1981, executive vice president since 1983 and a
director since 1984. He has been a director of the Dealer Manager since its
organization and its president since 1986. Prior to joining ATEL, Mr. Cash was a
senior marketing representative for Martin Marietta Corporation, data systems
division, from 1979 to 1980. From 1977 to 1979, he was employed by General
Electric Corporation, where he was an applications specialist in the medical
systems division and a marketing representative in the information services
division. Mr. Cash was a systems engineer with Electronic Data Systems from 1975
to 1977, and was involved in maintaining and developing software for commercial
applications. Mr. Cash received a B.S. degree in psychology and mathematics in
1972 and an M.B.A. degree with a concentration in finance in 1975 from Florida
State University. Mr. Cash is an arbitrator with the American Arbitration
Association and is qualified as a registered principal with the NASD.
Paritosh K. Choksi, age 46, joined ATEL in 1999 as a director, senior
vice president and its chief financial officer. Prior to joining ATEL, Mr.
Choksi was chief financial officer at Wink Communications Inc. from 1997 to
1999. From 1977 to 1997, Mr. Choksi was with Phoenix American Incorporated, a
financial services and management company, where he held various positions
during his tenure, and was senior vice president, chief financial officer and
director when he left the company. Mr. Choksi was involved in all corporate
matters at Phoenix and was responsible for Phoenix's capital market needs. He
also served on the credit committee overseeing all corporate investments,
including its venture lease portfolio. Mr. Choksi was part of the executive
management team which caused Phoenix's portfolio to grow from $50 million in
assets to over $2 billion. Mr. Choksi received a bachelor of technology degree
in mechanical engineering from the Indian Institute of Technology, Bombay; and
an M.B.A. degree from the University of California, Berkeley.
Donald E. Carpenter, age 49, joined ATEL in 1986 as controller. Prior
to joining the corporate Manager, Mr. Carpenter was employed as an audit
supervisor with Laventhol & Horwath, certified public accountants in San
Francisco, California, from 1983 to 1986. From 1979 to 1983, Mr. Carpenter was
employed by Deloitte Haskins & Sells, certified public accountants in San Jose,
California. From 1971 to 1975, Mr. Carpenter was a supply officer in the U.S.
Navy. Mr. Carpenter received a B.S. degree in mathematics (magna cum laude) from
California State University, Fresno in 1971 and completed a second major in
accounting in 1978. Mr. Carpenter has been a California certified public
accountant since 1981. He is qualified as a registered principal with the NASD.
Vasco H. Morais, age 40, joined ATEL in 1989 as general counsel. Mr.
Morais manages ATEL's legal department, which provides legal and contractual
support in the negotiating, drafting, documenting, reviewing and funding of
lease transactions. In addition, Mr. Morais advises on general corporate law
matters, and assisting on securities law issues. From 1986 to 1989, Mr. Morais
was employed by the BankAmeriLease Companies, Bank of America's equipment
leasing subsidiaries, providing in-house legal support on the documentation of
tax-oriented and non-tax oriented direct and leveraged lease transactions,
vendor leasing programs and general corporate matters. Prior to the
BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital Companies
in the Corporate and Securities Legal Department involved in drafting and
reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley; a J.D. degree in 1986 from Golden Gate University Law
School; and an M.B.A. (Finance) degree from Golden Gate University in 1997. Mr.
Morais has been an active member of the State Bar of California since 1986.
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John P. Scarcella, age 37, is senior vice president of ATEL Securities
Corporation. He joined the Dealer Manager as vice president of broker dealer
relations in 1992. He is involved in the marketing of securities offered by the
Dealer Manager. Prior to joining ATEL Securities Corporation, from 1987 to 1991,
he was employed by Landsing Pacific Fund, a real estate investment trust in San
Mateo, California and acted as director of investor relations. From 1984 to
1987, Mr. Scarcella acted as broker dealer representative for Landsing Capital
Corporation, where he was involved in the marketing of partnerships and REITs.
Mr. Scarcella received a B.S.C. degree with an emphasis in investment finance in
1983 and an M.B.A. degree with a concentration in marketing in 1991 from Santa
Clara University.
Selection and Management of Investments
ATEL Leasing Corporation, will have primary responsibility for
selecting and negotiating potential acquisitions and leases of equipment,
subject to the Manager's supervision and approval. The Manager's Investment
Committee will approve any acquisition before it is consummated. The Investment
Committee currently consists of A.J. Batt, Dean L. Cash, Paritosh K. Choksi and
Donald E. Carpenter.
ATEL Equipment Corporation will manage the Fund's portfolio of
Equipment, subject to the Manager's supervision. Management services to be
provided by AEC include collection of lease payments from the lessees of
Equipment, re-leasing services upon termination of leases, inspection of
Equipment, acting as a liaison between lessees and vendors, general supervision
of lessees and vendors to ensure that the Equipment is being properly used and
operated by lessees, arranging for maintenance and related services with respect
to the Equipment and the supervision, monitoring and review of others performing
services for the Fund. Third parties may participate in managing or may
separately manage Equipment for which they will receive a fee from the Fund.
Management Compensation
The Fund does not pay the officers or directors of the Manager or its
Affiliates any compensation. However, the Fund will pay the Manager and its
Affiliates the Asset Management Fee for their services to the Fund and the
Manager will have a Carried Interest in the Fund as a Member equal to 7.5% of
Fund allocations of Distributions, Net Income and Net Loss. Furthermore, the
Fund will reimburse the Manager and its Affiliates for certain costs incurred on
behalf of the Fund, including the cost of certain personnel (excluding
controlling persons of the Manager) who will be engaged by the Manager to
perform administrative, accounting, secretarial, transfer and other services
required by the Fund. Such individuals may also perform similar services for the
Manager, its Affiliates and other investment programs to be formed in the
future.
Changes in Management
The Operating Agreement provides that the Manager may be removed as
Manager at any time upon the vote of Holders owning more than 50% of the total
outstanding Units entitled to vote, and Holders have the right to elect a
successor Manager in place of the removed Manager by a similar vote. The Manager
may only withdraw voluntarily from the Fund with the approval of Holders owning
in excess of 50% of the Units entitled to vote on Fund matters. The Holders have
no voice in the election of directors or appointment of officers of the Manager
or its parent, ATEL Capital Group, and the capital stock of such entities can be
transferred without the consent of the Fund or the Holders.
The by-laws of the Manager provide for a maximum of three directors.
The by-laws can be amended to increase the number of directors either by a vote
of stockholders or of directors. In the event of a vacancy or increase in the
number of members of the board of directors, the remaining directors may elect
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<PAGE>
the members to serve until the next annual meeting of directors. Directors
are otherwise elected annually by vote of the stockholders, and the directors
appoint corporate officers to serve at the will of the board.
The Dealer Manager
ATEL Securities Corporation (the "Dealer Manager") was organized in
October 1985 principally for the purpose of assisting in the distribution of
securities of programs to be sponsored by the Manager and its Affiliates. The
Dealer Manager became a member of the NASD in February 1986. The Dealer Manager
is a wholly-owned subsidiary of ATEL. The Dealer Manager will provide certain
wholesaling services to the Fund in connection with the distribution of the
Units offered hereby.
PRIOR PERFORMANCE SUMMARY
The information presented in this section and in the tables included as
Exhibit A to this prospectus represents historical results of prior equipment
leasing programs sponsored by the Manager and its affiliates. Investors in the
Fund should not assume that they will experience investment results comparable
to those experienced by investors in prior programs.
Since July 28, 1977, the Manager and its Affiliates have financed,
structured or arranged equity and debt participations for equipment leasing
transactions involving total equipment costs in excess of $1 billion. The
Manager has sponsored and syndicated eight prior public equipment leasing
programs (collectively referred to as the "Prior Programs"). In addition,
beginning in August 1999, ATEL sponsored ATEL Venture Fund I, LLC, a private
fund formed to engage exclusively in "venture leasing", a different primary
investment objective than that of the Fund or the Prior Programs.
The first Prior Program, ATEL Cash Distribution Fund ("ACDF"),
commenced a public offering of up to $10,000,000 of its equity interests on
March 11, 1986. ACDF terminated its offering on December 18, 1987 after raising
a total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF public acquired a
variety of types of equipment with a total purchase cost of approximately
$11,133,679. All of such equipment had been sold and the partnership was
terminated as of December 31, 1997. Through its liquidation, ACDF made cash
distributions to its investors in the aggregate amount of $1,121.03 per
$1,000 invested. Of this amount a total of $244.89 represents investment income
and $876.14 represents return of capital.
The second Prior Program, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its equity interests on January 4, 1988. ACDF II
terminated its offering on January 3, 1990 after raising a total of $35,000,000
in offering proceeds from a total of approximately 3,100 investors, all of which
proceeds have been committed to equipment acquisitions, organization and
offering expenses and capital reserves. ACDF II acquired a variety of types of
equipment with a total purchase cost of approximately $52,270,536. All of
such equipment had been sold and the partnership was terminated as of December
31, 1998. ACDF II made total cash distributions to its investors in the
aggregate amount of $1,222.63 per $1,000 invested. Of this amount a total of
$335.43 represents investment income and $887.20 represents return of capital.
The third Prior Program, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its equity interests on January 4, 1990. ACDF III
terminated its offering on January 3, 1992 after raising a total of $73,855,840
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in offering proceeds from a total of approximately 4,822 investors, all of
which proceeds have been committed to equipment acquisitions, estimated
organization and offering expenses and capital reserves. ACDF III had acquired a
variety of types of equipment with a total purchase cost of approximately
$99,629,941 as of December 31, 1999. Of such equipment, items representing an
original purchase cost of approximately $93,643,805 had been sold as of December
31, 1999. Through December 31, 1999, ACDF III had made cash distributions to its
investors in the aggregate amount of $1,282.31 per $1,000 invested. Of this
amount a total of $351.28 represents investment income and $931.03 represents
return of capital.
The fourth Prior Program, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its equity interests on
February 4, 1992. ACDF IV terminated its offering on February 3, 1993 after
raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF IV had acquired a variety of types of equipment with a total
purchase cost of approximately $108,734,880 as of December 31, 1999. Of such
equipment, items representing an original purchase cost of approximately
$84,464,176 had been sold as of December 31, 1999. Through December 31, 1999,
ACDF IV had made cash distributions to its investors in the aggregate amount of
$1,007.87 per $1,000 invested. Of this amount a total of $261.26 represents
investment income and $746.61 represents return of capital.
The fifth Prior Program, ATEL Cash Distribution Fund V ("ACDF V"),
commenced a public offering of up to $125,000,000 of its equity interests in
February 1993. ACDF V terminated its offering in November 1994, after raising a
total of $125,000,000 in offering proceeds from a total of approximately 7,217
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF V had
acquired a variety of types of equipment with a total purchase cost of
approximately $186,995,157 as of December 31, 1999. Of such equipment, items
representing an original purchase cost of approximately $67,403,080 had been
sold as of December 31, 1999. Through December 31, 1999, ACDF V had made cash
distributions to its investors in the aggregate amount of $701 per $1,000
invested. Of this amount a total of $137.73 represents investment income and
$563.27 represents return of capital.
The sixth Prior Program, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its equity interests in
November 1994. ACDF VI terminated its offering in November 1996, after raising a
total of $125,000,000 in offering proceeds from a total of approximately 6,401
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF VI had
acquired a variety of types of equipment with a total purchase cost of
$208,277,121 as of December 31, 1999. Of such equipment, items representing an
original purchase cost of approximately $16,016,244 had been sold as of December
31, 1999. Through December 31, 1999, ACDF VI had made cash distributions to its
investors in the aggregate amount of $475.58 per $1,000 invested. All of this
amount represents return of capital.
The seventh Prior Program, ATEL Capital Equipment Fund VII ("ACEF VII"),
commenced a public offering of up to $150,000,000 of its equity interests in
November 1996. ACEF VII terminated its offering as of November 29, 1998, after
raising a total of $150,000,000 in offering proceeds, all of which proceeds have
been committed to equipment acquisitions, estimated organization and offering
expenses and capital reserves. ACEF VII had acquired a variety of types of
equipment with a total purchase cost of $287,743,680 as of December 31, 1999. Of
such equipment, items representing an original purchase cost of approximately
$8,132,789 had been sold as of December 31, 1999. Through December 31, 1999,
ACEF VII had made cash distributions to its investors in the aggregate amount of
$270.61 per $1,000 invested. Of this amount a total of $32.19 represents
investment income and $238.42 represents return of capital.
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The eight Prior Program, ATEL Capital Equipment Fund VIII ("ACEF
VIII"), commenced a public offering of up to $150,000,000 of its equity
interests in December 1998. ACEF VIII expects to terminate its offering on or
before Deceber 7, 2000. As of June 30, 2000, it had raised a total of $_________
in offering proceeds, all of which proceeds have been committed to equipment
acquisitions, estimated organization and offering expenses and capital reserves.
ACEF VIII had acquired a variety of types of equipment with a total purchase
cost of $____________ as of June 30, 2000. Of such equipment, items representing
an original purchase cost of approximately $__________ had been sold as of June
30, 2000. Through June 30, 2000, ACEF VIII had made cash distributions to its
investors in the aggregate amount of $_______ per $1,000 invested. Of this
amount a total of $_______ represents investment income and $_______ represents
return of capital.
Although certain of the Prior Programs have experienced lessee defaults
in the ordinary course of business, none of the Prior Programs has experienced
an unanticipated rate of default or other major adverse business developments
which the Manager believes will impair its ability to meet its investment
objectives. As of June 30, 2000, the Prior Programs have acquired equipment with
a total purchase cost of approximately $_____ million during a period of over
fourteen years since the date the first Prior Program commenced operations.
Aggregate losses from material lessee defaults on these transactions have been
approximately $___ million, or approximately ____% of the assets acquired,
substantially less than the amount assumed by the Manager and its Affiliates in
structuring these portfolios as the losses to be anticipated in the ordinary
course of leasing business.
The Prior Programs have investment objectives which are similar to
those of the Fund. The factors considered by the Manager in determining that the
investment objectives of the prior programs were similar to those of the Fund
include the types of equipment to be acquired, the structure of the leases to
such equipment, the credit criteria for lessees, the intended investment cycles,
the reinvestment policies and the investment goals of each program. Therefore
all of the information set forth in the tables included in Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
In Tables I through III information is presented with respect to all
Prior Programs sponsored by the Manager and its Affiliates which completed their
offerings of interests within the five-year period ending December 31, 1999,
except that ACDF VIII has not completed its public offering as of the date
hereof. Accordingly, the tabular information concerning ACDF VIII does not
reflect results of an operating period after completion of its funding. Table V
includes information regarding all acquisitions of equipment by Prior Programs.
Table VI includes information regarding all dispositions of equipment by Prior
Programs during the five year period ending December 31, 1999. Table IV includes
information concerning the two Prior Programs that had completed their
respective operations as of December 31, 1999.
The following is a list of the tables set forth in Exhibit A:
Table I -Experience in Raising and Investing Funds
Table II - Compensation to the Manager and Affiliates
Table III - Operating Results of Prior Programs
Table IV - Results of Completed Program
Table V - Acquisition of Equipment by Prior Programs
Table VI - Sales or Disposals of Equipment
The Manager will provide to any investor, upon written request and without
charge, copies of the most recent Annual Reports on Form 10-K filed with the
Securities and Exchange Commission by each of the Prior Programs, and will
provide to any investor, for a reasonable fee, copies of the exhibits to such
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reports. Investors may request such information by writing to ATEL Investor
Services, Inc. at 235 Pine Street, 6th Floor, San Francisco, CA 94104 or by
calling the Manager at (415) 989-8800.
INCOME, LOSSES AND DISTRIBUTIONS
The taxable income and taxable loss of the Fund (the "Net Income and
Net Loss") and all Fund cash distributions shall be allocated
- 92.5% to investors and
- 7.5% to the Manager as the Carried Interest.
Allocations of Net Income and Net Loss
The Fund will close its books as of the end of each quarter and
allocate Net Income, Net Loss and cash distributions on a daily basis, i.e.,
Fund items will be allocated to the investors in the ratio in which the number
of Units held by each of them bears to the total number of Units held by all as
of the last day of the fiscal quarter with respect to which such Net Income, Net
Loss and Distributions are attributable; provided, however, that, with respect
to Net Income, Net Loss and cash distributions attributable to the offering
period of the Units (including the full quarter in which the offering
terminates), such Net Income, Net Loss and cash distributions shall be
apportioned in the ratio in which (i) the number of Units held by each investor
multiplied by the number of days during the period the investor owned the Units
bears to (ii) the amount obtained by totaling the number of Units outstanding on
each day during such period. No Net Income, Net Loss and cash distributions with
respect to any quarter shall be allocated to Units repurchased by the Fund
during such quarter, and such Units shall not be deemed to have been outstanding
during such quarter for purposes of the foregoing allocations. Transfers of
Member interests will not be effective for any purpose until the first day of
the following quarter.
Timing of Distributions
Fund cash distributions are generally made and allocated to Holders on
a quarterly basis. However, the Manager will determine amounts available for
distributions on a monthly rather than quarterly basis. All investors will be
entitled to elect to receive distributions monthly rather than quarterly by
designating such election in a written request delivered to the Manager. An
initial election to receive monthly rather than quarterly distributions may be
made at the time of subscription by designating such election on the
Subscription Agreement. Thereafter, each investor may during each fiscal quarter
designate an election to change the timing of distributions payable to the
investor for the ensuing fiscal quarter by delivering to the Manager a written
request. Investors who have previously elected monthly distributions may at such
time elect to return to quarterly distributions and those receiving quarterly
distributions may elect monthly distributions for the following quarter.
Allocations of Distributions
Distributions will be allocated among investors on the same basis as
Net Income and Net Loss. Amounts to be distributed will be determined after
payment of Fund operating expenses, establishment or restoration of capital
reserves deemed appropriate by the Manager, and, to the extent permitted,
reinvestment in additional equipment.
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The Fund anticipates that income taxes on a portion of its
distributions will be deferred by depreciation available from its equipment. To
the extent Net Income is reduced by depreciation deductions, distributions will
be considered return of capital for tax purposes and income tax will be deferred
until subsequent years. Until investors receive total distributions equal to
their original investment, a portion of each distribution will be deemed a
return of capital rather than a return on capital. Notwithstanding the
foregoing, however, the Manager intends to make distributions only out of cash
from operations and cash from sales or refinancing and not out of capital
reserves or offering proceeds held pending investment.
The Fund is intended to be self-liquidating. After the sixth year
following the year the offering ends, the Fund will distribute all available
cash, other than reserves deemed required for the proper operation of its
business, including reserves for the upgrading of equipment to preserve its
value or for to purchase equipment the Fund has committed to buy prior to the
end of the reinvestment period.
When the Fund liquidates, and after the Fund pays its creditors
(including investors who may be creditors), the the Fund will distribute any
remaining proceeds of liquidation in accordance with each Member's positive
Capital Account balance. As a result, if cash distributions are made during the
period between the date investors are first admitted to the Fund and the end of
the offering of Units, it is likely that different amounts would be
distributable upon liquidation to the different investors, depending on their
then Capital Account balances. This difference will be substantially reduced or
eliminated by the special allocation to investors of gain from the sale of
equipment which could equalize their Capital Account balances. In particular, if
distributions made during the offering period to investors who were admitted at
the initial admission date reflect a return of capital (or to the extent that
such investors receive allocations of net losses relating to the offering
period), such investors will receive less on liquidation of the Fund than those
who were admitted at the final admission date. Furthermore, to the extent that
those investors who were admitted at the first admission date receive
allocations of net profits relating to the offering period in excess of the
distributions of cash for that same period, such investors will receive more
distributions on liquidation than those investors who are admitted at end of the
offering. As noted above, any differences would be substantially reduced or
eliminated to the extent the Manager equalizes Capital Accounts through special
allocations of gain from the sale of equipment.
Reinvestment
The Fund has the right to reinvest revenues during the period ending
six years after the year in the offering ends. Before the Fund can reinvest in
equipment, however, the Fund must, at a minimum, distribute
- enough cash to allow an investor in a 31% federal income tax bracket to
meet the federal and state income taxes due on income from the
operations of the Fund;
- Through the first full fiscal quarter ending at least six months after
termination of the offering of Units, an amount equal to the lesser of
- a rate of return on their original capital contribution equal
to 3.5% over the average yield on five-year United States
Treasury Bonds for the fiscal quarter immediately preceding
the date of distribution, as published in a national financial
newspaper from time to time (with a minimum of 8% per annum
and a maximum of 10% per annum), or
- 90% of the total amount of cash available for distributions;
and
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- for each quarter during the rest of the reinvestment period, an amount
equal to a rate of return on their original capital contribution equal
to 3.5% over the average yield on five-year United States Treasury
Bonds for the period from the commencement of the offering of Units
through a date six months following the termination date of the
offering (with a minimum of 8% per annum and a maximum of 10% per
annum) as published in a national financial newspaper.
Return of Unused Capital
Any net offering proceeds received by the Fund during the first twelve
months of the offering not committed to investment in equipment by eighteen
months after the beginning of the offering, and any offering proceeds received
in a second year of the offering not committed to investment by a date six
months after the end of the offering (except amounts used to pay operating
expenses or required as reserves) will be distributed to investors pro rata as a
return of capital. In addition, in order to refund to the investors the amount
of Front End Fees attributable to such returned capital, the Manager has agreed
to contribute to the Fund, and the Fund will distribute to investors pro rata,
the amount by which (x) the unused capital so distributed, divided by (y) the
percentage of offering proceeds remaining after payment of all Front End Fees,
exceeds the amount of unused capital distributed.
Cash from Reserve Account
The Operating Agreement requires that the Fund initially establish a
cash reserve for general working capital purposes in an amount equal to not less
than 1/2 of 1% of the offering proceeds (equal to $6,000 if the minimum Units
are sold and $750,000 if the maximum Units are sold). Any cash reserves used
need not be restored, and, if restored, may be restored from the operating
revenues of the Fund. Distributions of cash reserves will be allocated and
distributed in the same manner as cash proceeds from sales of equipment. Cash
reserves which the Manager deems no longer required as reserves may be
distributed or invested by the Fund.
Sources of Distributions - Accounting Matters
During the initial years, the Fund may experience loss in accordance
with generally accepted accounting principles. A substantial portion of any loss
would likely be caused by depreciation which is a non-cash expense. As a result,
distributions made in the initial years of the Fund may be considered to be a
return of capital and not investment income.
Without regard to the accounting method adopted, to the extent
equipment is not producing revenues in excess of operating expenses, debt
service and other contractual obligations, distributions may be considered a
return of capital.
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CAPITALIZATION
The capitalization of the Fund, as of the date of this Prospectus and
as adjusted to reflect the issuance and sale of the Units offered hereby
assuming the minimum 120,000 Units and the maximum 15,000,000 Units are sold is
as follows:
As of Minimum Maximum
the Date 120,000 15,000,000
hereof Units Units
------ ----------- --------------
Units of Member
Interest
($10 per Unit) 500 1,200,500 150,000,500
------- --------- -----------
Total Capitalization $ 500 $1,200,500 $150,000,500
Less Estimated
Organization
and Offering Expenses - 144,000 20,250,000
------ -------- ----------
Net Capitalization $ 500 $1,056,500 $129,750,500
------- --------- -----------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Until receipt and acceptance of subscriptions for 120,000 Units, the
Fund will not commence active operations.
After the minimum capital is received, subscription proceeds will be
released to the Fund from escrow and applied to the payment or reimbursement of
Organization and Offering Expenses, leaving estimated net proceeds available for
investment and operations of $1,056,000. As additional subscriptions for Units
are received, the Fund will experience a relative increase in liquidity and a
relative decrease in liquidity as capital is expended in the purchase and lease
of Equipment.
The Fund will acquire Equipment with cash and debt. The Fund may
borrow on a secured or unsecured basis amounts up to 50% of the aggregate
purchase price of equipment, and intends to borrow the maximum amount permitted.
The Fund currently has no arrangements with, or commitments from, any lender
with respect to debt financing. The Manager anticipates that any acquisition
financing or other borrowing will be obtained from institutional lenders. Except
as discussed below in connection with asset securitization financing, the Fund
does not currently anticipate that it will engage in any material hedging
transactions.
Until required for the acquisition or operation of equipment, the
offering proceeds will be held in short-term, liquid investments. The Fund is
required by the Operating Agreement to establish an initial working capital
reserve in the amount of 1/2 of 1% of the Gross Proceeds.
For financial reporting purposes, equipment on operating leases will
generally be depreciated using the straight-line method, over periods equal to
the terms of the related leases to the equipment, down to an amount equal to the
estimated residual value of the equipment at the end of the related leases. The
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treatment for financial reporting purposes differs from cost recovery for
tax purposes in which the IRS prescribes certain useful lives for each type of
equipment and the Code provides specific accelerated rates of depreciation over
those useful lives.
The potential effects of inflation on the Fund are difficult to
predict. If the general economy experiences significant rates of inflation,
however, it could affect the Fund in a number of ways. The cost of equipment
acquisitions could increase with inflation, but cost increases could be offset
by the Fund's ability to increase lease rates in an inflationary market.
Revenues from existing leases would not generally increase with inflation, as
the Fund does not expect to provide for rent escalation clauses tied to
inflation in its leases. Nevertheless, the anticipated residual values to be
realized upon the sale or re-lease of equipment upon lease terminations (and
thus the overall cash flow from the Fund's leases) may be expected to increase
with inflation as the cost of similar new and used equipment increases.
Fluctuations in prevailing interest rates could also affect the
Fund. The cost of capital reflected in interest rates is a significant factor in
determining market lease rates and the pricing of lease financing generally.
Higher interest rates could affect the cost of Fund borrowing, reducing its
yield on leveraged investments or reducing the desirability of leverage. The
Fund would also expect that increases or decreases in prevailing interest rates
would generally result in corresponding increases or decreases in available
lease rates on new leases. Except as discussed below, interest rate fluctuations
would generally have little or no effect on existing leases, as rates on such
leases would generally be fixed without any adjustment related to interest
rates.
The Fund may incur short term bridge financing bearing a variable
interest rate, but this borrowing would involve little exposure to increased
interest rates because of its limited term. However, the Manager expects that
any asset securitization financing by the Fund will involve borrowing at a
variable interest rate based on an established reference rate. The Manager would
seek to mitigate the Fund's exposure to increases in the interest rate by
engaging in hedging transactions that would effectively fix the interest rate
obligation of the Fund. The Manager's policy will be to incur variable rate
financing only under conditions and terms which limit the potential adverse
effect on the Fund's anticipated return on the related lease transactions. Other
than in short-term bridge financing or asset securitization financing, the
Manager will seek to avoid borrowing under terms which provide for a rate of
interest which may vary. The Manager will attempt to limit any other variable
interest rate borrowing to those instances in which the lessee agrees to bear
the cost of any increase in the interest rate. If such debt is incurred without
a corresponding variable lease payment obligation, the Fund's interest
obligations could increase while lease revenues remain fixed. Accordingly, a
rise in interest rates may increase borrowing costs and reduce the amount of
income and cash available for Distributions. Historically, the interest rates
charged by major banks have fluctuated; as a result, the precise amount of
interest which the Fund may be charged under such circumstances cannot be
predicted.
Year 2000 Compliance
The year 2000 issue is the result of computer programs being 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" (or "Y2K")
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.
The Manager uses, and expects on behalf of the Fund to use,
primarily third party software and has communicated with key software vendors to
ensure that the systems used by the Manager and the Fund are not impaired by the
year 2000 issue. Currently, all of ATEL's critical software systems are believed
by the Manager to be Y2K compliant.
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The ultimate impact of the year 2000 issue on the Fund will depend
to a great extent on the manner in which the issue is addressed by those
businesses whose operational capability is important to the Fund. Failure of
these businesses to be Y2K compliant may impact credit quality or cause a delay
in payments made to the Fund. The Manager has contacted those businesses with
which it currently has material relationships in order to request verification
of Y2K compliance. The Manager believes that each of those entities will have a
material self interest in resolving any year 2000 issue affecting its own
operations.
Equipment to be purchased by the Fund may include technology subject
to the year 2000 issue. Potential year 2000 issues will be among the many
factors considered by the Manager and its affiliates in analyzing and pricing
lease transactions for acquisition by the Fund. The lessees of the equipment
will select such equipment and may be expected to consider year 2000 issues
themselves in determining the suitability of the equipment for the lessee's use.
Most equipment is expected to be subject to fixed term, non-cancellable, triple
net leases. In addition, new equipment may be covered by manufacturer's
warranties. As a result of such triple net provisions and warranties, repairs or
modifications necessary to correct year 2000 issues will most likely be the
responsibility of the manufacturers or the lessees, and the Fund's rights to
lease payments as a triple net lessor will not be affected by any functional
issues affecting the equipment. It is expected that the lease terms for such
equipment will extend well beyond the year 2000.
As a result of the year 2000 issue, the Fund may experience
increased costs resulting from delayed payments from lessees, the costs
associated with the collection of those payments, or costs associated with
manual processing efforts in the event of a Y2K related system failure. In any
event, the Manager does not expect these increased costs to be significant or
that such costs will have any material adverse effect on the operations of the
Fund. Nevertheless, the impact of year 2000 issues cannot be predicted with
certainty and the Fund may be affected both by the impact these issues have on
parties with which it has direct contractual and other relationships as well as
by their impact on financial institutions and the national and international
economy as a whole. Accordingly, there can be no assurance that year 2000 issues
might not have some adverse impact on the operating results experienced by the
Fund.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of all material federal income tax
considerations which may be relevant to a prospective investor. However, it is
impractical to set forth in this prospectus all aspects of federal, state, local
and foreign tax law which may affect an investment in the Fund. Furthermore, the
discussion of various aspects of federal, state, local and foreign taxation
contained herein is based on the Internal Revenue Code, existing laws, judicial
decisions and administrative regulations, rulings and practice, all of which are
subject to change. Each prospective investor should consult his own tax counsel
to satisfy himself as to the tax consequences of his investment.
The Fund's management will prepare its income tax information
returns. The Fund will make a number of decisions on such tax matters as
- the expensing or capitalizing of particular items,
- the proper period over which capital costs may be depreciated or
amortized,
- the allocation of acquisition costs between equipment and management
fees, and
- other similar items.
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Such matters will be handled by the Fund. Tax counsel to the Fund will not
prepare or review the Fund's income tax information returns.
Opinion of Derenthal & Dannhauser
Derenthal & Dannhauser has reviewed this section of the prospectus.
Derenthal & Dannhauser has rendered its opinion that, to the extent the
summaries of federal income tax consequences to the investors set forth in this
section involve matters of law,
- such statements are accurate in all material respects under the
Internal Revenue Code, the Treasury Regulations and existing
interpretations thereof, and
- such statements address fairly the principal aspects of each
material federal income tax issue relating to an investment in
Units.
The opinion of Derenthal & Dannhauser is based upon
- the facts described in this prospectus,
- ATEL's representation of facts to Derenthal & Dannhauser, and
- the assumption that the Fund will operate its business as described
in this prospectus.
Any alteration of the facts may adversely affect the opinion rendered.
Each prospective investor should note that the opinion described
herein represents only Derenthal & Dannhauser's best legal judgment. It has no
binding effect or official status of any kind. The Fund has not requested an IRS
ruling on any matter. There can be no assurance that the IRS will not challenge
any of Derenthal & Dannhauser's opinions.
Treasury Regulations impose standards regarding tax shelter
opinions. For this purpose, a tax shelter is an investment that has, as a
significant or intended feature, the generation of tax losses or tax credits to
shelter taxable income or tax liability from other sources. The Fund is not a
tax shelter within that meaning. Derenthal & Dannhauser's opinion does not
follow the standards applicable to tax shelters opinions.
There are certain issues upon which Derenthal & Dannhauser cannot
express an opinion because:
- the issue is subject to facts that are not presently known and
cannot readily be determined,
- the issue is subject to future events, or
- there is insufficient judicial or other authority upon which a
conclusive opinion can be based.
Classification as a Partnership
ATEL has represented that the Fund will not elect to be treated as a
corporation for federal income tax purposes. If not, under the check-the-box
rules the Fund will be classified as a partnership and not an association
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corporation for federal income tax purposes. The check-the-box rules are
Treasury Regulations issued under Internal Revenue Code Section 7701.
Accordingly, the treatment of the Fund as a partnership for federal income tax
purposes is based upon the present provisions of the Internal Revenue Code and
the Treasury Regulations, which are subject to change. If those provisions were
to be amended, it is possible that the Fund would not qualify as a partnership.
Notwithstanding the preceding, if Units are considered publicly
traded the Fund will be treated as a corporation under the publicly traded
partnership provisions of Internal Revenue Code Section 7704. The Fund will be
treated as publicly traded if Units are
- traded on an established securities market, or
- readily tradable on a secondary market or the substantial equivalent
thereof.
An established securities market includes a securities exchange as well as a
regular over-the-counter market. Treasury Regulations under Internal Revenue
Code Section 7704 state that a secondary market for an entity's interests
generally is indicated
- by the existence of a person standing ready to make a market in the
interests, or
- where the holder of an interest has a readily available, regular and
ongoing opportunity to sell or exchange his interest through a
public means of obtaining or providing information on offers to buy,
sell or exchange interests.
Complicity or participation of the entity is relevant in determining whether
there is public trading of its interests. A partnership will be considered as
participating in public trading where trading in its interests is in fact taking
place and the partnership's governing documents impose no meaningful limitation
on the holders' ability to readily transfer their interests. A partnership's
right to refuse to recognize transfers is not a meaningful limitation unless
such right actually is exercised.
Whether the Units will become readily tradable on a secondary market
or the substantial equivalent thereof cannot be predicted with certainty. The
Units will not be deemed readily tradable on a secondary market or the
substantial equivalent thereof if any of the safe harbors included in the
Treasury Regulations is satisfied. One of these is the 2% safe harbor. If the
sum of the interests in Fund capital or profits that are sold or otherwise
transferred during a tax year does not exceed 2% of the total interests in
capital or profits, then a secondary market or its equivalent in Units will not
exist.
Neither the Fund nor ATEL will have any control over an independent
third person establishing a secondary market in Units. However, the Fund's
operating agreement requires that an investor obtain the consent of ATEL prior
to any transfers of Units. ATEL intends to exercise its discretion in granting
and withholding its consent to transfers so as to fall within the parameters of
the 2% safe harbor. If the Fund complies with the 2% safe-harbor provision of
the Treasury Regulations, Derenthal & Dannhauser is of the opinion that the Fund
will not be considered a publicly traded partnership.
If the Fund were treated for federal income tax purposes as a
corporation in any year,
- instead of there being no tax at the Fund level, the Fund would be
required to pay federal income taxes upon its taxable income;
- state and local income taxes could be imposed on the Fund;
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- losses of the Fund would not be reportable by the investors on their
personal income tax returns;
- any distributions would be taxable to an investor as
- ordinary income to the extent of current or accumulated
earnings and profits, and
- gain from the sale of the investor's Units to the extent any
distribution exceeded such earnings and profits and the tax
basis of such Units;
- distributions would be classified as portfolio income which would
not be available to offset passive activity losses. See "Limitation
on Deduction of Losses - Passive Loss Limitation" below.
Also, a change in status from a partnership to a corporation could result in
taxable income to an investor. The amount of taxable income would equal his
share of the liabilities of the Fund over the adjusted basis of his Units.
Any of the foregoing would substantially reduce the effective yield
on an investment in Units.
The following discussion is based upon the assumption that the Fund
will be classified as a partnership for federal income tax purposes.
Allocations of Profits and Losses
In general, a partner's distributive share of partnership income,
gain, deduction or loss will be determined in accordance with the operating or
partnership agreement. However, if such allocations do not have substantial
economic effect, distributive shares will be determined in accordance with the
partners' interests in the partnership.
An allocation has economic effect under the Treasury Regulations if:
- each partner's share of partnership items is reflected by an
increase or decrease in the partner's capital account;
- liquidation proceeds are distributed in accordance with capital
account balances; and
- any partner with a capital account deficit following the
distribution of liquidation proceeds is required to restore such
deficit.
An allocation can have economic effect even if a partner is not required to
restore a deficit balance in his capital account, but only
- to the extent the allocation does not reduce his capital account
balance below zero; and
- if the operating or partnership agreement contains a qualified
income offset.
An agreement contains a qualified income offset if it provides that a partner
who unexpectedly receives an adjustment, allocation or distribution that reduces
his capital account below zero will be allocated income or gain in an amount and
manner sufficient to eliminate his deficit capital account balance as quickly as
possible.
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Special rules apply to the allocation of deductions attributable to
nonrecourse debt. Such allocations will be respected under the Treasury
Regulations if the partners who are allocated the deductions bear the burden of
the future income related to the previous deductions. In particular, the
following additional elements must be satisfied:
- the operating or partnership agreement must provide for allocations
of nonrecourse deductions in a manner consistent with allocations of
some other significant partnership item related to the property
securing the nonrecourse debt, provided such other allocations have
substantial economic effect;
- all other material allocations and capital account adjustments under
the operating or partnership agreement are recognized under the
Treasury Regulations, and
- the operating or partnership agreement contains a minimum gain
chargeback.
A minimum gain chargeback provides that, if there is a net decrease in
partnership minimum gain during a tax year, all partners will be allocated items
of partnership income and gain in proportion to, and to the extent of, an amount
equal to the portion of such partner's share of the net decrease in partnership
minimum gain. The amount of partnership minimum gain is determined by computing
the amount of gain, if any, that would be realized by the partnership if it
disposed of the property subject to the nonrecourse liability in full
satisfaction thereof.
The Fund's operating agreement prohibits losses from being allocated
to an investor that would cause a deficit capital account in excess of the
investor's share of Fund minimum gain. Nonrecourse deductions will be allocated
in the same manner as operating profits and losses. The operating agreement
contains a minimum gain chargeback provision and a qualified income offset
provision that are intended to comply with the provisions of the Treasury
Regulations. The operating agreement provides that capital accounts will be
maintained in accordance with the provisions of the Treasury Regulations. The
operating agreement also provides that proceeds on liquidation will be
distributed in accordance with positive capital account balances. Therefore,
Derenthal & Dannhauser is of the opinion that it is more likely than not that
the allocations included in the operating agreement would not be significantly
modified if challenged by the IRS.
The economic effect of the Fund allocations also must be
"substantial." The meaning and scope of the substantiality requirements under
the Treasury Regulations are unclear at this time. Based on current Treasury
Regulations, Derenthal & Dannhauser does not believe the Fund allocations
present any material substantiality issues. Consequently, as stated above,
Derenthal & Dannhauser is of the opinion that it is more likely than not that
the Fund's allocations would not be significantly modified by the IRS. However,
no assurance can be given that the IRS will not disagree. If the IRS were
successful in challenging the Fund's allocations, the investors' shares of tax
loss could decrease or their shares of taxable income could increase.
Income Recognition
The Fund will prepare its tax returns using the accrual method of
accounting. Under the accrual method, the Fund will include in income items such
as interest and rentals as and when earned by the Fund, whether or not received.
Thus, the Fund may be required to recognize income sooner than would be the case
under the cash receipts and disbursements method of accounting.
Some leases provide for varying rental payments over the years.
Section 467 of the Internal Revenue Code can require a lessor to take such
rental payments into income as if the rent accrued at a constant level rate.
This provision applies to certain sale-leaseback transactions and certain
long-term leases. Certain of the Fund's leases may provide for varying rental
payments. If so, Section 467 requires the Fund to accrue the rental payments on
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such leases at a constant level rate. This could result in investors
receiving increased allocations of taxable income or reduced allocations of loss
in earlier years, without any increase in distributions until subsequent years.
An additional consequence could be a conversion of a portion of the Fund's
rental income from any such lease to interest income. Rental income generally
constitutes passive income. Interest income generally constitutes portfolio
income. See "Limitation on Deduction of Losses - Passive Loss Limitation."
Taxation of Investors
As long as the Fund is treated as a partnership for federal income
tax purposes, it will not be subject to any federal income taxes. Nonetheless,
the Fund will file federal partnership information tax returns for each calendar
year.
Each investor will be required to report on his own federal income
tax return his share of Fund items of income, gain, loss, deduction, or credit.
An investor will be subject to tax on his distributive share of Fund income
whether or not any distribution is made to him.
If the amount of a distribution to an investor for any year exceeds
the investor's share of the Fund's taxable income for the year, the excess will
constitute a return of capital. A return of capital is applied first to reduce
the tax basis of the investor's Units. Any amounts in excess of such tax basis
generally will be taxable as a gain from the sale of a capital asset. However,
all or a portion of a distribution to an investor in exchange for
- an interest in inventory items which have substantially appreciated
in value, or
- unrealized receivables
will generally result in the receipt of ordinary income. The terms inventory
items and unrealized receivables are specially defined for this purpose. The
term unrealized receivables includes depreciation recapture.
Limitation on Deduction of Losses
There are limitations on an investor's ability to deduct his
distributive share of Fund losses. Among them are:
- losses will be limited to the extent of the investor's tax basis in
his Units;
- losses will be limited to the amounts for which the investor is
deemed at risk; and
- losses will be limited to the investor's income from passive
activities.
Deduction of losses attributable to activities not engaged in for profit also
are limited.
Tax Basis. Initially, an investor's tax basis for his Units will be
equal to the price paid for the Units. Each investor will increase the tax basis
for his Units by
- his allocable share of the Fund's taxable income, and
- any increase in his share of the Fund's nonrecourse liabilities,
and will decrease the tax basis for his Units by
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- his allocable share of the Fund's tax loss,
- the amount of any distributions, and
- any reduction in his share of Fund nonrecourse liabilities.
If the tax basis of an investor should be reduced to zero, the amount of any
distributions and any reduction in Fund nonrecourse liabilities will be treated
as gain from the sale or exchange of the investor's Units.
Subject to the other limitations discussed below, on his own federal
income tax return an investor may deduct his share of the Fund's tax loss to the
extent of the tax basis for his Units. Fund losses which exceed his tax basis
may be carried over indefinitely and, subject to the limitations discussed
below, deducted in any year to the extent his tax basis is increased above zero.
At Risk Rules. Under Internal Revenue Code Section 465, the amount
of losses which may be claimed by an individual or a closely-held corporation
from equipment leasing activities cannot exceed the amount which the investor
has at risk with respect to such activities. A closely-held corporation is a
corporation more than 50% of which is owned directly or indirectly by not more
than five individuals.
The amount at risk is generally equal to the sum of money invested
in the activity. In addition, an investor will be at risk with respect to any
qualified nonrecourse financing used in the investment. An investor's at risk
amount will be decreased by his share of Fund losses and distributions. An
investor's at risk amount will be increased by his share of Fund income.
The total amount of money paid by each investor for his Units will
be considered at risk. Fund indebtedness is not expected to be considered at
risk. Accordingly, an investor will only be able to deduct his share of Fund
losses under the at risk rules in an amount equal to the purchase price of his
Units, as adjusted for Fund income, losses and distributions. Any losses in
excess of an investor's at risk amount will be treated as a deduction in
succeeding taxable years, again subject to the at risk limitations. An investor
must recapture previously allowed losses if the investor's amount at risk at the
end of the year is reduced below zero.
Even if an investor can claim Fund losses under the at risk rules,
the investor is still subject to the other limits on deduction discussed herein.
Under the Internal Revenue Code, the Fund will be permitted to
aggregate its equipment leasing activities only with respect to equipment placed
in service during the same taxable year. This could limit an investor's
deduction for losses with respect to certain equipment, even though the investor
must recognize income with respect to other equipment.
Passive Loss Limitation. Internal Revenue Code Section 469 limits
the amount of losses that individuals and certain other taxpayers may claim from
an activity in which the taxpayer does not materially participate. Under this
limitation, net losses from a passive activity may only be deducted against net
income from passive activities. Passive activity losses may not be used to
offset compensation income or other forms of active income. Also, passive
activity losses may not be used to offset interest, dividends and other forms of
portfolio income.
To the extent the Fund enters into true leases for Federal income
tax purposes, the equipment leasing activities of the Fund will be passive
activities. See "Tax Status of Leases" below in this section. Fund losses from
passive activities are considered to be passive activity losses. Most investors
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will only be able to deduct their share of Fund passive activity losses to
the extent they have passive income from other sources. Any excess Fund passive
activity losses will be suspended and carried forward indefinitely. Suspended
passive activity losses may be used to offset passive activity income in future
years. Suspended passive activity losses also may be claimed in full against all
types of income if an investor disposes of all of his Units in a fully taxable
transaction to an unrelated person.
The Fund will have portfolio income
- to the extent its investments constitute financing leases or secured
loans, rather than true leases, and
- to the extent of any dividends it receives from equity interests in
venture lease investments.
The Fund's receipt of the equity interests themselves may constitute a taxable
event. The income therefrom could be passive or portfolio, depending upon the
circumstances. Therefore, investors may be required to recognize taxable
portfolio income and pay tax thereon in years in which they also are allocated
passive losses which cannot be used by them. Counsel has rendered no opinion
regarding the classification of financing leases, secured loans, or equity
interests.
The passive loss limitation is applied after the at risk limitation.
Thus, if a loss is disallowed under the at risk rules for a particular year, it
will not again be disallowed by the passive loss limitation for such year.
Rather, for the year in which the investor becomes at risk in the activity, the
suspended at risk loss will become subject to the passive loss limitation.
Hobby Losses. Section 183 of the Internal Revenue Code limits
deduction of losses from activities not engaged in for profit. Whether an
activity is engaged in for profit is based on the facts and circumstances from
time to time. Although one of the objectives of the Fund is to provide investors
with distributions, there can be no assurance that the Fund will be deemed to be
engaged in an activity for profit. It is conceivable that the IRS may assert
that the Fund is not engaged in an activity for profit. Prospective investors
should consult their own tax advisers regarding the impact of Internal Revenue
Code Section 183 on their particular situations.
Tax Status of Leases
Whether a specific lease is categorized as a lease rather than as a
sale or a financing for federal income tax purposes involves a factual
determination. Accordingly, no assurance can be given that the Fund's leases of
equipment will be treated as leases by the IRS. If they are treated as sales or
financings rather than leases, the Fund and the investors would not be entitled
to cost recovery deductions with respect to such leases. On the other hand, a
portion of the lease rental payments would be deemed to constitute amortization
of such financing or sales proceeds which would not be taxable to the Fund.
The Fund does not intend to apply to the IRS for a ruling that any
leases of equipment will be treated as leases for federal income tax purposes.
No opinion of counsel has been rendered in this regard.
Cost Recovery
MACRS . Under the Modified Accelerated Cost Recovery System, the
cost of depreciable personal property placed in service after 1986 may be
recovered using specified recovery methods over specified recovery periods.
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Under MACRS the cost of most recovery property is recovered using
the 200% declining balance method. For some recovery property, the 150%
declining balance method is utilized. The recovery periods generally range from
three to 20 years.
The Internal Revenue Code contains provisions to prevent taxpayers
from utilizing MACRS on property placed in service prior to January 1, 1987. The
cost of such property is recovered under the Accelerated Cost Recovery System in
effect prior to 1987. In such cases, cost recovery deductions could be less in
the early years and greater in later years than the cost recovery deductions
allowable under MACRS.
The amount by which cost recovery deductions using the 200%
declining balance method exceeds the amount that would have been allowed using
the 150% declining balance method will be an item of tax preference. See
"Alternative Minimum Tax."
Recapture. All cost recovery deductions claimed by Fund investors
will be subject to recapture at ordinary income rates upon the disposition of
the equipment or the investor's Units.
Limitations on the Use of MACRS. Under certain circumstances, in
addition to those set forth above, a taxpayer is required to recover the cost of
property over a period longer than its MACRS recovery period. These
circumstances include:
- property used predominantly outside the United States,
- property used by a foreign or tax-exempt entity,
- property owned by a partnership which has both a tax-exempt entity
and a person who is not a tax-exempt entity
as holders, unless certain exceptions apply.
Tax Consequences Respecting Equity Interests
The Internal Revenue Code includes a myriad of rules respecting the
tax treatment of stock, stock options, stock warrants, and similar items. A
discussion of those provisions is beyond the scope of this prospectus. Investors
should consult with their own tax advisors if they desire more information in
that regard.
The Fund will have taxable income on the receipt of cash lease
payments. Similarly, the Fund could have taxable income on the receipt of equity
interests. However, the Fund's receipt of equity interests will not provide cash
for distribution to the investors. Any tax liability would be paid from an
investor's own funds.
Whether the Fund's receipt of equity interests will result in income
recognition will depend upon various factors, including
- whether or not the transfer of the equity interests by the Fund is
subject to restriction, and
- the nature of the equity interests. For example, the receipt of
marketable stock for no payment would almost always result in the
recognition of income.
These factors will also determine the amount of income, if any, and its
character for purposes of the passive activity rules. See "Limitation on
Deduction of Losses - Passive Loss Limitation" above.
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The Fund's exercise of stock options, warrants and similar
securities could result in the recognition of income.
No opinion of counsel has been rendered with regard to the tax
treatment of equity interests.
Deductibility of Management Fees
The Fund will pay asset management fees for services to be rendered
by ATEL. The Fund intends to deduct the asset management fees. It is possible
that the IRS may challenge the deductibility of all or a portion of the asset
management fees on the basis that
- the amount thereof is excessive,
- all or a portion thereof is payment for other services performed by,
or other value provided by, the recipient thereof, or
- payments for such services is not deductible.
If such a challenge by the IRS were successful, the asserted deductions would be
reduced or eliminated.
Tax Liabilities in Later Years
It is possible that after some years of Fund operations an
investor's tax liabilities may exceed cash distributions to him in corresponding
years. Such a situation would typically arise if the Fund's nondeductible loan
amortization payments on its equipment exceeded its depreciation deductions. It
is possible in such a situation that an investor's tax liabilities could exceed
cash distributions. If so, such excess would be a nondeductible out-of-pocket
expense to an investor. Based on historical experience with similar programs,
ATEL does not believe these events are likely to occur.
Sales or Exchanges of Fund Equipment
On the disposition of equipment, the Fund will realize gain in an
amount equal to the proceeds received minus the basis in the equipment. As a
result of cost recovery deductions, most equipment is expected to have a zero
basis. Proceeds received includes any debt assumed by the transferee.
Gain realized by the Fund on a disposition of equipment will be
taxed as ordinary income to the extent of prior cost recovery deductions taken
by the Fund on the equipment. Unless the Fund is a dealer in the property sold,
any other gain generally will be treated as capital gain.
A dealer is one who holds property primarily for sale to customers
in the ordinary course of business. Whether property is so held as dealer
property depends upon all of the facts and circumstances of the particular
transactions. The Fund intends:
- to purchase equipment for investment only,
- to engage in the business of owning and operating such equipment,
and
- to make occasional sales thereof.
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Accordingly, the Fund does not anticipate that it will be treated as a dealer
with respect to any of its equipment. However, there is no assurance that the
IRS will not take the contrary position.
As stated above, the Fund's gain on a disposition of equipment will
be measured by the difference between the disposition proceeds, and the Fund's
basis in the equipment. Disposition proceeds include the amount of any debt
encumbering the property. Consequently, the amount of tax payable by an investor
as a result of the disposition may exceed his share of the cash proceeds
therefrom. In the event of a foreclosure of a debt on equipment owned by the
Fund, the Fund would realize gain equal to the excess of such indebtedness over
its adjusted tax basis of the equipment. In such event the investors would
realize taxable income although they may not receive any cash distributions as a
result of the foreclosure.
Disposition of Units
The amount of gain which an investor will realize upon the
disposition of his Units will equal the excess of
- the amount realized by the investor, over
- the investor's tax basis in the Units.
Conversely, the amount of loss which an investor will realize upon the
disposition of his Units will equal the excess of
- the investor's tax basis, over
- the amount realized for the Units.
The amount realized on the sale of the Units will include the investor's share
of any Fund liabilities. As a result, a disposition of Units may result in a tax
liability in excess of the cash proceeds.
Such gain or loss generally will be capital gain or loss. In the
case of an individual, any such gain will be subject to tax:
- at a maximum rate of 20%, if the Units have been held for more than
18 months, and
- at a maximum rate of 28%, if the Units have been held for more than
12 months but not more than 18 months.
However, any gain realized on the disposition of a Unit by an investor which is
attributable to unrealized receivables or inventory items will be taxed at
ordinary income rates. Unrealized receivables would include the investor's share
of previous Fund cost recovery deductions. An investor must recognize such cost
recovery recapture in the year of disposition, regardless of the amount of
proceeds received in the year of disposition.
Liquidation of the Fund
The operating agreement provides that on liquidation of the Fund its
assets will be sold. The sale proceeds will be distributed pursuant to the terms
of the operating agreement. Each investor will realize his share of the gain or
loss on the sale of Fund assets. In addition, each investor will recognize gain
or loss measured by the difference between the cash he receives in liquidation
and the adjusted tax basis of his Units. The cash an investor receives will
include the cash constructively received as a result of relief of liabilities.
Gain or loss recognized generally will constitute capital gain or
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loss. However, gain attributable to the recapture of cost recovery deductions
will be taxable as ordinary income. See "Sales or Exchanges of Fund Equipment."
It is anticipated that all or substantially all of any gains will be
attributable to such deductions and taxed as ordinary income.
Fund Elections
Section 754 of the Internal Revenue Code permits an entity such as
the Fund to elect to adjust the tax basis of its
property
- upon the transfer of units by sale or exchange or on the death of a
holder, and
- upon the distribution of property by the fund to a holder.
This is known as a Section 754 election. If the Fund were to make such an
election, then transferees of Units would be treated, for the purpose of
depreciation and gain, as though they had acquired a direct interest in Fund
assets.
A Section 754 election is complex. A Section 754 election increases
the expense of tax accounting. As a result, ATEL does not intend to cause the
Fund to make a Section 754 election. If not, then an investor may have greater
difficulty in selling his Units.
The Internal Revenue Code includes other elections. The Fund may
make various elections for federal tax reporting purposes which could result in
various items of income, gain, loss, deduction and credit being treated
differently for tax purposes than for accounting purposes.
Treatment of Gifts of Units
Generally, no gain or loss is recognized for federal income tax
purposes as a result of a gift of property. There are exceptions to the general
rule. If a gift of a Unit were made at a time when the investor's allocable
share of the Fund's nonrecourse indebtedness exceeded the adjusted tax basis of
his Unit, such investor would realize gain for federal income tax purposes upon
the transfer of such Unit to the extent of such excess. A charitable
contribution of Units also would result in income or gain to the extent that the
transferor's share of nonrecourse liabilities exceeded the adjusted tax basis in
his Units. Gifts of Units may also result in gift tax liability pursuant to the
rules applicable to all gifts of property.
Investment by Qualified Retirement Plans and IRAs
Qualified pension, profit-sharing, stock bonus plans, Keogh Plans
and IRAs are generally exempt from taxation. A qualified retirement plan or an
IRA will have tax liability to the extent that its unrelated business taxable
income exceeds $1,000 during any fiscal year. Unrelated business taxable income
is determined in accordance with Sections 511- 514 of the Internal Revenue Code.
The Fund will be engaged in the business of equipment leasing. The share of a
qualified retirement plan or an IRA of the Fund's business income will
constitute unrelated business taxable income. A qualified retirement plan or IRA
will be required to report its pro rata share of the Fund's business income as
unrelated business taxable income if and to the extent that the investor's
unrelated business taxable income from all sources exceeds $1,000 in any taxable
year.
A portion of the gain from the sale of equipment subject to
acquisition indebtedness also will be included in the unrelated business income
of a tax-exempt entity. Indebtedness is acquisition indebtedness if it was
incurred directly or indirectly in connection with the acquisition or
improvement of the equipment. In addition,
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- gain which is characterized as ordinary income due to the recapture
of cost recovery, or
- gain from equipment which is inventory or property held primarily
for sale to customers in the ordinary course of a trade or business
will be unrelated business taxable income.
If a qualified retirement plan or IRA has unrelated business taxable
income in excess of $1,000 for any year,
- it is subject to income tax on the excess, and
- it is obligated to file a tax return for such year.
Any tax due should be paid directly from the tax-exempt entity. Payment of the
tax by the beneficiary could have other adverse tax consequences.
All tax-exempt entities are urged to obtain the advice of a
qualified tax advisor on the effect of an investment in Units.
Individual Tax Rates
General. The highest individual tax rate currently is 39.6%. The
benefits of personal exemptions are phased out for taxpayers with an adjusted
gross income over certain thresholds. Further, otherwise allowable itemized
deductions are reduced by an amount equal to 3% of a taxpayer's adjusted gross
income over certain thresholds. Such deductions may not be reduced by more than
80%.
Capital Gains and Losses. The excess of net long-term capital gains
over short-term capital losses is referred to in the Internal Revenue Code as
net capital gain. Net capital gain of individuals is taxed at a 28% maximum
rate.
Capital losses of individuals may offset capital gains plus only
$3,000 of ordinary income in a year. Capital losses of corporations may offset
capital gains only. Any remaining capital loss may be carried forward
indefinitely.
Two Percent Floor on Miscellaneous Itemized Deductions. Noncorporate
investors may deduct itemized expenses only to the extent they exceed 2% of
adjusted gross income. Itemized deductions include expenses paid or incurred
- for the production or collection of income,
- for the management, conservation, or maintenance of property held
for the production of income, or
- in connection with the determination, collection or refund of a tax.
Alternative Minimum Tax
In addition to the regular income tax, the Internal Revenue Code
includes an alternative minimum tax for noncorporate and corporate taxpayers.
The base upon which the alternative minimum tax is imposed is equal to
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- the taxpayer's taxable income,
- subject to alternative minimum tax adjustments,
- increased by items of tax preference, and
- reduced by an exemption,
all as described below.
Under the alternative minimum tax, depreciation deductions on
personal property are computed using the 150% declining balance method rather
than the 200% declining balance method. A less favorable net operating loss
deduction is used in lieu of the regular tax net operating loss deduction.
The itemized deductions allowable in computing alternative minimum
taxable income include the following:
- charitable contributions,
- medical deductions in excess of 10% of adjusted gross income,
- casualty losses,
- interest on personal housing, and
- other interest to the extent of net investment income.
No standard deduction is allowed, but an exemption amount is available as
discussed below.
The Internal Revenue Code eliminates an incentive for married
taxpayers to file separate returns by increasing the amount of alternative
minimum taxable income by the lesser of:
- 25% of the excess of alternative minimum taxable income over
$165,000, or
- $22,500.
For corporations, the Internal Revenue Code requires an addition to
taxable income of 75% of the amount by which adjusted current earnings exceeds
alternative minimum taxable income.
In addition to the adjustments described above, alternative minimum
taxable income is increased by the amount of items of tax preference. Tax
preferences include excess depletion deductions, excess intangible drilling
costs, tax- exempt interest, and the difference between the fair market value
and the exercise price of stock acquired by exercise of an incentive stock
option. No deduction is allowed for losses from a tax shelter farm activity.
Tax credits cannot be used to offset alternative minimum tax. Any
excess tax credits are first carried back one year and then forward 20 years.
The alternative minimum tax for individuals is equal to:
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- 26% of so much of the taxable excess as does not exceed $175,000,
plus
- 28% of so much of the taxable excess as exceeds $175,000.
For this purpose, taxable excess means the amount by which alternative minimum
taxable income exceeds the exemption amount. The exemption amount is:
- $45,000 for a married couple filing a joint return or a surviving
spouse,
- $33,750 for a single individual, and
- $22,500 for a married individual filing a separate return or for an
estate or trust.
However, the exemption is reduced by 25% of the amount by which the
alternative minimum taxable income exceeds:
- $150,000 in the case of a married couple filing a joint return,
- $112,500 in the case of a single individual, and
- $75,000 in the case of a married individual filing a separate return
or for an estate or trust.
The corporate alternative minimum tax is the amount, if any, by
which:
- 20% of the excess of
- the corporation's alternative minimum taxable income, over
- the exemption amount, exceeds
- the corporation's regular tax for the year.
The corporate exemption amount is $40,000. However, this exemption is reduced by
25% of the amount by which alternative minimum taxable income exceeds $150,000.
The corporate alternative minimum tax does not apply to corporations which have
elected to be subject to Subchapter S of the Internal Revenue Code. Rather, the
alternative minimum tax applies to the shareholders of an S corporation.
The corporate alternative minimum tax has been repealed for small
business corporations. A corporation that had average annual gross receipts of
less than $5,000,000 for the three-year period beginning after December 31, 1993
is a small business corporation for its first taxable year beginning after
December 31, 1997. A corporation that meets the $5,000,000 gross receipts test
will continue to be treated as a small business corporation so long as its
average gross receipts do not exceed $7,500,000.
Because the impact of the alternative minimum tax is dependent upon
each investor's particular tax situation, each prospective investor is urged to
consult his own tax adviser as to the effect an investment in the Fund will have
on the calculation of his alternative minimum tax liability.
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Fund Tax Returns and Tax Information
The Fund will use the accrual method of accounting. The Fund will
adopt the calendar year as its tax year. The Fund's operating agreement requires
the Fund to provide tax information to the investors within 75 days after the
close of each Fund tax year. Some investors may be required to file their tax
returns on or before March 15. If so, they may have to obtain an extension to
file.
Each investor must file his tax return either
- consistently with the information provided on the Fund's
informational return or
- in a manner which notifies the IRS of any inconsistency.
Otherwise, the IRS could automatically assess and collect the tax, if any,
attributable to the inconsistent treatment.
An investor will be required to inform the Fund of the sale or
exchange of his Units within the earlier of
- 30 days of the transaction or,
- January 15 of the calendar year following the calendar year in which
the transaction occurs.
The Fund will be required to inform the IRS of each such transfer. The failure
of an investor or of the Fund to file these notices may result in substantial
penalties. The Fund also must inform both the seller and the buyer of Units of
the proportionate interest of the transferred Units in the unrealized
receivables and inventory items of the Fund. This notification must be made
prior to February 1 of the calendar year following the calendar year in which
the transaction occurs.
Interest and Penalties
Document and Information Return Penalties. Three separate and distinct
categories of penalties apply to information returns and payee statements, as
follows:
- a penalty for failing to file an information return or to include
correct information therein. An example is Form 8308, which a
partnership must file upon a transfer of its partnership interests;
- a penalty for failing to file a payee statement or to include
correct information on a payee statement. An example is Schedule
K-1, which a partnership must provide annually to each partner; and
- a penalty for failure to comply with other information reporting
requirements. An example is the requirement that a transferor must
give notice to a partnership concerning the exchange of an interest
in the partnership.
The penalties in this category differ in amount. It is possible that
a filer might reduce or avoid some of the penalties by filing corrected returns
within specific time limits, or if the omissions and inaccuracies are
inconsequential. On the other hand, the penalties may be increased if the
failure to comply is due to intentional disregard.
Accuracy-Related and Fraud Penalties. The penalty for an inaccurate
tax return is equal to 20% of the portion of an underpayment resulting from one
or more of the following:
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- negligence or disregard of the rules and regulations,
- any substantial understatement of income tax,
- any substantial valuation overstatement,
- any substantial overstatement of pension liabilities, and
- any substantial estate or gift tax valuation understatement.
A substantial understatement of income tax exists if the amount of
the understatement exceeds the greater of 10% of the tax required to be shown,
or $5,000. The $5,000 is increased to $10,000 for most corporations.
A substantial valuation overstatement exists if:
- the value or adjusted basis of any property is 200% or more of the
amount determined to be the correct value or adjusted basis, or
- the price for services or property in transactions between
affiliated entities is 200% or more of the current price.
In the case of a gross overstatement, the penalty is increased to 40%. In no
event will a penalty be imposed unless the underpayment exceeds $5,000. The
$5,000 figure is increased to $10,000 for most corporations. A gross
overstatement occurs when the value or adjusted basis or price is 400% or more
of the correct amount.
Any portion of an understatement which is attributable to fraud is
subject to a penalty at the rate of 75% of the understatement. The 20%
accuracy-related penalty will not apply to any portion of an understatement
subject to the fraud penalty.
Audit of Tax Returns
The IRS could audit the Fund's tax information returns. Any such
audit could result in the audit of an investor's tax return. An audit of an
investor's return could result in adjustments to items related to the Fund as
well as items not related to the Fund.
The Internal Revenue Code treats a partnership as a separate entity
for purposes of audit, settlement and judicial review. Thus, the IRS may audit
and make a single determination of the propriety of a partnership's treatment of
partnership tax items at the partnership level. In general, a partnership's tax
matters partner represents the partnership and its partners in the event of an
audit of the partnership's tax returns. ATEL is the Fund's tax matters partner.
All partners are nevertheless entitled to participate in an audit and each
partner may enter into a settlement agreement on his own behalf with the IRS.
If the IRS proposes any adjustments to the tax returns filed by the
Fund or an investor, substantial legal and accounting expenses and deficiency
interest and penalties may be incurred. The Fund will not bear any expense that
may be incurred by an investor in connection with:
- the investor's participation in an audit of the Fund,
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- the audit of his tax returns, or
- the determination or redetermination of his tax liability even
though resulting solely from adjustments to the
Fund's tax returns.
Registration Provisions
Sections 6111 and 6112 of the Internal Revenue Code require
- registration of tax shelters and
- the maintenance of lists of investors participating in tax shelter
investments.
Under Section 6111, anyone who organizes a tax shelter must register
such shelter with the IRS. To determine if an entity is a tax shelter as to any
investor, the following ratio is computed:
- the sum of the aggregate gross deductions and 350% of the credits
potentially allowable, to
- the aggregate of the cash invested and the adjusted basis of other
property contributed by the investor, reduced by any liability to
which the property is subject.
A tax shelter is any investment as to which a person could reasonably infer that
the foregoing ratio is greater than two to one as of the close of any of the
first five years.
ATEL has determined that the Fund is not expected to generate a tax
shelter ratio of greater than two to one. Based on this determination, ATEL will
not register the Fund as a tax shelter.
Miscellaneous Fund Tax Aspects
- Fees for the syndication of the Fund must be permanently
capitalized.
- Fund organization fees must be capitalized and may be amortized over
a five-year period.
- Fund start-up expenditures must be capitalized and may be amortized
over a period of 60 months, beginning with the date on which the
business begins.
Foreign Tax Considerations for U.S. Investors
As noted above, the Fund may acquire equipment which is operated
outside the United States. If so, investors may be required to file returns and
pay taxes in foreign jurisdictions with respect to the income from such
equipment. The income taxed by the foreign jurisdiction would be calculated
according to the tax laws of the foreign jurisdiction. These tax laws may or may
not correspond with applicable United States standards.
Investors who have foreign tax liabilities as a result of the
purchase of Units may be entitled to a credit or a deduction for foreign taxes
on their U.S. tax returns. The calculation of the foreign tax credit is quite
complex. No assurance can be given that a credit or a deduction will
be available. For example, a taxpayer generally cannot claim a
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credit for taxes on foreign source income in an amount greater than the taxes
which would have been due had the taxes been computed under U.S. law. This could
result in higher taxes for income from equipment located in a foreign
jurisdiction than income from equipment located in the U.S. Each investor should
consult his own tax advisor regarding the applicability of foreign taxes to his
own situation.
U.S. Taxation of Foreign Persons
Special rules govern the U.S. federal income taxation of
- nonresident alien individuals,
- foreign corporations,
- foreign partnerships, and
- other foreign investors.
The rules are complex. No attempt is made herein to discuss the relevant rules.
Foreign investors persons should consult their own tax advisors to fully
determine the impact to them of United States federal, state and local income
tax laws.
Future Federal Income Tax Changes
No one can predict what additional legislation, if any, may be
proposed by
- members of Congress
- the current administration, or
- any subsequent administration,
No one can predict which proposals, if any, might ultimately be enacted.
Moreover, no one can predict what changes may be made to existing Treasury
Regulations, or what revisions may occur in IRS ruling policies. Any such
changes may have a retroactive effect. Consequently, no assurance can be given
that the federal income tax consequences of an investment in Units will continue
to be as described in this prospectus.
State and Local Taxes
In addition to the federal income tax considerations described
above, prospective investors should consider applicable state and local taxes
which may be imposed by various jurisdictions. An investor's distributive share
of the income, gain or loss of the Fund will be required to be included in
determining his reportable income for state or local tax purposes in the
jurisdiction in which he is a resident. Moreover, California and a number of
other states in which the Fund may do business impose taxes on nonresident
investors. The tax on nonresident investors generally is determined with
reference to the pro rata share of Fund income derived from such states. Any tax
losses associated with an investment in the Fund from operations in one state
may not be available to offset income from other sources taxable in a different
state.
California and a number of other states have adopted a withholding
tax procedure in order to facilitate the collection of taxes from nonresident
and foreign investors. Any amounts withheld would be deemed to be a distribution
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to the investor. The deemed distribution would decrease the amount of any actual
subsequent distribution. Investors may be allowed a credit for the amount
withheld against any income tax imposed by their state of residency. The Fund
cannot estimate the percentage of its income that will be from states which have
adopted such withholding tax procedures. Therefore, the Fund cannot estimate the
required withholding tax, if any.
Estate or inheritance taxes might be payable in any of the
jurisdictions outlined above upon the death of an investor.
Investors may be subject to state tax rules which are less favorable
than federal tax rules.
Need for Independent Advice
The foregoing summary is not intended as a substitute for careful
tax planning. The income tax consequences associated with an investment in the
Fund are complex and certain of them will not be the same for all taxpayers.
Accordingly, each prospective purchaser of Units is strongly urged to consult
his own tax advisors with specific reference to his own tax situation.
ERISA CONSIDERATIONS
Prohibited Transactions Under ERISA and the Code
Section 4975 of the Code (which applies to all Qualified Plans and
IRAs) and Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (which does not apply to IRAs or to certain Qualified Plans
that are not subject to ERISA's fiduciary rules) prohibit Qualified Plans and
IRAs from engaging in certain transactions involving "plan assets" with parties
that are "disqualified persons" under the Code. "Disqualified persons" include
fiduciaries of the Qualified Plan or IRA, officers, directors, shareholders and
other owners of the company sponsoring the Qualified Plan and natural persons
and legal entities sharing certain family or ownership relationships with other
"disqualified persons."
"Prohibited transactions" include any direct or indirect transfer or
use of a Qualified Plan's or IRA's assets to or for the benefit of a
disqualified person, any act by a fiduciary that involves 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 any receipt by a fiduciary of consideration for his
or her own personal account from any party dealing with a Qualified Plan or IRA.
Under ERISA, a disqualified person that engages in a prohibited transaction will
be required to disgorge any profits made in connection with the transaction and
will be required to compensate any Qualified Plan that was a party to the
prohibited transaction for any losses sustained by the Qualified Plan. Section
4975 of the Code imposes excise taxes on a disqualified person that engages in a
prohibited transaction with a Qualified Plan or IRA. Section 408(e)(2) of the
Code provides that an IRA will cease to be an IRA and will be treated as having
immediately distributed all of its assets, if it engages in a prohibited
transaction.
Plan Assets
If the Fund's assets were determined under ERISA or the Code to be
"plan assets" of Qualified Plans and/or IRAs holding Units, fiduciaries of such
Qualified Plans and IRAs might under certain circumstances be subject to
liability for actions taken by the Manager or its Affiliates, and certain of the
transactions described in this Prospectus in which the Fund might engage,
including certain transactions with Affiliates of the Fund, might constitute
prohibited transactions under the Code and ERISA with respect to such Qualified
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Plans and IRAs, even if their acquisition of Units did not originally
constitute a prohibited transaction. Moreover, Qualified Plans (other than IRAs)
might be deemed to have delegated their fiduciary responsibility to the Manager
in violation of ERISA.
Although under certain circumstances ERISA and the Code, as
interpreted by the Department of Labor in currently effective regulations, apply
a "look-through" rule under which the assets of an entity in which a Qualified
Plan or IRA has made an equity investment may generally constitute "plan
assets," the applicable regulations except from the application of the
"look-through" principle investments in entities in which equity participation
in the entity by benefit plan investors is not significant.
In order to qualify for the exception described above, "benefit plan
investors" must at all times hold less than 25% of the value of any class of
equity interest in the entity. For this purpose, the value of any equity
interests held by a person (other than a "benefit plan investor") who has
discretionary authority or control with respect to the assets of an entity or
any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person, is disregarded. A
"benefit plan investor" is any of the following:
- any employee benefit plan (as defined in Section 3(3) of ERISA,
which definition includes Qualified Plans), whether or not it is
subject to the provisions of Title I of ERISA,
- any plan described in Section 4975(e)(1) of the Code (which
description includes Qualified Plans and IRAs), and
- any entity (such as a common or collective trust fund of a bank)
whose underlying assets include plan assets by reason of a plan's
investment in the entity.
The sale of Units during this offering and the subsequent transfer of Units will
be limited to the extent that the Manager deems it necessary to qualify for this
exception. Therefore, the Fund's assets should not be "plan assets" of any
Qualified Plan or IRA investor; and no prohibited transaction should occur based
on treatment of the Fund's underlying assets as "plan assets" of Qualified Plan
or IRA investors.
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
- the investment is in accordance with the documents and instruments
governing the Qualified Plan or IRA,
- the purchase is prudent in light of the potential difficulties that
may exist in liquidating Units,
- the investment will provide sufficient cash distributions in light
of the Qualified Plan's likely required benefit payments,
- after an acquisition of Units, the Qualified Plan's investments
taken as a whole are sufficiently diversified so as to minimize the
risk of large losses,
- the investment is made solely in the interests of plan participants,
and
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- the fair market value of Units will be sufficiently ascertainable,
with sufficient frequency, to enable the Qualified Plan to value its
assets on an annual basis in accordance with the Qualified Plan's
rules and policies.
Prospective Qualified Plan investors should note that, with respect to the
diversification of assets requirement, the legislative history of ERISA and a
Department of Labor advisory opinion indicate that in determining whether the
assets of a Qualified Plan that has invested in an entity such as the Fund are
sufficiently diversified, it may be relevant to look through the Qualified
Plan's interest in the entity to the underlying portfolio of assets owned by the
entity, regardless of whether the entity's underlying assets are treated as
"plan assets" for the purpose of ERISA's and the Code's prohibited transaction
and other fiduciary duty rules.
SUMMARY OF THE OPERATING AGREEMENT
The Operating Agreement (attached as Exhibit B) is the governing
instrument establishing the Fund's right under the laws of the State of
California to operate as a limited liability company, and contains the rules
under which the Fund will be operated. The Operating Agreement will be executed
on behalf of each subscriber upon his admission to the Fund by the Manager
acting pursuant to the power of attorney contained in the Subscription
Agreement.
The following is a brief summary of certain provisions of the
Operating Agreement. It does not purport to be complete and it is recommended
that each prospective investor review the Operating Agreement carefully in its
entirety. Aspects of the Operating Agreement relating to allocations of Net
Income, Net Loss and Distributions to Holders and reports to the Members are
summarized elsewhere in this Prospectus.
The Duties of the Manager
ATEL Financial Corporation is Manager of the Fund and has the
exclusive management and control of all aspects of the business of the Fund.
Affiliates of the Manager will perform certain Equipment acquisition, leasing,
management and disposition services, as well as certain administrative services,
for the Fund. In the course of its management, the Manager may, in its absolute
discretion, acquire, hold title to, sell, re-lease or otherwise dispose of
Equipment and interests therein when and upon such terms as it determines to be
in the best interest of the Fund and employ such persons, including Affiliates
of the Manager, as it deems necessary for the efficient operation of the Fund.
However, prior to the sale or other disposition of Substantially All of the
Assets of the Fund in any single 12-month period, except upon liquidation of the
Fund, Holders owning more than 50% of the total outstanding Units must consent
to such sale or other disposition.
Liability of Holders
A Holder's capital is subject to the risks of the Fund's business.
He is not permitted to take any part in the management or control of the
business and he may not be required to contribute additional capital at any
time. Under the California Act, a Holder will not be liable for Fund obligations
in excess of his unreturned capital contribution and share of undistributed
profits. Notwithstanding the foregoing, a Holder will be liable to the Fund in
an amount equal to any Distribution made by the Fund to such Holder to the
extent that, immediately after the Distribution is made, all liabilities of the
Fund, other than liabilities to Members on account of their interest in the Fund
and liabilities as to which recourse of creditors is limited to specified
property of the Fund, exceed the fair value of the Fund assets, provided that
the fair value of any property that is subject to a liability as to which
recourse of creditors is so limited is included in the Fund assets only to the
extent that the fair value of the property exceeds such liability.
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Term and Dissolution
The Fund will continue for a maximum period ending December 31,
2020, but may be dissolved at an earlier date if certain contingencies occur.
The Fund intends to liquidate its assets and distribute the proceeds thereof
beginning after the Reinvestment Period expires (at the end of the sixth full
year following the year during which the Final Closing Date occurs) with final
liquidation expected to occur approximately ten to eleven years after the Final
Closing Date. A Holder may not withdraw from the Fund prior to dissolution, but
may assign his Units to others or may, under certain circumstances, request that
the Fund repurchase his Units. See "Repurchase of Units" below under this
caption. The contingencies whereupon the Fund may be dissolved are as follows:
(a) The Fund becomes insolvent or bankrupt;
(b) The removal, adjudication of bankruptcy, insolvency, disability
or incompetence or dissolution or death of a Manager unless (i) there is a
remaining Manager, and the remaining Manager, within 45 days of the date of such
event, elects to continue the business of the Fund or (ii) if, upon removal of
the last remaining Manager, the Members holding in excess of 50% of the
outstanding Units elect a successor Manager prior to the effective date of
removal and such successor Manager elects to continue the business of the Fund;
(c) An election to dissolve upon the vote of Members owning more
than 50% of the total outstanding Units; or
(d) The disposition of all interests in Equipment and other assets
of the Fund and the receipt by the Fund of the proceeds of such disposition.
Voting Rights of Members
In any vote of the Members, each Member will be entitled to cast one
vote for each Unit which such Member owns as of the date designated as the
record date for such vote. Notwithstanding the foregoing, Units held by the
Manager or any Affiliate of the Manager will not be entitled to vote, and will
not be deemed to be "outstanding" for purposes of any vote, upon matters which
involve a conflict between the interests of the Manager and the Fund, including,
but not limited to, any vote on the proposed removal or withdrawal of the
Manager as Manager or any proposed amendment to the Operating Agreement which
would expand or extend the rights, authorities or powers of the Manager. The
Members have the right, by vote of Members owning more than 50% of the total
outstanding Units, to vote upon:
(a) Removal or voluntary withdrawal of the Manager;
(b) Election of a successor Manager;
(c) Termination and dissolution of the Fund;
(d) Amendment of the Operating Agreement, provided such amendment is
not for the purpose of reflecting the addition or substitution of Members, the
reduction of Capital Accounts or for any other purposes prohibited under the
Operating Agreement as described below;
(e) The sale or other disposition of Substantially All of the Assets
in a single sale, or in multiple sales in the same twelve-month period, except
in the liquidation and winding up of the business of the Fund upon its
termination and dissolution; and
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(f) The extension of the term of the Fund.
Without the consent of the Members to be adversely affected
by the amendment, the Operating Agreement may not be amended so as to
- convert a Holder into a Manager;
- modify the limited liability of a Holder;
- alter the interest of the Members in Net Income, Net Loss and
Distributions; or
- affect the status of the Fund as a partnership for federal income
tax purposes.
Dissenters' Rights and Limitations on Mergers and Roll-ups
Section 16.7 of the Operating Agreement provides that Members
holding not less than 90% of the outstanding Units must approve any proposal
that involves an acquisition, conversion, merger or consolidation transaction in
which the Holders are issued new securities in the resulting entity. The rights
of any dissenting Holders will be as provided under Section 16.7 and Sections
17600 through 17613 of the California Act. Such provisions generally give a
dissenting Member the right, subject to certain procedural requirements, to
require that the company repurchase the dissenting Member's interest at a price
equal to its fair market value.
Meetings
The Manager may at any time call a meeting of the Members or a vote
of the Members without a meeting, on matters on which they are entitled to vote,
and shall call such meeting or for a vote without a meeting following receipt of
a written request therefore of Members holding 10% or more of the total
outstanding Units. Upon such written request of Members holding 10% or more of
the total outstanding Units, such Members may propose a vote by all Members on
any matter on which Members are entitled to vote under the Operating Agreement.
Books of Account and Records
The Manager is responsible for keeping books of account and records
of the Fund reflecting all of the contributions to the capital of the Fund and
all of the expenses and transactions of the Fund. Such books of account and
records will include the following:
(i) A current list of the full name and last known business
or residence address of each Member set forth in alphabetical order
together with the Original Invested Capital, the Units held and the
share in Net Income and Net Loss of each Member;
(ii) A copy of the articles of organization and all
amendments;
(iii) Copies of the Fund's federal, state and local income
tax or information returns and reports, if any, for the six most
recent taxable years;
(iv) Copies of the original of the Operating Agreement and
all amendments;
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(v) Financial statements of the Fund for the six most recent
fiscal years; and
(vi) The Fund's books and records for at least the current
and past three fiscal years.
Such books of account and records will be kept at the principal
place of business of the Fund in the State of California, and each Member and
his authorized representatives shall have, at all times during reasonable
business hours, free access to and the right to inspect and copy at their
expense such books of account and all records of the Fund. Upon the request of a
Member, the Manager shall promptly deliver to such Member at the expense of the
Fund a copy of the information described in (i), (ii) and (iv) above. In the
event a Member is required to compel the Manager to produce the foregoing
records as a result of the Manager's breach of its obligation to deliver such
information, the Manager shall reimburse the Member for all reasonable costs
actually incurred in compelling production.
Status Of Units
Each Unit will be fully paid and nonassessable and all Units have
equal voting and other rights, except as noted above with respect to the voting
of Units held by the Manager or its Affiliates.
Transferability of Units
The Manager may condition the effectiveness of any proposed transfer
of Units or an interest in Units on such representations, warranties, opinions
of counsel, and other assurances as it considers appropriate as to:
(i) such assignment or transfer not resulting, in the opinion of
counsel for the Fund, in the Fund being considered to have
terminated within the meaning of Section 708 of the Code;
(ii) the transferee not being a minor or an incompetent;
(iii) the transfer or assignment not violating federal or state
securities laws;
(iv) the transferor or the transferee not holding Units representing
Original Invested Capital of less than $2,500 ($2,000 in the case
of IRAs and Keogh Plans);
(v) such assignee or transferee being a Citizen of the United
States;
(vi) such assignment or transfer not constituting a transfer "on a
secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code or otherwise adversely
affecting the tax status of the Fund;
(vii) such assignment or transfer not causing Fund assets to be
deemed Plan Assets under ERISA; and
(viii) the transferor filing with the Fund a duly executed and
acknowledged counterpart of the instrument effecting such
assignment or transfer, which instrument evidences the written
acceptance by the assignee or transferee of all of the terms and
provisions of the Operating Agreement, contains a representation
that such assignment or transfer was made in accordance with
all applicable laws and regulations (including any investor
suitability requirements) and in all other respects is satisfactory
in form and substance to the Manager.
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In connection with state securities laws restrictions on transfer,
Section 260.141.11 of the Rules of the California Commissioner of Corporations
states:
(a) The issuer of any security upon which a restriction on
transfer has been imposed pursuant to Sections 260.102.6, 260.141.10
or 260.534 of the Rules of the California Corporations Commissioner
shall cause a copy of this section to be delivered to each issuee or
transferee of such security at the time the certificate evidencing
the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to
consummate a sale or transfer of such security, or any interest
therein, without the prior written consent of the Commissioner
(until this condition is removed pursuant to Section 260.141.12 of
the Rules of the California Corporations Commissioner), except: (1)
to the issuer; (2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of
the Corporations Code of the State of California or Section
260.105.14 of the Rules of the California Corporations Commissioner;
(4) to the transferor's ancestors, descendants, or spouse, or any
custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee
by a trustee or custodian for the account of the transferee or the
transferee's ancestors, descendants, or spouse; (5) to holders of
securities of the same class of the same issuer; (6) by way of gift
or donation inter vivos or on death; (7) by or through a
broker-dealer licensed under the Corporations Code of the State of
California (either acting as such or as a finder) to a resident of a
foreign state, territory, or country who is neither domiciled in the
State of California to the knowledge of the broker-dealer, nor
actually present in the State of California if the sale of such
securities is not in violation of any securities law of the foreign
state, territory, or country concerned; (8) to a broker-dealer
licensed under the Corporations Code of the State of California in a
principal transaction, or as an underwriter or member of an
underwriting syndicate or selling group; (9) if the interest sold or
transferred is a pledge or other lien given by the purchaser to the
seller upon a sale of the security for which the California
Corporations Commissioner's written consent is obtained or is not
required under Section 260.141.11 of the Rules of the California
Corporations Commissioner; (10) by way of a sale qualified under
Section 25111, 25112, 25113, or 25121 of the Corporations Code of
the State of California, of the securities to be transferred,
provided that no order under Section 25140 or subdivision (a) of
Section 25143 of the Corporations Code of the State of California is
in effect with respect to such qualification; (11) by a corporation
to a wholly-owned subsidiary of such corporation, or by a
wholly-owned subsidiary of a corporation to such corporation; (12)
by way of an exchange qualified under Section 25111, 25112, or 25113
of the Corporations Code of the State of California, provided that
no order under Section 25140 or subdivision (a) of Section 25143 of
the Corporations Code of the State of California is in effect with
respect to such qualification; (13) between residents of foreign
states, territories, or countries who are neither domiciled nor
actually present in the State of California; (14) to the California
State Controller pursuant to the Unclaimed Property Law or to the
administrator of the unclaimed property law of another state; or
(15) by the California State Controller pursuant to the Unclaimed
Property Law or by the administrator of the unclaimed property law
of another state if, in either such case, such person (i) discloses
to potential purchasers at the sale that transfer of the securities
is restricted under Section 260.141.11 of the Rules of the
California Corporations Commissioner, (ii) delivers to each
purchaser a copy of Section 260.141.11 of the Rules of the
California Corporations Commissioner, and (iii) advises the
California Corporations Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee shall
contain the legend required by Section 260.141.11 of the Rules of
the California Corporations Commissioner; or (17) by way of an offer
and sale of outstanding securities in an issuer transaction that is
subject to the qualification requirement of Section 25110 of the
Corporations Code but exempt from that qualification requirement by
subdivision (f) of Section 25102.
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(c) The certificates representing such securities subject to
such a restriction on transfer, whether upon initial issuance or
upon any transfer thereof, shall bear on their face a legend,
prominently stamped or printed thereon in capital letters of not
less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
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."
Any assignment, sale, exchange or other transfer in contravention of
any of the provisions of the Operating Agreement shall be void and ineffectual,
and shall not bind or be recognized by the Fund.
An Assignee of Record will be entitled to receive allocations and
Distributions from the Fund attributable to the Units acquired by reason of such
assignment from and after the effective date of the assignment of such Units to
him; provided, however, the Fund and the Manager will be entitled to treat the
assignor of such Units as the absolute owner thereof in all respects, and will
incur no liability for allocations of Net Income, Net Loss or Distributions, or
transmittal of reports and notices requested to be given to Holders which are
made in good faith to such assignor until such time as the written instrument of
assignment has been received by the Fund and recorded on its books and the
effective date of an assignment of Units has passed. The effective date of an
assignment of Units and the date on which the Assignee shall be deemed an
Assignee of Record shall be the first day of the first full fiscal quarter
following the later of (i) the date set forth on the written instrument of
assignment, or (ii) the date on which the Fund has actual notice of the
assignment.
All costs and expenses incurred by the Fund in connection with the
transfer of a Unit shall be paid by the transferring Holder.
An Assignee may only be substituted as a Member in the place of the
assignor with the prior consent of the Manager, which consent may be withheld in
the Manager's sole discretion. Any substituted Member must also agree to be
bound by the provisions of the Operating Agreement. The Manager shall cause the
Operating Agreement to be amended to reflect the substitution of Members at
least once in each fiscal quarter.
The Manager will, with respect to any Units owned by it, enjoy all
of the rights, other than the right to request that the Fund repurchase any such
Units, and be subject to all of the obligations and duties of a Member, except
as noted above under "Voting Rights of Members."
Repurchase of Units
In the event a Holder ceases to be a United States Citizen or
Resident Alien for any reason, he must immediately notify the Fund and may be
required to tender his Units to the Fund for repurchase in order to protect the
Fund's interest in certain leases. The Fund will have the absolute right, but no
obligation, to repurchase the Units for a price equal to the Unit Holder's
capital account, computed in accordance with federal tax accounting principles,
allocable to the repurchased Units as of the last day of the quarter during
which the precipitating event occurs.
Upon any repurchase of Units by the Fund, the Units will be canceled
and will no longer be deemed to represent an interest in the Fund, and the
interests of all other Unit holders will be adjusted accordingly. The Manager
may, in its discretion and on such terms as it deems appropriate, repurchase
Units in the event that it deems such repurchase in the best interests of the
Fund, but the Fund is in no event required to make any such repurchase. No such
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repurchase may be effected if it would impair the capital of the Fund or
cause the Fund or any remaining Unit holder to suffer a material adverse tax
consequence.
Indemnification of the Manager
The Operating Agreement provides that the Manager and its affiliates
who perform services for the Fund will be indemnified against any liability or
loss arising out of any act or omission by any such Person when acting in
connection with the business of the Fund, provided that such Person determines
in good faith that its conduct was in the best interest of the Fund and,
provided further, that its conduct did not constitute fraud, negligence, breach
of fiduciary duty or misconduct. The Operating Agreement also provides that, to
the extent permitted by law, the Fund will indemnify the Manager against
liability and related expenses (including attorneys' fees) incurred in dealing
with third parties, provided that the conduct of the Manager is consistent with
the standards described in the preceding sentence. A successful claim for such
indemnification would deplete the Fund's capital assets by the amount paid.
The Manager will not be indemnified against liabilities arising
under the Securities Act of 1933. Furthermore, the Manager has agreed to
indemnify the Fund against any loss or liability it may incur as a result of any
violation of state or federal securities laws by the Manager or its Affiliates.
The Fund will not pay for any insurance covering liability of the Manager or any
other persons for actions or omissions for which indemnification is not
permitted by the Operating Agreement, provided, however, that this will not
preclude the naming of the Manager or any Affiliates as additional insured
parties on policies obtained for the benefit of the Fund to the extent that
there is no additional cost to the Fund.
The Manager will have fiduciary responsibility for the safekeeping
and use of all funds and assets of the Fund.
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PLAN OF DISTRIBUTION
Distribution
The Units will be offered and sold on a "best efforts
minimum/maximum" basis through ATEL Securities Corporation (the "Dealer
Manager"), a broker-dealer which is an Affiliate of the Manager (see "Conflicts
of Interest" and "Management"), and through other participating broker-dealers
who are members of the National Association of Securities Dealers, Inc.
("NASD"). The Dealer Manager will manage the selling group and provide certain
wholesaling services. Although the Dealer Manager may participate in the
offering on the same basis as other broker-dealers, it has not in the past
effected, nor does it anticipate in this offering directly effecting, any
significant sales of the Units. The Dealer Manager is a wholly-owned subsidiary
of ATEL formed solely to manage offerings sponsored by ATEL and its Affiliates.
The minimum offering amount is $1,200,000 (120,000 Units) and the
maximum is $150,000,000 (15,000,000 Units).
The minimum subscription is 250 Units ($2,500); provided that an IRA
or Keogh Plan may subscribe for a minimum of 200 Units ($2,000). Additional
investments may subsequently be made in a minimum amount of 50 Units ($500), and
additional one-Unit ($10) increments.
The broker-dealers are not obligated to obtain any subscriptions,
and there is no assurance that any Units will be sold.
Subscriptions will be effective only on acceptance by the Manager
and the right is reserved to reject any subscription in whole or in part. The
Subscription Agreement provided to the investor for execution must be
accompanied by a copy of this Prospectus, and each subscriber has the right to
cancel his or her subscription during a period of five business days after the
subscriber has submitted the executed Subscription Agreement to the
broker-dealer through which the Units are sold. The Fund and/or the selling
broker-dealer will send each investor a written confirmation of the acceptance
of the investor's subscription for Units upon admission to the Fund.
The offering will terminate on a date not later than two years from
the date of this Prospectus. The offering of Units after the end of one year
from the date hereof will be subject to renewal or requalification in all those
jurisdictions requiring such renewal or requalification. However, the offering
may be terminated at any time by the Manager. If subscriptions for a minimum of
120,000 Units have not been received and accepted prior to a date one year from
the date hereof, all funds received will be promptly returned together with any
interest earned thereon.
Selling Compensation and Certain Expenses
The Dealer Manager will receive selling commissions in an amount
equal to 9.5% of the Gross Proceeds, and will reallow to participating
broker-dealers selling commissions equal to 8% of the Gross Proceeds
attributable to Units sold by them. Out of the 1.5% of the selling commissions
retained by the Dealer Manager, it will pay wholesaling compensation in the form
of salaries and commissions to its personnel and certain participating
broker-dealers, reimburse certain wholesaling expenses incurred by participating
broker-dealers and reimburse amounts which may be advanced by ATEL for certain
overhead expenses of the Dealer Manager and its personnel.
The Dealer Manager (out of its compensation equal to 1.5% of the
Gross Proceeds) or the Fund (up to a maximum amount equal to 0.5% of the Gross
Proceeds) may pay or reimburse participating dealers a portion of their actual
expenses in connection with this offering (including expenses incurred in
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coordinating their sales efforts, training their personnel and expenses
incurred, by such broker-dealers as the Dealer Manager shall designate, in
performing "wholesaling" functions). The Fund may also pay or reimburse
participating dealers for their due diligence expenses. Subject to NASD approval
and compliance with Rule 2810(b)(4)(E) of the NASD's Conduct Rules, the Fund,
the Manager or the Dealer Manager may establish noncash sales incentive programs
for sales representatives of participating dealers, provided that the aggregate
value of any noncash incentive awards to any individual by the Manager or any of
its Affiliates during any year does not exceed the sum of $100. The total of all
selling compensation, including sales commissions, wholesaling salaries and
commissions, retail and wholesaling expense reimbursements, broker dealer and
investment seminar expenses, non-cash incentive payments and any other forms of
compensation paid to the Dealer Manager or other participating broker-dealers
(including any unreimbursed overhead costs of the Dealer Manager advanced by
ATEL), will not exceed 10% of the Gross Proceeds, except that up to an
additional 0.5% of the Gross Proceeds may, in the sole discretion of the
Manager, be paid in connection with accountable, bona fide due diligence
activities.
The Manager has agreed to indemnify the participating
broker-dealers, including the Dealer Manager, against certain liabilities
arising under the Securities Act of 1933, as amended.
At various times during the offering period the Manager may elect to
pay a portion of the set-up fees for IRAs which purchase Units. The Manager will
pay a maximum of $25 toward such fees for each IRA which purchases the minimum
number of Units or more.
The Fund will not pay referral or similar fees to any accountants,
attorneys or other persons in connection with the distribution of Units.
Escrow Arrangements
Until the minimum number of subscriptions are received and the
initial subscribers are admitted to the Fund, subscription checks will be made
payable to, and subscription funds will be held in an escrow account at, U.S.
Bank Trust National Association, San Francisco, California (the "Bank"). Until
such time all participating broker-dealers will forward subscription checks to
the Dealer Manager promptly but in no event later than noon of the next business
day following receipt thereof, and the Dealer Manager will forward such
subscriptions to the bank escrow agent promptly, but in no event later than noon
of the second business day following receipt thereof by the Dealer Manager.
Subscription proceeds held in the escrow account will be invested in
United States government securities, including Treasury bills, securities issued
or guaranteed by United States government agencies, certificates of deposit and
time or demand deposits in banks and savings and loan associations which are
insured by United States government agencies or deposits in members of the
Federal Home Loan Bank System, as directed by the Manager. Subscribers may not
withdraw funds from the escrow account. Upon the earlier of termination of the
offering or satisfaction of the escrow condition, any interest which accrues on
funds held in escrow will be distributed to subscribers and allocated among them
on the basis of the respective amounts of the subscriptions and the number of
days that such amounts were on deposit in the escrow account.
Notwithstanding the foregoing, subscriptions received from
Pennsylvania subscribers will be placed in a separate escrow account and will
not be counted toward satisfaction of the minimum escrow condition. Instead,
such Pennsylvania subscriptions will be released to the Fund only at such time
as total subscription proceeds received by the Fund from all subscribers,
including the escrowed Pennsylvania subscriptions, equal not less than $7.5
million in Gross Proceeds.
The Original Invested Capital of the initial subscribers will be
transferred from escrow to the Fund at any time after subscriptions for the
minimum of 120,000 Units have been accepted by the Manager and received and
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collected by the bank escrow agent, and such subscribers will be admitted
to the Fund within 15 days thereafter. Subsequent subscribers will have their
subscriptions accepted or rejected within 30 days after receipt. Investors whose
subscriptions are accepted will be admitted to the Fund promptly after such
acceptance, but not later than 30 days thereafter. Rejected subscription funds
will be promptly returned.
The Bank's sole role in this offering is that of escrow holder and
as such it has not reviewed any of the offering materials and makes no
representations whatsoever as to the nature of this offering or its compliance
or lack thereof with any applicable state or federal laws, rules or regulations.
The Bank neither endorses, recommends nor guarantees the purchase, value or
repayment or any other aspect of an investment in the Units. The Bank does not
represent the interests of the Members or potential investors. Its duties are
limited as expressly set forth in the Escrow Agreement and interested parties
may request a copy of the Escrow Agreement from the Manager. Pursuant to the
terms of the Escrow Agreement, the Fund has directed the Bank to distribute to
the subscribers any interest earned on funds held in escrow as described above
under this caption.
Investments By Certain Persons
The Manager and its Affiliates may, but do not currently intend to,
acquire such number of Units as they determine. Except as noted below, any Units
purchased by the Manager or its Affiliates will be purchased on the same terms
as the other Units offered hereby. Such Units will be acquired solely for
investment and not with a view to or for distribution. Any Units acquired by
such Persons will not be applied to the requirement that a minimum of 120,000
Units be purchased by all subscribers.
The Manager, the Dealer Manager or the broker-dealers engaged by the
Dealer Manager to sell the Units, or any of their Affiliates or employees, may
purchase Units in this offering net of the 8% retail selling commissions at a
per Unit price of $9.20. In addition, clients of an investment advisor which is
registered under the Investment Advisors Act of 1940 and is an Affiliate of a
participating broker-dealer may also purchase Units with reduced selling
commissions, subject to the express approval of such participating broker-dealer
Affiliate, if the client
- has been advised by such advisor over a continuous course of time on
investments other than the purchase of Units, and
- is not being charged by the advisor or its Affiliates, through the
payment of commissions or otherwise, for the advice rendered by such
advisor specifically in connection with the purchase of Units.
In no event will the net contribution to the Fund by such persons be less than
$9.20 per Unit. The Dealer Manager may require that any investor claiming the
right to purchase on the foregoing terms demonstrate the basis for such right
through reasonable documentation and certification. Sales to any such purchasers
on such terms would be for investment purposes only, and the Fund and the
Manager would not recognize any attempted transfer of such Units unless the
Manager is satisfied that the original purchase was not made with a view to
distribution of the securities and that any proposed transfer was in compliance
with all applicable laws and regulations, including the NASD's Rules of Fair
Practice.
State Requirements
In addition to the investor suitability and minimum investment
standards established by the Fund and described under "Who Should Invest" above,
the securities administrators of certain states have imposed more restrictive
standards on investments in Units effected within their jurisdictions. Any such
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additional requirements imposed after the date of this Prospectus will be
reflected in a supplement hereto, and investors are urged to review any such
supplement to ascertain whether more restrictive standards are applicable to
their investment.
The following states have imposed additional conditions on investments in
such jurisdictions:
Iowa. The minimum investment for all IRAs in Iowa is $2,500 (250 Units).
Maine. The minimum amount which may be invested by a Maine investor on any
subscription, whether an initial investment or any subsequent investment, is
$2,500 (250 Units), or $2,000 (200 Units) for IRAs and Qualified Plans.
Michigan. An investor in Michigan may not invest in Units any amount in
excess of 10% of the investor's net worth (exclusive of home, home furnishings
and automobiles)
Missouri. Each Missouri investor must (i) have an annual gross income of at
least $60,000 and a net worth (exclusive of home, home furnishings and
automobiles) of at least $60,000 in excess of his Original Invested Capital; or
(ii) have a net worth (determined with the same exclusions) of at least $225,000
in excess of his Original Invested Capital.
Nebraska. The minimum investment for all investors in Nebraska, except IRAs
and Keogh Plans, is $5,000 (500 Units).
New Hampshire. Each New Hampshire investor must (i) have an annual gross
income of at least $50,000 and a net worth (exclusive of home, home furnishings
and automobiles) of at least $125,000 in excess of his Original Invested
Capital; or (ii) a net worth (exclusive of home, home furnishings and
automobiles) of at least $250,000 in excess of his Original Invested Capital.
North Carolina. Each North Carolina investor must (i) have an annual gross
income of at least $60,000 and a net worth (exclusive of home, home furnishings
and automobiles) of at least $60,000 in excess of his Original Invested Capital;
or (ii) have a net worth (determined with the same exclusions) of at least
$225,000 in excess of his Original Invested Capital.
Ohio. An Ohio investor may not invest in Units an amount in excess of 10%
of the investor's net worth.
Pennsylvania. In addition to the investor suitability standards set forth
under "Who Should Invest," an investor in Pennsylvania may not invest in Units
an amount in excess of 10% of the investor's net worth (with such net worth
calculated exclusive of home, home furnishings and automobiles). Furthermore,
Pennsylvania subscriptions will be subject to a separate escrow and will be
released to the Fund only when the Fund has received aggregate subscriptions
from all investors equal to not less than $7.5 million.
REPORTS TO HOLDERS
The Fund fiscal year will be the calendar year; provided, however,
that the Manager may, subject to the approval of applicable taxing authorities,
adopt another fiscal year if they deem it to be in the Fund's best interest.
The Fund will furnish to each Holder certain reports, statements
and tax information, as set forth in Article 14 of the Operating Agreement. The
Manager shall have prepared and distributed at least annually, at the Fund's
expense,
- a statement of cash flow,
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- Fund information necessary in the preparation of each Holder's
federal income tax returns;
- a report of the business of the Fund;
- a statement as to the compensation received by the Manager and its
Affiliates from the Fund during the year;
- a report identifying the sources of all Fund Distributions for the
year; and
- a special report containing an opinion of a certified public
accounting firm and a breakdown of the costs reimbursed by the Fund
to the Manager or its Affiliates.
Following the close of each taxable year of the Fund, the Fund will distribute
to the Holders copies of the annual report and annual financial statements
(balance sheet, statement of income or loss, statement of members' equity and
statement of cash flow, accompanied by a report containing an opinion of
independent certified public accountants) within 120 days thereafter, and such
statements will be prepared on an accrual basis in accordance with generally
accepted accounting principals; and all Fund information necessary in the
preparation of their federal income tax returns within 75 days after the end of
each fiscal year. The Manager does not intend to cause the Fund to prepare and
distribute any reconciliation between the financial information contained in the
foregoing reports and the information furnished to Holders for income tax
purposes.
During the offering period and until the Fund is fully invested, the
Fund will also furnish to each Holder, at least quarterly, information
concerning the investments of the Fund.
The Fund will also furnish to each Holder a quarterly report
covering each of the first three quarters of Fund operations in each calendar
year, including unaudited financial statements (each of which shall include a
balance sheet, statement of income or loss for said quarterly period and
statement of Cash from Operations and Cash from Sales or Refinancing for said
quarterly period) and a statement of other pertinent information regarding the
Fund and its activities during the quarterly period covered by the report.
Copies of such statements and other pertinent information shall be distributed
to each Holder within 60 days after the close of the quarterly period covered by
the report of the Fund.
SUPPLEMENTAL SALES MATERIAL
In addition to and apart from this Prospectus, the Fund may use
certain sales material in connection with the offering of Units. In certain
jurisdictions such sales material may not be available. This material will
include information relating to this offering, the Manager and its Affiliates
and brochures and articles and publications concerning equipment leasing.
The Fund will use only sales material which has been approved by
such appropriate regulatory bodies as may be required. The offering is made only
by means of this Prospectus. Although the information contained in such sales
material does not conflict with any of the information contained in this
Prospectus, such material does not purport to be complete, and should not be
considered as part of this Prospectus or the registration statement of which
this Prospectus is a part, or as incorporated by reference in this Prospectus or
said registration statement or as forming the basis of the offering of Units
which are offered hereby.
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LEGAL OPINIONS
The legality of the Units has been passed upon and the statements
under the captions "Income Tax Consequences" and "ERISA Considerations" as they
relate to federal income tax and ERISA matters have been reviewed and passed
upon by Derenthal & Dannhauser, San Francisco, California.
EXPERTS
The consolidated balance sheet of ATEL Financial Corporation and
subsidiary at July 31, 1999 and the financial statements of ATEL CAPITAL
EQUIPMENT FUND IX, LLC at _______, 2000 [TO BE FILED BY AMENDMENT], and for the
period from ________, 2000 (inception) through _____,2000 [TO BE FILED BY
AMENDMENT], appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Fund has filed with the Securities and Exchange Commission,
Washington, D.C., a registration statement under the Securities Act of 1933, as
amended, with respect to the Units offered pursuant to this Prospectus. For
further information, reference is made to the registration statement and the
exhibits thereto which are available for inspection at no fee in the principal
office of the Commission at 450 Fifth Street, Northwest, Washington, D.C. 20549.
The Fund is subject to the informational requirements of the Securities Exchange
Act of 1934 and in accordance therewith files reports and other information with
the Securities and Exchange Commission. Such reports, the registration statement
and other information are available for inspection and copying at the above
address, and are also available to be viewed and retrieved without charge on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov. In addition, photostatic copies of the
material containing this information may be obtained from the Commission upon
paying of the fees prescribed by the rules and regulations of the Commission.
This Prospectus contains a fair summary of the material provisions of the
exhibits filed with the Commission. This Prospectus does not knowingly contain
any untrue statement of a material fact or omit to state any material fact
required to be stated herein or necessary to make the statements herein not
misleading.
GLOSSARY
The following terms used in this Prospectus shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Acquisition Expenses" shall mean expenses including, but not
limited to, legal fees and expenses, travel and communication expenses, costs of
appraisals, accounting fees and expenses, and miscellaneous expenses relating to
selection and acquisition of Equipment, whether or not acquired.
"Acquisition Fees" shall mean the total of all fees and commissions
paid by any party in connection with the initial purchase or manufacture of
Equipment. Included in the computation of such fees or commissions shall be any
commission, selection fee, financing fee, nonrecurring management fee, or any
fee of a similar nature, however designated.
"Adjusted Invested Capital" shall mean, as of any date, the
Original Invested Capital attributable to the Units held by any Person on or
before such date, as decreased (but not below zero) by the amount by which (i)
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all Distributions with respect to such Units on or before the date of
determination pursuant to any provision of the Operating Agreement exceed (ii)
the Priority Distribution attributable to such Units for such period.
"Affiliate" of a Person shall mean
- any Person directly or indirectly controlling, controlled by or
under common control with such Person;
- any Person owning or controlling 10% or more of the outstanding
voting securities or beneficial interests of such
Person,
- any officer, director, trustee or partner of such Person and
- if such Person is an officer, director, trustee, partner or holder
of 10% or more of the voting securities or beneficial interests of
such Person, any other company for which such Person acts in such
capacity. However, such term shall not include a Person who is a
partner in a partnership or joint venture with the Fund if such
Person is not otherwise an Affiliate.
"Asset Management Fee" shall mean the fee payable to the Manager and
its Affiliates under the provisions of Section 8.2 of the Operating Agreement.
"Asset Management Fee Limit" means the total fees calculated
pursuant to the alternative fee schedule set forth under Section 8.3 of the
Operating Agreement, equal to the aggregate of an Equipment Management Fee,
Incentive Management Fee, and Equipment Resale/Re-Leasing Fee, plus the Carried
Interest, determined in the manner described therein.
"Assignee" shall mean a Person who has acquired a beneficial
interest in one or more Units from a third party but who is neither a
substituted Holder nor an Assignee of Record.
"Assignee of Record" shall mean an Assignee who has acquired a
beneficial interest in one or more Units whose ownership has been recorded on
the books of the Fund and which ownership is the subject of a written instrument
of assignment, the effective date of which assignment has passed.
"ATEL" shall mean ATEL Financial Corporation, a California
corporation.
"California Act" shall mean the Beverly-Killea Limited Liability
Company Act, Title 2.5, Chapters 1-15, of the California Corporations Code, as
it may be amended from time to time.
"Capital Account" shall mean, with respect to any Member, such
Member's Capital Account determined in accordance with Section 6.7 of the
Operating Agreement.
"Carried Interest" shall mean the allocable share of Fund
Distributions of Cash from Operations and Cash from Sales or Refinancing payable
to the Manager, as a Member, pursuant to Sections 10.4 and 10.5 of the
Agreement.
"Cash from Operations" shall mean the excess of Gross Revenues
(which excludes revenues from Equipment sales or refinancing) over cash
disbursements (including the Equipment Management Fee and amounts reinvested by
the Fund in Equipment) without reduction for depreciation and amortization of
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intangibles such as organization and underwriting costs but after a
reasonable allowance for cash for repairs, replacements, contingencies and
anticipated obligations, as determined by the Manager.
"Cash from Reserve Account" shall mean that portion of the Net
Proceeds not utilized in the acquisition of Equipment, including cash maintained
according to the provisions of Section 9.4 of the Operating Agreement.
"Cash from Sales or Refinancing" shall mean the net cash realized by
the Fund from the sale, refinancing or other disposition of any Equipment after
payment of all expenses related to the transaction.
"Closing Date" shall mean such date designated by the Manager for
the termination of the offering of Units, but not later than December 7, 2000.
Extension of the offering beyond one year from the date of the Prospectus shall
be subject to the qualification of the offering for any such extension in those
jurisdictions which may limit the offering period to one year. "Initial Closing
Date" shall mean the date on which subscribers for Units, other than the initial
Holder, are first admitted to the Fund as Holders. "Final Closing Date" shall
mean the last date on which subscribers for Units are admitted to the Fund as
Holders.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent federal revenue laws.
"Distributions" shall mean any cash distributed to Holders and the
Manager arising from their respective interests in the Fund.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Equipment" shall mean the equipment acquired and owned by the Fund
to be leased by the Fund to others as well as any Fund interest in equipment,
including without limitation its rights, whether direct or indirect, in all
trusts, joint ventures, leases, chattel paper, options and other contract rights
with respect to equipment.
"Equipment Management Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement.
"Equipment Re-leasing Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement.
"Equipment Resale Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement.
"Front-End Fees" shall mean fees and expenses paid by any party for
any services rendered during the Fund's organization and acquisition phase
including Organization and Offering Expenses, Leasing Fees, Acquisition Fees,
Acquisition Expenses, and any other similar fees, however designated.
Notwithstanding the foregoing, Front-End Fees shall not include any Acquisition
Fees or Acquisition Expenses paid by a manufacturer of Equipment to any of its
employees unless such Persons are Affiliates of the Manager.
"Full Payout Lease" shall mean a lease under which the
non-cancellable rental payments due during the initial term of the lease are at
least sufficient to cover the purchase price of the Equipment leased.
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"Fund" shall mean ATEL CAPITAL EQUIPMENT FUND IX, LLC, the
California limited liability company created under the Operating Agreement.
"Fund Manager" or "Manager" shall mean ATEL Financial Corporation
("ATEL"), a California corporation, or any other Person or Persons which succeed
it in such capacity. The Manager is referred to throughout the Prospectus as
"ATEL" or the "Manager."
"Fund Minimum Gain" shall have the meaning set forth in Regulations
Section 1.704-2(d)(1).
"Gross Proceeds" shall mean the aggregate total of the Original
Invested Capital of the initial and all of the additional Holders.
"Gross Lease Revenues" shall mean all revenues attributable to the
Equipment other than from security deposits paid by lessees thereof. The term
"Gross Revenues" shall not include revenues from the sale, refinancing or other
disposition of Equipment.
"High Payout Lease" shall mean a lease under which the
noncancellable rental payments and other payment obligations of the lessee due
through the initial term of the lease are equal to at least 90% of the original
purchase price paid by the Fund for the Equipment.
"Holders" shall mean owners of Units who are either Members or
Assignees of Record, and reference to a "Holder" shall be to any one of them.
The Manager shall not be considered to be a Holder except to the extent it also
owns Units.
"Incentive Management Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement.
"IRA" shall mean an individual retirement account qualifying under
Section 408 of the Code.
"Investment in Equipment" shall mean the amount of Gross Proceeds
actually paid or allocated to the purchase of Equipment acquired by the Fund,
any amount of Gross Proceeds reserved pursuant to Section 9.4 of the Operating
Agreement up to a maximum of 3% of Gross Proceeds and other cash payments such
as interest and taxes, but excluding Front-End Fees.
"Members" shall mean the initial Members and any other Persons who
are admitted to the Fund as additional or substituted Members. Reference to a
"Member" shall refer to any one of them.
"Net Income" or "Net Loss" shall mean the taxable income or taxable
loss of the Fund as determined for federal income tax purposes, computed by
taking into account each item of Fund income, gain, loss, deduction or credit
not already included in the computation of taxable income and taxable loss, but
does not mean Distributions.
"Net Lease Provisions" shall mean contractual arrangements under
which the lessee assumes responsibility for, and bears the cost of, insurance,
taxes, maintenance, repair and operation of the leased asset and where
non-cancellable rental payments under the lease are absolutely net to the
lessor, notwithstanding that some minor costs or responsibilities remain with
the Fund as lessor or that the Fund retains the option to require and pay for a
higher standard of care or greater level of maintenance or insurance than would
be imposed on the lessee under the terms of the lease.
"Net Proceeds" shall mean the total Gross Proceeds less Organization
and Offering Expenses.
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"Operating Lease" shall mean a lease under which the aggregate
rental payments due during the initial term of the lease are less than the
purchase price of the Equipment leased.
"Operating Revenues" means the total for any period of all Gross
Lease Revenues plus all Cash from Sales or Refinancing.
"Organization and Offering Expenses" shall mean those expenses
incurred in connection with preparing the Fund for registration and subsequently
offering and distributing Units to the public, including selling commissions and
all advertising expenses except advertising expenses related to the leasing of
Equipment.
"Original Invested Capital" shall mean the original gross purchase
price of the Units contributed by each Member to the capital of the Fund for his
interest in the Fund, which amount shall be attributed to Units in the hands of
a subsequent Holder.
"Operating Agreement" or "Agreement" shall mean the Limited
Liability Company Operating Agreement of ATEL CAPITAL EQUIPMENT FUND IX, LLC, as
it may be amended from time to time.
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
"Priority Distribution" shall mean a hypothetical amount determined
solely for purposes of the alternative fee schedule calculation to determine the
Asset Management Fee Limit under the provisions of Section 8.3 of the Operating
Agreement. Such amount will equal, for any calendar year or other period with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during such period multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the capital contribution of the initial purchaser of
such Units was received by the Fund and pro rated for any fraction of a calendar
year for which such calculation is made).
"Prospectus" shall mean the final prospectus filed in connection
with the registration of the Units with the Securities and Exchange Commission
on Form S-1, as amended, together with any supplement thereto which may be
subsequently filed with such Commission.
"Purchase Price of Equipment" shall mean the price paid upon the
purchase or sale of a particular item of equipment including all liens and
mortgages on the equipment, but excluding points and prepaid interest.
"Qualified Plan" shall mean employee trusts (or employer individual
retirement accounts), Keogh Plans and corporate retirement plans qualifying
under Section 401(a) of the Code.
"Regulations" or "Treasury Regulations" shall mean the income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Reinvestment Period" shall mean the period commencing with the
Initial Closing Date and ending on a date 72 months after the last day of the
fiscal year during which the Final Closing Date occurs.
"Reimbursable Administrative Expenses" shall mean the ordinary
recurring administration expenses incurred by the Manager and reimbursed by the
Fund. Such expenses shall not include interest, depreciation, equipment
maintenance or repair, third party services or other non-administrative
expenses.
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"Resident Alien" shall mean a resident alien as defined within the
Federal Aviation Act of 1958, as amended from time to time, or any successor
statute, or any regulations adopted pursuant to such Act or any successor
statute.
"Roll-Up" shall mean a transaction involving the acquisition,
merger, conversion or consolidation, either directly or indirectly, of the Fund
and the issuance of securities of a Roll-Up Entity. Such term does not include:
(a) any transaction if the securities of the Fund have
been for at least twelve months traded through the National
Association of Securities Dealers, Inc. Automated Quotation National
Market System; or
(b) a transaction involving the conversion to corporate,
trust or association form of only the Fund, if, as a consequence of
the transaction, there will be no significant adverse change in any
of the following
(i) the Members voting rights;
(ii) the term of existence of the Fund;
(iii) the terms of compensation of the Manager and its
Affiliates; or
(iv) the Fund's investment objectives.
"Service" shall mean the United States Internal Revenue Service or
its successor.
"Substantially All of the Assets" shall mean, unless the context
otherwise dictates, Equipment representing 66 2/3% or more of the net book value
of all Equipment as of the end of the most recently completed fiscal quarter.
"Unit" shall mean the interest in the Fund representing Original
Invested Capital in the amount of $10 and shall entitle the Holder thereof to
the rights herein provided.
"United States Citizen" shall mean a "citizen of the United States"
as defined within the Federal Aviation Act of 1958, as amended from time to
time, or any successor statute, or any regulations adopted pursuant to such Act
or any successor statute.
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[Outside Back Cover]
The Fund has not authorized anyone to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer of its Units, and unauthorized information or
representations must not be relied upon. This Prospectus is not an offer or
solicitation by anyone in any state or other jurisdiction in which the offer or
solicitation is not authorized or in which the person making an offer is not
qualified to do so or to any person to whom it is unlawful to make an offer or
solicitation. Neither the delivery of this Prospectus or any Supplement nor any
sale made hereunder shall, under any circumstances, create an implication that
there has been no change in the facts set forth herein since the date hereof;
however, if any material change not contemplated hereby occurs while this
Prospectus is required to be delivered, this Prospectus will be amended or
supplemented accordingly.
Until a date 90 days after the effective date of this Prospectus,
all dealers effecting transactions in the registered securities, whether or not
participating in this distribution may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
ATEL CAPITAL EQUIPMENT FUND IX, LLC is not a mutual fund or
any other type of investment company within the meaning of
the Investment Company Act of 1940 and is not regulated by that Act.
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FINANCIAL STATEMENTS
[TO BE PROVIDED BY AMENDMENT]
F-1
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EXHIBIT A
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PRIOR PERFORMANCE INFORMATION
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ATEL Financial Corporation ("ATEL"), the Manager of the Fund, and its affiliates
have extensive experience in the equipment leasing industry, including: (i)
originating and financing leveraged and single investor lease transactions for
corporate investors, (ii) acting as a broker/packager by arranging equity and
debt participants for equipment leasing transactions originated by other
companies, (iii) consulting on the pricing and structuring of equipment lease
transactions for banks, leasing companies and corporations, (iv) organizing and
offering individual ownership and limited partnership investment leasing
programs and (v) supervising and arranging for the supervision of equipment
management and marketing on leasing transactions involving total equipment costs
in excess of $1 billion.
In addition to the Fund, ATEL has sponsored eight prior public and two private
equipment leasing limited programs. See "Prior Performance Summary" for a
summary of information regarding such prior programs.
The first prior partnership, ATEL Lease Income Fund 1985-A ("ALIF"), completed a
private placement of $218,500 of its limited partnership interests in April 1986
from a total of 12 investors. ALIF had acquired a variety of equipment with a
total purchase cost of approximately $296,627 as of December 31, 1997. All such
equipment had been sold as of December 31, 1995 and the partnership has ceased
operations. See Table VI - "Sales or Disposals of Equipment" in this Exhibit A.
The second prior partnership, ATEL Cash Distribution Fund ("ACDF"), commenced a
public offering of up to $10,000,000 of its limited partnership interests on
March 1, 1986. ACDF terminated its offering on December 18, 1987 after raising a
total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF acquired a variety
of types of equipment with a total purchase cost of approximately $11,133,679.
See Table V - "Acquisition of Equipment by Prior Programs" in Exhibit A for
further information concerning the types of equipment acquired by ACDF. All such
equipment had been sold as of December 31, 1997. See Table VI - "Sales or
Disposals of Equipment" in Exhibit A.
Through December 31, 1997, ACDF had made cash distributions to its investors in
the aggregate amount of $1,121.03 per $1,000 invested. Of this amount a total of
$244.89 represents investment income and $876.14 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table IV - "Results of
Completed Program" in this Exhibit A, for further information.
The third prior partnership, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its limited partnership interests on January 4,
1988. ACDF II terminated its offering on January 3, 1990 after raising a total
of $35,000,000 in offering proceeds from a total of approximately 3,100
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF II acquired a
variety of types of equipment with a total purchase cost of approximately
$52,270,536. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF II. All such equipment had been sold as of December 31, 1998. See Table VI
- "Sales or Disposals of Equipment" in Exhibit A.
Through December 31, 1998, ACDF II had made cash distributions to its investors
in the aggregate amount of $1,222.63 per $1,000 invested. Of this amount a total
of $335.43 represents investment income and $887.20 represents return of
capital. See Table III - "Operating Results of Prior Programs" in this Exhibit A
for further information concerning such distributions. See Table IV - "Results
of Completed Program" in this Exhibit A, for further information.
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The fourth prior partnership, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its limited partnership interests on January 4,
1990. ACDF III terminated its offering on January 3, 1992 after raising a total
of $73,855,840 in offering proceeds from a total of approximately 4,822
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF III acquired a
variety of types of equipment with a total purchase cost of approximately
$99,629,941. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF III. Of such equipment, items representing an original purchase cost of
approximately $93,643,805 had been sold as of December 31, 1999.
Through December 31, 1999, ACDF III had made cash distributions to its investors
in the aggregate amount of $1,282.31 per $1,000 invested. Of this amount a total
of $351.28 represents investment income and $931.03 represents return of
capital. See Table III - "Operating Results of Prior Programs" in this Exhibit A
for further information concerning such distributions.
The fifth prior partnership, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its limited partnership
interests on February 4, 1992. ACDF IV terminated its offering on February 3,
1993 after raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF IV
acquired a variety of types of equipment with a total purchase cost of
approximately $108,734,880. See Table V - "Acquisition of Equipment by Prior
Programs" in Exhibit A for further information concerning the types of equipment
acquired by ACDF IV. Of such equipment, items representing an original purchase
cost of approximately $84,464,176 had been sold as of December 31, 1999.
Through December 31, 1999, ACDF IV had made cash distributions to its investors
in the aggregate amount of $1007.87 per $1,000 invested. Of this amount a total
of $261.26 represents investment income and $746.61 represents return of
capital. See Table III - "Operating Results of Prior Programs" in this Exhibit A
for further information concerning such distributions.
The sixth prior partnership, ATEL Cash Distribution Fund V ("ACDF V"), commenced
a public offering of up to $125,000,000 of its limited partnership interests on
February 22, 1993. ACDF V terminated its offering on November 15, 1994. As of
that date, $125,000,000 of offering proceeds had been received from
approximately 7,217 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF V
acquired a variety of types of equipment with a total purchase cost of
approximately $186,995,157 as of December 31, 1999. Of such equipment, items
representing an original purchase cost of approximately $67,403,080 had been
sold as of December 31, 1999.
Through December 31, 1999, ACDF V had made cash distributions to its investors
in the aggregate amount of $701.00 per $1,000 invested. Of this amount a total
of $137.73 represents investment income and $563.27 represents return of
capital. See Table III - "Operating Results of Prior Programs" in this Exhibit A
for further information concerning such distributions. See Table V -
"Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACDF V. See Table VI -
"Sales or Disposals of Equipment" in Exhibit A.
The seventh prior partnership, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its limited partnership
interests on November 23, 1994. ACDF VI terminated its offering on November 22,
1996. As of that date, $125,000,000 of offering proceeds had been received from
approximately 6,401 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF VI
acquired a variety of types of equipment with a total purchase cost of
approximately $208,277,121 as of December 31, 1999. Of such equipment, items
representing an original purchase cost of approximately $16,016,244 had been
sold as of December 31, 1999.
A-2
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Through December 31, 1999, ACDF VI had made cash distributions to its investors
in the aggregate amount of $475.58 per $1,000 invested. All of this amount
represents return of capital. See Table III - "Operating Results of Prior
Programs" in this Exhibit A for further information concerning such
distributions. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF VI. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
The eighth prior partnership, ATEL Capital Equipment Fund VII ("ACEF VII"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on November 29, 1996. ACEF VII terminated its offering on November 29,
1998. As of that date, $150,000,000 of offering proceeds had been received from
approximately 5,348 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACEF VII
had acquired a variety of types of equipment with a total purchase cost of
approximately $287,743680 as of December 31, 1999. Of such equipment, items
representing an original purchase cost of approximately $8,132,789 had been sold
as of December 31, 1999.
Through December 31, 1999, ACEF VII had made cash distributions to its investors
in the aggregate amount of $270.61 per $1,000 invested. Of this amount a total
of $32.19 represents investment income and $238.42 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table V - "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACEF VII. See Table VI - "Sales or Disposals of
Equipment" in Exhibit A.
Although certain of the Prior Programs have experienced lessee defaults in the
ordinary course of business, none of the Prior Programs has experienced an
unanticipated rate of default or major adverse business developments which the
Fund Manager believes will impair its ability to meet its investment objectives.
All of the Prior Programs included in these tables have investment
objectives that are similar to those of the Fund. It should be noted, however,
that the prior privately placed program, ALIF, invested in equipment without the
use of any acquisition debt, while Prior Programs ("Prior Public Programs") were
designed to use moderate amounts of acquisition debt, as is the Fund. In
addition, as in the case of the Fund's portfolio objectives, the Prior Public
Programs' equipment portfolios placed greater emphasis on relatively low
technology equipment than did ALIF.
The factors considered by the Manager in determining that the investment
objectives of the prior programs were similar to those of the Fund include the
types of equipment to be acquired, the structure of the leases to such
equipment, the credit criteria for lessees, the intended investment cycles, the
reinvestment policies and the investment goals of each program. Therefore all of
the information set forth in Tables included in this Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
In Tables I through III information is presented with respect to all Prior
Programs sponsored by the Manager and its Affiliates which closed their
offerings within the five year period ending December 31, 1999, except that ACDF
closed its offering December 18, 1987, ACDF II closed its offering January 3,
1990, ACDF III closed its offering January 3, 1992, ACDF IV closed its offering
on February 3, 1993 and ACDF V closed it offering on November 15, 1994. Table VI
includes information regarding all dispositions of equipment by prior programs
through June 30, 1999. The following is a list of the tables set forth on this
Exhibit A:
TABLE I Experience in Raising and Investing Funds
TABLE II Compensation to the General Partners
TABLE III Operating results of Prior Programs
TABLE IV Results of Completed Programs
TABLE V Acquisition of Equipment by Prior Programs
TABLE VI Sales or Disposals of Equipment
ATEL will provide to any investor, upon written request and without charge,
copies of the most recent Annual Reports on Form 10-K filed with the Securities
and Exchange Commission by each Prior Public Program and will provide to any
investor, for a reasonable fee, copies of the exhibits to such reports.
INVESTORS IN THE PARTNERSHIP WILL HAVE NO INTEREST IN THE INVESTMENTS DESCRIBED
IN THE FOLLOWING TABLES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE INCLUSION
OF THIS INFORMATION AS INDICATIVE OF THE POSSIBLE OPERATIONS OF THE PARTNERSHIP.
A-3
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(on a percentage basis)
December 31, 1999
(Unaudited)
The following Table sets forth certain information concerning the experience of
the General Partners in raising and investing funds. A percentage analysis of
the application of the proceeds raised is presented.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
<S> <C> <C> <C> <C>
EQUITY PROCEEDS
Dollar amount of equity
offered $ 10,000,000 $ 35,000,000 $75,000,000 $ 75,000,000
Dollar amount of equity
raised $ 10,000,000 $ 35,000,000 $73,855,840 $ 75,000,000
-------------- -------------- ------------- --------------
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.00% 5.00% 4.25% 4.53%
Reserves 3.00% 1.50% 1.50% 1.50%
-------------- -------------- ------------- --------------
Percent available for investment 83.50% 84.00% 84.75% 84.47%
Acquisition costs:
Purchase price (2) 79.00% 79.25% 80.00% 79.71%
Acquisition fees 4.50% 4.75% 4.75% 4.76%
-------------- -------------- ------------- --------------
83.50% 84.00% 84.75% 84.47%
-------------- -------------- ------------- --------------
Percent leverage (9) 20.26% 40.93% (8) 43.04% (10) 43.50%
============== ============== ============= ==============
Date offering commenced: Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Length of offering 21 Months 24 Months 24 Months 12 Months
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 30 Months (3) 27 Months (4) 30 Months (5) 20 Months (6)
</TABLE>
A-3(cont.)
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
EQUITY PROCEEDS
<S> <C> <C> <C>
Dollar amount of equity
offered $ 125,000,000 $125,000,000 $150,000,000
Dollar amount of equity
raised $ 125,000,000 $125,000,000 $150,000,000
-------------- -------------- --------------
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.60% 4.70% 4.67%
Reserves 1.50% 1.50% 0.50%
-------------- -------------- --------------
Percent available for investment 84.40% 84.30% 85.33%
Acquisition costs:
Purchase price (2) 79.64% 79.80% 85.33%
Acquisition fees 4.76% 4.50% -
-------------- -------------- --------------
84.40% 84.30% 85.33%
-------------- -------------- --------------
Percent leverage (9) 35.06% 46.12% 36.60%
============== ============== ==============
Date offering commenced: Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Length of offering 21 Months 24 Months 24 Months
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 22 Months (7) 24 Months (11) 24 Months (12)
A-4
<PAGE>
FOOTNOTES:
<FN>
(1) Includes organization, legal, accounting, printing, binding, delivery and
other costs incurred by the General Partner.
(2) Represents amounts paid to unrelated third parties for purchase of equipment
under leases.
(3) As of December 1988, 100% of the amount available for investment had been
invested.
(4) As of June 1990, 100% of the amount available for investment had been
invested.
(5) As of September 30, 1992, 100% of the amount available for investment had
been invested.
(6) As of December 31, 1993, the proceeds of the offering had been fully
invested.
(7) As of November 15, 1994, the Partnership's offering of Limited Partnership
Units was completed. As of December 31, 1994, the proceeds of the offering had
been fully committed.
(8) From January 4, 1988 through August 31, 1994, the maximum amount of leverage
at the end of any quarter was 37%. This was computed as the outstanding balance
of all debt divided by the original cost of all equipment owned by the
partnership as of the end of each period.
(9) The percentage leverage is calculated by dividing the initial principal
amount of debt incurred by the program through the date of this table by the
aggregate original cost of all equipment purchased by the program through such
date. It should be noted, however, that each program has acquired assets, has
made or will make principal amortizing debt service payments and/or has disposed
or will dispose of assets over a period of time extending from its first
investment in equipment. As a result, for each program the total cost of the
assets in its portfolio and the total principal amount of debt outstanding have
fluctuated from time to time. The percentage figure, therefore, does not reflect
the current leverage ratio or the debt ratio at any one point in time, but
constitutes an aggregate ratio for the life of the program through the date of
the table.
(10) From January 4, 1990 through December 31, 1997, the maximum amount of
leverage at the end of any quarter was less than 40%. This was computed as the
outstanding balance of all debt divided by the original cost of all equipment
owned by the partnership as of the end of each period.
(11) As of November 22, 1996, the Partnership's offering of Limited Partnership
Units was completed. As of that date, the proceeds of the offering had been
fully committed.
(12) As of November 29, 1998, the Partnership's offering of Limited Partnership
Units was completed. As of that date, the proceeds of the offering had been
fully committed.
</FN>
</TABLE>
A-4(cont.)
<PAGE>
TABLE II
COMPENSATION TO THE GENERAL PARTNERS
December 31, 1999
(Unaudited)
The following Table sets forth certain information concerning the compensation
derived by the General Partner. Amounts paid are from two sources: proceeds of
the offering and gross revenues.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
<S> <C> <C> <C> <C>
Date offering commenced Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Date offering closed Dec. 18, 1987 Jan. 3, 1990 Jan. 3, 1992 Feb. 3, 1993
Dollar amount raised $ 10,000,000 $ 35,000,000 $73,855,840 $ 75,000,000
Amounts paid to General Partners from proceeds of offering:
Acquisition fees $ 450,000 $ 1,662,500 $ 3,558,700 $ 3,575,123
Selling commissions $ 19,078 $ 230,985 $ 561,914 $ 716,296
Organization and program costs $ 550,000 $ 1,751,422 $ 3,135,942 $ 3,394,652
Dollar amount of cumulative cash
generated from operations before
deducting payments to the General
Partner $ 9,166,349 $ 38,627,639 $70,267,247 $ 49,865,564
Cumulative amount paid to the
General Partner from operations:
Management fees $ 765,081 $ 2,980,123 $ 6,267,222 $ 5,519,991
Other operating expenses $ 475,740 $ 1,666,567 $ 2,896,790 $ 2,700,609
Aggregate payments to General
Partner: (1)
1995 $ - $ 380,380 $ 1,201,436 $ 1,480,305
1996 - 290,349 967,667 1,097,106
1997 - 212,148 909,024 1,113,697
1998 - 211,503 876,403 766,462
1999 - - 319,147 826,175
-------------- -------------- ------------- --------------
$ - $ 1,094,380 $ 4,273,677 $ 5,283,745
============== ============== ============= ==============
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
<S> <C> <C> <C>
Date offering commenced Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Date offering closed Nov. 15, 1994 Nov. 22, 1996 Nov. 29, 1998 (2)
Dollar amount raised $ 125,000,000 $125,000,000 $150,000,000
Amounts paid to General Partners from proceeds of offering:
Acquisition fees $ 5,956,319 $ 5,625,000 None
Selling commissions $ 1,702,822 $ 1,711,446 $ 1,922,703
Organization and program costs $ 5,751,177 $ 5,875,000 $ 7,000,000
Dollar amount of cumulative cash
generated from operations before
deducting payments to the General
Partner $ 85,124,223 $90,047,042 $57,529,077
Cumulative amount paid to the
General Partner from operations:
Management fees $ 8,529,742 $ 5,489,396 $ 3,810,242
Other operating expenses $ 3,254,601 $ 2,548,510 $ 2,258,760
Aggregate payments to General
Partner: (1)
1995 $ 4,067,056 $12,837,117
1996 2,328,139 13,208,900
1997 2,053,274 1,969,649 $10,657,867
1998 1,740,666 1,822,010 14,212,252
1999 1,378,262 1,575,230 $ 2,448,883
-------------- -------------- --------------
$ 11,567,397 $31,412,906 $27,319,002
============== ============== ==============
<FN>
FOOTNOTES:
(1) As of December 31, 1998. Includes payments of management fees,
reimbursements of syndication costs to general partner (and affiliates),
acquisition fees and reimbursements of administrative costs.
</FN>
</TABLE>
A-5(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
December 31, 1999
(Unaudited)
The following Table summarizes the operating results of Prior Programs (ACDF,
ACDF II, ACDF III, ACDF IV, ACDF V, ACDF VI and ACEF VII). The Programs' records
are maintained in accordance with generally accepted accounting principles for
financial statement purposes.
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1986 1987 1988 1989
Months of operations 2 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 6,257 $ 375,072 $ 1,493,794 $ 1,761,021
- gain (loss) on sales of assets - - - 11,951
--------------- ----------------- --------------- ---------------
6,257 375,072 1,493,794 1,772,972
Less Operating Expenses: (1)
Depreciation expense - 51,965 914,188 1,215,223
Amortization expense - 7,849 7,949 7,949
Interest expense 1,558 29,918 37,727 52,553
Administrative costs and reimbursements - 16,288 20,978 43,990
Legal/Professional fees - 15,105 16,586 39,712
Provision for doubtful accounts - - - -
Supplies - 10,507 6,414 -
Other 125 10,886 18,329 12,648
Management fee - 19,882 108,196 147,120
--------------- ----------------- --------------- ---------------
1,683 162,400 1,130,367 1,519,195
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (2) $ 4,574 $ 212,672 $ 363,427 $ 253,777
=============== ================= =============== ===============
Taxable income (loss) from operations $ 3,972 $ (208,962) $ (414,155) $ (294,778)
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $221,291 $160,581 $1,402,104 $1,521,502
Cash generated from sales - - - -
Cash generated from refinancing - - - -
Cash generated from other (3) - 104,143 183,679 221,151
--------------- ----------------- --------------- ---------------
221,291 264,724 1,585,783 1,742,653
--------------- ----------------- --------------- ---------------
Less cash distributions to investors:
From operating cash flow - 160,581 1,215,018 1,508,226
From sales - - - -
From refinancing - - - -
From other - 93,374 - -
--------------- ----------------- --------------- ---------------
Total distributions - 253,955 1,215,018 1,508,226
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 221,291 $ 10,769 $ 370,765 $ 234,427
=============== ================= =============== ===============
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
(cont.) 1986 1987 1988 1989
Months of operations 2 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 2.76 $ (46.78) $ (41.00) $ (29.20)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income None $ 47.60 $ 35.98 $ 25.14
- Return of capital None 9.82 85.52 125.75
--------------- ----------------- --------------- ---------------
None 57.42 121.50 150.89
---------------
---------------
Cash available for distribution, reinvested for
investors' accounts None 65.08 28.50 9.11
--------------- ----------------- --------------- ---------------
Total None $ 122.50 $ 150.00 $ 160.00
=============== ================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 77.46 $ 150.00 $ 160.00
Other 45.04 - -
--------------- ----------------- --------------- ---------------
Total None $ 122.50 $ 150.00 $ 160.00
=============== ================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $ 467,071 $ 4,293,800 $ 8,139,130 $ 8,989,917
Amount invested in program equipment (book value) $ 488,090 $ 4,341,128 $ 7,244,935 $ 6,724,650
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 4.20% 38.57% 73.10% 80.75%
</TABLE>
A-6(cont.)
(Footnotes follow on page A-22)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1990 1991 1992 1993
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,201,630 $ 1,816,898 $ 1,410,396 $ 895,012
- gain (loss) on sales of assets 8,766 4,998 15,909 9,929
--------------- ----------------- --------------- ---------------
2,210,396 1,821,896 1,426,305 904,941
Less Operating Expenses: (1)
Depreciation expense 1,612,647 1,277,406 906,100 348,650
Amortization expense 7,949 7,849 - -
Interest expense 176,922 144,752 72,057 25,403
Administrative costs and reimbursements 37,163 55,293 126,664 140,984
Legal/Professional fees 35,231 41,141 41,459 44,256
Provision for doubtful accounts 96,682 42,870 5,731 -
Supplies - - - -
Other 11,786 25,922 35,839 21,664
Management fee 164,932 130,347 94,229 80,016
--------------- ----------------- --------------- ---------------
2,143,312 1,725,580 1,282,079 660,973
--------------- ----------------- --------------- ---------------
Net income (loss) - GAAP basis (2) $ 67,084 $ 96,316 $ 144,226 $ 243,968
=============== ================= =============== ===============
Taxable income (loss) from operations $ 150,104 $ 180,117 $ 1,105,467 $ 692,509
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 1,585,967 $ 1,424,425 $ 1,673,016 $ 574,077
Cash generated from sales 30,000 159,396 562,504 1,343,908
Cash generated from refinancing - - - -
Cash generated from other (3) 237,576 185,406 126,552 183,275
--------------- ----------------- --------------- ---------------
1,853,543 1,769,227 2,362,072 2,101,260
--------------- ----------------- --------------- ---------------
Less cash distributions to investors:
From operating cash flow 1,516,124 1,265,955 1,470,260 574,077
From sales - - - 524,806
From refinancing - - - -
From other - - - 183,275
--------------- ----------------- --------------- ---------------
Total distributions 1,516,124 1,265,955 1,470,260 1,282,158
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 337,419 $ 503,272 $ 891,812 $ 819,102
=============== ================= =============== ===============
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
(cont.) 1990 1991 1992 1993
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 14.88 $ 17.83 $ 109.44 $ 68.55
Recapture $ - $ -
Capital gain (loss) $ - $ -
Cash distributions to investors on a GAAP basis:
- Investment income $ 6.66 $ 9.54 $ 14.30 $ 24.18
- Return of capital 145.17 117.24 132.94 104.22
--------------- ----------------- --------------- ---------------
151.83 126.78 147.24 128.40
--------------- ----------------- --------------- ---------------
Cash available for distribution, reinvested for
investors' accounts 18.17 14.46 31.00 (21.92)
--------------- ----------------- --------------- ---------------
Total $ 170.00 $ 141.24 $ 178.24 $ 106.48
=============== ================= =============== ===============
Sources (on a cash basis)
Sales $ 43.58
Refinancing
Operations $ 170.00 $ 141.24 $ 178.24 47.68
Other - - - 15.22
--------------- ----------------- --------------- ---------------
Total $ 170.00 $ 141.24 $ 178.24 $ 106.48
=============== ================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $10,064,292 $ 8,607,852 $ 7,402,311 $ 3,620,293
Amount invested in program equipment (book value) $ 5,961,158 $ 3,639,966 $ 2,147,253 $ 724,675
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 90.40% 77.31% 66.49% 32.52%
(Footnotes follow on page A-22)
</TABLE>
A-7 (cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1994 1995 1996 1997
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 264,117 $ 374,172 $ 169,765 $ 142,272
- gain (loss) on sales of assets 220,266 15,106 39,095 60,838
--------------- ----------------- --------------- ---------------
484,383 389,278 208,860 203,110
Less Operating Expenses: (1)
Depreciation expense 98,835 29,324 62,028 36,917
Amortization expense - - - -
Interest expense 5,154 12,496 15,883 11,505
Administrative costs and reimbursements 34,380 - - -
Legal/Professional fees 20,391 15,443 10,606 14,959
Provision for losses - 3,768 2,088 -
Provision for doubtful accounts - - - -
Supplies - - - -
Other 20,697 17,552 16,712 14,962
Management fee 20,359 - - -
--------------- ----------------- --------------- ---------------
199,816 78,583 107,317 78,343
--------------- ----------------- --------------- ---------------
Net income (loss) - GAAP basis (2) $ 284,567 $ 310,695 $ 101,543 $ 124,767
=============== ================= =============== ===============
Taxable income (loss) from operations $ 745,274 $ 339,275 $ 193,822 $ (311,342)
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 195,123 $ 200,234 $ 93,675 $ 114,354
Cash generated from sales 622,350 112,188 212,802 263,096
Cash generated from refinancing - - - -
Cash generated from other (3) 119,745 79,692 79,520 1,000
--------------- ----------------- --------------- ---------------
937,218 392,114 385,997 378,450
--------------- ----------------- --------------- ---------------
Less cash distributions to investors:
From operating cash flow 195,123 200,234 93,675 114,354
From sales 622,350 112,188 142,200 298,243
From refinancing - - - -
From other 412,143 174,165 - 1,000
--------------- ----------------- --------------- ---------------
Total distributions 1,229,616 486,587 235,875 413,597
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ (292,398) $ (94,473) $ 150,122 $ (35,147)
=============== ================= =============== ===============
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
(cont.) 1994 1995 1996 1997
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 73.92 $ 33.65 $ 19.22 $ (30.88)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 28.22 $ 30.82 $ 10.07 $ 12.38
- Return of capital 94.96 17.91 13.55 29.06
--------------- ----------------- --------------- ---------------
123.18 48.73 23.62 41.44
--------------- ----------------- --------------- ---------------
Cash available for distribution, reinvested for
investors' accounts (23.66) (18.63) (3.62) (9.44)
--------------- ----------------- --------------- ---------------
Total $ 99.52 $ 30.10 $ 20.00 $ 32.00
=============== ================= =============== ===============
Sources (on a cash basis)
Sales $ 50.37 $ 6.94 $ 12.06 $ 23.07
Refinancing
Operations 15.79 12.39 7.94 8.85
Other 33.36 10.77 0.08
--------------- ----------------- --------------- ---------------
Total $ 99.52 $ 30.10 $ 20.00 $ 32.00
=============== ================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $ 2,300,024 $ 2,825,287 $ 2,296,755 $ -
Amount invested in program equipment (book value) $ 484,971 $ 552,050 $ 234,707 $ -
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 20.66% 25.38% 20.63% -
</TABLE>
(Footnotes follow on page A-22)
A-8(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
1988 1989 1990 1991
Months of operations 9 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 1,001,065 $ 4,190,191 $ 8,619,546 $ 8,774,789
- gain (loss) on sales of assets - - - (31,613)
--------------- ----------------- --------------- ---------------
1,001,065 4,190,191 8,619,546 8,743,176
Less Operating Expenses: (1)
Depreciation expense 531,855 2,579,866 5,253,869 5,546,000
Provision for decline in value of commercial -
aircraft - - 1,083,834 -
Provision for doubtful accounts - - - 30,400
Interest expense 31,445 362,122 1,485,960 1,353,033
Administrative costs and reimbursements 19,284 107,082 95,474 94,910
Legal/Professional fees - 32,022 42,748 52,281
Other 7,799 41,448 58,465 38,337
Management fee 43,721 252,159 472,064 510,416
--------------- ----------------- --------------- ---------------
634,104 3,374,699 8,492,414 7,625,377
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (5) $ 366,961 $ 815,492 $ 127,132 $ 1,117,799
=============== ================= =============== ===============
Taxable income (loss) from operations $ (588,007) $ (3,544,620) $ (3,583,850) $ (2,013,494)
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 1,044,176 $ 3,639,963 $ 6,823,453 $ 6,705,095
Cash generated from sales $ - $ - $ - 223,447
Cash generated from refinancing -
Cash generated from other (3) 100,715 147,741 400,308 488,962
--------------- ----------------- --------------- ---------------
1,144,891 3,787,704 7,223,761 7,417,504
Less cash distributions to investors:
From operating cash flow 253,760 1,986,455 4,069,920 4,561,842
From sales - - - -
From refinancing - - - -
From other - - - -
--------------- ----------------- --------------- ---------------
Total distributions 253,760 1,986,455 4,069,920 4,561,842
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 891,131 $ 1,801,249 $ 3,153,841 $ 2,855,662
=============== ================= =============== ===============
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
(cont.) 1988 1989 1990 1991
Months of operations 9 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (96.15) $ (158.82) $ (101.37) $ (56.95)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 41.91 $ 36.54 $ 3.60 $ 31.62
- Return of capital - 53.37 112.69 98.72
--------------- ----------------- --------------- ---------------
41.91 89.91 116.29 130.34
Cash available for distribution, reinvested for
investors' accounts 37.47 30.09 13.71 9.66
--------------- ----------------- --------------- ---------------
Total $ 79.38 $ 120.00 $ 130.00 $ 140.00
=============== ================= =============== ===============
Sources (on a cash basis)
Operations $ 79.38 $ 120.00 $ 130.00 $140.00
Sales - - - -
Refinancing - - - -
Other - - - -
--------------- ----------------- --------------- ---------------
Total $ 79.38 $ 120.00 $ 130.00 $ 140.00
=============== ================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $14,664,014 $ 30,309,212 $ 48,538,987 $ 47,181,808
Amount invested in program equipment (book value) $14,661,074 $ 28,412,251 $ 40,154,353 $ 29,983,437
Amount remaining invested in program equipment
(Cost of equipment owned at end of period as a
percentage of cost of all equipment purchased by the
program) (4) 28.05% 57.99% 92.86% 90.26%
</TABLE>
(Footnotes follow on page A-22)
A-9(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
1992 1993 1994 1995
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 8,148,565 $ 6,665,582 $ 5,627,738 $ 3,191,834
- gain (loss) on sales of assets 111,809 184,599 (3,239) 453,960
--------------- ----------------- --------------- ---------------
--------------- ----------------- --------------- ---------------
8,260,374 6,850,181 5,624,499 3,645,794
Less Operating Expenses: (1)
Depreciation expense 5,285,315 4,285,373 2,963,445 1,451,193
Provision for decline in value of commercial
aircraft - -
Provision for doubtful accounts 4,064 - 11,616 25,972
Interest expense 1,171,105 860,663 509,267 365,099
Administrative costs and reimbursements 256,184 313,421 238,185 157,444
Legal/Professional fees 39,612 47,110 37,647 44,864
Other 70,316 49,725 66,324 71,101
Management fee 408,421 427,874 313,115 222,936
--------------- ----------------- --------------- ---------------
7,235,017 5,984,166 4,139,599 2,338,609
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (5) $ 1,025,357 $ 866,015 $ 1,484,900 $ 1,307,185
=============== ================= =============== ===============
Taxable income (loss) from operations $ 1,686,207 $ 2,346,733 $ 4,340,559 $ 3,101,835
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 6,601,157 $ 4,720,797 $ 3,921,897 $ 2,788,119
Cash generated from sales 767,749 2,643,336 2,959,549 2,304,367
Cash generated from refinancing - - - -
Cash generated from other (3) 698,496 1,437,114 1,311,673 875,730
--------------- ----------------- --------------- ---------------
8,067,402 8,801,247 8,193,119 5,968,216
Less cash distributions to investors:
From operating cash flow 4,927,246 4,720,797 3,921,897 2,788,119
From sales - - 859,241 1,064,197
From refinancing - - - -
From other - 794,270 1,311,673 875,730
--------------- ----------------- --------------- ---------------
Total distributions 4,927,246 5,515,067 6,092,811 4,728,046
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 3,140,156 $ 3,286,180 $ 2,100,308 $ 1,240,170
=============== ================= =============== ===============
</TABLE>
A-10
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
(cont.) 1992 1993 1994 1995
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 47.69 $ 66.38 $ 122.79 $ 87.76
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 29.01 $ 24.50 $ 42.01 $ 36.99
- Return of capital 111.77 133.07 132.10 98.14
--------------- ----------------- --------------- ---------------
140.78 157.57 174.11 135.13
Cash available for distribution, reinvested for
investors' accounts 9.22 2.43 (4.11) (30.13)
--------------- ----------------- --------------- ---------------
Total $ 150.00 $ 160.00 $ 170.00 $ 105.00
=============== ================= =============== ===============
Sources (on a cash basis)
Operations $ 150.00 $ 136.96 $ 109.43 $ 61.92
Sales - - 23.97 23.63
Refinancing - - - -
Other - 23.04 36.60 19.45
--------------- ----------------- --------------- ---------------
Total $ 150.00 $ 160.00 $ 170.00 $ 105.00
=============== ================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $41,405,356 $ 36,692,677 $ 26,755,760 $ 21,031,914
Amount invested in program equipment (book value) $23,667,996 $ 16,204,828 $ 11,523,077 $ 7,459,980
Amount remaining invested in program equipment
(Cost of equipment owned at end of period as a
percentage of cost of all equipment purchased by the
program) (4) 79.21% 70.20% 51.19% 40.24%
</TABLE>
(Footnotes follow on page A-22)
A-10(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
December 31,
1996 1997 1998
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 1,994,161 $ 1,189,141 $ 879,740
- gain (loss) on sales of assets 168,927 124,594 1,647,529
----------------- --------------- ---------------
2,163,088 1,313,735 2,527,269
Less Operating Expenses: (1)
Depreciation expense 885,426 364,425 191,489
Provision for doubtfull accounts - 17,072 -
Provision for losses 22,221 13,097 4,994
Interest expense 237,226 115,320 41,969
Administrative costs and reimbursements 132,994 127,992 123,597
Legal/Professional fees 21,173 24,303 20,930
Other 72,138 54,154 49,779
Management fee 157,355 84,156 87,906
----------------- --------------- ---------------
1,528,533 800,519 520,664
----------------- --------------- ---------------
Net income - GAAP basis (5) $ 634,555 $ 513,216 $ 2,006,605
================= =============== ===============
Taxable income (loss) from operations $ 2,079,449 $ 1,357,072 $ 5,173,576
================= =============== ===============
Cash generated by (used in) operations (3) $ 1,288,526 $ 635,243 $ 459,213
Cash generated from sales 1,298,116 778,928 4,085,168
Cash generated from refinancing - - -
Cash generated from other (3) 877,510 816,922 136,857
----------------- --------------- ---------------
3,464,152 2,231,093 4,681,238
Less cash distributions to investors:
From operating cash flow 1,288,526 635,243 459,213
From sales - - 4,085,168
From refinancing - - -
From other 788,922 655,877 365,512
----------------- --------------- ---------------
Total distributions 2,077,448 1,291,120 4,909,893
----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 1,386,704 $ 939,973 $ (228,655)
================= =============== ===============
</TABLE>
A-11
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
December 31,
(cont.) 1996 1997 1998
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 58.84 $ 38.40 $ 146.38
Recapture $ - $ -
Capital gain (loss) $ - $ -
Cash distributions to investors on a GAAP basis:
- Investment income $ 17.95 $ 14.52 $ 56.78
- Return of capital 41.42 22.38 83.54
----------------- --------------- ---------------
59.37 36.90 140.32
Cash available for distribution, reinvested for
investors' accounts (7.37) (6.90) (5.32)
----------------- --------------- ---------------
Total $ 52.00 $ 30.00 $ 135.00
================= =============== ===============
Sources (on a cash basis)
Operations $ 32.25 $ 14.76 $ 12.63
Sales - - 112.32
Refinancing - - -
Other 19.75 15.24 10.05
----------------- --------------- ---------------
Total $ 52.00 $ 30.00 $ 135.00
================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $ 16,329,599 $ 11,293,265 $ -
Amount invested in program equipment (book value) $ 4,564,924 $ 2,740,429 $ 2,370,652
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 31.24% 21.61%
</TABLE>
(Footnotes follow on page A-22)
A-11(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended December 31,
1990 1991 1992
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 2,130,161 $ 7,760,246 $ 12,713,280
- gain (loss) on sales of assets - (17,714) 1,202,188
----------------- --------------- ---------------
2,130,161 7,742,532 13,915,468
Less Operating Expenses: (1)
Depreciation expense 1,278,427 4,919,605 7,739,054
Provision for decline in value of commercial
aircraft 623,294 - -
Interest expense 482,047 1,002,520 1,186,760
Administrative costs and reimbursements 70,775 239,667 542,510
Legal/Professional fees 7,600 52,746 31,691
Other 22,898 49,198 52,629
Management fee 83,245 391,494 839,909
----------------- --------------- ---------------
1,289,859 1,735,625 2,653,499
----------------- --------------- ---------------
Net income - GAAP basis (6) $ (438,125) $ 1,087,302 $ 3,522,915
================= =============== ===============
Taxable income (loss) from operations $ (2,539,135) $ (6,476,596) $ (3,010,933)
================= =============== ===============
Cash generated by (used in) operations (3) $ 1,572,921 $ 6,288,997 $ 9,564,446
Cash generated from sales - - 4,006,080
Cash generated from refinancing - - -
Cash generated from other (3) 125,093 14,587 181,746
----------------- --------------- ---------------
1,698,014 6,303,584 13,752,272
Less cash distributions to investors:
From operating cash flow 396,751 4,185,400 9,261,560
From sales - - -
From refinancing - - -
From other - - -
----------------- --------------- ---------------
Total distributions 396,751 4,185,400 9,261,560
----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 1,301,263 $ 2,118,184 $ 4,490,712
================= =============== ===============
</TABLE>
A-12
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended December 31,
(cont.) 1990 1991 1992
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (282.13) $ (200.01) $ (40.37)
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 33.58 $ 47.23
- Return of capital $ 44.53 96.98 78.19
----------------- --------------- ---------------
$ 44.53 $ 130.56 $ 125.42
================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 44.53 $ 130.56 $ 125.42
Other - - -
----------------- --------------- ---------------
Total $ 44.53 $ 130.56 $ 125.42
================= =============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $ 28,534,220 $ 52,188,848 $ 83,423,686
Amount invested in program equipment (book value) $ 27,475,925 $ 44,531,829 $ 64,526,606
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 28.64% 52.38% 83.73%
</TABLE>
(Footnotes follow on page A-22)
A-12(cont)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
1993 1994 1995 1996
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $13,970,227 $ 14,212,777 $ 13,378,680 $ 10,565,963
- gain (loss) on sales of assets (140,513) 155,497 954,115 1,143,807
--------------- ----------------- --------------- ---------------
13,829,714 14,368,274 14,332,795 11,709,770
Less Operating Expenses: (1)
Depreciation expense 8,984,502 9,734,408 9,037,450 7,051,625
Provision for losses 36,626 826,550 118,023
Interest expense 1,456,147 1,395,276 1,064,823 630,450
Administrative costs and reimbursements 468,005 340,269 300,952 245,242
Legal/Professional fees 58,809 60,552 59,237 38,522
Other 75,289 113,411 110,637 149,613
Management fee 915,375 999,086 900,484 722,425
--------------- ----------------- --------------- ---------------
11,958,127 12,679,628 12,300,133 8,955,900
--------------- ----------------- --------------- ---------------
Income before extraordinary items 1,871,587 1,688,646 2,032,662 2,753,870
Extrordinary gain on early extinguisment of debt - - - 97,608
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (6) $ 1,871,587 $ 1,688,646 $ 2,032,662 $ 2,851,478
=============== ================= =============== ===============
Taxable income (loss) from operations $ (5,122,581) $ 635,990 $ 6,281,437 $ 8,404,788
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $11,402,915 $ 11,400,861 $ 10,333,228 $ 8,435,426
Cash generated from sales 269,479 682,595 3,276,705 5,335,135
Cash generated from refinancing - - - -
Cash generated from other (3) 719,701 1,317,531 1,518,191 1,628,837
--------------- ----------------- --------------- ---------------
12,392,095 13,400,987 15,128,124 15,399,398
Less cash distributions to investors:
From operating cash flow 9,594,918 10,201,485 10,333,228 8,435,426
From sales - - - -
From refinancing - - - -
From other - - 4,961 777,879
--------------- ----------------- --------------- ---------------
Total distributions 9,594,918 10,201,485 10,338,189 9,213,305
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 2,797,177 $ 3,199,502 $ 4,789,935 $ 6,186,093
=============== ================= =============== ===============
</TABLE>
A-13
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
(cont.) 1993 1994 1995 1996
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (68.68) $ 8.53 $ 84.28 $ 112.76
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 25.09 $ 22.66 $ 27.27 $38.26
- Return of capital 104.86 115.59 112.73 86.63
--------------- ----------------- --------------- ---------------
$ 129.95 $ 138.25 $ 140.00 $ 124.89
=============== ================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 129.95 $ 138.25 $ 139.93 $ 114.35
Other - - 0.07 10.54
--------------- ----------------- --------------- ---------------
Total $ 129.95 $ 138.25 $ 140.00 $ 124.89
=============== ================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $91,612,304 $ 87,442,745 $ 79,602,818 $ 64,700,440
Amount invested in program equipment (book value) $63,434,911 $ 52,479,724 $ 39,107,792 $ 26,203,009
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 91.95% 87.77% 79.90% 64.94%
</TABLE>
(Footnotes follow on page A-22)
A-13(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 7,610,362 $ 4,847,317 $ 1,712,222
- gain (loss) on sales of assets 2,823,095 6,160,019 (369,377)
----------------- --------------- ---------------
10,433,457 11,007,336 1,342,845
Less Operating Expenses: (1)
Depreciation expense 4,560,013 2,557,024 752,327
Provision for losses 104,335 17,173 -
Interest expense 319,415 126,982 20,756
Administrative costs and reimbursements 248,250 235,984 205,136
Legal/Professional fees 31,985 25,882 22,954
Other 174,046 110,675 142,807
Management fee 660,774 640,419 114,011
----------------- --------------- ---------------
6,098,818 3,714,139 1,257,991
----------------- --------------- ---------------
Income before extraordinary items 4,334,639 7,293,197 84,854
Extrordinary gain on early extinguisment of debt - - -
----------------- --------------- ---------------
Net income - GAAP basis (6) $ 4,334,639 $ 7,293,197 $ 84,854
================= =============== ===============
Taxable income (loss) from operations $ 10,406,517 $ 10,556,855 $ 3,766,664
================= =============== ===============
Cash generated by (used in) operations (3) $ 6,535,498 $ 3,953,216 $ 779,739
Cash generated from sales 10,182,310 9,580,103 3,614,285
Cash generated from refinancing - -
Cash generated from other (3) 1,047,681 962,739 419,924
----------------- --------------- ---------------
17,765,489 14,496,058 4,813,948
Less cash distributions to investors:
From operating cash flow $6,535,498 $3,953,216 $ 779,739
From sales 35,201 5,541,168 3,614,285
From refinancing -
From other 1,047,681 962,739 10,628,597
----------------- --------------- ---------------
Total distributions 7,618,380 10,457,123 15,022,621
----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 10,147,109 $ 4,038,935 $ (10,208,673)
================= =============== ===============
</TABLE>
A-14
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
(cont.) 1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 139.66 $ 141.69 $ 50.56
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 58.17 $ 97.89 $ 1.14
- Return of capital 45.11 43.88 202.52
----------------- --------------- ---------------
$ 103.28 $ 141.77 $ 203.66
================= =============== ===============
Sources (on a cash basis)
Sales $ 0.48 $ 75.12 $ 49.00
Refinancing - - -
Operations 88.60 53.59 10.57
Other 14.20 13.06 144.09
----------------- --------------- ---------------
Total $ 103.28 $ 141.77 $ 203.66
================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $ 43,579,341 $ 29,610,312 $ 9,331,016
Amount invested in program equipment (book value) $ 13,159,990 $ 6,221,543 $ 1,086,753
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 43.74% 29.72% 9.37%
</TABLE>
(Footnotes follow on page A-22)
A-14(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended December 31,
1992 1993 1994 1995
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,123,081 $ 10,510,289 $ 13,246,145 $ 12,973,718
- gain (loss) on sales of assets - (38,429) (102,932) 615,042
--------------- ----------------- --------------- ---------------
2,123,081 10,471,860 13,143,213 13,588,760
Less Operating Expenses: (1)
Depreciation and amortization expense 1,147,209 7,054,380 8,743,149 8,740,231
Provision for losses - - 34,505 679,634
Interest expense 91,577 81,437 1,332,542 1,960,823
Administrative costs and reimbursements 382,114 537,918 358,441 349,663
Legal/Professional fees 46,935 52,838 86,594 76,365
Other 25,988 57,575 114,376 110,466
Management fee 103,510 752,950 1,060,190 872,374
--------------- ----------------- --------------- ---------------
1,797,333 8,537,098 11,729,797 12,789,556
--------------- ----------------- --------------- ---------------
Net income - GAAP basis $ 325,748 $ 1,934,762 $ 1,413,416 $ 799,204
=============== ================= =============== ===============
Taxable income (loss) from operations $ (2,034,428) $ (9,624,570) $ (8,073,869) $ (2,073,084)
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 3,560,891 $ 9,021,440 $ 10,366,325 $ 8,830,893
Cash generated from sales - 98,752 5,648,425 2,722,954
Cash generated from refinancing - - - -
Cash generated from other (3) - 220,258 1,522,609 2,384,094
--------------- ----------------- --------------- ---------------
3,560,891 9,340,450 17,537,359 13,937,941
Less cash distributions to investors:
From operating cash flow 1,936,639 8,686,491 9,653,038 8,830,893
From sales - - - -
From refinancing - - - -
From other - - - 906,007
--------------- ----------------- --------------- ---------------
Total distributions 1,936,639 8,686,491 9,653,038 9,736,900
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 1,624,252 $ 653,959 $ 7,884,321 $ 4,201,041
=============== ================= =============== ===============
</TABLE>
A-15
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended December 31,
(cont.) 1992 1993 1994 1995
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (76.67) $ (127.78) $ (106.64) $ (27.43)
Recapture
Capital gain (loss) $ 0.04
Cash distributions to investors on a GAAP basis:
- Investment income $ 12.28 $ 15.86 $ 18.67 $ 10.57
- Return of capital 61.44 100.63 110.12 119.50
--------------- ----------------- --------------- ---------------
$73.72 $116.49 $128.79 $ 130.07
=============== ================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 73.72 $ 116.49 $ 128.79 $ 117.97
Other - - - 12.10
--------------- ----------------- --------------- ---------------
Total $ 73.72 $ 116.49 $ 128.79 $ 130.07
=============== ================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $49,603,894 $ 82,896,683 $ 88,187,291 $ 98,547,911
Amount invested in program equipment (book value) $49,801,834 $ 69,901,953 $ 65,252,553 $ 63,967,204
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 45.62% 76.24% 81.10% 90.63%
</TABLE>
(Footnotes follow on page A-22)
A-15(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended
December 31,
1996 1997 1998 1999
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $11,664,408 $ 8,076,530 $ 5,301,074 $ 3,903,062
- gain (loss) on sales of assets 1,574,946 3,203,666 719,396 6,311,690
--------------- ----------------- --------------- ---------------
13,239,354 11,280,196 6,020,470 10,214,752
Less Operating Expenses: (1)
Depreciation and amortization expense 7,849,010 4,846,725 2,379,210 1,620,663
Provision for losses 135,965 321,876 288,145 -
Interest expense 1,858,316 971,628 448,071 293,850
Administrative costs and reimbursements 275,778 303,642 268,282 224,771
Legal/Professional fees 46,419 35,746 31,781 29,136
Other 98,471 156,841 94,243 138,323
Management fee 821,328 810,055 498,180 601,404
--------------- ----------------- --------------- ---------------
11,085,287 7,446,513 4,007,912 2,908,147
--------------- ----------------- --------------- ---------------
Income before extraordinary items 2,154,067 3,833,683 2,012,558 7,306,605
Extrordinary gain on early extinguisment of debt 112,546 - - -
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (6) $ 2,266,613 $ 3,833,683 $ 2,012,558 $ 7,306,605
=============== ================= =============== ===============
Taxable income (loss) from operations $ 1,101,252 $ 13,539,726 $ 5,093,690 $ 15,997,567
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 7,511,884 $ 5,717,928 $ 3,979,852 $ 876,351
Cash generated from sales 4,376,555 20,594,019 2,981,305 15,767,012
Cash generated from refinancing - - - -
Cash generated from other (3) 2,991,035 2,593,695 2,210,380 1,378,787
--------------- ----------------- --------------- ---------------
14,879,474 28,905,642 9,171,537 18,022,150
Less cash distributions to investors:
From operating cash flow 7,511,884 $5,717,928 $3,979,852 $ 876,351
From sales - 2,169,677 2,981,305 8,229,048
From refinancing - - -
From other 2,881,345 2,593,695 3,523,299 1,378,787
--------------- ----------------- --------------- ---------------
Total distributions 10,393,229 10,481,300 10,484,456 10,484,186
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 4,486,245 $ 18,424,342 $ (1,312,919) $ 7,537,964
=============== ================= =============== ===============
</TABLE>
A-16
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended
December 31,
(cont.) 1996 1997 1998 1999
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 14.56 $ 179.03 $ 67.35 $ 211.52
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 29.97 $ 50.69 $ 26.61 $ 96.61
- Return of capital 108.83 89.31 113.39 43.39
--------------- ----------------- --------------- ---------------
$ 138.80 $ 140.00 $ 140.00 $ 140.00
=============== ================= =============== ===============
Sources (on a cash basis)
Sales $ 28.98 $ 39.81 $ 109.89
Refinancing - - -
Operations $ 100.32 76.38 53.14 11.70
Other 38.48 34.64 47.05 18.41
--------------- ----------------- --------------- ---------------
Total $ 138.80 $ 140.00 $ 140.00 $ 140.00
=============== ================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $92,543,075 $ 60,025,398 $ 53,022,506 $ 27,047,824
Amount invested in program equipment (book value) $52,264,526 $ 27,375,489 $ 20,423,330 $8,049,422
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 85.11% 55.20% 48.76% 24.88%
</TABLE>
(Footnotes follow on page A-22)
A-16(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
1993 1994 1995 1996
Months of operations 10 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,173,205 $ 10,806,892 $ 19,951,380 $ 23,662,790
- gain (loss) on sales of assets - 2,564 933,289 1,325,132
--------------- ----------------- --------------- ---------------
2,173,205 10,809,456 20,884,669 24,987,922
Less Operating Expenses: (1)
Depreciation and amortization expense 1,600,628 8,135,951 14,600,474 15,351,574
Provision for losses - 34,158 987,013 255,294
Interest expense 31,511 61,036 1,222,050 3,962,860
Administrative costs and reimbursements 373,089 706,324 535,812 455,316
Legal/Professional fees 13,746 65,028 110,744 117,566
Other 36,269 113,981 176,847 428,631
Management fee 178,583 1,013,448 1,623,818 1,725,751
--------------- ----------------- --------------- ---------------
2,233,826 10,129,926 19,256,758 22,296,992
--------------- ----------------- --------------- ---------------
Income before extraordinary items (60,621) 679,530 1,627,911 2,690,930
Extrordinary gain on early extinguisment of debt - - - 160,955
--------------- ----------------- --------------- ---------------
Net income - GAAP basis (6) $ (60,621) $ 679,530 $ 1,627,911 $ 2,851,885
=============== ================= =============== ===============
Taxable income (loss) from operations $ (5,061,304) $ (13,005,033) $ (11,831,759) $ (7,493,824)
=============== ================= =============== ===============
Cash generated by (used in) operations (3) $ 1,795,722 $ 10,053,220 $ 15,800,948 $ 14,733,366
Cash generated from sales - 22,572 6,930,477 5,900,451
Cash generated from refinancing - - - -
Cash generated from other (3) - 1,513,782 2,498,923 4,855,093
--------------- ----------------- --------------- ---------------
1,795,722 11,589,574 25,230,348 25,488,910
Less cash distributions to investors:
From operating cash flow 922,278 8,223,081 13,101,508 13,672,825
From sales - - - -
From refinancing - - - -
From other - - -
--------------- ----------------- --------------- ---------------
Total distributions 922,278 8,223,081 13,101,508 13,672,825
--------------- ----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 873,444 $ 3,366,493 $ 12,128,840 $ 11,816,085
=============== ================= =============== ===============
</TABLE>
A-17
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
(cont.) 1993 1994 1995 1996
Months of operations 10 12 12 12
<S> <C> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (219.75) $ (152.59) $ (93.72) $ (59.36)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 8.05 $ 12.89 $ 22.59
- Return of capital $ 40.45 89.41 91.93 86.81
--------------- ----------------- --------------- ---------------
$ 40.45 $ 97.46 $ 104.82 $ 109.40
=============== ================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 40.45 $ 97.46 $ 104.82 $ 109.40
Other - - -
--------------- ----------------- --------------- ---------------
Total $ 40.45 $ 97.46 $ 104.82 $ 109.40
=============== ================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $34,699,207 $113,427,843 $ 161,866,626 $ 168,575,337
Amount invested in program equipment (book value) $34,246,741 $100,762,242 $ 131,686,535 $ 125,729,656
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 18.56% 60.66% 86.56% 90.15%
</TABLE>
(Footnotes follow on page A-22)
A-17(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $23,092,315 $ 20,960,261 $ 15,772,680
- gain (loss) on sales of assets 345,340 1,050,907 1,291,920
--------------- ----------------- ---------------
23,437,655 22,011,168 17,064,600
Less Operating Expenses: (1)
Depreciation and amortization expense 13,503,318 11,830,276 7,935,060
Provision for losses 1,801,707 (7) 55,409 -
Interest expense 3,599,776 2,738,745 2,055,475
Administrative costs and reimbursements 405,886 422,293 355,881
Legal/Professional fees 94,603 60,684 54,935
Other 571,546 724,155 442,298
Management fee 1,647,388 1,318,373 1,022,381
--------------- ----------------- ---------------
21,624,224 17,149,935 11,866,030
--------------- ----------------- ---------------
Income before extraordinary items 1,813,431 4,861,233 5,198,570
Extrordinary gain on early extinguisment of debt - - -
--------------- ----------------- ---------------
Net income - GAAP basis (6) $ 1,813,431 $ 4,861,233 $ 5,198,570
=============== ================= ===============
Taxable income (loss) from operations $ (913,120) $ 15,903,507 $ 7,473,487
=============== ================= ===============
Cash generated by (used in) operations (3) $16,546,120 $ 15,715,879 $ 10,478,968
Cash generated from sales 3,136,926 13,675,178 5,186,472
Cash generated from refinancing - -
Cash generated from other (3) 4,476,163 3,410,321 2,160,238
--------------- ----------------- ---------------
24,159,209 32,801,378 17,825,678
Less cash distributions to investors:
From operating cash flow 13,744,875 14,854,419 10,478,968
From sales - - 3,297,315
From refinancing - - -
From other - - 1,222,943
--------------- ----------------- ---------------
Total distributions 13,744,875 14,854,419 14,999,226
--------------- ----------------- ---------------
Cash generated (deficiency) after cash distributions $10,414,334 $ 17,946,959 $ 2,826,452
=============== ================= ===============
</TABLE>
A-18
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
(cont.) 1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (7.23) $ 125.99 $ 59.20
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 14.51 $ 38.51 $ 41.18
- Return of capital 95.48 80.35 78.84
--------------- ----------------- ---------------
$ 109.99 $ 118.86 $ 120.02
=============== ================= ===============
Sources (on a cash basis)
Sales $26.38
Refinancing
Operations $ 109.99 $ 118.86 $ 83.85
Other - - -
--------------- ----------------- ---------------
Total $ 109.99 $ 118.86 $ 120.02
=============== ================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $163,806,646 $138,296,812 $ 121,739,054
Amount invested in program equipment (book value) $104,863,156 $ 74,753,369 $60,548,669
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 87.65% 73.96% 65.10%
</TABLE>
(Footnotes follow on page A-22)
A-18(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31,
1995 1996 1997
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 6,440,218 $ 25,837,343 $ 36,458,734
- gain (loss) on sales of assets 3,819 (107,873) 26,431
--------------- ----------------- ---------------
6,444,037 25,729,470 36,485,165
Less Operating Expenses: (1)
Depreciation and amortization expense 4,976,075 19,298,500 27,596,548
Provision for losses 64,892 257,814 364,852
Interest expense 931,651 5,773,463 7,993,746
Administrative costs and reimbursements 539,009 748,745 435,759
Legal/Professional fees 50,962 186,724 91,625
Other 121,541 612,698 807,883
Management fee 362,581 1,061,856 1,492,716
--------------- ----------------- ---------------
7,046,711 27,939,800 38,783,129
--------------- ----------------- ---------------
Net income (loss) - GAAP basis $ (602,674) $ (2,210,330) $ (2,297,964)
=============== ================= ===============
Taxable income (loss) from operations $ (11,625,618) $ (27,319,391) $ (22,433,132)
=============== ================= ===============
Cash generated by (used in) operations (3) $ 4,354,020 $ 13,940,220 $ 23,899,770
Cash generated from sales 54,156 636,397 406,362
Cash generated from refinancing - - -
Cash generated from other (3) 195,884 501,623 685,665
--------------- ----------------- ---------------
4,604,060 15,078,240 24,991,797
Less cash distributions to investors:
From operating cash flow 2,484,971 8,719,731 12,475,238
From sales - - -
From refinancing - - -
From other - - -
--------------- ----------------- ---------------
Total distributions 2,484,971 8,719,731 12,475,238
--------------- ----------------- ---------------
Cash generated (deficiency) after cash distributions $ 2,119,089 $ 6,358,509 $ 12,516,559
=============== ================= ===============
</TABLE>
A-19
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31,
(cont.) 1995 1996 1997
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (364.88) $ (346.74) $ (177.67)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income
- Return of capital $ 78.78 $ 92.53 $ 99.80
--------------- ----------------- ---------------
$ 78.78 $ 92.53 $ 99.80
=============== ================= ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 78.78 $ 92.53 $ 99.80
Other - - -
--------------- ----------------- ---------------
Total $ 78.78 $ 92.53 $ 99.80
=============== ================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $98,036,611 $204,553,244 $ 206,090,008
Amount invested in program equipment (book value) $92,802,029 $185,510,097 $ 158,856,251
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 47.07% 98.21% 98.95%
</TABLE>
(Footnotes follow on page A-22)
A-19(cont.)
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31,
1998 1999
Months of operations 12 12
<S> <C> <C>
Gross revenue - lease and other $ 35,362,991 $ 34,138,161
- gain (loss) on sales of assets 786,070 262,067
----------------- ---------------
36,149,061 34,400,228
Less Operating Expenses: (1)
Depreciation and amortization expense 26,193,147 22,710,097
Provision for losses and doubtful accounts 97,528 5,396,281
Interest expense 6,557,551 4,783,105
Administrative costs and reimbursements 427,872 397,125
Legal/Professional fees 74,390 65,918
Other 693,512 776,273
Management fee 1,394,138 1,178,105
----------------- ---------------
35,438,138 35,306,904
----------------- ---------------
Net income (loss) - GAAP basis $ 710,923 $ (906,676)
================= ===============
Taxable income (loss) from operations $ (3,932,316) $ 3,551,441
================= ===============
Cash generated by (used in) operations (3) $ 24,079,438 $ 23,773,594
Cash generated from sales 3,357,017 1,802,696
Cash generated from refinancing - -
Cash generated from other (3) 428,622 255,610
----------------- ---------------
27,865,077 25,831,900
Less cash distributions to investors:
From operating cash flow 12,500,645 13,058,314
From sales - -
From refinancing - -
From other - -
----------------- ---------------
Total distributions 12,500,645 13,058,314
----------------- ---------------
Cash generated (deficiency) after cash distributions $ 15,364,432 $ 12,773,586
================= ===============
</TABLE>
A-20
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31,
(cont.) 1998 1999
Months of operations 12 12
<S> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (31.14) $ 28.13
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 5.63 $ (7.18)
- Return of capital 94.37 111.65
----------------- ---------------
$ 100.00 $ 104.47
================= ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 100.00 $ 104.47
Other - -
----------------- ---------------
Total $ 100.00 $ 104.47
================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $199,708,088 $ 192,691,365
Amount invested in program equipment (book value) $129,566,007 $ 99,946,381
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 95.89% 92.52%
</TABLE>
(Footnotes follow on page A-22)
A-20
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ATEL Capital Equipment Fund VII
Period Ended
December 31,
1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 7,370,229 $ 35,399,754 $ 38,849,918
- gain (loss) on sales of assets 3,752 1,795,336 784,853
----------------- --------------- ---------------
7,373,981 37,195,090 39,634,771
Less Operating Expenses: (1)
Depreciation and amortization expense 5,847,827 22,861,169 24,868,782
Provision for losses and doubtful accounts 74,277 56,955 6,779,040
Interest expense 714,701 5,473,480 6,082,904
Administrative costs and reimbursements 645,437 1,056,746 556,577
Legal/Professional fees 90,305 151,183 146,794
Other 380,821 756,971 1,467,738
Management fee 358,846 1,559,090 1,892,306
----------------- --------------- ---------------
8,112,214 31,915,594 41,794,141
----------------- --------------- ---------------
Net income (loss) - GAAP basis $ (738,233) $ 5,279,496 $ (2,159,370)
================= =============== ===============
Taxable income (loss) from operations $ (7,867,498) $ (26,502,705) $ (30,943,906)
================= =============== ===============
Cash generated by (used in) operations (3) $ 6,061,438 $ 21,650,163 $ 29,817,476
Cash generated from sales 130,413 4,742,122 2,469,199
Cash generated from refinancing - - -
Cash generated from other (3) 232,472 2,345,113 3,406,564
----------------- --------------- ---------------
6,424,323 28,737,398 35,693,239
Less cash distributions to investors:
From operating cash flow 2,684,635 9,798,122 14,977,030
From sales - - -
From refinancing - - -
From other - - -
----------------- --------------- ---------------
Total distributions 2,684,635 9,798,122 14,977,030
----------------- --------------- ---------------
Cash generated (deficiency) after cash distributions $ 3,739,688 $ 18,939,276 $ 20,716,209
================= =============== ===============
</TABLE>
A-21
<PAGE>
<TABLE>
<CAPTION>
ATEL Capital Equipment Fund VII
Period Ended
December 31,
(cont.) 1997 1998 1999
Months of operations 12 12 12
<S> <C> <C> <C>
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (230.41) $ (228.48) $ (190.87)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 45.51 $ (13.32)
- Return of capital $ 79.42 45.81 113.19
----------------- --------------- ---------------
$ 79.42 $ 91.32 $ 99.87
================= =============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 79.42 $ 91.32 $ 99.87
Other -
----------------- --------------- ---------------
Total $ 79.42 $ 91.32 $ 99.87
================= =============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $149,409,976 $ 268,896,594 $ 279,610,891
Amount invested in program equipment (book value) $101,284,861 $ 204,329,984 $ 183,993,816
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 51.92% 98.38% 97.17%
</TABLE>
(Footnotes follow on page A-22)
A-21(cont.)
<PAGE>
FOOTNOTES:
(1) Operating expenses include reimbursements to the corporate general partner
as follows:
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Capital
Year ended Distribution Distribution Distribution Distribution Distribution Distribution Equipment
December 31, Fund Fund II Fund III Fund IV Fund V Fund VI Fund VII
<S> <C> <C> <C> <C> <C> <C> <C>
1986 $ 100
1987 15,100
1988 21,500 $ 3,000
1989 32,201 86,234
1990 37,163 95,474 $ 70,775
1991 48,195 71,289 239,667
1992 126,664 256,184 542,510 $ 382,114
1993 140,984 313,421 468,005 537,918 $ 373,089
1994 34,380 238,185 340,269 358,441 706,324
1995 - 157,444 300,952 349,663 535,812 $ 539,009
1996 - 132,994 245,242 275,778 455,316 748,745
1997 - 127,992 248,250 303,642 405,886 435,759 $ 645,437
1998 - 123,597 235,984 268,282 422,293 427,872 1,056,746
1999 - - 205,136 224,771 355,881 397,125 556,577
------------ ------------ ------------ ------------- ------------ ------------- ------------
$ 456,287 $ 1,605,814 $ 2,896,790 $ 2,700,609 $ 3,254,601 $ 2,548,510 $ 2,258,760
============ ============ ============ ============= ============ ============= ============
<FN>
(2) A portion of the equipment owned by the Partnership is accounted for under
the direct financing method. Income under direct financing leases is reported on
the financing method where the income portion of each rental payment is
calculated so as to generate a constant rate of return on the outstanding net
investment. The effect is to recognize decreasing amounts of income in later
periods as the net investment declines. Net income was also negatively impacted
in 1990 by necessity for a provision for doubtful accounts. Prior to 1990, there
had been no such need. The decrease in net income from 1988 to 1989 and from
1989 to 1990 is due to increasing debt levels and interest expense. The decrease
from 1992 to 1993 is due to decreased lease revenues. Revenues have declined as
equipment leases have expired and as the related assets have been sold.
(3) Cash generated by (used in) operations does not include the principal
portion of lease rentals received under direct financing leases. In the
partnerships' statements of cash flows (under generally accepted accounting
principles), these amounts are included in the investing activities section.
(4) The percentage is calculated as a fraction, the numerator of which is the
amount invested in program equipment (at cost) as of the end of the indicated
period and the denominator of which is the cumulative total of the cost of all
equipment acquired by the program through the end of the latest period shown.
(5) Net income decreased from 1989 to 1990 due to the provision for decline
value of commercial aircraft ($1,083,834) included in net income in 1990.
Excluding the effect of that provision, net income per $1,000 invested would
have been $34.60. The results in 1990 are also effected by higher depreciation
rates used for more recent equipment purchases, resulting in increased
depreciation expense compared to lease revenues. The remaining amount of the
changes from 1988 to 1989 and from 1989 to 1990 are primarily due to the timing
of the acquisition of assets, the placement of debt against certain assets and
other operating factors.
(6) Net income increased from 1990 to 1991 due to the provision for decline
value of commercial aircraft ($623,294) included in net income in 1990. The
remaining amount of the changes from 1990 to 1991 and from 1991 to 1992 are
primarily due to the timing of the acquisition of assets, the placement of debt
against certain assets and other operating factors.
(7) In January 1998, Pegasus Gold, one of the Partnership's lessees, filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. The
Partnership determined that certain of the assets under this direct financing
lease were impaired at December 31,1997. The Partnership's provision for losses
and impairments for 1997 includes a reserve for the estimated credit exposure
(approximately $1,200,000) related to the remaining lease assets.
</FN>
</TABLE>
A-22
<PAGE>
TABLE IV
RESULTS OF COMPLETED PROGRAMS
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Program name: ATEL Cash Distribution ATEL Cash Distribution
Fund Fund II
<S> <C> <C>
Dollar amount of equity raised: $ 10,000,000 $ 35,000,000
Assets purchased (see Table 5 for detail listings): $ 11,133,679 $ 52,270,536
Date of Closing of Offering: December 18, 1987 January 3, 1990
Date of first sale of property: May 1, 1989 July 1, 1994
Date of final sale of property: December 31, 1997 December 31, 1998
Taxand distribution data per $1,000 limited partner investment through December
31, 1998:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 192.40 $ 154.95
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 244.89 $ 335.43
- Return of capital 876.14 887.20
------------------- ------------------
1,121.03 1,222.63
Cash available for distribution, reinvested for
investors' accounts 89.05 48.75
------------------- ------------------
Total $ 1,210.08 $ 1,271.38
=================== ==================
Sources (on a cash basis)
Sales $ 136.03 $ 159.92
Refinancing
Operations 969.59 987.33
Other 104.46 124.13
------------------- ------------------
Total $ 1,210.08 $ 1,271.38
=================== ==================
</TABLE>
A-23
<PAGE>
TABLE V
ACQUISITION OF EQUIPMENT
BY PRIOR PROGRAMS
The following is a summary of Equipment acquisitions and Lessees by the seven
prior publicly-registered programs sponsored by ATEL Financial Corporation and
its affiliates. Information concerning the prior programs' Equipment acquisition
is current through June 30, 1999.
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund
Acushnet Company Office Information Jan-87 $ 134,246 $ 6,041 60 FP
Systems
Alachua General Hospital, Inc. 7 Medical Jan-89 628,632 28,288 36 OL
American Motors Corporation Lift Trucks Oct-87 622,632 28,018 48 OL
to Jan-88
Anaheim Memorial Hospital Medical Jan-88 779,613 35,083 48.07% 60 FP
Campbell Soup Company Lift Trucks Mar-87 317,500 14,288 84 FP
Colour Graphics Corporation 8 Printing Jan-87 222,520 10,013 80.75% 84 FP
Enron Corp. Office Information Aug-88 244,488 11,002 36 FP
Systems
Financial News Network, Inc. 9 Studio and Broadcasting Apr-90 909,735 26,183 36 FP
GAF Corporation 10 Manufacturing Oct-88 512,208 23,049 60 FP
GAF Corporation Lift Trucks Oct-87 439,866 19,794 60 OL
Galardi Group, Inc. Restaurant Furnitue and Jul-94 247,000 - 48 FP
Fixtures
Hartford Insurance Group Communication Mar-88 89,236 4,016 60 FP
Imperial Plastics, Inc. 11 Manufacturing Sep-87 526,270 23,682 69.63% 84 FP
to Apr-88
Martin Marietta Corporation Communication May-88 425,670 19,155 48 OL
Nord Kaolin Company 12, 13 Mining, Processing Jul-87 358,710 16,734 60-62 FP
to Jan-88
Nord Sil-Flo Company 12, 13 Material Handling Aug-89 28,113 673 86.27% 60 FP
to Jan-88
Polaroid Corporation Office Information Jan-87 36,190 1,629 59 FP
Systems
Putnam County Hospital Medical May-88 110,000 4,950 60 FP
Rohr Industries, Inc. Motor Vehicle Apr-88 327,240 14,726 36-84 FP, OL
to Oct-88
Teledyne Industries, Inc. 14 Lift Trucks Jan-88 1,653,596 74,412 36-84 FP, OL
to Oct-89
The Dow Chemical Company Motor Vehicle May-88 217,908 9,805 74.86% 50 FP
Treasure Chest Advertising
Company 15 Printing Apr-87 498,746 22,444 97.79% 60 FP
TRW, Inc. Communication Apr-89 320,657 14,430 36 OL
United Technologies Office Information Jan-87 74,115 3,335 48 FP
Corporation, Pratt & Systems
Whitney Aircraft Group
Vista Chemical Company Railroad Rolling Stock Mar-88 850,000 38,250 53.45% 60 FP
Vista Chemical Company Railroad Rolling Stock, Apr-93 350,000 - 60 OL
Improvements
WSMP, Inc. Food Processing Jul-95 208,788 - 98.47% 60 FP
Equipment
---------------- ----------------
ATEL Cash Distribution Fund total: $11,133,679 $ 450,000
================ ================
</TABLE>
A-24
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund II
A.O. Smith Corporation Office Information Jul-89 $ 873,480 $ 5,878 11.59% 36-59 FP
to Feb-91
Systems, Lift
Trucks
Addwest Gold, Inc. 16 Mining Oct-88 1,100,717 52,284 60 FP
Alachua General Hospital, Inc. 7 Medical Jan-89 1,257,263 59,720 36 OL
American Express Company Manufacturing May-89 276,775 13,147 48 FP
American President Trucking 17 Tractors Sep-88 2,890,840 137,315 84 FP
Co., Ltd.
Bristol-Myers Squibb Company Office Furniture Jul-92 324,310 - 24 OL
Buffalo & Pittsburgh Railroad Locomotive Nov-93 108,127 - 37 FP
Campbell Soup Company Lift Trucks Aug-88 350,772 16,662 84 FP
Chesebrough-Pond's Inc. Lift Trucks Jun-90 201,452 - 48-50 FP
Chrysler Corporation Material Handling Dec-93 103,620 - 12 OL
Colour Graphics Corporation Computer System Oct-88 33,805 1,606 60 FP
Cooper Tire & Rubber Company Lift Trucks Jan-89 576,326 27,375 84 FP
Delnor Community Hospital Medical Jul-88 449,956 21,373 36 OL
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 810,000 - 36 OL
Emanuel Hospital & Health Helicopter Oct-88 2,247,765 106,769 79.58% 144 FP
Center
Financial News Network, Inc. 9, 18 Studio and Apr-90 640,544 29,815 36 FP
Broadcasting
Fingerhut Corporation Binding, Printing Jan-89 1,441,690 68,481 60 FP
to Mar-89
FMC Gold Company Material Handling Apr-90 761,129 36,154 36 OL
GAF Corporation Manufacturing Oct-88 682,310 32,410 60 FP
to Apr-88
Galardi Group, Inc. Restaurant Furniture Jul-94 507,000 - 48 FP
and Fixtures
General Motors Corporation Video Projectors Jan-94 58,644 - 36 OL
Home Life Insurance Company Office Furniture/Lift Dec-88 425,658 20,219 60 FP
Trucks/Binding
Hudson Foods, Inc. Food Processing Dec-89 2,713,115 128,872 65.91% 57-59 FP
Inland Steel Company Scientific Measuring Sep-89 417,000 19,808 54 FP
International Paper Company 19 Delivery Trucks Jul-88 1,281,761 60,884 36-60 FP, OL
KeyCorp Office Furniture, Jul-89 1,618,337 76,870 40.09% 53-55 FP
Automated Teller
Machines
Koppers Industries, Inc. Material Handling Jun-90 639,120 - 60 FP
Liggett Group, Inc. 20 Manufacturing Dec-88 648,577 30,807 56 FP
Midway Airlines, Inc. 21 Commercial Aircraft Jun-90 4,592,040 - 68.85% 102 FP
National Semiconductor Manufacturing Apr-89 728,000 34,580 56 FP
Corporation
National Steel Corporation Material Handling May-89 606,153 28,792 87.63% 81 FP
National Union Electric 22 Communication Apr-89 459,893 21,845 60 FP
Corporation
Nissan Motor Corporation Office Information Jul-88 219,187 10,411 48 FP
In USA Systems
NMCS, Inc. , d/b/a National 23 Office Furniture Apr-88 599,001 28,452 60 FP
Medical Group Services, Inc.
Nord Kaolin Company 12 Drilling Apr-89 292,799 13,908 60 FP
Owens Corning Fiberglas Material Handling Jul-89 1,689,012 42,404 39.57% 36-84 FP, OL
Corporation to Oct-90
Quaker Coal Company 24 Tractor Apr-94 558,301 - 24 OL
Regents of the University of Communication Dec-88 80,386 3,818 60 FP
California
Rocky Mountain 25 Medical Aircraft Nov-89 2,150,000 102,125 81.86% 84 FP
Helicopters, Inc.
Rohr Industries, Inc. Motor Vehicles Jan-89 749,291 33,835 36-84 FP
to Jan-90
</TABLE>
A-25
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sebastiani Vineyards, Inc. Production Line, Jan-90 2,818,067 29,362 79.98% 60-84 FP
Wine Barrels to Jan-91
Shell Mining Company 26 Mining Jul-90 3,736,965 104,055 21.46% 60-84 FP
Sherwood Rehabilitation 27 Medical Furniture/ Oct-90 1,814,036 - 97.36% 87 FP
Hospital, Inc. Fixtures & Eqt.
South Dade Nursing Home Ltd. 27 Physical Therapy & Jul-90 36,676 - 60 FP
Exercise Eqt.
St. Luke's-Roosevelt Hospital Medical Furniture/ Feb-90 1,075,795 50,428 84.68% 34-39 OL
Center Fixtures & Eqt.
The Budd Company Material Handling May-90 1,099,014 - 75.09% 55-80 FP
to Jun-90
The Dow Chemical Company Material Handling Jun-88 1,532,061 72,773 74.86% 50 OL
Treasure Chest Advertising Printing Press Apr-93 850,000 - 95.59% 60 FP
Company
Treasure Chest Advertising Printing Equipment Feb-94 233,000 - 60 FP
Company
USX Corporation Haul Trucks Dec-89 2,910,766 138,261 83.41% 60 FP
---------------- ----------------
ATEL Cash Distribution Fund II total: $52,270,536 $ 1,661,498
================ ================
</TABLE>
A-25(cont.)
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund III
A.O. Smith Corporation Material Handling Feb-91 $ 451,902 $ 21,465 60 FP
Alachua General Hospital, Inc. Medical Oct-92 2,074,989 - 36 OL
Alachua General Hospital, Inc. Medical Apr-95 80,500 - 0.00% 18 FP
Alumina Partners of Jamaica 28 Earth Moving Jun-93 2,057,133 - 60 FP
American President Trucking Tractors and Trailers Mar-90 4,859,181 230,811 68.08% 77-84 FP
Co., Ltd. to Aug-90
AMOCO Corporation Trailers May-94 523,805 - 85.88% 66 FP
ARR, Inc. 29, 30 Corporate Aircraft Oct-92 5,275,000 - 84 OL
Barney's, Inc. 31 Retail Store Furniture Oct-93 2,041,222 - 60.04% 60 FP
and Fixtures
Buffalo & Pittsburgh Locomotives Nov-93 792,657 - 37 FP
Railroad Company
Carrier Corporation Lift Trucks Jul-90 108,062 5,133 55 FP
Carrier Corporation Lift Trucks Jul-90 533,950 25,363 53 FP
to Aug-90
Dean Foods Company Trailers Nov-90 1,213,190 57,627 75-84 FP
to Apr-91
Fingerhut Corporation Offset Printing Press Apr-91 1,303,078 61,896 85 FP
Fingerhut Corporation Printing Oct-91 2,074,915 14,464 48.47% 84-85 FP
to Oct-92
FMC Gold Company Haul Truck Jul-90 534,828 25,404 48 OL
Fred Meyer, Inc. Point-of-Sale Oct-90 6,343,897 301,335 63.93% 58 FP
General American Life Office Furniture Jan-93 1,611,278 76,536 84 FP
Insurance
H.E. Butt Grocery Company Tractors and Trailers Jan-93 2,112,747 - 60-84 OL/FP
Ingersoll International, Inc. Communication System Dec-90 277,017 13,158 60 FP
Kelly-Springfield Material Handling Apr-92 127,834 6,072 60 FP
Tire Company to Jul-92
Koppers Industries, Inc. Material Handling Oct-90 402,722 19,129 60 FP
Kraft General Foods, Inc. Lift Trucks May-91 1,621,541 77,023 48-72 FP
to Nov-91
Midway Airlines, Inc. 21 Commercial Aircraft Jul-90 2,296,020 109,061 68.85% 102 FP
Mobil Oil Corporation Material Handling Jul-92 70,256 1,173 36 OL
Mobil Oil Corporation Electric Golf Carts Nov-93 280,119 - 36 OL
Nord Kaolin Company 32 Materials Processing Sep-90 391,116 18,578 60 FP
Ohio Coal Company 33 Mining Apr-92 10,630,130 504,931 84.48% 51-84 OL/FP
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 539,330 25,618 45.63% 58-72 FP
to Sep-90
Pilgrim's Pride Corporation Food Processing Nov-90 3,619,095 171,907 59 FP
Pittston Coal Group 34 Mining Jul-92 5,810,941 276,020 75.71% 60 FP
Portland General Electric 35 Power Generation Jun-90 2,710,359 128,742 70.25% 101 OL
Company
PSI Energy, Inc. Earth Moving Aug-90 842,013 39,996 72 FP
Quaker Coal Company Mining Jan-94 5,808,385 - 60 OL
Reliance Insurance Company Office Furniture Jul-92 1,222,297 50,135 51.90% 60 FP
Rohr Industries Motor Vehicle Oct-95 37,244 - 36 OL
Shell Mining Company Haul Trucks Jan-92 3,167,443 150,454 65.64% 60-84 FP
Stone Container Corporation Material Handling Nov-90 2,975,000 141,313 34.40% 26-57 OL
Teledyne Industries, Inc. Lift Trucks Feb-91 116,476 5,533 39 OL
Terex Corporation Manufacturing Apr-91 291,455 13,845 84 FP
The Dow Chemical Company Material Handling Nov-90 4,504,918 195,358 68.68% 53-60 OL/FP
to Dec-92
The Helen Mining Company 36 Mining Shields Jul-91 5,270,314 250,340 60 FP
The Pillsbury Company Harvesting Jan-93 2,327,946 110,577 59.93% 60 OL
Treasure Chest Advertising Flying High Speed Apr-93 239,171 - 87 FP
Company Paster
Treasure Chest Advertising Printing Stackers Oct-95 139,600 - 84 FP
Company
Truck-Lite Company, Inc. 36 Project Line Oct-91 6,875,715 308,441 81.76% 69-84 FP
to Jan-93
USS/Kobe Steel Company 37 Lift Trucks Sep-91 408,410 19,399 36-60 OL/FP
to Nov-91
Utilicorp United, Inc. 38 Power Generation Sep-91 1,086,934 51,629 75.65% 105 FP
Wal-Mart, Inc. Trailers / Forklifts May-94 490,255 - 95.09% 20-38 OL/FP
West Penn Power Company Storage Tanks Sep-91 1,057,551 50,234 97.86% 87 FP
---------------- ----------------
ATEL Cash Distribution Fund III total: $99,629,941 $ 3,558,700
================ ================
</TABLE>
A-26
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund IV
ARR, Inc. 29, 30 Corporate Aircraft Oct-92 $9,635,969 $ 337,259 84 OL
to Dec-92
ATS, Automatic Tooling Systems Machine Tools Mar-95 434,904 123,410 86.98% 60 FP
ATS, Automatic Tooling Systems Machine Tools Mar-95 175,974 6,545 86.98% 60 FP
Barney's, Inc. 31 Retail Store Oct-93 2,353,608 82,376 60.05% 60 FP
Furniture and
Fixtures
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 29,723 37 FP
Burlington Air Exress Materials Handling Apr-95 622,663 21,793 78.25% 84 FP
Burlington Air Exress Materials Handling Jul-95 505,325 - 80.23% 84 FP
Burlington Northern Railroad 39 Locomotives Jan-93 7,950,000 278,250 24 OL
Company
Chrysler Corporation Tractors & Trailers Dec-93 3,253,000 113,855 84.13% 71-72 FP
Clinchfield Coal Company Drill, Endloader, Jan-94 985,203 34,482 65.79% 73.5-91.5 FP
Diesel Generator
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 1,890,000 66,150 36 OL
Federal Paper Board Co., Inc. Office Equipment Jul-95 77,950 - 36 FP
Foodmaker, Inc. Restaurant Furniture Oct-94 2,651,356 92,797 60 FP
and Fixtures to Jan-95
Galardi Group, Inc. Restaurant Furniture Jul-94 546,000 19,110 48 FP
and Fixtures
GE Industrial & Power Systems Office Automation Mar-95 138,130 4,835 36 FP
GE Industrial & Power Systems Machine Center Jun-95 457,670 - 84 FP
H.E. Butt Grocery Company Trailers Oct-92 5,709,369 199,828 72.48% 60-84 OL/FP
to Jan-93
H.E. Butt Grocery Company Trailers Jun-93 1,404,302 49,151 75.71% 84 FP
Holston Mining, Inc. 40 Endloader, Dozer Jan-94 584,617 20,462 91.5 FP
Kraft General Foods, Inc. Tractors Dec-93 964,315 33,751 71.69% 31 FP
Liquid Carbonic Industrial/ 41 Air Separation Plant Dec-93 9,500,897 332,531 54.21% 99 FP
Medical Corporation
Midwest Power Systems, Inc. Coal Hopper Cars Jan-93 2,240,000 78,400 28.36% 36 OL
Mobil Oil Corporation Tractors/Construction Oct-92 2,760,175 95,786 27-60 OL
/Earth Moving to Apr-94
Nabisco, Inc. Office Automation Aug-95 337,594 - 36 FP
National Steel Corporation Construction Equipment Jan-95 2,208,510 77,298 76.55% 60-84 FP
National Steel Corporation Construction Equipment Apr-95 3,675,997 83,148 88.15% 85-91 FP
Omnicom Group Inc. Office Automation Oct-95 901,849 - 36 FP
Omnicom Group Inc. Computers & Related Aug-96 32,599 - 36 FP
Equipment
Paramount Coal Corporation 40 Drill, Dozer Jan-94 595,800 20,853 65.79% 61.5-91.5 FP
Pepsico, Inc. Materials Handling Jan-94 146,926 5,142 48-60 OL/FP
Pepsico, Inc. Materials Handling Jul-93 458,017 16,031 48-60 OL/FP
to Sep-93
Pittston Coal Group 34 Mining Jul-92 846,883 29,641 78.76% 60 FP
Pittston Coal Group 34 Mining Mar-95 819,349 28,677 65.79% 60 FP
Quaker Coal Company 24 Rail Car Mover Nov-95 263,984 - 48 FP
Rochelle Coal Company 42 Mining Jan-93 6,303,701 220,630 70.34% 84 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 189,855 6,645 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 180,253 6,309 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 454,721 15,915 36 FP
to Jul-94
Signature Flight Support Air Support Equipment Jan-95 1,142,400 39,200 84 FP
Corporation
Tarmac America, Inc. 43 Crawler Dozer, Wheel Aug-94 385,443 13,491 75.64% 60-84 FP
Loader
Tarmac America, Inc. 43 Construction Equipment Jan-95 210,438 7,365 80.90% 84 FP
Tarmac America, Inc. 43 Construction Equipment Jul-95 1,309,300 - 79.82% 97 FP
to Aug-95
</TABLE>
A-27
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund IV
TASC, Inc. Office Automation Jan-95 131,008 4,585 36 FP
TASC, Inc. Office Automation Oct-95 601,701 - 36 FP
to Apr-96
The Dow Chemical Company Material Handling, Dec-92 2,221,228 77,743 74.80% 60-84 FP
Research
The Dow Chemical Company Research Feb-93 102,149 3,575 87.94% 60 FP
The Dow Chemical Company Boom Lift May-93 66,900 2,342 75.81% 60 FP
The Helen Mining Company 36 Mining Jan-92 3,816,507 133,578 32.62% 60 FP
to May-92
The Kendall Company Office Automation Nov-94 166,835 5,839 36 FP
The Kendall Company Office Automation Jan-95 86,108 3,014 36 FP
The Kendall Company Office Automation Apr-95 434,705 15,071 36 FP
The Kendall Company Office Automation Oct-95 568,370 - 24-36 FP
to Jan-96
The Stop & Shop Supermarket Bakery Labeling Feb-96 368,500 - 60 FP
Company Machines
Trans Ocean Container 44 Intermodal Containers Oct-93 3,001,930 105,068 120 FP
Corporation
Treasure Chest Advertising Bin Stackers and Dec-93 753,419 26,370 84-86 FP
Company Trimmers to Apr 94
Treasure Chest Advertising Printing Press Dec-93 3,478,749 121,756 88.28% 84 FP
Company
Treasure Chest Advertising Printing Press & Aug-93 2,075,000 72,625 89.99% 66 FP
Company Associated Equipment
Treasure Chest Advertising Printing Press & Feb-95 511,907 17,917 84 FP
Company Associated Equipment
Union Pacific Corporation Intermodal Jan-93 1,453,096 50,858 46.85% 60 OL
Union Tank Car Company Rail Sep-92 6,460,600 225,666 23.25% 25-51 OL
to Oct-92
USS/Kobe Steel Company 37 Materials Handling Jul-94 35,920 1,257 60 FP
USS/Kobe Steel Company 37 Dump Truck Aug-92 256,000 8,960 84 FP
USX Corporation Materials Handling Jun-93 3,061,376 107,148 83.67% 54-69 FP
Xerox Corporation Materials Handling Feb-95 26,092 913 44 OL
Xerox Corporation AKT PVD System Upgrade Jan-97 77,518 - 54 FP
Xerox Corporation AKT PVD System Jul-96 2,825,000 - 85.74% 60 FP
---------------- ----------------
ATEL Cash Distribution Fund IV total: $108,734,880 $ 3,575,123
================ ================
</TABLE>
A-27(cont.)
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund V
Armco, Inc. Phone Mail System Jan-96 $ 459,835 $ 16,094 84 FP
Armco, Inc. Telephone System Jan-97 31,932 - 72 FP
Upgrade
The Atchison, Topeka & Santa Containers Jan-95 1,926,930 67,443 62.75% 84 OL
Fe Railroad Company
The Atchison, Topeka & Santa Rail Car Containers Jul-94 7,812,200 273,427 55.89% 84 OL
Fe Railroad Company and Chassis
The Atchison, Topeka & Santa 45 Tank Containers Nov-93 744,875 26,071 84 FP
Fe Railroad Company
Barney's, Inc. 31 Retail Store Furniture Oct-93 3,365,947 117,808 60.04% 60 FP
and Fixtures
BJ's Wholesale Club 46 Materials Handling Oct-94 613,998 21,490 62 FP
BNMC Leasing, Inc. Over-the-road Tractors May-94 141,540 4,954 35.62% 8 OL
Burlington Air Express Materials Handling Jan-95 1,720,008 60,200 75.87% 84 FP
to Apr-95
Burlington Northern Railroad Locomotives Jan-95 12,350,000 432,250 28 OL
Burlington Northern Railroad 47 Covered Hopper Apr-96 9,344,563 60,848 21 FP
Rail Cars
Burris Foods, Inc. Over-the-road Trailers May-94 245,296 8,585 21.16% 5 OL
Canadian Pacific Limited 47 Covered Hopper Apr-96 1,798,388 - 13 FP
Rail Cars
Cargill, Inc. 47 Covered Hopper Apr-96 282,100 - 36 FP
Rail Cars
CF Industries, Inc. 47 Covered Hopper Apr-96 528,938 - 12 FP
Rail Cars
Chrysler Corporaion Materials Handling Dec-94 1,300,286 45,510 76.79% 60 OL
to Mar-95
Chrysler Corporation Over-the-road Dec-93 1,379,490 48,282 54.62% 60 OL
Tractors
Chrysler Corporation Materials Handling Apr-96 9,296 - 60 OL
Chrysler Corporation Forklifts Jul-96 25,162 - 60 OL
Chrysler Corporation Materials Handling Apr-95 166,069 5,812 30.07% 60 OL
to Jun-95
Chrysler Corporation Materials Handling Nov-93 1,303,039 45,606 58.69% 60 OL
to Jan-94
CITGO Petroleum Corp. Over-the-road May-94 837,904 29,327 74.10% 36 OL
Tractors
Clark Oil & Refining Retail Store Fixtures Jan-94 1,268,656 44,403 36 OL
Corporation
Denver and Rio Grande Western Auto Racks May-94 7,180,000 251,300 44 FP/OL
Railroad
Emerson Electric Company Over-the-road May-94 237,149 8,300 27.39% 80 FP
Trailers
Federal Paper Board Materials Handling Jan-95 1,315,911 46,057 36 OL
Company, Inc.
Federal Paper Board Materials Handling Apr-95 930,814 32,578 36 OL
Company, Inc.
Federal Paper Board Forklifts, Wheeloader Oct-94 167,791 5,873 36 OL
Company, Inc.
Foodmaker, Inc. Fixtures and Fittings Jan-94 6,042,382 211,489 15.63% 60 FP
and Trailers to Oct-94
General Electric Company Injection Molding Feb-96 1,470,000 51,450 76.28% 120 FP
General Motors Corporation Materials Handling Jan-94 3,023,173 105,811 62.16% 60 OL
(Service Parts Operation to May-94
Division)
General Motors Corporation Materials Handling Jul-94 893,382 31,268 73.33% 60 OL
(Truck and Bus Division)
IBM Corporation Office Furniture Aug-93 1,825,710 63,900 48 OL
Illinois Central Railroad 47 Covered Hopper Apr-96 1,234,188 - 12-40 FP
Company Rail Cars
Ingersoll International, Inc. Machine Tools Jun-94 1,196,355 41,872 72 FP
Kaiser Cement Corporation Tractor and Dump Truck Oct-93 984,671 34,463 60 OL
Kraft, Inc. Over-the-road Trailers May-94 1,000,353 35,012 91.49% 56 FP
McDonnell Douglas Helicopter Office Automation Aug-95 110,320 3,861 36 FP
Systems
Minteq International, Inc. 48 Turbo Laser May-96 347,430 - 36 FP
Minteq International, Inc. 48 Turbo Laser Feb-94 461,800 16,163 60 FP
Mobil Administrative Services 49 Helicopter Jun-93 844,525 29,558 24 OL
Company, Inc.
Mobil Oil Corporation Environmental Ejector Jul-93 423,000 14,805 36 OL
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 2,457 36 OL
Mobil Oil Corporation Materials Handling Jan-95 853,093 29,858 60 OL
Mobil Oil Corporation Liquid Petroleum Tank Oct-95 12,863,591 450,226 75.74% 240 FP
Cars to Jan-96
Montana Rail Link, Inc. 47 Covered Hopper Rail Apr-96 846,300 - 12 FP
Cars
</TABLE>
A-28
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nabisco, Inc. Office Automation Mar-95 426,420 14,925 36 OL
Nabisco, Inc. Office Automation Oct-95 190,442 6,665 36 FP
National Steel Corporation Wheel Loader Oct-94 253,527 8,873 55.74% 60 FP
National Steel Corporation Materials Handling Oct-94 64,650 2,263 46.63% 49 OL
National Steel Corporation Materials Handling Jan-95 1,649,465 57,731 59.70% 61 OL
National Steel Corporation Materials Handling Jan-95 66,134 2,315 51.26% 36 OL
National Steel Corporation Materials Handling Apr-95 873,161 30,561 63.31% 61 OL
National Steel Corporation Materials Handling Apr-95 609,500 21,333 56.28% 49 OL
National Steel Corporation Bulldozer / Crane Oct-95 2,137,183 74,801 78.44% 90 FP
Occidental Chemical Barges Aug-94 2,798,303 97,941 56.31% 16 OL
Corporation
Omnicom Group, Inc. 50 Office Automation & Jan-96 1,458,896 51,061 36-60 FP
Office Furniture
Owens Corning Fiberglas Corp. Materials Handling Aug-93 157,462 5,511 36 OL
Pegasus Gold Corporation 51 Surface Mining Jan-96 7,280,747 254,826 79.77% 84 FP
Praxair, Inc. Over-the-road May-94 668,114 23,384 52.77% 27 OL
Tractors
Primark Corporation Office Automation Jul-95 143,449 5,021 36 FP
to Apr-96
PV Trucking Over-the-road May-94 75,332 2,637 18 FP
Tractors
Quaker Coal Company 24 Haul Truck & Crawler Oct-94 2,626,953 91,943 24-30 OL
Tractor
Quaker Coal Company 24 Mining Equipment Jan-95 3,000,000 105,000 24 OL
Quaker Coal Company 24 Haul Trucks & Tractor Oct-95 2,877,672 100,719 48-60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Jun-96 436,331 - 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Jul-96 499,131 - 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Sep-96 450,273 - 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 POS System Sep-96 33,023 - 60 FP
Quantum Restaurant Group, Inc. 52 POS System Oct-96 36,185 - 60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 432,328 15,131 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 425,437 14,890 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 205,981 7,209 60 FP
Fixtures &
Equipment
Roper Corporation Forklifts Jan-96 243,659 8,528 84 FP
Roper Corporation Industrial Batteries Sep-96 30,882 - 76 FP
Schwegmann Giant Super 53 Fixtures & Equipment Jul-95 5,058,331 176,161 60 FP
Markets, Inc.
Sebastiani Vineyards, Inc. Bottling Equipment Apr-94 113,673 3,979 48 OL
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 95,848 3,355 36 FP
Smitty's Super Valu, Inc. 54 Retail Store Jan-96 4,709,326 164,826 64.27% 60 FP
Furniture &
Fixtures
Soo Line Railroad Company 47 Covered Hopper Apr-96 1,586,813 - 12 FP
Rail Cars
Star Enterprise Over-the-road Tractors May-94 923,533 32,324 59.16% 32 OL
Tarmac America, Inc. 43 Concrete Trucks with Sep-94 5,937,371 207,808 76.81% 48 FP
Mixers to Oct-94
Tarmac America, Inc. 43 Construction Equipment Sep-95 1,491,348 52,197 70.16% 84 FP
to Jan-96
Tarmac America, Inc. 43 Concrete Trucks with Sep-95 1,982,071 69,372 75.27% 97 FP
Mixers to Oct-95
TASC, Inc. Office Automation Jan-95 237,685 8,319 18 OL
TASC, Inc. Office Automation Apr-96 522,280 16,716 18-36 FP
Texaco Trading and Over-the-road Tractors May-94 4,485,676 156,999 60.91% 32-68 FP/OL
Transportation, Inc. & Trailers
The Dow Chemical Company Copiers Jul-94 272,809 9,548 36 OL
The Dow Chemical Company Office Equipment Apr-95 122,800 4,298 36 FP
The Dow Chemical Company Office Automation Oct-94 377,702 13,220 36 OL/FP
to Jan-95
The Kendall Company Office Automation Oct-96 3,735 131 36 FP
The Pillsbury Company Harvesting Equipment Oct-94 1,643,101 57,509 84.91% 60 FP/OL
The Pittston Company 34 Construction & Mining Jan-94 14,037,683 491,319 38.93% 49-61 OL/FP
Equipment to Dec-94
Tom's Foods, Inc. Over-the-road Tractors May-94 259,102 9,069 35.23% 9 OL
Trans Ocean Container 44 Intermodal Containers Oct-93 5,000,683 175,024 120 OL
Corporation
</TABLE>
A-29
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Treasure Chest Advertising Printing Press & Oct-93 2,069,950 72,448 77.94% 60-84 FP
Company, Inc. Associated
Equipment
Treasure Chest Advertising Printing Press and Aug-96 287,320 9,051 84 FP
Company, Inc. Associated
Equipment
Treasure Chest Advertising Printing Press & Jul-95 2,325,000 81,375 46.50% 66 FP
Company, Inc. Associated to Nov-95
Equipment
Tyson Foods, Inc. Tractors / Trailers Jul-93 5,785,000 202,475 26.95% 36-84 OL
to Aug-93
Union Carbide Corporation Rail Tank Cars Aug-95 4,835,759 140,000 39.30% 68-92 FP
USS / Kobe Steel Company 37 Wheel loader, Crane Jan-94 603,352 21,117 60-84 FP/OL
& Lift Truck
---------------- ----------------
ATEL Cash Distribution Fund V total: $186,897,181 $ 5,956,319
================ ================
</TABLE>
A-29(cont.)
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund VI
A T & T Communications, Inc. 55 Printers Aug-95 $ 1,578,500 $ 46,200 36 OL
to Nov-95
A T & T Communications, Inc. 55 Printers Jul-96 1,171,302 17,192 34 OL
to Dec-96
A T & T Communications, Inc. 55 Printers Nov-97 912,252 28-32 OL
A T & T Communications, Inc. 55 Printers Jun-96 540,181 15,752 28-34 OL
to Jul-96
American President Trucking 17 Tractors and trailers Nov-95 759,092 22,773 30.18% 8 OL
Company, Ltd.
Applid Magnetics Corporation Manufacturing Sep-96 7,435,380 223,061 71.50% 60 OL/FP
to Oct-96
Applied Magnetics Corporation Sputter Jul-96 3,274,642 98,239 78.86% 60 FP
Armco, Inc. Link-Belt Scrapmaster Oct-95 388,993 11,670 36 OL
Armco, Inc. Data processing Nov-95 67,829 2,035 37 FP
Armco, Inc. Office Automation Jul-96 109,416 3,282 30 FP
Armco, Inc. Office Automation Jan-97 60,655 72 FP
AT&L Railroad Company 47 Covered Hopper Apr-96 35,263 1,050 12 FP
Rail Cars
Atchison, Topeka & Santa Fe Containers Oct-94 9,196,811 298,896 60.53% 84 OL
Railroad Company to Jan-95
ATS Automation Tooling Machine Tools Apr-96 379,551 77,093 60 FP
Systems, Inc. to Oct-96
ATS Automation Tooling Machine Center Oct-96 330,901 3,513 60 FP
Systems, Inc. to Jan-97
BJ's Wholesale Club 46 Materials Handling Jul-95 931,635 30,278 63 OL
Burlington Northern Railroad 47 Covered Hopper Apr-96 13,223,438 396,703 21 FP
Rail Cars
Canadian Pacific Limited 47 Covered Hopper Apr-96 2,433,113 72,450 13 FP
Rail Cars
Cargill, Inc. 47 Covered Hopper Apr-96 352,625 10,500 36 FP
Rail Cars
Certified Grocers of Materials Handling Oct-96 637,702 19,131 60 OL
California
CF Industries, Inc. 47 Covered Hopper Apr-96 705,250 21,000 12 FP
Rail Cars
Chrysler Corporation Materials Handling Feb-96 1,749,200 52,476 69.99% 53-60 OL
to Jul-96
Chrysler Corporation Materials Handling Mar-95 5,925,384 184,233 66.83% 60 OL
to Dec-95
Chrysler Corporation Materials Handling May-96 2,419,598 69,832 69.93% 52-60 OL/FP
to Oct-96
Consolidated Rail Corporation Locomotives Sep-95 22,353,332 668,372 57.02% 60 OL
Consolidated Rail Corporation Intermodal Container Jan-96 2,502,750 75,083 60 OL
Chassis
Coors Transportation Company 56 Refrigerated Trailers Nov-95 797,704 23,931 47.35% 21 OL
Fairmont Homes, Inc. Materials Handling Apr-96 644,565 19,337 60 OL
Federal Paper Board Company Materials Handling Apr-96 1,740,861 52,226 70.43% 36-60 OL
to Jun-96
Federal Paper Board Company Materials Handling Jul-95 5,401,765 166,124 57.05% 36-84 OL/FP
to Jan-96
General Electric Company - Office Filing System Jan-97 101,685 60 FP
Aircraft Engines
General Motors Corporation Manufacturing Jul-95 652,232 19,567 36 OL
Equipment
Gerber Products Company Materials Handling Oct-96 197,035 5,911 60 FP
Hastings Leasing Limited 57 Trucks & Aug-96 20,242,332 607,270 90.58% 80 FP
Miscellaneous
Illinois Central Railroad 47 Covered Hopper Apr-96 1,692,600 50,400 12-40 FP
Company Rail Cars
IMC Fertilizer, Inc. Rail Tank Cars Sep-95 1,266,374 37,991 27 OL
Mobil Oil Corporation Tractor Jul-96 78,327 2,350 36 OL
Mobil Oil Corporation Materials Handling Oct-96 185,726 5,256 36 OL
Mobil Oil Corporation Hydraulic Crane Oct-96 160,773 4,823 84 OL
</TABLE>
A-30
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mobil Oil Corporation Liquid Petroleum Jan-96 16,110,807 483,324 75.44% 240 FP
Tank Cars to Feb-96
Montana Rail Link, Inc. 47 Covered Hopper Apr-96 1,198,925 35,700 12 FP
Rail Cars
Nabisco, Inc. Office Automation Apr-95 709,572 23,061 36 OL
National Steel Corporation Hydraulic Shovels Jul-96 6,245,062 187,352 69.96% 60 OL
National Steel Corporation Steel Yard Equipemt Jan-97 948,705 14,543 48-60 OL/FP
National Steel Corporation Steel Yard Equipemt Oct-96 338,674 10,160 75.58% 60 FP
National Steel Corporation Wheel Loaders & Jan-96 4,710,131 141,304 59.68% 36-90 OL/FP
Forklifts to Apr-96
National Steel Corporation Materials Handling, Jul-95 1,525,887 49,517 66.05% 60-90 OL/FP
Tractors & Trailers to Oct-95
National Steel Corporation Cranes & Loaders Jul-96 1,099,210 32,976 72.33% 36-84 FP/OL
to Oct-96
NEC Electronics, Inc. 58 Manufacturing Jan-96 18,320,603 66.67% 51 OL/FP
NVR, Inc. Roof Truss Assembly Jul-96 78,484 2,355 84 FP
Omnicom Group, Inc. 50 Office Automation Apr-95 2,232,559 68,290 36-60 OL/FP
to Oct-95
Omnicom Group, Inc. 50 Television Production Jul-96 1,080,056 4,819 48 FP
Equipment to Oct-96
Overnite Transportation Tractors Apr-96 2,140,643 62,961 36 OL
Company
Peerless Eagle Coal Company 59 Haul Trucks &
Construction Jul-95 5,184,875 168,508 59.29% 48 OL
Perdue Transportation 60 Freightliner Tractors Nov-95 536,740 16,102 62.74% 24 OL
Incorporated
Quaker Coal Company 24 Wheel Loaders, Drill Jan-96 3,298,935 98,968 48 FP
& Grader
Quantum Restaurant Group, Inc. 52 Restaurant Furniture Oct-96 253,676 7,610 60 FP
& Fixtures
Quantum Restaurant Group, Inc. 52 POS System Nov-96 33,815 60 FP
Sebastiani Vineyards, Inc. Bottle Labeler Feb-96 317,520 9,526 60 OL
Signature Flight Support Fuel Trucks Jan-97 1,085,000 85.01% 96-132 FP
Corporation
Soo Line Railroad Company 47 Covered Hopper Apr-96 2,256,800 67,200 12 FP
Rail Cars
Tarmac America, Inc. 43 Dragline Jul-96 1,441,764 43,253 84 FP
Tarmac America, Inc. 43 Concrete Mixer Trucks Jul-96 4,787,890 143,637 96 FP
to Sep-96
Tarmac America, Inc. 43 Construction Oct-94 3,114,870 101,233 71.69% 97 FP
Equipment to Nov-94
TASC, Inc. Office Automation Jan-96 1,018,030 30,542 36 FP
to Jul-96
TASC, Inc. Office Automation May-95 1,567,339 50,413 18-36 OL/FP
to Oct-95
TASC, Inc. OfficeAutomation Oct-96 2,654,244 11,629 36 FP
to Jul-97
Trans Ocean Container 44 Intermodal Containers Jan-96 9,995,127 299,854 120 FP
Corporation
Tyson Foods, Inc. Office Automation Jun-95 563,411 18,311 24 OL
Xerox Corporation Binding & Finishing Feb-95 646,466 19,981 48 OL
Equipment to Jun-95
Xerox Corporation Materials Handling May-95 144,527 4,456 44 OL
to Aug-95
---------------- ----------------
ATEL Cash Distribution Fund VI total: $208,277,121 $ 5,623,585
================ ================
</TABLE>
A-31
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Capital Equipment Fund VII
A.P.Moller (Maersk) 61 Intermodal Containers Jan-98 $ 2,280,100 52 OL
Alliant Techsystems, Inc. Semiconductor Jan-98 138,505 8-16 OL
Equipment
Anchor Glass Container Office Automation Jan-98 404,995 18 FP
Corporation
Anchor Glass Container Glass Packaging Jan-98 371,282 33.52% 3-6 OL
Corporation Equipment
Anna Offshore Inc. Offshore supply Apr-98 15,000,000 36 OL
vessels
Applied Magnetics Corporation Manufacturing Jul-97 4,152,810 85.33% 60 FP
Equipment
Applied Magnetics Corporation Wafer Fabrication Dec-97 7,975,841 60-63 FP
Equipment to Jan-98
Archer Daniels Midland Company 62 Rail Tank Cars Jan-98 42,875 6 OP
Arkansas Electric Cooperatives Surface Mining Jan-99 7,933,630 66 OL
Atmel Corporation Semiconductor Jan-98 4,114,596 96 FP
Manufacturing
Equipment
Avon Products, Inc. Office Automation Jan-98 29,415 17 FP
Blue Star Line Ltd. 61 Intermodal Containers Jan-98 3,573,462 60 OL
Burlington Northern & Santa GE B39-8 Diesel Jul-98 16,200,000 36 OL
Fe Railroad Electric
Locomotives
Burlington Northern & Santa Containers Oct-98 9,280,000 84 OL
Fe Railroad
Burlington Northern Railroad 63 GE Locomotives Dec-96 5,010,960 13 OL
Company
Cargill, Incorporated Covered Hopper Sep-98 2,708,564 88 FP
Railcar
Cargill, Incorporated Covered Hopper Sep-98 1,173,946 28 FP
Railcar
Cargill, Incorporated 64 Covered Hopper Jan-97 6,534,000 72 FP
Railcars
Certified Grocers of Forklifts Jan-99 41,025 60 OL
California, Ltd.
Certified Grocers of Forklifts Jul-98 810,792 60 OL
California, Ltd.
Chrysler Corporation Material Handling Oct-96 982,293 60 OL/HP
Equipment to Dec-96
Columbus & Greenville 64 Boxcars Jan-97 667,000 16 FP
Railway Company
Consolidated Diesel Company Copiers Jan-98 15,697 10-13 FP
Consolidated Diesel Company Machine Tools Jan-98 15,161 14 OL
Consolidated Rail Corporation Intermodal Containers Sep-97 3,314,000 84 HP
& Chassis to Nov-97
Costain Coal, Inc. Euclid Hual Trucks Jan-98 805,181 58.22% 12 OL
Crowley Foods, Inc. Bag In Box Filler Sep-98 330,496 60 OL
& Line
Crowley Foods, Inc. Materials Handling Sep-98 82,313 36 OL
Equipment to Oct-98
CVS Pharmacy, Inc. Phone Systems Jan-99 2,426,385 60 FP
CVS Pharmacy, Inc. Materials Handling Jun-99 1,152,971 60 FP
Equipment
Danskin, Inc. Textile Manufacturing Jan-98 255,718 6-15 OL
Equipment
Dole Fresh Fruit Company 61 Intermodal Containers Jan-98 3,876,170 44 OL
Empire Blue Cross and Office Furniture and Jan-98 696,766 27 FP
Blue Shield Fixtures
Exel Logistics, Inc. Tractors and Jan-98 133,947 3 OL
Trailers
Far Eastern Shipping Company 61 Intermodal Containers Jan-98 2,257,299 75 HP
Farmland Hydro, L.P. 62 Rail Tank Cars Jan-98 370,808 16 OL
First Union Rail Corporation 62, 74 Rail Tank Cars N/A 478,836 N/A N/A
</TABLE>
A-32
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
General American Various Tank / Jan-99 8,368,524 84 OL
Transportation Company Hopper Cars
General Electric Company / Sun Enterprise SVR Aug-98 308,343 36 OL
General Electric Stations
Aircraft Engines
General Electric Company / Spectrometer Nov-98 77,150 60 FP
General Electric
Aircraft Engines
General Electric Company / Surface Grinders Aug-98 135,510 60 OL
General Electric to Sep-98
Aircraft Engines
General Electric Company / Machining Centers Jan-99 2,721,058 84 OL
General Electric to May-99
Aircraft Engines
General Electric Company / Machining centers Sep-98 1,546,649 84 FP
General Electric to Jul-99
Aircraft Engines
General Electric Company / Blow Molding Machine Jan-97 906,370 24 OL
General Electric Plastics
General Electric Company / Spectrometers Mar-97 306,545 60 FP
General Electric Plastics
General Electric Company / Trackmobile Railcar Mar-97 166,602 60 OL
General Electric Plastics Mover
General Motors Corporation - Forklifts Jan-98 352,520 17 OL
GM Powertrain Group
Grand Trunk Western Railroad 65 Remanufactured High Jan-98 3,342,139 56.64% 24 OL
Incorporated Cube Boxcars
Great Salt Lake Minerals 62 Rail Tank Cars Jan-98 481,261 7 OL
Corporation
Group Management Services Office Furniture Jul-98 10,209 60 FP
Hallsmith-Sysco Food Services, 1999 Volvo WG42T Aug-98 274,485 84 FP
a division of Sysco Tractor
Corporation
Hallsmith-Sysco Food Services, 1999 Trailmobile Nov-98 1,054,033 96 FP
a division of Sysco Refrigerated
Corporation Trailers
Hallsmith-Sysco Food Services, Volvo Tractors Apr-98 823,455 84 FP
a division of Sysco
Corporation
Hallsmith-Sysco Food Services, Trailmobile May-98 1,209,055 96 FP
a division of Sysco Refrigerated
Corporation Trailers
Hambros Vendor Leasing Limited 66 Vehicles & Sep-97 5,381,076 78.56% 30-66 FP
Sanitation Trucks
Hartz Foods, Inc. Refrigeration Units Jan-98 18,422 9 FP
Hastings Leasing Limited 67 Trucks & Oct-97 28,811,289 88.85% 29-113 FP
Miscellaneous
Hastings Leasing Limited 67 Medical Equipment Oct-97 8,014,488 91.66% 25-81 FP
Henry General Hospital Hematology Analyzers Jan-98 185,700 41 FP
& Upgrades
Hughes Network Systems, Inc. Remote Communication Jan-98 97,237 54.61% 6-9 OL
Device
Hyplains Beef, L.C. Racking and Conveyor Jan-98 1,364,007 10 OL
Equipment
IBM Corporation Stereolithography Jan-98 30,026 7 OL
Apparatus
Illinois Central Railroad 64 Boxcars Jan-97 1,610,000 36 FP
Company
International Paper Company Trackmobile Railcar Jan-97 248,952 60 OL
Mover
International Paper Company Knuckle Boom Loader Feb-97 213,095 72 FP
International Paper Company 68 Rail Log Cars Oct-97 5,624,724 51 OL
International Paper Company CAT Wheel Loaders Jan-97 417,700 48 HP
to Feb-97
</TABLE>
A-33
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Paper Company Hydraulic Excavator, Jun-97 539,438 60 OL
Lift Trucks, Loader to Jul-97
International Paper Company Knuckle Boom/ Sep-97 926,964 2.84% 48-60 OL/HP
Wheel Loaders to Oct-97
International Rectifier Wafer Fabrication Jan-98 589,829 8.45% 1-9 OL
Corporation Equipment
ITO Corporation Forklifts Jan-98 240,488 15-31 FP
Kawasaki Kisen Kaisha, 61 Intermodal Containers Jan-98 2,614,728 52 OL
Ltd. (K-Line)
Koppers Industries, Inc. 62 Rail Tank Car Jan-98 5,400 6 OL
Kraft Foods, Inc. Office Furniture/ Jul-98 1,227,554 71-84 FP
Fixtures to Dec-98
Kraft Foods, Inc. Phone System Jul-98 566,862 53-60 FP
to Sep-98
Kraft Foods, Inc. Steelcase Office Nov-97 1,154,439 84 FP
Furniture & to Jan-98
Fixtures
Kraft Foods, Inc. Telephone System Nov-97 549,980 60 FP
to Jan-98
Louisiana Workers' Office Automation Jan-98 2,199 1 OL
Compensation Corporation
Maxtor Corporation 69 Electronic Test Sep-97 533,698 36 HP
Equipment
Maxtor Corporation 69 Computer Equipment Jan-98 241,310 6 OL
McDonnell Douglas Helicopter Lift Trucks Apr-98 96,510 60 OL
Company
Midland Enterprises, Inc. Jumbo Hopper Barges Dec-98 4,941,229 25-49 OL
Minteq International, Inc. Geotronics Laser Jan-97 689,350 36 HP
Measuring Machine to Mar-97
Minteq International, Inc. Geotronics Laser Sep-97 1,019,585 36 HP
Measuring Machines to Jan-98
Mobil Business Resources 70 Helicopters Nov-96 1,650,000 36 OL
Corporation
Mobil Business Resources 70 Helicopter Oct-97 1,160,000 36 OL
Corporation
Mobil Oil Corporation Wheel Loader Jan-98 92,773 36 OL
National Steel Corporation Haul Trucks/Loader/ Oct-98 7,735,693 60 OL
Dozer to Jan-99
National Steel Corporation CAT Dozer Tractors Apr-97 734,730 75.36% 60 HP
National Steel Corporation CAT Dozer, Loaders Jul-97 3,666,101 60 OL
National Steel Corporation Motor Grader & Front Oct-97 1,747,828 60 HP
End Loader
National Steel Corporation Crane & Wheel Loader Jan-98 861,344 48 OL
National Steel Corporation Omega Forklift & Apr-98 1,286,210 60 HP
Loaders
Nippon Yusen Kaisha, Ltd. 61 Intermodal Containers Jan-98 8,715,760 96 FP
(N.Y.K.Line)
North American Chemical Mini Mag - Jan-98 18,809 5 FP
Company Flow Meters
NVR, Inc. Home Manufacturing Nov-97 137,921 84 FP
Equipment
NVR, Inc. Home Manufacturing Oct-98 370,348 84 FP
Equipment
NVR, Inc. Tee-Lok Roller Gantry Aug-97 591,046 84 FP
Systems to Oct-97
Omnicom Group, Inc. 71 Office Furniture Jul-97 20,292 60 FP
Omnicom Group, Inc. 71 Office Furniture Jan-98 1,007,401 60 FP
Omnicom Group, Inc. Office Furniture Jul-98 108,468 60 FP
Omnicom Group, Inc. Office Furniture Jul-98 4,600 60 FP
PCS Phosphate Company, Inc. 62 Rail Tank Cars Jan-98 175,000 25 OL
Pentagon Systems, Inc. SMT-1200C Surface Jan-98 106,842 35 FP
Mount Placement
System
Pioneer Chlor Alkali Company 62 Rail Tank Cars Jan-98 1,614,144 15-60 OL/HP
PlasmaQuest , Inc. Office Automation Jan-98 6,406 8 FP
PVS Technologies, Inc. 62 Rail Tank Cars Jan-98 672,388 6-24 OL
</TABLE>
A-34
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Railcar, Ltd. Gondola and Hopper Nov-98 4,550,304 120 OL
Railcars
Ralphs Grocery Company Forklifts Jan-98 275,385 8.49% 2-17 FP
Riceland Foods, Inc. 62 Rail Tank Cars Jan-98 130,032 4 OL
Rose Acres Farms, Inc. Food Processing Jan-98 185,461 62.96% 16 OL
Equipment
Sarif, Inc. Wafer Fabrication Jan-98 224,702 23 FP
Equipment
Seaboard Commodity 62 Rail Tank Cars Jan-98 525,618 6-22 OL
Trading Company
Sebastiani Vineyards, Inc. Wine Barrels Jan-98 872,061 36-60 HP/FP
Sebastiani Vineyards, Inc. Wine Barrels Jul-98 201,470 36 HP
Sematec, Inc. Manufacturing Oct-97 1,303,600 36 HP
Equipment
Sematec, Inc. Manufacturing Jul-98 2,400,000 36 OL
Equipment
Sematech, Inc. Novellus Inova Feb-99 3,500,000 36 FP
Pvd System
Sierra Pacific Power 68 Coal Hopper Rail Cars Dec-97 2,600,000 67 OL
Company & Idaho Power
Company
Signature Flight Support Rampmaster Fuel Truck Oct-98 320,700 96 FP
Corporation
Signature Flight Support Fuel Trucks Apr-97 760,000 89.01% 132 FP
Corporation
Signature Flight Support Fuel Trucks Jan-98 620,000 72.64% 96-132 FP
Corporation
Signature Flight Support Fuel Truck & Deicer Apr-98 518,997 78.24% 96 FP
Corporation
Signature Flight Support Isuzu Trucks Jul-98 722,275 78.53% 60 HP
Corporation
Sisseton Milbank 64 Covered Hopper Jan-97 330,000 36 FP
Railroad, Inc. Railcars
Smitty's Super Valu, Inc. Furniture and Fixtures Jan-98 451,861 3 OL
Sony Pictures Sony Monitors Mar-98 1,278,900 36 OL
Entertainment, Inc.
Sony Pictures Cybex / Tectrix Jan-99 83,642 48 OL
Entertainment, Inc. Fitness Equipment
Sony Pictures Laserjet Printers Dec-98 78,820 36 OL
Entertainment, Inc. & Equipment
Southern Illinois Railcar Co. 64 Covered Hopper Jan-97 462,000 48 FP
Railcars
Southern Pacific Locomotives Jan-98 795,316 9 OL
Transportation Company
Southwest Health Centre, Inc. Siemens Mammographic Jan-98 13,000 1 OL
System
Stater Brothers Markets Furniture and Fixtures Jan-98 13,643 2 FP
Tarmac America, Inc. / 72 CAT / Michigan Loaders Apr-97 350,000 18 OL
Tarmac Mid Atlantic, Inc.
Tarmac Minerals. Inc. 72 Steel Deck Barges Jan-98 7,335,250 60 OL
TASC, Inc. Office Automation Apr-98 1,146,296 36 HP
TASC, Inc. Office Automation Jul-98 848,065 36 FP
TASC, Inc. Office Automation Jul-98 2,362,948 36 FP
to Apr-99
TASC, Inc. Office Automation Oct-97 1,169,828 36 HP/FP
to Jan-98
The Pittston Company Fletcher Rr11-15 Dec-98 462,120 60 FP
Roof Bolters
The Pittston Company Diesel Mantrip Dec-98 140,500 60 FP
The Pittston Company Cat D11R Crawler Oct-98 2,246,938 48 OL
Tractors to Dec-98
</TABLE>
A-35
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3a) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thompson Pipe & Steel Company Phone System, Jan-98 31,918 1 OL
Furniture and
Fixtures
Thomson Saginaw Ball Screw Machine Tools Jan-98 488,918 16 OL
Company
Triad International Aircraft Access and Jan-98 954,125 36.77% 3 OL
Maintenance Corporation Ground Support
Equipment
Ultrabeam Lithography, Inc. 73 Manufacturing Aug-98 971,517 48 FP
to Feb-99
Ultrabeam Lithography, Inc. 73 Manufacturing May-98 167,220 48 HP
Ultrabeam Lithography, Inc. 73 Manufacturing Aug-98 220,887 48 HP
Ultrabeam Lithography, Inc. 73 Technical Instrument Dec-97 269,888 48 HP
Confocal Metrology
System
United States Surgical Assorted Manufacturing Jul-98 3,747,760 120 FP
Corporation Equipment
Universal City Florida Office Automation Oct-98 1,665,120 36 OL
Partners to Apr-99
Wagner College Desktop PCs Jan-98 91,951 7-9 OL
Wayne Farms, a division of Food Processing Jan-98 64,686 12 OL
Continental Grain Company Equipment
Wisconsin Packing Company, Inc. Forklifts Jan-98 91,850 25 HP
Xerox Corporation FPD Inspection System Jan-98 3,521,046 60 HP
Xerox Corporation Lift truck Aug-98 21,921 44 OL
---------------- ----------------
ATEL Capital Equipment Fund VII total: $279,750,668 $ 0
================ ================
TOTAL OF ALL FUNDS: $946,694,006 $ 20,825,225
================ ================
</TABLE>
A-35(cont.)
<PAGE>
[FN]
TABLE V ACQUISITION OF EQUIPMENT FOOTNOTES
(1) In many cases, a Lease transaction is funded over a period of time
according to the Lessee's requirements. Therefore "Commencement Date (s)"
expressed as a range represents multiple commencement dates occurring or
anticipated under the same Lease line.
(2) "Acquisition Cost" includes either amounts committed to Lessees for
funding by the program, or the actual Equipment acquisition cost, less any
Acquisition Fees. All figures are rounded.
(3) "Acquisition Fees" include fees accrued by the program as of the
Preparation Date. For partially funded Lease lines, additional fees may be
expended by the program for future acquisitions made pursuant to the terms of
the Lease.
(4) "Percent Leverage" represents the percent ratio of the original
principal amount of the debt acquired or assumed by the program, to the
Acquisition Cost of the Equipment. The Equipment may be "leveraged" (where a
portion of the Equipment Acquisition Cost is financed using non-recourse debt
financing) at the time of, or subsequent to, the acquisition of the Equipment by
the program. Therefore, actual leverage ratios may be more or less than
indicated due to the timing of the acquisition of the Equipment in relation to
the amortization of the principal amounts of the debt.
(5) "Lease Term" is expressed in terms of months, although the actual Lease
Term may be expressed as monthly, quarterly, semiannual or annual.
(6) A designation of "FP" indicates that the aggregate rents to be received
during the Lease Term exceed or are equal to the Acquisition Cost of the
Equipment. A designation of "OL" indicates that the aggregate rentals to be
received during the Lease Term are less than the Acquisition Cost.
(7) The interest in this transaction is held 1/3 by ATEL Cash Distribution
Fund and 2/3 by ATEL Cash Distribution Fund II.
(8) Guaranteed by both Fingerhut Corporation and by Primerica Corporation,
as successor in interest to American Can Company.
(9) In March 1992, Financial News Network ("FNN"), a lessee of ATEL Lease
Income Fund, ATEL Cash Distribution Fund and ATEL Cash Distribution Fund II,
filed for protection under Chapter 11 of the U.S. Bankruptcy Act. Subsequent
competitive bidding between CNBC (a division of General Electric Company) and a
partnership consisting of Dow Jones, Inc. and Group W (Westinghouse) developed
for the purchase of FNN assets. This bidding resulted in the sale of certain FNN
assets, principally its subscribers, to CNBC for $145 million in cash and the
assumption of $9.3 million in liabilities. The proceeds from the sale were
distributed beginning in June 1992 resulting in the recovery of substantially
all of the programs' remaining investment in the Equipment.
(10) A 34.41% interest in this transaction was acquired by ATEL Cash
Distribution Fund. The remaining 65.59% was acquired by ATEL Cash Distribution
Fund II.
(11) Guaranteed by Fingerhut Corporation.
(12) Credit support provided by an Investment Agreement of Nord Kaolin
Corporation and of Nord Resources Corporation.
(13) These transactions are all leveraged under one non-recourse note with
Sogelease Corporation.
(14) Leased to Teledyne Wah Chang Albany, a division of Teledyne
Industries, Inc.
A-36
<PAGE>
(15) ATEL Cash Distribution Fund holds a one-half interest in this
transaction, the remaining half interest was acquired by ATEL Financial
Corporation on identical terms.
(16) Guaranteed by Addington Resources.
(17) Guaranteed by American President Companies.
(18) A 97.75% interest in Equipment Schedule No. 2 was acquired by ATEL
Cash Distribution Fund II. The remaining 2.25% interest in that Schedule was
acquired by ATEL Lease Income Fund.
(19) Lease originally with Hammermill Paper Company as lessee and
subsequently assumed by International Paper Company.
(20) Lease assigned to and assumed by Liggett & Meyers Tobacco Company,
with recourse retained against the original Lessee.
(21) On January 1, 1991 Midway Airlines, Inc., the lessee of the DC9-32 in
which ATEL Cash Distribution Fund II and ATEL Cash Distribution Fund III owned
interests, suspended payments on its debt and aircraft leases. On March 26,
1991, the Lessee filed for protection under Chapter 11 of the U.S. Bankruptcy
Act. On September 4, 1991, the non-recourse lender, John Hancock Leasing
Corporation, exercised its right to foreclose on the aircraft. As this
investment represents a relatively small portion of the programs' total equity
and anticipated cash flow, the General Partners do not believe that the adverse
developments with respect to this investment will have a material effect on
their respective operations, cash flows or rates of cash distributions. The
beneficial interest in the Equipment was held two-thirds by ATEL Cash
Distribution Fund II and one-third by ATEL Cash Distribution Fund III.
(22) Equipment operated by the Eureka Company, a division of Lessee, an
indirect subsidiary of AB Electrolux, Sweden.
(23) Guaranteed by Reynolds and Reynolds.
(24) On December 31, 1997, this lessee requested a moratorium on lease
payments from January through March 1998. ATEL Cash Distribution Fund V is
currently negotiating a settlement with the lessee.
(25) On October 13, 1993 the lessee, Rocky Mountain Helicopters, Inc.,
filed for protection under Chapter 11 of the U. S. Bankruptcy Act. The aircraft
which was the subject of the lease was delivered to ATEL Cash Distribution Fund
II, prior to the petition for bankruptcy and was sold by the lessor. The
proceeds of the sale satisfied in full the non-recourse debt obligation owed to
USX Credit Corporation and the excess was applied to mitigate the lessor's claim
against the lessee. The lessor subsequently filed and was allowed an unsecured
claim in the amount of $776,542. Through June 30, 1997, the lessor has received
$310,617 on this claim, representing 40% of the allowed claim. The sum of the
proceeds from the rents, sale of the aircraft and the claim filed in bankruptcy
has resulted in a recovery exceeding the lessor's original investment in the
aircraft.
(26) Assigned to and assumed by various subsidiaries of Lessee. Recourse
retained against Lessee. Lessee subsequently changed its name to SMC Mining
Corporation.
(27) Guaranteed by Continental Medical Systems, Inc.
(28) An indirect subsidiary and joint venture of Kaiser Aluminum & Chemical
Corporation and Norsk Hydro.
(29) Guaranteed by United States Surgical Corporation.
A-37
<PAGE>
(30) Acquisition Cost represents one-half of the total Equipment
Acquisition Cost. Title to this Equipment is held in an equipment trust where
one-half of the beneficial interest in the Equipment is owned by ATEL Cash
Distribution Fund III and one-half by ATEL Cash Distribution Fund IV.
(31) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
(32) Guaranteed by Nord Resources Corporation. Subsequently the lease was
assigned without recourse to DBK Minerals, Inc. with a guarantee of Dry Branch
Kaolin Company.
(33) Lessee indicated is the parent of Central Ohio Coal Company and
Southern Ohio Coal Company. The Lease transaction represents three distinct
leases with subsidiary companies. Credit support is provided by the parent, Ohio
Power Company by an Inducement Letter.
(34) The Lessee name is indicated for convenience only. The actual Lessees
are Paramount Coal Corporation, Clinchfield Coal Company, Heartland Resources,
Inc., Motivation Coal Company, Elkay Mining Company, Holston Mining, Inc. and
Meadow River Coal Company, all subsidiaries of The Pittston Company. The Lease
is guaranteed by The Pittston Company.
(35) Title to the Equipment and Lease transaction is held by an equipment
trust. A divisible 1/2 beneficial interest in the equipment trust is owned by
the program. The remaining divisible 1/2 beneficial interest in the equipment
trust is owned by a non-affiliate.
(36) Guaranteed by Quaker State Corporation. This lease was subsequently
assigned to Costain Coal Company on a recourse basis. In 1996, the assignee
defaulted on a lease payment, which default was subsequently cured. The lessor
is currently negotiating a settlement with the assignee, lessee and guarantor.
(37) Lessee is a partnership formed by United States Steel Corporation and
Kobe Steel Corporation.
(38) Title to the Equipment and Lease transaction is held by an equipment
trust. Partnership owns a 17.3199% beneficial interest in the equipment trust.
(39) Subject to a remarketing agreement with General Motors -
Electro-Motive division.
(40) Guaranteed by The Pittston Company.
(41) Guaranteed by CBI Industries, Inc. Subsequently guaranteed by Praxair,
Inc.
(42) Guaranteed by Peabody Holding Company, Inc.
(43) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(44)The equipment is subject to operating leases and managed by the lessee
under a pooled management arrangement. Rentals are variable. Average monthly
lease payments are estimated based on the minimum lease payments to be received
on similar Equipment owned by a prior program.
A-38
<PAGE>
(45) Lessee has limited option to terminate at 36 months and 60 months,
subject to a remarketing agreement with Bond International (US), Inc.
(46) A division of Waban, Inc.
(47) Equipment is subject to a full payout management agreement with MRXX
Corporation.
(48) Guaranteed by Mineral Technologies, Inc.
(49) Guaranteed by Mobil Corporation.
(50) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: DDB Needham Worldwide Communications Group
Inc.; Griffin Bacal Inc.; DDB Needham Chicago Inc.; DDB Needham Dallas, Inc.;
PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group Management
Services; and TLP, Inc.
(51) This lessee filed for protection under Chapter 11 of the United States
Bankruptcy Code on January 16, 1998. As this lease has been leveraged using
non-recourse secured debt, the General Partner does not feel that the effect of
the bankruptcy will have a material adverse impact on the performance of ATEL
Cash Distribution Fund V.
(52) The lessee name represents the guarantor of the lease obligations
(which has since changed its name to the Morton's Restaurant Group, Inc.).
Actual lessees are various subsidiaries of the guarantor.
(53) This lessee defaulted on a portion of its lease payments in October
1997. ATEL Cash Distribution Fund V is currently negotiating a possible
settlement with the lessee.
(54) Guaranteed by Smith's Food & Drug Centers.
(55) Subject to a remarketing/residual sharing agreement with AT&T Credit
Corporation.
(56) Guaranteed by Adolf Coors Company.
(57) The end-users of the Equipment are various governmental entities in
the United Kingdom.
(58) Guaranteed by NEC Corporation.
(59) Guaranteed by A.T. Massey Coal Company, Inc.
(60) Guaranteed by Perdue Farms, Inc.
(61) Subject to a management agreement with Transamerica Leasing, Inc.
(62) Subject to a management agreement with First Union Rail Corporation.
(63) Title to the Equipment and Lease is held by an equipment trust. A
divided beneficial interest in the trust representing 24 of 34 of the
diesel-electric locomotives is owned by the program. A divided beneficial
interest in the trust representing the remaining 10 diesel-electric locomotives
has been assigned to a non-affiliate, however, such interest continues to be
managed by an affiliate of the program.
(64) The equipment is subject to a full payout management agreement with
MRXX Corporation.
(65) Title to the equipment is held in a trust. A divided beneficial
interest in the trust representing 130 of 291 boxcars is owned by the program. A
divided interest in the trust representing the remaining 161 boxcars continues
to be owned by the seller of the program's interest, which seller is a
non-affiliate.
A-39
<PAGE>
(66) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hambros Vendor Finance Limited and include a residual sharing agreement.
(67) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hastings Leasing Limited and include a residual sharing agreement.
(68) Title to the equipment is held in a trust. The program has a 100%
undivided beneficial interest in the trust.
(69) Guaranteed by Hyundai Electronics Industries Co., Ltd.
(70) Guaranteed by Mobil Corporation.
(71) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: The DDB Needham Worldwide Communications
Group Inc.; Griffin Bacal Inc.; DDB Needham Chicago, Inc.; DDB Needham Dallas,
Inc.; PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group
Management Services and TLP, Inc.
(72) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(73) Co-lessee under the lease with Ultratech Stepper, Inc., UltraBeam
Lithography, Inc. and Verdant Technologies, Inc. as additional co-lessees.
(74) The lessee name represents the manager of the rail tank cars. These
rail tank cars are not currently subject to a fixed term lease.
</FN>
A-40
<PAGE>
TABLE VI
SALES OR DISPOSALS OF EQUIPMENT
ATEL Lease Income Fund, ATEL Cash Distribution Fund, ATEL Cash Distribution Fund
II, ATEL Cash Distribution Fund III, ATEL Cash Disitribution Fund IV, ATEL Cash
Distribution Fund V, ATEL Cash Distribution Fund VI and ATEL Capital Equipment
Fund VII have disposed of equipment in their portfolios as of June 30, 1999. Set
forth below is a summary of equipment sales and dispositions as of such date.
Sales were for consideration unless otherwise noted. Interim rent (rent paid
prior to formal commencement of a lease), hold-over rent (rent received after
termination of the initial lease term, but before formal extension or
disposition) and extension rent (rent paid after formal extension of a lease)
are included in the "Excess of Rents Over Expenses" column. "Equipment
Acquisition Price" includes acquisition fees. Dispositions are shown on a per
asset basis.
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
ATEL LEASE INCOME FUND 1985-A
<S> <C> <C> <C> <C> <C> <C> <C>
Colour Graphics Computer system Feb-87 $ 34,500 Oct-93 $ 2,525 $ 44,483
Colour Graphics Office Information Systems Jul-88 45,000 Jan-94 11,200 55,777
Educational Loan Services, Office Information Systems May-86 33,050 Oct-90 900 31,350
Inc.
Federal Home Loan Bank of Office Information Systems May-86 39,127 Apr-90 870 36,800
New York
Financial News Network, Inc. Studio and Broadcasting Feb-90 14,777 Jun-92 11,493 2,027 5
Gorham, Inc. Office Information Systems May-86 38,799 Mar-90 2,300 45,180
Long Lake Staionary, Inc. Binding Equipment May-87 4,023 Jul-92 1 6,242
Philip Morris, U.S.A. Office Information Systems May-86 13,297 Jan-89 3,600 12,400
Philip Morris, U.S.A. Office Information Systems May-86 21,584 Aug-92 - 22,050
Polaroid Corporation Office Information Systems May-86 48,028 Jan-90 4,500 45,000
Rohr Industries, Inc. Motor Vehicle Jan-89 12,451 Apr-95 6,400 17,843
Rohr Industries, Inc. Motor Vehicle Apr-89 8,376 Jul-92 4,723 8,558
-------------- -------------- --------------
$ 313,012 $ 48,512 $ 327,710
============== ============== ==============
</TABLE>
A-41
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND
Acushnet Company Office Information Systems Jan-87 $ 140,287 Dec-91 $ 4,545 $ 156,000
Alachua General Hospital MRI Scanner Jan-89 641,593 Jan-95 1 699,453
Alachua General Hospital Tractor Jan-89 15,327 Sep-92 9,000 15,900 6
American Motors Corporation Lift Trucks Oct-87 217,066 Jun-97 57,000 229,029
American Motors Corporation Lift Trucks Oct-87 109,751 Mar-93 31,800 141,636
American Motors Corporation Lift Trucks Oct-87 55,579 Apr-93 15,956 71,727
American Motors Corporation Lift Truck Oct-87 34,494 May-89 30,818 10,117
American Motors Corporation Lift Trucks Oct-87 25,754 Sep-92 6,200 31,306
American Motors Corporation Lift Trucks Oct-87 15,201 Feb-94 4,500 22,886
American Motors Corporation Lift Trucks Oct-87 12,877 Jan-93 3,200 15,863
American Motors Corporation Hoist Mill Truck Dec-87 104,834 Mar-93 18,000 131,164
American Motors Corporation Lift Truck Dec-87 29,709 Jun-97 - 21,189
American Motors Corporation Lift Trucks Jan-88 45,385 Dec-92 7,000 63,268
Anaheim Memorial Hospital CAT Scanner Jan-88 814,696 Apr-93 88,000 839,938
Campbell Soup Company Reach / Walkie Trucks Mar-87 79,248 Sep-93 2,700 89,216
Campbell Soup Company Lift Truck Battery Chargers Mar-87 37,127 Aug-93 12,435 38,812
Campbell Soup Company Lift Truck Mar-87 34,790 Jun-90 30,000 19,575
Campbell Soup Company Lift Truck Mar-87 25,668 Jul-94 5,022 31,663
Campbell Soup Company Lift Truck Mar-87 19,763 Oct-95 2,000 27,283
Campbell Soup Company Lift Truck Mar-87 19,491 May-95 - 25,976
Campbell Soup Company Batteries / Chargers Mar-87 12,417 Dec-93 4,250 13,977
Campbell Soup Company Lift Trucks Mar-87 10,584 Dec-97 11,000 36,430
Campbell Soup Company Lift Truck Apr-87 24,550 Apr-91 17,764 17,765
Campbell Soup Company Lift Truck Apr-87 4,997 Apr-91 3,616 3,616
Campbell Soup Company Lift Truck Apr-87 63,153 Dec-97 20,873 71,540
Color Graphics Corporation 645-MSS Output Scanning Dec-86 232,533 Mar-94 20,000 303,307
Station
Enron Corp. Office Information Systems Jun-88 88,364 Jun-91 17,857 90,326
Enron Corp. Office Information Systems Jun-88 87,399 Feb-92 10,650 85,140
Enron Corp. Office Information Systems Jun-88 79,726 Mar-92 8,000 76,968
Financial News Network, Inc. Studio and Broadcasting Mar-90 935,918 Jun-92 747,617 123,050 7
GAF Corporation Lift Trucks Oct-87 459,660 Nov-92 94,575 457,460
GAF Corporation Joy Filler Mar-88 535,257 Dec-97 44,525 822,498
Galardi Group Restaurant FF&E Jun-94 247,000 Oct-96 147,148 173,042
Hartford Insurance Group Communication Jul-88 93,252 Jul-93 3,618 106,785
Imperial Plastics, Inc. Injection Molding Jun-87 137,247 Apr-94 67,000 147,445
Imperial Plastics, Inc. Injection Molding Dec-87 150,879 Apr-94 64,000 170,530
Imperial Plastics, Inc. Injection Molding Jan-88 194,944 Apr-94 77,000 229,797
Imperial Plastics, Inc. Air Compressor Temperature Mar-88 66,883 Apr-94 17,000 71,949
Control Unit
</TABLE>
A-42
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND
Martin Marietta Corporation Communication Apr-88 296,550 Aug-93 500 277,184
Martin Marietta Corporation Communication Apr-88 148,275 Jun-92 16,000 138,592
Nord Kaolin Company Hydraulic Excavator May-87 163,490 Mar-93 45,000 184,567
Nord Kaolin Company Komatsu Crawler Tractor Aug-87 50,693 Jul-96 12,000 36,492
Nord Kaolin Company Lift Trucks Sep-87 15,633 Oct-95 3,500 27,386
Nord Kaolin Company Magnetic Separator Oct-87 160,669 Dec-96 25,000 150,087
Nord Kaolin Company Industrial Truck Oct-89 13,745 Oct-97 3,000 20,856
Polaroid Corporation Office Information Systems Mar-87 37,819 Apr-92 2,475 41,005
Putnam County Hospital Spectrum Analyzer May-88 114,950 May-94 2,000 158,780
Rohr Industries, Inc. Motor Vehicle Jul-87 14,790 Feb-93 4,175 17,080
Rohr Industries, Inc. Motor Vehicle Jan-88 9,346 Aug-96 3,232 11,495
Rohr Industries, Inc. Motor Vehicle Feb-88 12,060 Aug-96 1,502 14,896
Rohr Industries, Inc. Motor Vehicle Mar-88 16,421 Feb-93 4,575 19,073
Rohr Industries, Inc. Motor Vehicle Apr-88 16,183 Aug-93 3,977 18,986
Rohr Industries, Inc. Motor Vehicle Apr-88 16,052 Feb-96 5,000 21,252
Rohr Industries, Inc. Motor Vehicle Apr-88 14,630 Apr-91 5,725 13,106
Rohr Industries, Inc. Motor Vehicle Apr-88 14,028 Dec-95 4,630 20,629
Rohr Industries, Inc. Motor Vehicle Apr-88 13,330 Oct-92 2,530 15,081
Rohr Industries, Inc. Motor Vehicle Apr-88 12,932 Apr-91 4,380 11,585
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,498 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,198 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 9,356 Aug-96 3,332 12,647
Rohr Industries, Inc. Motor Vehicle May-88 13,981 Sep-95 3,900 20,280
Rohr Industries, Inc. Motor Vehicle Jul-88 29,656 Nov-92 7,135 31,553
Rohr Industries, Inc. Motor Vehicle Jul-88 25,755 Mar-96 9,000 33,051
</TABLE>
A-43
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,075 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,850 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 3,890 10,517
Rohr Industries, Inc. Motor Vehicle Aug-88 17,829 Nov-96 6,590 23,532
Rohr Industries, Inc. Motor Vehicle Aug-88 16,538 May-93 2,622 18,710
Rohr Industries, Inc. Motor Vehicle Aug-88 14,662 Oct-93 3,435 16,587
Rohr Industries, Inc. Motor Vehicle Oct-89 15,460 Dec-97 2,750 33,297
Teledyne Industries, Inc. Lift Truck Oct-87 160,930 Feb-93 48,000 162,751
Teledyne Industries, Inc. Lift Truck Oct-87 147,345 Nov-92 20,000 149,763
Teledyne Industries, Inc. Lift Truck Oct-87 87,258 Jan-93 19,000 89,166
Teledyne Industries, Inc. Lift Truck Jan-88 147,345 Nov-91 41,000 137,956
Teledyne Industries, Inc. Lift Truck Jan-88 52,250 Apr-91 15,000 47,775
Teledyne Industries, Inc. Lift Truck Jan-88 39,188 Apr-91 10,000 35,832
Teledyne Industries, Inc. Lift Truck Feb-88 173,330 Feb-93 58,000 150,644
Teledyne Industries, Inc. Lift Truck Mar-88 50,160 May-93 11,000 51,896
Teledyne Industries, Inc. Lift Truck Apr-88 55,907 Feb-93 20,000 58,088
Teledyne Industries, Inc. Lift Truck Jul-88 147,345 Oct-92 20,000 134,726
Teledyne Industries, Inc. Lift Truck Aug-88 42,845 Jan-94 9,000 46,240
Teledyne Industries, Inc. Lift Truck Nov-88 38,278 Mar-94 11,000 41,481
Teledyne Industries, Inc. Lift Truck Nov-88 35,530 Jan-94 10,390 36,406
Teledyne Industries, Inc. Lift Trucks Aug-89 32,771 Nov-94 7,896 33,173
Teledyne Industries, Inc. Lift Truck Sep-89 68,970 Oct-92 10,000 67,300
Teledyne Industries, Inc. Lift Truck Nov-89 218,133 Jan-93 44,000 204,009
Teledyne Industries, Inc. Lift Truck Nov-89 58,374 Mar-94 12,500 63,256
Teledyne Industries, Inc. Lift Truck Jan-90 57,487 Mar-94 13,000 55,978
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
The Dow Chemical Company Truck Jul-87 111,288 Jun-93 17,500 102,367
The Dow Chemical Company Trucks Jul-87 91,216 Jul-93 26,000 80,985
The Dow Chemical Company Mack Truck Jul-87 25,210 Aug-92 7,500 24,846
Treasure Chest Advertising Printing Press Mar-87 521,190 Dec-92 311,844 523,950
Company, Inc.
TRW, Inc. Communication Apr-89 257,130 Jul-93 8,400 235,080
TRW, Inc. Communication Apr-89 77,957 May-92 19,800 70,704
United Technologies Office Information Systems Dec-86 77,450 Mar-91 20,000 80,985
Corporation
Vista Chemical Company Tank cars Mar-88 1,238,250 Dec-93 885,000 1,090,493
WSMP, Inc. Vacuum Pkg. Machine Apr-95 208,788 Dec-97 150,314 129,870
-------------- -------------- --------------
$ 11,583,679 $ 3,768,290 $ 11,146,398
============== ============== ==============
</TABLE>
A-44
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND II
A.O. Smith Corporation Office Automation Equipment Dec-90 $ 723,258 Sep-94 $ 75,017 $ 763,652
A.O. Smith Corporation Lift Truck Jul-89 80,717 Jun-94 34,000 81,198
A.O. Smith Corporation Lift Truck Jul-89 26,910 Jun-95 6,250 51,147
A.O. Smith Corporation Lift Truck Jul-89 17,616 Jul-95 1,500 23,346
A.O. Smith Corporation Personnel Carrier Jul-89 4,381 Jul-94 500 4,407
A.O. Smith Corporation Machinery Jul-91 26,475 Jan-93 18,360 15,660
Addwest Gold, Inc. Portable Jaw Crusher Plant Sep-88 1,153,001 Nov-94 301,000 1,104,720
Alachua General Hospital MRI Scanner Jan-89 1,286,256 Jan-95 1 1,683,244
Alachua General Hospital Tractor Jan-89 30,727 Sep-92 18,000 31,801 6
American Express Company Manufacturing May-89 289,922 May-93 10,000 293,040
American President Trucking Tractors Sep-88 60,326 Jan-94 15,500 55,808
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,400 61,125
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,200 61,571
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,400 55,808
Co., Ltd.
American President Trucking Tractors Sep-88 60,325 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Dec-93 16,000 52,752
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Jan-94 16,000 60,854
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Jan-94 16,000 58,674
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Apr-94 17,000 59,724
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Dec-93 15,000 51,734
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Jan-94 15,500 56,701
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 16,400 58,570
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 16,400 58,145
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 19,000 58,595
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jun-93 45,041 47,171
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Dec-93 15,926 59,573
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jan-94 16,000 59,369
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jan-94 16,000 56,907
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jun-96 8,500 71,279
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 May-93 44,172 44,957
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-94 17,461 58,772
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-94 15,500 55,808
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-94 19,000 55,809
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-94 16,400 58,570
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,282 69,903
Co., Ltd.
</TABLE>
A-45
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND II
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-96 10,565 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 May-96 10,390 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jun-96 9,500 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jul-96 9,995 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,325 Dec-95 11,522 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Jun-96 9,500 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Aug-96 7,200 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Mar-89 61,513 Feb-96 10,488 71,279
Co., Ltd.
Bistol-Meyers Squib Office furniture Jun-92 324,310 Oct-95 89,834 340,960
Buffalo & Pittsburgh Railroad Locomotives Nov-93 108,127 Nov-96 103,500 109,471
Campbell Soup Company Lift Trucks Jul-88 237,980 Oct-95 33,000 304,036
Campbell Soup Company Life plus charger Jul-88 28,056 Aug-95 6,000 34,608
Campbell Soup Company Lift Truck Jul-88 26,604 Oct-95 2,500 33,597
Campbell Soup Company Forklift Truck Jul-88 to 74,794 Dec-98 1,680 77,130
Sep-88
Chesebrough-Pond's Inc. Lift Trucks May-90 109,901 Aug-94 42,000 124,236
Chesebrough-Pond's Inc. Motorized Lowlift Walk/ May-90 38,303 Aug-94 4,800 43,452
Ride Trucks
Chesebrough-Pond's Inc. Lift Truck May-90 35,029 Aug-94 12,950 39,270
Chesebrough-Pond's Inc. Lift Truck May-90 18,220 Aug-94 6,750 20,502
Chrysler Corporation C-Line Industrial Battery Dec-93 7,202 Oct-97 2,221 85,182
Chrysler Corporation Battery Charger Dec-93 4,798 Oct-97 1,479 56,748
Colour Graphics Corporation Computer system Jul-88 35,411 Oct-93 2,475 41,767
Continental Medical Systems, Physical therapy Jun-90 36,676 Jun-95 11,750 45,485
Inc.
</TABLE>
A-46
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND II
Cooper Tire & Rubber Company Lift Trucks Nov-88 33,296 Jan-96 10,600 37,698
Cooper Tire & Rubber Company Forklifts Apr-89 to 87,906 Jul-96 15,760 107,895
Jun-89
Cooper Tire & Rubber Company Forklifts Jan-89 to 482,499 Oct-96 89,200 598,468
Mar-89
Delnor Community Hospital Medical Apr-88 89,081 Dec-91 35,000 87,406
Delnor Community Hospital Medical Jul-88 263,473 Apr-91 45,000 247,586 8
Delnor Community Hospital Medical Jul-88 118,775 Apr-91 17,850 106,513
DJ Aerospace Limited Executive Aircraft Apr-94 810,000 Jan-97 436,309 681,820
Emmanuel Hospital & Health 1987 BK117-A4 Helicopter Jul-88 2,354,534 Oct-98 1,591,194 3,236,782
Center
Financial News Network, Inc. Studio and Broadcasting Feb-90 670,359 Jun-92 534,432 148,788
Fingerhut Corporation Pacesetter Saddlebinder Dec-89 233,268 Dec-94 110,000 258,130
FMC Gold Company Material Handling Apr-90 417,082 Jul-93 155,000 361,891
FMC Gold Company Material Handling Apr-90 380,201 May-93 105,000 322,256
GAF Corporation Manufacturing Mar-88 433,267 Jun-95 1 657,024
Galardi Group Restaurant FF&E Jun-94 507,000 Oct-96 302,042 355,190
General Motors Corporation Video Projector Dec-93 6,516 Jan-98 - 10,006
General Motors Corporation Video Projectors Dec-93 52,128 Jun-97 11,613 59,207
Hammermill Paper Company Truck Dec-88 to 100,728 Jul-98 to 13,700 102,577
Mar-90 Dec-98
Home Life Insurance Furniture Jan-89 445,877 Sep-98 102,867 753,912
Hudson Foods, Inc. Chicken Processing Jul-89 326,880 Aug-94 120,215 373,808
Hudson Foods, Inc. Waste Water Pre-treatment Aug-89 331,070 Aug-94 121,600 377,895
Plant
Hudson Foods, Inc. Chicken Processing Dec-89 1,102,591 Sep-94 333,006 1,182,678
Equipment
Hudson Foods, Inc. Chicken Processing Dec-89 890,708 Sep-94 272,280 959,784
Equipment
Hudson Foods, Inc. Chicken Processing Dec-89 190,739 Sep-94 56,897 205,202
Equipment
Inland Steel Company Laser Measuring System Sep-89 436,808 Apr-94 105,000 487,179
International Paper Company Truck Jun-88 25,080 Nov-92 14,653 28,446
International Paper Company Trucks Jul-88 32,039 Nov-91 7,412 31,840
International Paper Company Truck Sep-88 42,161 Dec-95 11,120 73,774
International Paper Company Van Sep-88 39,626 Nov-94 11,325 37,872
International Paper Company Trucks Sep-88 37,910 May-92 17,372 33,220
International Paper Company Truck Sep-88 35,302 Sep-94 8,500 36,360
International Paper Company Trucks Sep-88 28,114 Dec-93 7,750 30,848
International Paper Company Truck Sep-88 20,850 Dec-95 11,924 39,114
International Paper Company Trucks Nov-88 165,175 Aug-91 118,185 90,831
International Paper Company Truck with power lift gate Nov-88 32,691 Dec-94 10,000 36,079
International Paper Company Truck with power lift gate Nov-88 32,691 Feb-95 9,500 36,079
International Paper Company Motor Vehicle Dec-88 13,873 Apr-97 5,500 22,610
International Paper Company Motor Vehicle Jan-89 33,029 Jul-96 4,000 58,146
International Paper Company Motor Vehicle Feb-89 41,080 Jun-97 4,250 65,533
International Paper Company Trucks Mar-89 48,783 May-95 26,000 40,150
International Paper Company Truck Mar-89 24,458 Apr-95 11,000 25,968
International Paper Company Cargo Van Mar-89 13,910 Jan-95 2,740 16,189
International Paper Company Trucks Apr-89 76,873 May-95 20,000 86,592
International Paper Company Truck Jun-89 29,079 May-95 9,000 31,744
International Paper Company Trucks Jun-89 27,457 Apr-94 4,500 32,538
International Paper Company Truck Aug-89 27,249 Apr-96 7,000 37,622
International Paper Company Cut-away Van Aug-89 19,484 Dec-94 5,750 19,095
International Paper Company Trucks Oct-89 116,589 May-92 83,477 63,595
International Paper Company Cab & chassis Oct-89 25,374 Dec-95 9,477 38,797
International Paper Company Trucks Nov-89 33,587 Mar-94 9,000 34,975
International Paper Company Trucks Dec-89 123,513 Apr-95 50,750 139,088
International Paper Company Trucks Mar-90 76,300 May-92 54,047 34,906
KeyCorp Office Furniture and Aug-89 913,120 Apr-94 245,000 1,014,508
Equipment
Keycorp ATM's Aug-89 251,385 Dec-96 23,500 287,781
KeyCorp ATM Machines Aug-89 195,522 Apr-96 18,650 211,431
KeyCorp ATM Machines Aug-89 139,658 Jan-94 41,250 146,802
Keycorp ATM's Aug-89 139,658 Jun-97 10,000 213,512 9
KeyCorp ATM Machines Aug-89 55,864 Aug-94 14,500 66,333
Koppers Industries, Inc. Hydraulic loader & end Jun-90 639,120 Jun-95 317,500 793,198
loader
Liggett Group Laser Perforation Unit Dec-88 679,384 Aug-98 75,000 362,630
Midway Airlines, Inc. Commercial Aircraft Jun-90 4,592,040 Sep-91 3,444,589 463,076
National Semiconductor Wafer Processing System Apr-89 762,580 Jan-94 82,000 869,955
Corporation
</TABLE>
A-47
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND II
National Steel Corporation Crane (20 Ton) Oct-89 169,447 Oct-98 38,000 35,432
National Steel Corporation Wheel Loader Dec-89 380,203 Jul-96 134,512 476,098
National Steel Corporation Forklifts Dec-89 85,296 Jun-97 25,000 109,159
National Union Electric Phone System Aug-89 481,738 Mar-94 130,000 507,722
Corporation
Nissan Motor Corporation Office Information Systems Jul-88 229,598 Jul-93 3,700 221,328
In USA
NMCS, Inc. , d/b/a National Office Furniture Jun-88 627,453 Mar-94 1 747,640
Medical Group Services,
Inc.
Nord Kaolin Company Water Tank Trucks Feb-89 229,795 Nov-96 31,800 191,762
Nord Kaolin Company Ford Truck & Truck Crane Apr-89 76,913 Mar-97 28,000 109,219
Owens Corning Fiberglas Corp. Automobile Nov-88 15,822 Apr-95 3,650 20,000
Owens Corning Fiberglas Corp. Material Handling Jul-89 175,098 Jul-92 41,020 154,944
Owens Corning Fiberglas Corp. Material Handling Oct-89 151,207 Mar-93 47,000 139,317
Owens Corning Fiberglas Corp. Material Handling Oct-89 56,733 Sep-94 13,000 62,760
Owens Corning Fiberglas Corp. Material Handling Oct-89 31,192 Sep-94 9,000 34,524
Owens Corning Fiberglas Corp. Material Handling Dec-89 21,331 May-96 4,100 27,834
Owens Corning Fiberglas Corp. Material Handling Feb-90 100,985 Oct-95 35,000 119,560
Owens Corning Fiberglas Corp. Lift Truck Mar-90 18,288 Mar-95 6,500 19,851
Owens Corning Fiberglas Corp. Material Handling Apr-90 122,130 Apr-94 36,600 126,827
Owens Corning Fiberglas Corp. Material Handling Apr-90 118,092 Apr-95 44,500 128,182
Owens Corning Fiberglas Corp. Material Handling Apr-90 101,775 Jun-93 29,100 92,836
Owens Corning Fiberglas Corp. Material Handling May-90 57,956 Jun-93 13,500 62,821
Owens Corning Fiberglas Corp. Material Handling May-90 21,866 May-98 4,200 30,239
Owens Corning Fiberglas Corp. Material Handling May-90 18,972 Apr-94 4,800 20,165
Owens Corning Fiberglas Corp. Material Handling Jun-90 152,935 Oct-95 56,000 179,186
Owens Corning Fiberglas Corp. Material Handling Jun-90 16,179 Aug-96 5,000 19,670
Owens Corning Fiberglas Corp. Forklift Truck Jul-90 22,422 Jul-97 1 36,338
Owens Corning Fiberglas Corp. Material Handling Aug-90 123,102 Aug-93 41,000 113,082
Owens Corning Fiberglas Corp. Lift Truck Aug-90 59,786 Dec-94 20,000 59,404
Owens Corning Fiberglas Corp. Forklift Aug-90 25,601 Oct-96 5,050 31,106
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Aug-95 10,750 22,911
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Sep-95 10,750 22,911
Owens Corning Fiberglas Corp. Forklift Truck Aug-90 19,000 Jul-97 4,000 24,084
Owens Corning Fiberglas Corp. Mobile Rail Car Mover Oct-90 114,900 Sep-97 70,000 142,436
Owens Corning Fiberglas Corp. Material Handling Oct-90 22,750 Nov-95 7,000 29,948 10
Owens Corning Fiberglas Corp. Material Handling Oct-90 21,920 Oct-95 10,750 24,521
Owens Corning Fiberglas Corp. Material Handling Oct-90 17,235 Jan-98 2,833 22,627
Owens Corning Fiberglas Corp. Sweeper Nov-90 27,592 Dec-93 6,600 26,638
Owens Corning Fiberglas Corp. Material Handling Nov-90 11,302 Mar-95 1 15,881
Pre Press Group Digital Color Scanner Nov-88 1,276,903 Nov-97 9,000 1,529,568
Quaker Coal Company Crawler Dozer Feb-94 558,301 Apr-96 255,000 356,875
Ran-Bar Corporation Boom lift Aug-93 7,950 Sep-95 1 19,152
Regents of the University of Communication Jan-89 84,204 Dec-93 25,500 87,434
California
Rocky Mountain Helicopters, Aircraft Oct-89 2,252,125 Dec-93 1,472,413 1,383,000
Inc.
Rohr Industries, Inc. Motor Vehicles Oct-88 47,524 Aug-93 19,095 61,845
Rohr Industries, Inc. Motor Vehicles Oct-88 24,450 May-93 5,534 24,406
Rohr Industries, Inc. Motor Vehicles Oct-88 11,370 Dec-93 3,977 13,300
Rohr Industries, Inc. Motor Vehicles Oct-88 8,742 Aug-96 3,482 12,950
Rohr Industries, Inc. Motor Vehicles Dec-88 99,553 Jan-93 22,012 99,184
Rohr Industries, Inc. Motor Vehicles Dec-88 15,642 Jan-95 3,077 21,521
Rohr Industries, Inc. Motor Vehicles Dec-88 15,569 Dec-93 4,777 17,664
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 Feb-92 3,509 12,925
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 May-92 5,538 13,776
Rohr Industries, Inc. Motor Vehicles Jan-89 9,532 Apr-94 3,300 12,375
Rohr Industries, Inc. Motor Vehicles Feb-89 9,359 Aug-94 3,177 12,851
Rohr Industries, Inc. Motor Vehicles Feb-89 8,952 Aug-96 - 14,280
Rohr Industries, Inc. Motor Vehicles Apr-89 72,014 Jul-92 20,088 68,396
Rohr Industries, Inc. Motor Vehicles Apr-89 36,263 Apr-89 7,667 35,328
Rohr Industries, Inc. Motor Vehicles Apr-89 35,762 Apr-92 9,019 34,793
Rohr Industries, Inc. Motor Vehicles Apr-89 24,343 Jul-92 5,146 23,683
Rohr Industries, Inc. Motor Vehicles Apr-89 21,759 Jul-94 8,500 25,267
</TABLE>
A-48
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND II
Rohr Industries, Inc. Motor Vehicles Apr-89 12,393 Jan-92 2,313 12,086
Rohr Industries, Inc. Motor Vehicles Apr-89 11,921 May-92 3,058 11,597
Rohr Industries, Inc. Motor Vehicles Apr-89 11,920 Jul-92 2,973 11,597
Rohr Industries, Inc. Motor Vehicles May-89 16,760 Jul-94 3,677 18,710
Rohr Industries, Inc. Motor Vehicles May-89 11,920 May-93 2,772 12,955
Rohr Industries, Inc. Motor Vehicles Jul-89 18,477 Feb-93 11,810 14,614
Rohr Industries, Inc. Motor Vehicles Jul-89 17,801 Jul-92 3,823 15,948
Rohr Industries, Inc. Motor Vehicles Aug-89 14,570 Dec-93 3,695 15,270
Rohr Industries, Inc. Motor Vehicle Sep-89 8,702 Aug-96 3,979 12,557
Rohr Industries, Inc. Motor Vehicles Nov-89 16,378 May-92 13,340 9,100
Rohr Industries, Inc. Motor Vehicle Nov-89 15,863 Aug-96 4,422 20,605
Rohr Industries, Inc. Pickup Truck Nov-89 9,652 Jan-95 4,100 10,720
Rohr Industries, Inc. Motor Vehicles Mar-90 15,065 Feb-93 6,756 12,658
Rohr Industries, Inc. Vehicles Oct-88 to 101,804 Aug-98 to 20,176 109,725
Jul-90 Sep-98
Sebastiani Vineyards, Inc. Wine Barrels Oct-88 143,804 Jun-96 6,535 188,158
Sebastiani Vineyards, Inc. Wine Barrels May-89 67,314 Jun-96 2,700 81,120
Sebastiani Vineyards, Inc. Wine Barrels May-89 33,919 Jun-94 4,340 41,682
Sebastiani Vineyards, Inc. Bottling Line And Related Apr-90 to 2,602,391 Nov-98 1,011,587 3,360,000
Equipment Mar-91
Shell Mining Company Crawler Tractor Oct-89 1,013,257 Dec-94 390,000 1,048,122
Shell Mining Company Miner Machine Feb-90 640,995 Mar-95 130,000 648,032
Shell Mining Company Miner Machine Feb-90 640,427 Mar-95 130,000 647,458
Shell Mining Company Haultruck and Water Truck Apr-90 to 1,546,341 Sep-98 491,564 2,062,732
May-90
Sherwood Rehab. Hospital/CMS Various Office & Medical Jul-90 to 1,814,036 Aug-98 350,000 2,705,406
Equipment Nov-90
St. Luke's-Roosevelt Medical Furniture, Fixtures Feb-90 1,126,223 Apr-93 404,654 1,116,417
Hospital Center & Equipment
The Budd Company Electric Forklifts May-90 426,589 Sep-97 68,742 491,609
The Budd Company Forklifts May-90 90,919 Jul-97 27,600 104,777
The Budd Company Industrial Batteries May-90 85,100 Oct-97 - 98,071
The Budd Company Industrial Batteries May-90 70,128 Sep-97 17,190 80,817
The Budd Company Electric Tow Tractors May-90 42,589 Jul-97 5,400 49,080
The Budd Company Electric Tuggers May-90 22,342 Jul-97 4,000 25,747
The Budd Company Chargers May-90 19,394 Sep-97 5,441 22,350
The Budd Company Walkie Reach Truck May-90 15,903 Sep-97 3,887 18,327
The Budd Company Electric Cart May-90 2,793 Sep-97 682 3,218
The Budd Company Lift Trucks May-90 154,260 Mar-96 29,000 158,330
The Budd Company Lift Trucks Jun-90 168,998 Mar-98 28,400 242,141
The Dow Chemical Company Material Handling Jul-87 990,448 Aug-92 382,160 877,628
The Dow Chemical Company Rail car Mover Jul-87 145,822 Jan-93 43,650 125,152
The Dow Chemical Company Lift Truck Jul-87 26,198 Aug-92 4,300 25,820
The Dow Chemical Company Material Handling May-88 294,792 Jul-93 74,300 290,517
The Dow Chemical Company Material Handling May-88 55,516 Sep-95 - 73,736
The Dow Chemical Company Material Handling May-88 33,943 Jun-94 10,900 32,539
The Dow Chemical Company Material Handling May-88 33,119 Jan-95 10,000 39,517
The Dow Chemical Company Material Handling May-88 17,045 Jan-94 5,800 16,340
Treasure Chest Advertising Co. Printing Press Mar-93 850,000 Mar-98 400,000 1,017,960
Treasure Chest Advertising Co. Plate Maker Nov-93 233,000 Sep-98 79,617 254,855
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,013,766 Dec-94 324,300 999,671
-------------- -------------- --------------
$ 53,466,721 $ 18,844,053 $ 53,318,597
============== ============== ==============
</TABLE>
A-49
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND III
A.O. Smith Corporation Side loaders Nov-90 $ 230,591 Feb-97 $ 62,000 $ 266,272
A.O. Smith Corporation Towmotors Nov-90 120,865 Jan-96 44,000 124,614
A.O. Smith Corporation Forklifts Nov-90 33,752 Feb-97 8,100 40,198
A.O. Smith Corporation Lift trucks Nov-90 25,315 Jan-96 8,250 26,100
A.O. Smith Corporation Lift trucks Nov-90 22,516 Jan-96 9,000 23,215
A.O. Smith Corporation Carton Clamps Nov-90 22,469 Jan-96 9,000 26,166
A.O. Smith Corporation Lift trucks Nov-90 17,860 Mar-96 3,950 18,414
Alumina Partners Of Jamaica Payhauler Haul Truck Dec-92 804,472 Sep-98 250,000 971,599
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 18,788 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 15,473 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 11,894 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 9,900 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,993 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,455 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 May-96 19,738 62,791
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Jun-96 18,738 62,791
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Nov-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 9,900 76,442
Co., Ltd.
American President Trucking Tractors Feb-90 64,863 Jun-96 18,788 63,134
Co., Ltd.
American President Trucking Trailers Mar-90 641,594 Mar-98 210,000 743,110
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 14,572 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
</TABLE>
A-50
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND III
American President Trucking Tractors Mar-90 63,685 Dec-96 15,534 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,396 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 15,598 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 May-97 13,972 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Jun-97 13,772 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Jun-97 13,772 73,663
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Nov-96 15,543 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Dec-96 15,443 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Dec-96 15,443 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 322,551 Jun-96 97,892 300,307
Co., Ltd.
American President Trucking Tractors May-90 129,021 Jul-97 24,085 183,461
Co., Ltd.
American President Trucking Tractors May-90 64,510 Nov-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Nov-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Dec-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Feb-97 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Feb-97 15,543 68,070
Co., Ltd.
American President Trucking Tractors May-90 387,062 Jun-96 150,839 343,988
Co., Ltd.
American President Trucking Tractors May-90 129,021 Jun-96 37,934 120,123
Co., Ltd.
American President Trucking Trailer May-90 163,481 Jun-98 52,500 189,348
Co., Ltd.
American President Trucking Tractor Jun-90 64,510 Jul-97 12,043 71,710
Co., Ltd.
American President Trucking Utility Curtainsiders Jul-90 163,482 Aug-97 60,000 189,348
Co., Ltd.
Barney's, Inc. Retail Store FF&E Sep-93 2,009,077 Jul-96 1,033,020 967,060
Buffalo & Pittsburgh Railroad Locomotives Nov-93 792,657 Nov-96 713,100 802,504
Carrier Corporation Lift trucks Jun-90 359,305 Apr-95 89,800 369,875
Carrier Corporation Lift trucks Jun-90 113,195 Apr-95 27,950 114,228
Carrier Corporation Lift trucks Aug-90 200,008 Apr-95 43,100 203,148
Central Ohio Coal Company CAT Scrapers Mar-92 2,713,694 Jul-96 1,048,730 2,580,680
Central Ohio Coal Company 160 Ton Coal Hauler Mar-92 2,280,162 Dec-97 972,955 2,936,837
Central Ohio Coal Company Billdozer Mar-92 396,549 Oct-96 53,000 392,373
Costain Coal, Inc. Hemscheidt Mining Shield Jun-91 5,299,496 Apr-99 126,667 4,636,355
Dean Foods Company Trailer Oct-90 34,996 Nov-96 20,461 35,617
Dean Foods Company 91 Utility 48'X102 Reefer Oct-90 1,099,749 Feb-98 390,000 1,303,590
Trailer
Fingerhut Corporation Saddlebinder/Stacker Oct-91 318,979 Nov-98 130,000 377,903
FMC Gold Company Haul Truck Jun-90 560,232 Jan-94 295,000 427,663
Fred Meyer, Inc. Data Processing Oct-90 3,244,649 Aug-95 1,060,276 3,608,683
Fred Meyer, Inc. Data Processing Nov-90 3,340,551 Dec-92 2,715,033 2,338,583 11
H.E. Butt Grocery Company 1993 GMC Tractors Dec-92 1,443,798 Mar-99 214,200 1,544,402
</TABLE>
A-51
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND III
Ingersoll International, Inc. Microwave Communication Nov-90 290,175 Nov-98 25,000 313,002
System
Koppers Industries, Inc. Material Handling Jul-90 54,156 Sep-95 23,000 64,020
Koppers Industries, Inc. Material Handling Aug-90 45,485 Jan-94 33,383 31,471
Koppers Industries, Inc. Material Handling Dec-90 200,911 Dec-95 102,500 237,614
Koppers Industries, Inc. Hydraulic Excavator Mar-91 114,492 Apr-96 57,500 129,848
Kraft General Foods Lift Truck Apr-91 160,846 May-98 29,925 187,568
Kraft General Foods Lift Truck Apr-91 44,277 Apr-98 11,000 51,633
Kraft General Foods Lift Truck Apr-91 23,101 May-98 3,875 26,939
Kraft General Foods Lift Truck Apr-91 22,523 May-98 2,050 26,265
Kraft General Foods Lift Truck Apr-91 22,093 May-98 2,675 25,763
Kraft General Foods Lift Truck Apr-91 17,614 May-98 4,875 23,309
Kraft General Foods, Inc. Material Handling Jul-91 46,694 Aug-94 24,248 22,701
Kraft General Foods, Inc. Lift Trucks and Pallet Mar-91 to 1,296,898 Jul-98 to 173,569 970,702
Trucks Jul-91 Jan-99
Midway Airlines, Inc. Commercial Aircraft Jun-90 2,405,081 Sep-91 1,656,694 226,541
Mobil Oil Corporation Material Handling Apr-92 35,662 Jun-95 13,040 29,673
Mobil Oil Corporation Material Handling Jul-92 36,249 Jun-95 10,611 30,163
Mobil Oil Corporation Golf Carts Jun-93 142,464 Jul-97 74,800 98,983
Mobil Oil Corporation Golf Carts Jun-93 137,654 Jul-96 80,800 95,642
Nord Kaolin Company Lab Equipment Aug-90 409,694 Oct-97 91,000 110,806
Pepsico, Inc. Material Handling Jul-90 208,042 Sep-96 16,000 254,225
Pepsico, Inc. Material Handling Sep-90 228,666 Oct-96 21,000 266,447
Pepsico, Inc. Material Handling Sep-90 32,885 Sep-96 1,200 41,214
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 73,050 Jun-95 8,470 52,933
Philips Semiconductors Inc. X-Ray Photo Electron Nov-90 674,771 Feb-99 1 140,149
Spectrometer
Pilgrim's Pride Corporation Chicken Processing Dec-90 3,791,002 Oct-95 1,400,000 4,000,050
Portland General Electric 50 Mw Turbines Jun-90 2,839,101 Dec-98 4,250,000 2,656,687
PSI Energy, Inc. Wheel Tractor Scraper Jul-90 842,013 Sep-96 295,000 923,917
Quaker Coal Company 1993 Cat 789B 170 Ton Haul Oct-93 1,291,110 May-99 250,000 1,199,570
Truck
Reliance Insurance Company Office Furniture Jun-92 1,133,854 Jun-97 287,622 1,213,841 12
Reliance Insurance Company Office Furniture Sep-92 137,047 Sep-97 37,346 159,007
Reliance Insurance Company Offset Press Sep-92 29,780 Sep-97 8,338 35,093
Shell Mining Company Crawler Dozer Oct-91 776,000 Dec-96 350,000 801,763
Southern Ohio Coal Company Mining Mar-92 3,795,152 Jun-92 4,469,135 207,307
Southern Ohio Coal Company Shuttle Cars Mar-92 767,590 Apr-97 120,000 851,419
Southern Ohio Coal Company Power Center Mar-92 102,826 Apr-97 15,000 114,056
Stone Container Corp Forklift Nov-90 35,759 Mar-98 6,500 54,404
Stone Container Corp C50 Forklift Nov-90 19,696 Apr-98 4,000 15,700
Stone Container Corporation Material Handling Nov-90 299,787 Aug-93 115,700 301,446
Stone Container Corporation Material Handling Nov-90 227,384 May-93 54,500 163,622
Stone Container Corporation Material Handling Nov-90 216,936 Jun-95 72,500 199,500
Stone Container Corporation Material Handling Nov-90 183,825 Jul-95 105,500 188,712
Stone Container Corporation Tractor Nov-90 137,327 Mar-95 75,842 124,820
Stone Container Corporation Material Handling Nov-90 136,838 Jun-96 60,670 164,020
Stone Container Corporation Material Handling Nov-90 116,700 Jul-95 23,750 133,201
Stone Container Corporation Caterpillar Wheel Loader Nov-90 110,990 Aug-98 45,000 73,008
Stone Container Corporation Material Handling Nov-90 110,836 Jul-95 21,750 125,403
Stone Container Corporation Material Handling Nov-90 96,611 Jun-95 29,500 107,181
Stone Container Corporation Forklifts Nov-90 83,200 Aug-97 21,555 110,823
Stone Container Corporation Material Handling Nov-90 68,950 Mar-96 21,500 85,665
Stone Container Corporation Material Handling Nov-90 63,433 Sep-95 14,000 69,970
Stone Container Corporation Tractor Nov-90 53,694 Jan-95 30,500 50,456
Stone Container Corporation Material Handling Nov-90 51,420 Jun-95 14,500 54,541
Stone Container Corporation Material Handling Nov-90 50,097 Oct-94 17,735 52,700
Stone Container Corporation Material Handling Nov-90 49,232 Jul-95 14,500 54,618
Stone Container Corporation Material Handling Nov-90 46,928 May-96 8,400 57,267
Stone Container Corporation Forklifts Nov-90 46,681 Jul-96 13,375 67,363
Stone Container Corporation Material Handling Nov-90 46,492 Mar-96 13,500 41,148
Stone Container Corporation Material Handling Nov-90 45,669 Apr-94 17,500 45,093
Stone Container Corporation Material Handling Nov-90 43,850 Apr-93 9,000 36,268
</TABLE>
A-52
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND III
Stone Container Corporation Material Handling Nov-90 33,498 Mar-95 14,500 35,136
Stone Container Corporation Forklifts Nov-90 32,261 Nov-96 9,100 47,409
Stone Container Corporation Forklifts Nov-90 26,256 Apr-97 9,000 55,930
Stone Container Corporation Material Handling Nov-90 25,898 Jul-95 12,000 26,586
Stone Container Corporation Material Handling Nov-90 23,674 Oct-93 5,800 24,262
Stone Container Corporation Material Handling Nov-90 22,561 Jan-96 2,000 29,525
Stone Container Corporation Material Handling Nov-90 22,308 Jul-95 5,500 23,453
Stone Container Corporation Material Handling Nov-90 18,611 Jul-94 3,500 16,737
Stone Container Corporation Material Handling Nov-90 17,250 Jul-95 5,500 15,176
Stone Container Corporation Tractor Nov-90 17,227 Jan-95 6,000 18,431
Stone Container Corporation Material Handling Nov-90 17,124 Jul-95 4,300 19,535
Stone Container Corporation Material Handling Nov-90 15,984 Mar-93 5,500 14,058
Stone Container Corporation Material Handling Nov-90 15,810 Jul-95 8,500 16,230
Stone Container Corporation Material Handling Nov-90 15,625 Feb-95 4,000 14,480
Stone Container Corporation Sweeper Nov-90 14,203 Oct-95 2,100 10,440
Stone Container Corporation Material Handling Nov-90 12,949 Jul-95 6,000 13,293
Stone Container Corporation Material Handling Apr-91 128,314 Dec-93 117,236 59,610
Teledyne Industries, Inc. Material Handling Nov-90 56,635 Jan-94 13,714 52,309
Teledyne Industries, Inc. Material Handling Nov-90 41,301 Apr-96 15,000 42,464
Teledyne Industries, Inc. Material Handling Nov-90 24,073 Apr-94 11,100 22,234
Terex Corporation KW-KC Induction Unit Apr-91 68,088 Aug-97 29,428 75,403
Terex Corporation Shape Cutting Machine Jul-91 237,213 Aug-97 89,660 262,698
The Dow Chemical Company Research Equipment Apr-91 222,801 Mar-97 6,000 231,500
The Dow Chemical Company Research Equipment Apr-91 56,295 Oct-96 25,000 61,271
The Dow Chemical Company Research Equipment Apr-91 930,833 Feb-96 214,500 1,013,116
The Dow Chemical Company Research Equipment Oct-91 649,269 Nov-96 to 125,030 748,348
Dec-96
The Dow Chemical Company Research Equipment Oct-91 61,615 Dec-96 2,200 68,479
The Dow Chemical Company Material Handling Oct-91 50,478 Aug-93 12,000 47,859
The Dow Chemical Company Research Equipment Jan-92 937,459 Jan-97 217,000 1,031,519
The Dow Chemical Company Research Equipment Jan-92 468,214 Jan-97 94,875 512,287
The Dow Chemical Company Dilor Micro Raman Apr-92 183,312 Apr-98 24,275 221,865
Spectrometer
The Dow Chemical Company Krypton Ion Laser Apr-92 31,373 Apr-98 7,000 37,971
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Dozer Jul-92 158,778 Jun-97 79,389 160,540
The Dow Chemical Company Trackmobile And JLG Jul-92 to 233,355 Aug-98 to 80,500 251,995
Manlift Work Platform Dec-92 May-99
The Helen Mining Company Mining Jun-91 222,801 Aug-93 14,321 227,537
The Helen Mining Company Mining Shields Sep-93 149,536 Jan-97 - 149,536
The Kelly Springfield Tire Co. Trackmobile Mar-92 86,943 Mar-97 65,000 86,246
The Kelly Springfield Tire Co. Mail Sorter Mar-92 28,452 Mar-97 5,432 30,512
The Kelly Springfield Tire Co. Forklifts May-92 18,512 Jun-97 5,000 20,139
The Pillsburry Company Stripper Combines May-92 1,023,718 Dec-97 428,375 857,137
The Pillsburry Company Self Propelled Pods (3) Jun-92 1,012,828 Dec-97 423,819 848,020
The Pillsburry Company Corn Harvesters (3) Jun-92 385,217 Dec-97 148,172 341,077
The Pillsburry Company Dump Cart Jun-92 10,475 Dec-97 4,029 9,275
The Pillsburry Company Poclain Motors Jun-92 6,285 Dec-97 2,418 5,565
The Pittston Company MECD Conveyor System Apr-92 1,766,809 Sep-97 116,000 1,753,821
The Pittston Company Simmons Rand Un-A-Hauler Apr-92 729,550 Oct-97 75,000 724,187
The Pittston Company Fletcher Bolter Apr-92 190,154 Jul-97 36,000 188,756 13
The Pittston Company Versatrack Apr-92 183,104 Jun-97 31,500 188,826
The Pittston Company Versatrack Apr-92 159,207 Oct-96 83,321 147,150
The Pittston Company Simmons Rand Scoup Apr-92 136,531 Jun-97 18,000 141,702
The Pittston Company Stamler Feeder Apr-92 131,697 Sep-97 15,000 130,729
The Pittston Company Personnel Carrier Apr-92 61,549 Jun-97 12,000 63,880
The Pittston Company Compressor Car Apr-92 34,253 Jun-97 7,000 35,550
The Pittston Company Continuous Miner Jun-92 949,110 Feb-97 437,995 945,758
The Pittston Company LWPC & Controls Jun-92 252,060 Sep-97 5,000 251,170
The Pittston Company Un-a-hauler Jun-92 247,104 Jun-97 35,000 246,915
The Pittston Company Locomotive Jun-92 125,394 Jun-97 28,000 125,298
Truck-Lite Company Project Line Equipement Sep-91 414,720 Jun-97 224,054 397,993
Truck-Lite Company Ct-20 Project Line Sep-91 1,993,259 Apr-98 686,574 2,152,003
Equipment
</TABLE>
A-53
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND III
Truck-Lite Company 700 Ton Press Sep-91 320,311 Apr-98 110,331 345,821
Truck-Lite Company 500 Ton Press Sep-91 245,164 Apr-98 84,446 264,690
Truck-Lite Company 275 Ton Press Sep-91 193,862 Apr-98 66,775 209,301
Truck-Lite Company 150 Ton Press Sep-91 152,248 Apr-98 52,442 164,374
Truck-Lite Company Electro Static Plotter Sep-91 31,070 Apr-98 10,702 33,544
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Project Line Equipement Dec-91 699,062 Jun-97 380,946 656,930
Truck-Lite Company CT-20 Project Line Dec-91 1,076,902 Apr-98 365,102 1,156,569
Equipment
Truck-Lite Company 500 Ton Press Dec-91 224,929 Apr-98 76,258 241,569
Truck-Lite Company 275 Ton Press Dec-91 173,702 Apr-98 58,890 186,552
Truck-Lite Company 150 Ton Press Dec-91 131,393 Apr-98 44,546 141,113
Truck-Lite Company Scissor Lift Mold Truck Dec-91 25,011 Apr-98 8,480 26,861
Truck-Lite Company Ct-20 Project Line Mar-92 1,089,540 Apr-98 380,022 1,168,223
Equipment
Truck-Lite Company Ct-20 Project Line Aug-92 274,069 Apr-98 98,219 300,135
Equipment
Truck-Lite Company Ct-20 Project Line Dec-92 108,149 Apr-98 38,093 119,258
Equipment
US Surgical Corp./ARR, Inc. Falcon 50 Aircraft Oct-92 5,275,000 Oct-97 5,200,000 4,421,201
USS/KOBE Steel Corporation Forklift Trucks Aug-91 197,211 Aug-97 45,700 241,284
USS/KOBE Steel Corporation Material Handling Nov-91 82,769 Oct-97 12,000 92,719
USS/KOBE Steel Corporation Hyster Lift Truck Nov-91 34,079 Nov-97 6,200 61,723
Wal-Mart Stores, Inc. Dryvan Trailer Jun-94 300,624 Aug-97 248,000 337,232
Wal-Mart Stores, Inc. Forklifts, Trucks & Jun-94 189,632 Jan-96 165,000 188,817
Trailers
West Penn Power Company Oil Storage Facility Sep-91 1,107,785 Dec-98 1,925,000 1,477,705
-------------- -------------- --------------
$ 82,305,221 $ 39,003,171 $ 75,028,171
============== ============== ==============
</TABLE>
A-54
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND IV
Barney's, Inc. Retail Store FF&E Sep-93 $ 2,316,543 Jul-96 $ 1,191,112 $ 1,115,058 11
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 Nov-96 729,200 859,766
Burlington Northern Railroad Locomotives Dec-92 7,950,000 Dec-94 5,595,000 4,161,000
Canadian Pacific Limited Box Cars Sep-92 2,418,000 Nov-98 to 2,942,249 3,583,440
May-99
Canadian Pacific Limited Rail Car Oct-92 5,704 Apr-96 21,772 520
Canadian Pacific Limited Boxcar Oct-92 5,474 May-97 20,466 3,942
Costain Coal, Inc. Shield Supports and High Dec-91 2,649,142 Apr-99 63,333 2,424,042
Pressure Pumps
DJ (Aeorspace) Limited Executive Aircraft Apr-94 1,890,000 Jan-97 1,018,053 1,590,913
Foodmaker, Inc. Furniture,Fixtures And May-94 to 2,202,926 Oct-98 1,048,585 2,606,000
Equipment Sep-94
Galardi Group Restaurant FF&E Jun-94 546,000 Oct-96 325,276 382,513
H. E. Butt Grocery Company Refrigerated Trailers Oct-92 2,128,029 Mar-97 1,174,703 1,410,730
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,897,830 Mar-97 1,079,789 1,246,977
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,645,554 Mar-97 610,258 1,299,522
H. E. Butt Grocery Company Trailers Nov-92 37,957 Jan-96 35,624 18,607
H. E. Butt Grocery Company Refrigerated Trailers May-93 1,404,302 Mar-97 831,127 790,395
International Paper Company Copiers Mar-95 77,950 Oct-98 9,400 78,574
Kendall Company Office Automation Apr-95 to 431,350 Dec-98 to 17,555 478,152
Mar-99
Dec-95
Kraft General Foods, Inc. Tractors Dec-93 545,048 Jul-96 139,956 581,119
Kraft General Foods, Inc. Tractors Dec-93 419,267 Jan-95 363,510 337,986
Liquid Carbonic Ind./ Air Separation Plant Dec-93 9,500,897 Apr-99 7,500,000 9,485,252
Medical Corporation
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 2,222,500 Apr-96 1,730,291 1,993,170
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 17,500 Sep-93 20,543 3,915
Mobil Oil Corporation John Deere Loader Rops Apr-92 74,977 Dec-97 30,000 94,050
Mobil Oil Corporation Manlift Jul-92 67,304 Jul-97 31,000 89,177
Mobil Oil Corporation Bobcat Loader Jul-92 15,289 Jul-97 9,000 20,258
Mobil Oil Corporation John Deer Excavator Jul-92 139,970 Jun-98 30,000 102,073
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 195,915 Feb-98 59,250 174,678
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 65,305 Feb-98 19,750 58,226
Mobil Oil Corporation Tractors Nov-92 436,136 Sep-96 137,900 536,101
Mobil Oil Corporation Snorkel Uno-33E Electric Nov-92 28,185 Jun-98 7,000 41,689
Boom
Mobil Oil Corporation Snorkel/Economy 2032 Nov-92 13,533 Jun-98 2,700 20,017
Scissorlifts
Mobil Oil Corporation Material Handling Equipment Dec-92 69,000 Dec-97 50,000 65,419
Mobil Oil Corporation 1993 Kenworth Tractor Dec-92 63,307 Apr-98 15,750 33,901
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 55,351
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 35,882
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Jun-98 29,458 32,161
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 18,500 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 62,055 Apr-98 17,000 55,328
Mobil Oil Corporation Accessories For Tractor Oct-93 3,541 Sep-96 - 979
Mobil Oil Corporation Accessories For Tractor Oct-93 5,682 Apr-98 - 5,774
Mobil Oil Corporation Accessories For Tractor Oct-93 1,982 Feb-98 - 1,703
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Jun-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Motor Vehicle Accessories Oct-93 285 Feb-98 - 245
Mobil Oil Corporation 1993 Freightliner Tractors Aug-92 to 258,544 Jul-98 to 51,000 251,800
Oct-93 May-99
Mobil Oil Corportion Tractors Nov-92 182,949 Jun-96 48,000 136,246
Mobil Oil Corportion Boom Trucks Nov-92 69,903 Jan-94 46,026 19,329
Mobil Oil Corportion Tractors Nov-92 62,312 Jan-96 25,500 43,963
Mobil Oil Corportion Tractors Nov-92 62,312 Mar-96 25,500 43,963
Mobil Oil Corportion Tractors Dec-92 23,500 Feb-96 8,950 21,126
Nabisco, Inc. Computers and Related Jul-95 211,104 Jul-97 to 63,855 100,306
Equipment Nov-97
Nabisco, Inc. Computers and Related Jul-95 72,622 Jul-97 to 26,909 34,506
Equipment Dec-97
Nabisco, Inc. Computers & Related Jul-95 43,423 Dec-96 to 34,799 21,684
Equipment Jun-97
Nabisco, Inc. Computers & Related Jul-95 10,447 Dec-96 to 8,590 5,071
Equipment Jun-97
</TABLE>
A-55
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND IV
National Steel Corporation Wheel Loader Oct-94 2,180,730 May-97 1,259,019 1,080,629
National Steel Corporation Forklift Oct-94 27,780 May-97 21,495 11,992
National Steel Corporation Scrap Loader Jan-95 242,595 May-97 193,044 92,425
National Steel Corporation Dump Haul Trucks Mar-95 3,433,402 May-97 2,783,959 1,145,594
Omnicom Group, Inc. Office Automation Sep-95 819,878 Oct-98 to 90,529 934,508
Mar-99
Pepsico, Inc. Pallet Trucks and Jun-93 103,258 Jul-97 10,000 97,740
Related Equipment
Pepsico, Inc. Battery Connector Jan-94 3,352 Sep-97 2,506 2,787
Pepsico, Inc. Battery Connector / Jan-94 88,419 Jan-98 5,850 83,694
Charger / Pallet Truck
Pepsico, Inc. Pallet Trucks and Related Jul-93 to 31,376 Oct-97 1,950 29,700
Equipment Aug-93
Pepsico, Inc. Material Handling Jun-93 to 378,537 Jul-98 to 64,756 398,099
Dec-93 Feb-99
Rochelle Coal Company Haul Truck Nov-92 1,429,807 Jun-97 772,200 1,022,764
Rochelle Coal Company Loader Dec-92 1,988,931 Jun-97 1,074,250 1,403,767
Rochelle Coal Company Haul Truck Dec-92 1,429,807 Jun-97 772,200 1,008,524
Rochelle Coal Company Haul Truck Jan-93 1,455,158 Jun-97 800,500 1,002,462
Sebastiani Vineyards, Inc. Wine Barrels Jun-94 405,121 Jul-98 to 68,025 501,690
Oct-98
Signature Flight Support Corp. Simon Ultimate Deicer Dec-94 1,142,400 Dec-98 800,000 1,318,567
TASC, Inc. Office Automation Oct-95 7,394 Apr-98 2,079 7,426
TASC, Inc. Office Automation Oct-95 3,932 Apr-98 1,061 3,949
TASC, Inc. Office Automation Dec-95 4,757 Apr-98 1,301 4,778
TASC, Inc. Office Automation Jan-96 4,351 Apr-98 1,145 4,370
TASC, Inc. Office Automation Jan-96 4,139 Apr-98 1,228 4,157
TASC, Inc. Office Automation Jan-96 3,477 Apr-98 970 3,492
Tasc, Inc. Office Automation Jan-95 to 374,473 Nov-98 to 29,632 298,511
Dec-95 Jun-99
The Dow Chemical Company Varian Spectra A4400 Plus Feb-93 102,149 Mar-98 29,500 113,385
System
The Dow Chemical Company JLG Wheel Star Boom Lift May-93 66,900 Jul-98 16,000 72,091
The Helen Mining Company Mining Mar-92 333,458 Mar-92 72,385 347,258
The Helen Mining Company Battery Locomotive Apr-92 185,249 May-97 39,131 198,041
The Helen Mining Company Mining May-92 641,854 Aug-93 44,235 679,436
The Kendall Company Computers Aug-94 21,819 Nov-97 8,184 24,926
The Kendall Company Computers Aug-94 21,581 Dec-97 3,099 24,654
The Kendall Company Computer Equipment Aug-94 55,013 May-98 9,632 64,411
The Kendall Company Computers Oct-94 45,471 Nov-97 14,322 51,946
The Kendall Company Computers Oct-94 17,206 Dec-97 2,360 19,656
The Kendall Company Computer Oct-94 4,735 Dec-96 2,233 3,822
The Kendall Company Computers Dec-94 20,067 Nov-97 5,924 32,675
The Kendall Company Computers Dec-94 8,586 Dec-97 2,112 13,980
The Kendall Company Computer Equipment Dec-94 57,455 May-98 7,243 95,337
The Kendall Company Centillion Speedswitch(s) Mar-95 43,770 Oct-97 18,906 51,335
The Kendall Company Computers Mar-95 9,553 Dec-96 5,817 6,304
The Kendall Company Computer Equipment Mar-95 346,935 May-98 25,290 472,246
The Kendall Company Computers Jun-95 11,771 Oct-97 to 5,993 9,856
Dec-97
The Kendall Company Dell Latitude Xpi 75Mhz Oct-95 118,854 Jun-98 8,786 109,712
Notebook Computer
The Kendall Company Computers Jan-95 to 34,449 Nov-97 14,009 40,403
Mar-95
The Pittston Company 1992 Joy 14Cm10 Continuous Jun-92 846,883 Apr-98 127,500 916,497
Miner
The Pittston Company Drill Nov-93 387,000 Apr-97 184,092 254,059
The Pittston Company Wheel Loader Nov-93 382,831 Apr-97 243,561 169,890 13
The Pittston Company Wheel Loader Nov-93 381,922 Apr-97 223,879 198,841
The Pittston Company Drill Nov-93 358,831 Apr-97 203,034 203,113
The Pittston Company Diesel Generator Nov-93 244,450 Apr-97 156,164 114,774
The Pittston Company Crawler Tractor Nov-93 208,800 Apr-97 136,878 98,035
The Pittston Company Crawler Tractor Nov-93 201,786 Apr-97 132,280 94,742
</TABLE>
A-56
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND IV
The Pittston Company Continuous Miner Mar-95 819,349 Apr-97 546,207 346,748
The Stop & Shop Bakery Labeling Machine Dec-95 2,750 Mar-97 2,568 759
Supermarket Co.
Trans Ocean Container Intermodal Containers Sep-93 65,073 Oct-96 to 53,512 24,637
Corporation Apr-97
Trans Ocean Container Intermodal Containers Sep-93 55,621 Jul-98 to 38,205 304,474
Corporation Jun-99
Trans Ocean Container Intermodal Containers Sep-93 23,074 Dec-97 14,130 23,576
Corporation
Trans Ocean Container Intermodal Containers Sep-93 13,870 Dec-95 10,608 5,537
Corporation
Trans Ocean Container Intermodal Containers Sep-93 13,223 Apr-95 12,095 3,016
Corporation
Trans Ocean Container Intermodal Containers Sep-93 10,196 Oct-95 6,112 3,595
Corporation
Trans Ocean Container Intermodal Containers Sep-93 6,744 Jul-94 7,398 825
Corporation
Trans Ocean Container Intermodal Containers Sep-93 6,706 Jul-95 6,394 2,069
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,572 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,341 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 3,248 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 3,900 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 600 2,615
Corporation
Union Pacific Railroad Intermodal Flat Racks Nov-92 1,150,967 Dec-98 to 153,470 1,292,093
Company Apr-99
Union Tank Car Company Box Car Sep-92 12,000 Aug-98 30,379 1,230
Union Tank Car Company Rail Car Oct-92 1,222,542 Jul-95 1,383,118 601,100
Union Tank Car Company Rail Car Oct-92 389,367 Sep-95 441,332 203,680
Union Tank Car Company Rail Car Oct-92 389,367 Oct-95 442,564 209,760
Union Tank Car Company Rail Car Oct-92 26,000 Apr-96 21,695 18,920
Union Tank Car Company Box Car Oct-92 25,000 Feb-95 23,158 21,678
Union Tank Car Company Box Car Oct-92 13,000 Aug-97 9,829 12,805
Union Tank Car Company Boxcar Oct-92 13,000 Nov-96 8,979 11,220
Union Tank Car Company Boxcar Oct-92 13,000 Apr-97 9,829 12,100
Union Tank Car Company Rail Car Oct-92 12,000 Apr-95 11,088 12,752
Union Tank Car Company Rail Car Oct-92 12,000 Jan-96 10,371 8,202
Union Tank Car Company Rail Car Dec-92 13,000 Jan-93 14,569 880
US Surgical Corp./ARR, Inc. Falcon 50 Air Craft Aug-92 5,275,000 Oct-97 5,200,000 4,417,201
USX Steel Company Material Handling Equipment Jun-93 711,679 Oct-97 175,000 776,136
USX Steel Corporation Material Handling Jun-93 2,292,822 831,250 2,465,502
-------------- -------------- --------------
$ 77,109,114 $ 47,302,009 $ 62,463,501
============== ============== ==============
</TABLE>
A-57
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND V
Barney's, Inc Retail Store FF&E Sep-93 $ 3,312,940 Jul-96 $ 1,703,435 $ 1,594,669 11
Burlington Northern & Santa Container - Domestic May-94 9,787 Jan-98 8,434 4,274
Fe Railroad Company
Burlington Northern & Santa 1995 Pines 48' Container Oct-94 9,635 Jan-98 8,591 3,672
Fe Railroad Company
Burlington Northern & Santa Intermodal Tank Container Nov-93 744,875 Apr-99 416,057 910,219
Fe Railroad Company
Burlington Northern & Santa EMD GP38-2 Locomotives Dec-94 12,350,000 Dec-98 8,682,050 9,477,200
Fe Railroad Company
Burlington Northern & Santa Container - Domestic May-94 to 58,264 Jul-98 to 47,104 154,733
Fe Railroad Company Nov-94 Jan-99
Burlington Northern Railroad Covered Hopper Cars Mar-96 35,000 Dec-96 22,425 619
Company
Burlington Northern Railroad Covered Hopper Cars Mar-96 35,000 Jan-97 36,367 -
Company
Burris Foods Trailers Apr-94 108,442 Dec-95 121,000 53,210
Canadian Pacific Railr Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,607 7,600
Railcar
Clark Oil & Refining Refrigeration Units Aug-93 1,268,656 Dec-96 560,000 1,164,635
Corporation
Conagra, Inc. Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,341 11,875
Railcar
Daimler Chrysler Corporation Materials Handling Oct-93 to 1,549,529 Dec-98 to 414,000 1,474,181
Mar-94 Mar-99
Foodmaker, Inc. Restaurant Furniture, Jul-93 to 5,233,726 Oct-98 2,250,161 6,028,123
Fixtures and Equipment Jun-94
IBM Corporation Office Furniture Aug-93 1,131,815 Nov-97 431,901 1,087,248
IBM Corporation Office furniture Sep-93 693,896 Jun-95 516,291 666,576
International Paper Company Wheel Loader Aug-94 112,054 Apr-98 45,000 110,842
International Paper Company Utility Hand Truck Sep-94 4,300 Nov-97 1,415 3,314
International Paper Company Floor Sweeper/Scrubber Sep-94 9,069 Apr-98 1,000 8,972
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Caterpillar 980F Wheel Oct-94 248,304 Apr-98 70,000 247,350
Loader
International Paper Company Caterpillar 936F Wheel Oct-94 112,054 Apr-98 45,000 111,623
Loader
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Bolzoni Paper Roll Clamp Nov-94 10,376 Jun-98 500 10,336
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Bolzoni Paper Roll Clamp Dec-94 10,376 Jun-98 500 10,336
International Paper Company Hyster S120Xl2 Lift Truck Feb-95 52,884 Apr-98 20,000 45,384
International Paper Company Hyster Forklift W/Paper Mar-95 65,584 Apr-98 30,000 56,284
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
International Paper Company Forklifts Jul-94 to 431,522 Jul-98 to 161,650 1,181,090
Jan-95 Jun-99
Kaiser Cement Corporation Tractor & Dompak Truck Aug-93 984,671 Dec-98 450,000 820,821
Kraft General Foods, Inc. 89 Kidron 28' Single Apr-94 165,644 May-99 14,000 157,498
Reefer Carr
</TABLE>
A-58
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND V
Louis Dreyfus Corporation Jumbo Covered Hopper Mar-96 105,788 Apr-98 107,505 4,096
Railcar
Louis Dreyfus Corporation Jumbo Covered Hopper Sep-96 70,525 Sep-98 to 58,033 17,760
Railcars Apr-99
McDonnell Douglas Helicopters Office Automation Jul-95 110,320 Apr-99 3,500 111,408
Mobil Administrative Services Helicopter Jun-93 844,525 Mar-95 920,000 308,000
Company
Mobil Oil Corporation Environmental Ejector May-93 423,000 Apr-97 88,000 458,067
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 Oct-96 39,000 50,579
Mobil Oil Corporation 33,000-Gal Liq.Petroleum Sep-95 76,090 Jul-98 79,035 10,219
Tank Car
Nabisco, Inc. Hewlett Packard Notebook Feb-95 357,104 Apr-98 62,807 348,386
Computers
Nabisco, Inc. Hewlett Packard Printers Feb-95 39,572 Apr-98 29,370 38,610
Nabisco, Inc. Hewlett Packard Printers Feb-95 29,744 Apr-98 29,370 29,016
Nabisco, Inc. Computers Aug-95 to 123,509 Aug-97 to 100,813 51,414
Oct-95 Nov-97
Nabisco, Inc. Computers & Related Aug-95 to 66,932 Dec-96 to 54,102 29,697
Equipment Oct-95 Jun-97
National Steel Corporation Skid Steer Loader Aug-94 to 130,784 Nov-98 to 29,592 179,838
Nov-94 Feb-99
Omnicom Group, Inc. Office Automation Dec-95 294,982 Jan-99 to 34,237 303,632
Jun-99
Owens Corning Fiberglas Corp. Forklifts Jul-93 157,462 May-97 31,800 157,273
Praxair, Inc. Tractors Jun-94 576,685 Sep-96 to 214,000 340,982
Apr-97
Praxair, Inc. Tractors Jun-94 91,429 Aug-97 to 23,028 54,060
Sep-97
Primark Corporation Synoptics 10Bt Ethernet May-95 to 143,449 Jul-98 to 22,087 145,186
Hub-Ntwk Mar-96 Mar-99
PV Trucking Tractors Jun-94 75,333 Jan-96 50,000 36,000
Quaker Coal Company Mining equipment Jun-94 1,118,880 Jun-95 930,251 347,926
Quaker Coal Company Crawler Dozer Jun-94 913,073 Oct-96 425,000 732,192
Quaker Coal Company Mining equipment Jun-94 595,000 Jun-95 505,775 173,253
Quaker Coal Company Mining equipment Dec-94 3,000,000 Jun-95 2,696,718 794,600
Schwegmann Giant Super Markets Fixtures & Equipment Jun-95 1,784,722 May-98 221,893 1,043,329
Schwegmann Giant Super Markets Retail Store FF&E Jun-95 574,703 Oct-96 527,405 167,353
Schwegmann Giant Super Markets Retail Store FF&E Jun-95 309,024 Dec-96 272,109 101,701
Sebastiani Vineyards American Oak Barrels Aug-94 95,848 Jun-98 20,148 87,769
Soo Line Railroad Comp Jumbo Covered Hopper Mar-96 35,263 Jun-98 30,551 14,688
Railcar
Southern Pacific Railroad Auto Rack - Bi-Level May-94 17,770 Apr-99 5,196 31,673
Star Enterprise Tractors Jun-94 887,041 Jan-97 to 331,750 649,727
Apr-97
Star Enterprise Tractors Jun-94 36,492 Aug-97 12,850 26,827
TASC, Inc. Computers & Related Dec-94 237,685 Jul-96 70,000 226,989
Equipment
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 586 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,310 Feb-98 782 4,965
32Mb/1G Computer
</TABLE>
A-59
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND V
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,310 Feb-98 782 4,965
32Mb/1G Computer
Tasc, Inc. Office Automation Jan-96 to 273,814 May-99 to 13,712 282,087
Mar-96 Jun-99
Texaco Trading & Tractors and Trailer Apr-94 99,456 Dec-98 to 34,500 25,880
Transportation Mar-99
Texaco Trading & Tractors Jun-94 983,717 Jul-97 to 361,500 757,569
Transportation Nov-97
Texaco Trading & Tractors Jun-94 983,294 Feb-97 to 370,000 742,508
Transportation Jun-97
Texaco Trading & Tractors Jun-94 338,992 Aug-97 to 120,000 274,077
Transportation Nov-97
Texaco Trading & Tractors & Trailers Jun-94 156,645 Apr-97 55,000 120,533
Transportation
Texaco Trading & Tractors Jun-94 138,783 Feb-97 to 59,250 94,571
Transportation Mar-97
Texaco Trading & Tank Trailers Jun-94 73,805 Aug-97 to 25,000 59,672
Transportation Nov-97
The Atchison Topeka & Santa Intermodal Containers Apr-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers May-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Jun-94 9,787 Jan-95 10,107 611
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Jun-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Oct-94 9,635 Jan-95 10,123 306
Fe Railroad Company
The Burlington Northern & Intermodal Containers May-94 9,787 Jul-96 9,337 2,548
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Jun-94 9,787 Jul-96 9,337 2,843
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Jun-94 9,787 Jan-97 8,991 2,843
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Nov-94 9,634 Jul-96 9,462 1,993
Santa Fe Railway Co.
The Dow Chemical Company Copiers Jul-94 42,694 Jul-95 31,150 13,588
The Dow Chemical Company Copiers Jul-94 195,975 Jan-96 139,400 224,830
The Dow Chemical Company Copiers Oct-94 230,577 Jan-96 204,000 76,459
The Dow Chemical Company Copiers Jan-95 37,493 Dec-95 20,750 12,437
The Dow Chemical Company Copiers Jan-95 110,900 Jan-96 98,750 38,074
The Dow Chemical Company Copiers Apr-95 13,455 Dec-95 14,080 2,199
The Dow Chemical Company Staplers Apr-95 109,800 Jan-96 119,000 18,576
The Kendall Company Computer Mar-96 3,735 Jan-97 4,112 686
The Pittston Company Haul Trucks and Drills Nov-93 3,489,255 Feb-99 to 1,198,801 2,973,731
May-99
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company Endloader and Drills Dec-94 1,227,996 Dec-98 to 141,000 1,145,956
May-99
Tom's Food, Inc. Tractors Jun-94 197,195 Aug-96 to 77,000 181,009
Feb-97
Tom's Foods, Inc. Tractors Jun-94 61,908 Feb-96 36,800 49,982
Trans Ocean Container Intermodal Containers Sep-93 154,077 Jul-98 to 87,925 857,188
Corporation Jun-99
Trans Ocean Container Intermodal Containers Sep-93 62,100 Oct-96 to 51,749 21,640
Corporation Apr-97
Trans Ocean Container Intermodal Containers Sep-93 53,507 Dec-95 46,560 21,970
Corporation
</TABLE>
A-60
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND V
Trans Ocean Container Intermodal Containers Sep-93 25,925 Apr-96 19,257 10,817
Corporation
Trans Ocean Container Intermodal Containers Sep-93 22,868 Jul-97 to 21,673 13,976
Corporation Dec-97
Trans Ocean Container Intermodal Containers Sep-93 18,054 Jul-94 18,898 2,371
Corporation
Trans Ocean Container Intermodal Containers Sep-93 10,116 Apr-95 5,246 2,345
Corporation
Trans Ocean Container Intermodal Containers Sep-93 5,814 Jul-95 5,263 1,866
Corporation
Trans Ocean Container Intermodal Containers Sep-93 4,647 Oct-95 4,405 850
Corporation
Trans Ocean Container Intermodal Containers Sep-93 3,372 Oct-94 3,675 1,674
Corporation
Trans Ocean Container Intermodal Containers Sep-93 2,245 Jun-96 2,468 1,041
Corporation
Trans Ocean Container Intermodal Container - T40 Sep-93 5,693 Mar-98 2,715 3,431
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 963 2,032
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 923 2,032
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,751 2,032
Corporation
Trans Ocean Container Intermodal Container - C20 Sep-93 2,245 Mar-98 2,080 1,353
Corporation
Trans Ocean Container Intermodal Container - C20 Sep-93 2,245 Mar-98 1,284 1,353
Corporation
Tyson Foods, Inc. Tractors Jun-93 1,585,000 Jul-96 637,500 1,027,080
Tyson Foods, Inc. Tractors Aug-93 1,575,000 Jul-96 637,500 1,022,490
-------------- -------------- --------------
$ 58,936,879 $ 30,116,549 $ 46,276,857
============== ============== ==============
</TABLE>
A-61
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND VI
American President Trucking Tractors Nov-95 $ 759,092 Jul-96 to $ 327,062 $ 225,942
Co., Ltd. Apr-97
Armco, Inc. Linkbelt Sl6000 Scrapmaster Sep-95 to 566,238 Nov-98 to 166,938 691,107
Jun-96 Jan-99
At&T Communications, Inc. Printers/Folders Aug-95 to 1,607,661 Dec-98 to 155,000 1,953,642
Jan-96 Mar-99
Burlington Northern & Santa 48'Aluminum External Post Sep-94 20,068 Jul-98 to 16,287 53,407
Fe Railroad Co. Containers Apr-99
Coors Transportation Company Utility Refrigerated Nov-95 52,024 Jul-98 to 19,683 26,969
Trailers Aug-98
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 7,366 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 6,734 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 9,530 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 9,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Genaral Motors Corporation Roboform CNC EDM Machines Jul-95 652,232 Nov-98 240,000 397,992
Hastings Leasing Limited Office Equipment Aug-96 103,752 Sep-98 41,247 231,841
International Paper Company Materials Handling Apr-95 to 1,307,495 Oct-98 to 614,655 991,589
Dec-96 Jun-99
Louis Dreyfus Corporation Jumbo Covered Hopper Mar-96 176,313 Sep-98 to 114,125 62,160
Railcars Apr-99
Mobil Oil Corporation Petroleum Wax Car Feb-96 59,953 Jan-97 64,717 3,597
Mobil Oil Corporation Liquid Petroleum Tank Cars Nov-95 to 135,997 May-99 to 144,809 360,686
Feb-96 Jul-99
Omnicom Group, Inc. Office Automation Mar-95 to 1,339,140 Jul-98 to 170,696 1,402,467
Jun-95 Mar-99
Perdue Transportation Incorpor Freightliner Tandem Tractor Nov-95 280,829 Nov-98 51,452 331,500
Perdue Transportation Tractors Nov-95 47,038 Feb-96 45,838 3,900
Incorporated
Tasc, Inc. Office Automation Mar-95 to 973,844 Jul=98 to 94,413 1,044,037
Sep-96 Jun-99
The Atchison Topeka & Santa Intermodal Containers Jan-94 20,068 Jan-95 21,084 567
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Sep-94 10,034 Jan-95 10,446 335
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Sep-94 20,068 Jan-96 19,973 2,543
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 10,034 Feb-95 10,446 1,159
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 10,034 Jan-96 10,113 968
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 9,633 Apr-96 9,588 1,240
Fe Railroad Company
</TABLE>
A-62
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CASH DISTRIBUTION FUND V
The Atchison Topeka & Santa Intermodal Containers Nov-94 6,453 Apr-96 6,567 788
Fe Railroad Company
The Burlington Northern & Ext. Post Container Nov-94 9,633 Oct-97 8,767 3,379
Santa Fe Railway Company
The Burlington Northern & Intermodal Container Sep-94 10,034 Jul-96 9,717 2,225
Santa Fe Railway Company
The Burlington Northern & Intermodal Container Nov-94 10,034 Jul-96 9,855 1,614
Santa Fe Railway Company
The Burlington Northern Utility Refrigerated Nov-95 312,145 Sep-97 to 144,951 161,813
Railroad Company Trailers Dec-97
The Burlington Northern Covered Hopper Cars Mar-96 70,526 Sep-97 to 67,033 10,100
Railroad Company Dec-97
The Burlington Northern Covered Hopper Cars Mar-96 70,000 Dec-96 to 59,553 619
Railroad Company Jan-97
Tracy Locke, Inc. Printers Mar-95 12,470 Sep-95 12,179 1,662
Trans Ocean Container Intermodal Containers Dec-95 53,198 Jul-98 to 52,101 22,908
Corporation Jun-99
Trans Ocean Container Intermodal Containers Dec-95 17,748 Oct-96 to 20,730 1,107
Corporation Jan-97
Trans Ocean Container Intermodal Containers Dec-95 11,063 Jul-97 to 12,070 1,986
Corporation Dec-97
Trans Ocean Container Intermodal Containers Dec-95 9,529 Jun-96 11,167 700
Corporation
Tyson Foods, Inc. Computers Jun-95 563,411 Jun-97 to 66,323 522,877
Nov-97
Tyson Foods, Inc. Computers & Related Jun-95 195,152 Jun-97 23,080 181,113
Equipment
-------------- -------------- --------------
$ 9,946,468 $ 3,060,967 $ 8,925,289
============== ============== ==============
</TABLE>
A-63
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
------ ----------------- -------- --------- --------- --------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ATEL CAPITAL EQUIPMENT FUND VII
Anchor Glass Container Glass Packaging Equipment Dec-97 $ 325,684 Nov-98 $ 357,890 $ 116,336
Corporation
Anchor Glass Container Glass Packaging Equipment Apr-98 45,598 Jun-98 60,611 10,086
Corporation
Burlington Northern & Santa Fe 48'Aluminium Domestic Aug-98 to 27,840 Jan-99 30,081 1,224
Container Sep-98
Cargill, Inc. Railcars Jan-97 99,000 May-97 to 96,747 9,415
Oct-97
Consolidated Diesel Company Minolta Copiers Dec-97 15,697 Nov-98 to 2,249 16,690
Mar-99
Consolidated Rail Corporation Domestic Container Aug-97 10,255 Jan-98 10,752 9,646
Costain Coal, Inc. Vme/Euclid 339Sd Rear Apr-98 805,181 Jun-98 886,985 161,683
Dump Truck
Danskin, Inc. Textile Manufacturing Dec-97 255,717 Aug-98 to 248,350 110,500
Equipment Dec-98
Exel Logistics, Inc. 1993 International 8200 Apr-98 88,610 May-98 89,307 16,341
Tractor
Exel Logistics, Inc. 1993 Monon Semi-Trailer Apr-98 45,337 May-98 45,693 8,360
Hartz Foods, Inc. Thermo Kings Refrigeration Dec-97 18,422 Oct-98 1 22,671
Unit
Hyplains Beef, L.C. Food Processing Equipment Dec-97 1,235,019 Jan-99 1,145,190 684,040
IBM Corporation Stereolithography Dec-97 30,026 Dec-98 50,000 36,010
International Rectifier Corp. Two Zone Thermal Shock Dec-97 190,911 Aug-98 to 148,000 76,091
Chamber Oct-98
International Rectifier Corp. Furnace/Heat Base Apr-98 153,515 Jun-98 154,782 71,669
International Rectifier Corp. Bdf-41 Furnace W/Attachments Apr-98 124,193 Jun-98 125,218 57,233
International Rectifier Corp. Wafer Cleaning System Apr-98 86,791 Jun-98 95,000 26,672
International Rectifier Corp. Optical Assoc.Handler Apr-98 13,336 May-98 12,000 4,480
Assy W/Kit
International Rectifier Corp. VSLI Critical Dim. Measure Apr-98 12,056 May-98 16,805 1,139
System
International Rectifier Corp. Itc5511D Energy Testing Apr-98 9,027 Jun-98 6,000 3,518
System
ITO Corporation Taylor Stacker W/Fork Dec-97 104,878 Apr-99 - 119,136
Shifter
Louisiana Workers Printer Dec-97 2,200 Jun-99 - 11,393
Compensation Corp.
Nippon Yusen Kaisha 20'Aluminum Refrigerated Dec-97 17,432 Feb-99 20,995 3,059
(N.Y.K.Line) Container
North American Chemical Co. Mini Magnetic Flow Meters Dec-97 18,809 Dec-98 - 22,771
Plasmaquest, Inc. Tatung Sparcstations Dec-97 6,406 Aug-98 5,445 7,104
Riceland Foods, Inc 23,700 Gal Uni-Temp Tank Car Jan-98 17,594 Apr-98 17,594 1,981
Sarif, Inc. ECR Enhanced CVD System Dec-97 224,702 Apr-99 89,826 225,348
Smitty'S Super Valu, Inc. Furniture,Fixtures & Apr-98 451,861 Jun-98 601,960 139,202
Equipment
Southern Pacific EMD SD45-T2 Locomotive Dec-97 397,658 Mar-99 520,000 391,486
Transportation Company
Southwest Health Center, Inc. Siemens Mammographic X-Ray Apr-98 13,000 May-98 18,500 1,331
Stater Brothers Markets Grocery Store Equipment Apr-98 13,643 Jun-98 - 16,315
Tarmac America, Inc. Tractors Mar-97 35,000 Aug-97 33,666 6,119
Tasc, Inc. Office Equipment Oct-97 to 27,247 Dec-98 to 21,441 26,974
Jul-98 Jun-99
The Burlington Northern & General Electric C30-7 Dec-96 208,790 Jun-99 125,000 143,520
Santa Fe Railroad Company Locomotive
Thompson Pipe & Steel Company Office Furniture & Fixtures Apr-98 31,918 May-98 25,000 6,012
Thomson Saginaw Ball Screw Co. Machine Tools Dec-97 488,917 Aug-98 382,771 242,618
Triad Intl Maintenance Corpora Aircraft Access and Ground Dec-97 954,124 Jul-98 to 1,306,184 367,159
Support Equipment Aug-98
Wagner College Various Desktop Computers Dec-97 91,951 Aug-98 to 34,289 77,503
Oct-98
-------------- -------------- --------------
$ 6,698,343 $ 6,784,332 $ 3,252,836
============== ============== ==============
TOTALS OF ALL FUNDS: $300,359,436 $148,927,884 $ 260,739,360
============== ============== ==============
</TABLE>
A-64
<PAGE>
[FN]
TABLE VI SALES OR DISPOSALS OF EQUIPMENT FOOTNOTES
(1) "Acquisition Date" is the date the Equipment was acquired by the prior
program.
(2) "Equipment Acquisition Price" is the actual cost of the item of
Equipment, including Acquisition Fees, and any other expenditures incurred by
the prior program in the acquisition of the Equipment.
(3) "Sale Price" is the actual cash received for the purchase, early
termination or casualty of the Equipment upon Lease termination, net of any
direct out-of-pocket closing costs incurred by the prior program as a result of
such termination.
(4) "Excess of Rents Over Expenses" is a total amount of Lease rents, less
any applicable direct out-of-pocket costs incurred by the prior program during
the term of the Lease for the particular Lease transaction.
(5) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved Chapter 11 Reorganization Plan.
Distributions were as follows: Cash $9,512; Senior Secured Notes $1,000;
Convertible Subordinated Notes $700; Common Stock $296 (market value as of
7/16/92).
(6) The original lease included a mobile MRI unit and a tractor. The
tractor leased under the original lease was sold to the lessee. The MRI unit has
been leased to a third party on a 24 month term with a bargain purchase option
to be exercised at the end of the lease term. The Equipment under this lease is
owned 1/3 by ATEL Cash Distribution Fund and 2/3 By ATEL Cash Distribution Fund
II.
(7) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11 Plan.
Distributions were as follows: Cash $602,435; Senior Secured Notes $72,800;
Convertible Subordinated Notes $50,900; Common Stock $21,482 (market value as of
7/16/92).
(8) "Sales Price" represents cash and non-cash amounts distributed by
Lessee as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11
Plan. Distributions were as follows: Cash $431,499; Senior Secured Notes
$51,600; Convertible Subordinated Notes $36,100; Common Stock $15,233 (market
value as of 7/16/92).
(9) "Equipment Acquisition Price" represents a 2/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $1,430,345, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(10) The "Sales Price" represents the sum of cash received from the sale of
the aircraft pre-bankruptcy petition, plus all amounts received by the lessor
under its unsecured claim filed in the lessee's Chapter 11 reorganization,
through the date of this table. Through September 30, 1996, such claim payments
have amounted to 40% of the allowed claim amount of $776,542, or $310,617.
(11) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
(12) "Equipment Acquisition Price" represents a 1/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $715,172, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(13) The remaining equipment originally leased to The Helen Mining Company
is now leased to Costain Coal. Quaker State Corporation continued to guarantee
payments through the original lease term. The new lease also includes a two year
extension of the lease term.
</FN>
A-65
<PAGE>
EXHIBIT B
ATEL CAPITAL EQUIPMENT FUND IX, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
September 27, 2000
<PAGE>
ATEL CAPITAL EQUIPMENT FUND IX, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
TABLE OF CONTENTS
Page
1. NAME AND PRINCIPAL PLACE OF BUSINESS..................................B-1
2. DEFINITIONS...........................................................B-1
3. BUSINESS AND PURPOSE..................................................B-7
4. TERM..................................................................B-8
5. MANAGER...............................................................B-8
6. INITIAL AND ADDITIONAL MEMBERS........................................B-8
Section 6.1 Initial Members........................................B-8
Section 6.2 Additional Members.....................................B-8
Section 6.3 Conditions to Admission................................B-8
Section 6.4 Admission as a Member..................................B-8
Section 6.5 Limitation on Additional Issuance......................B-8
Section 6.6 Escrow.................................................B-8
Section 6.7 Capital Account........................................B-9
7. LIABILITY AND STATUS OF MEMBERS.......................................B-9
8. COMPENSATION TO THE MANAGER AND/OR AFFILIATES.........................B-9
Section 8.1 General Limitation.....................................B-9
Section 8.2 Asset Management Fee...................................B-9
Section 8.3 Asset Management Fee Limit ............................B-9
Section 8.4 Other Services........................................B-10
Section 8.5 Payment of Fees on Removal............................B-11
Section 8.6 Employment of Broker-Dealers...........................B-11
9. FUND EXPENSES AND RESERVES...........................................B-11
Section 9.1 Reimbursement of Manager..............................B-11
Section 9.2 Limitation on Reimbursement...........................B-11
Section 9.3 Fund Expenses.........................................B-12
Section 9.4 Reserves..............................................B-13
10. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS.........................B-13
Section 10.1 Allocation of Net Income and Net
Loss Prior to Initial Closing Date.................B-13
Section 10.2 Allocation of Net Income and Net
Loss After Initial Closing Date....................B-13
ii
<PAGE>
Section 10.3 Special Allocations..................................B-13
Section 10.4 Distribution of Cash From Operations.................B-15
Section 10.5 Distribution of Cash From Sales or Refinancing......B-15
Section 10.6 Distributions of Cash From Reserve Account..........B-15
Section 10.7 Determination of Amounts to be Distributed..........B-15
Section 10.8 Consent to Allocations..............................B-16
Section 10.9 Limitation on Distributions.........................B-16
Section 10.10 Allocation to Manager...............................B-16
Section 10.11 Return of Unused Capital............................B-16
Section 10.12 Distributions in Kind...............................B-16
Section 10.13 Withholding Taxes...................................B-17
11. ASSIGNMENT OF FUND INTERESTS.........................................B-17
Section 11.1 Limitations on Transfer..............................B-17
Section 11.2 Distributions and Effective Date of Transfer.........B-18
Section 11.3 Governmental Restrictions............................B-18
Section 11.4 Non-Complying Transfers..............................B-18
Section 11.5 Misrepresentations and Forfeit.......................B-18
12. SUBSTITUTED MEMBERS..................................................B-19
Section 12.1 Limitations on Substitution..........................B-19
Section 12.2 Consent to Admission.................................B-19
Section 12.3 Amendment of Agreement...............................B-19
13. REPURCHASE OF FUND INTERESTS.........................................B-19
14. BOOKS, RECORDS, ACCOUNTINGS AND REPORTS..............................B-20
Section 14.1 Books of Account and Records.........................B-20
Section 14.2 Audited Annual Financial Statements..................B-21
Section 14.3 Other Annual Reporting...............................B-21
Section 14.4 Quarterly Reports....................................B-22
Section 14.5 Unaudited Quarterly Financial Statements.............B-22
Section 14.6 Other Quarterly Reports..............................B-22
Section 14.7 Tax Returns..........................................B-23
Section 14.8 Governmental Reports.................................B-23
Section 14.9 Maintenance of Suitability Records...................B-23
15. RIGHTS, AUTHORITY, POWERS AND RESPONSIBILITIES
OF THE MANAGER.................................................B-23
Section 15.1 Services of the Manager..............................B-23
Section 15.2 Authority of the Manager.............................B-23
Section 15.3 General Powers and Fiduciary Duty....................B-26
Section 15.4 Limitations on Manager's Authority...................B-26
Section 15.5 Limitation on Manager's Liability....................B-29
Section 15.6 Tax Matters Member...................................B-29
Section 15.7 Minimum Investment in
Equipment /Maximum Front-End Fees....................B-29
Section 15.8 Reliance on Manager's Authority......................B-31
iii
<PAGE>
16. RIGHTS, POWERS AND VOTING RIGHTS OF THE MEMBERS......................B-31
Section 16.1 Limitation on Member Authority.......................B-31
Section 16.2 Voting Rights........................................B-31
Section 16.3 Voting Procedures....................................B-31
Section 16.4 Limitations on Member Rights.........................B-33
Section 16.5 Limitations on Power to Amend Agreement..............B-33
Section 16.6 Member List..........................................B-33
Section 16.7 Dissenters' Rights and Limitations on
Mergers and Roll-ups.................................B-33
17. TERMINATION OF A MANAGER AND TRANSFER OF THE
MANAGER'S INTEREST.................................................B-34
Section 17.1 Removal or Withdrawal................................B-34
Section 17.2 Other Terminating Events.............................B-35
Section 17.3 Election of Successor Manager;
Continuation of Fund Business........................B-35
Section 17.4 Admission of Successor or Additional Manager.........B-35
Section 17.5 Effect of a Terminating Event........................B-35
Section 17.6 Election of Additional Manager.......................B-36
Section 17.7 Assignment of Manager's Interest.....................B-36
Section 17.8 Members' Participation in Manager's Bankruptcy.......B-36
18. CERTAIN TRANSACTIONS.................................................B-37
19. TERMINATION AND DISSOLUTION OF THE FUND..............................B-37
Section 19.1 Termination and Dissolution..........................B-37
Section 19.2 Accounting and Liquidation...........................B-37
20. SPECIAL POWER OF ATTORNEY............................................B-38
Section 20.1 Execution of Power of Attorney.......................B-38
Section 20.2 Special Power of Attorney............................B-38
21. INDEMNIFICATION......................................................B-39
Section 21.1 Indemnification of the Manager.......................B-39
Section 21.2 Limitations on Indemnification.......................B-39
Section 21.3 Insurance............................................B-40
22. MISCELLANEOUS........................................................B-40
Section 22.1 Counterparts.........................................B-40
Section 22.2 Successors and Assigns...............................B-40
Section 22.3 Severability.........................................B-40
Section 22.4 Notices..............................................B-40
Section 22.5 Captions.............................................B-40
Section 22.6 Number and Pronouns..................................B-40
Section 22.7 Manager Address......................................B-40
Section 22.8 Member Address.......................................B-40
Section 22.9 Construction.........................................B-41
Section 22.10 Qualification to Do Business.........................B-41
iv
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF ATEL CAPITAL EQUIPMENT FUND IX, LLC
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the "Agreement"), is entered
into as of the 27th day of September, 2000, by and between ATEL Financial
Corporation ("ATEL"), a California Corporation, as the Managing Member (the
"Manager"), and ATEL Capital Group as the initial Member, whereby the parties
together agreed to form a limited liability company pursuant to the California
Limited Liability Company Act.
1. NAME AND PRINCIPAL PLACE OF BUSINESS
The name of the Fund shall be ATEL Capital Equipment Fund IX, LLC or
such other name as the Manager shall hereafter designate in writing to the
Members. The Fund's principal place of business shall be 235 Pine Street, 6th
Floor, San Francisco, California 94104, or such other place or places in the
State of California as the Manager may hereafter determine.
2. DEFINITIONS
The following terms used in this Agreement shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Acquisition Expenses" shall mean expenses including, but not limited
to, legal fees and expenses, travel and communication expenses, costs of
appraisals, accounting fees and expenses, and miscellaneous expenses relating to
selection and acquisition of Equipment, whether or not acquired.
"Acquisition Fees" shall mean the total of all fees and commissions
paid by any party in connection with the initial purchase or manufacture of
Equipment. Included in the computation of such fees or commissions shall be any
commission, selection fee, financing fee, nonrecurring management fee, or any
fee of a similar nature, however designated.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Member, the deficit balance if any, in such Member's Capital Account as of the
end of the Fund taxable year, after giving effect to the following adjustments:
(a) Crediting to such Capital Account any amounts which such Member is obligated
to restore or is deemed to be obligated to restore pursuant to Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (b) Debiting from such Capital
Account the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5)
and (6). This definition is intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.
"Adjusted Invested Capital" shall mean, as of any date, the Original
Invested Capital attributable to the Units held by any Person on or before such
date, as decreased (but not below zero) by the amount which (i) all
Distributions from Cash from Operations and Cash from Sales and Refinancing with
respect to such Units on or before the date of determination pursuant to any
provision of this Agreement exceed (ii) the Priority Distribution attributable
to such Units for such period.
B-1
<PAGE>
"Affiliate" of a Person shall mean (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person;
(ii) any Person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such Person, (iii) any officer, director,
trustee or partner of such Person and (iv) if such Person is an officer,
director, trustee, partner or holder of 10% or more of the voting securities or
beneficial interests of such Person, any other company for which such Person
acts in such capacity. However, such term shall not include a Person who is a
partner in a partnership or joint venture with the Fund if such Person is not
otherwise an Affiliate.
"Asset Management Fee" shall mean the fee payable to the Manager and
its Affiliates under the provisions of Section 8.2 of this Agreement.
"Asset Management Fee Limit" means the total fees calculated pursuant
to the alternative fee schedule set forth under Section 8.3 of this Agreement,
equal to the aggregate of an Equipment Management Fee, Incentive Management Fee,
and Equipment Resale/Re-Leasing Fee, plus the Manager's Carried Interest,
determined in the manner described herein.
"Assignee" shall mean a Person who has acquired a beneficial interest
in one or more Units from a third party but who is neither a substituted Holder
nor an Assignee of Record.
"Assignee of Record" shall mean an Assignee who has acquired a
beneficial interest in one or more Units whose ownership has been recorded on
the books of the Fund and which ownership is the subject of a written instrument
of assignment, the effective date of which assignment has passed.
"ATEL" shall mean ATEL Financial Corporation, a California corporation.
"California Act" or "California Limited Liability Company Act" shall
mean the Beverly-Killea Limited Liability Company Act, Title 2.5, Chapters 1-15,
of the California Corporations Code, as it may be amended from time to time.
"Capital Account" shall mean, with respect to any Member, such Member's
Capital Account determined in accordance with Section 6.7.
"Carried Interest" shall mean the allocable share of Fund Distributions
of Cash from Operations and Cash from Sales or Refinancing payable to the
Manager, as Manager, pursuant to Sections 10.4 and 10.5 of this Agreement.
"Cash from Operations" shall mean the excess of Gross Revenues over
cash disbursements (including the Asset Management Fee and amounts reinvested by
the Fund in Equipment in compliance with Section 15.4.18) without reduction for
depreciation and amortization of intangibles such as organization and
underwriting costs but after a reasonable allowance for cash for repairs,
replacements, contingencies and anticipated obligations, as determined by the
Manager. Cash from Operations shall not include Cash from Sales or Refinancing
or Cash from Reserve Account.
"Cash from Reserve Account" shall mean that portion of the Net Proceeds
not utilized in the acquisition of Equipment, including cash maintained
according to the provisions of Section 9.4.
"Cash from Sales or Refinancing" shall mean the net cash realized by
the Fund from the sale, refinancing or other disposition of any Equipment
B-2
<PAGE>
(including insurance proceeds or lessee indemnity payments arising from the
loss or destruction of any Equipment through casualty) after payment of all
expenses related to the transaction; provided, however that Cash from Sales or
Refinancing shall not include Cash from Reserve Account or Cash from Operations.
"Closing Date" shall mean such date designated by the Manager for the
termination of the offering of Units, but not later than ______________, 2002.
Extension of the offering beyond one year from the date of the Prospectus shall
be subject to the qualification of the offering for any such extension in those
jurisdictions which may limit the offering period to one year. "Initial Closing
Date" shall mean the date on which subscribers for Units, other than the initial
Holders, are first admitted to the Fund as Holders. "Final Closing Date" shall
mean the last date on which subscribers for Units are admitted to the Fund as
Holders.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent federal revenue laws.
"Distributions" shall mean any cash, tax credits or other property
allocated to or distributed to Holders and the Manager arising from their
respective interests in the Fund, but shall not include any compensation payable
to the Manager under the provisions of Article 8 or Article 9, except as
otherwise provided herein.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Equipment" shall mean the equipment acquired and owned by the Fund to
be leased by the Fund to others as well as any Fund interest in equipment,
including without limitation its rights, whether direct or indirect, in all
trusts, joint ventures, leases, chattel paper, options and other contract rights
with respect to equipment.
"Equipment Management Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Equipment Re-lease Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Equipment Resale Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Front-End Fees" shall mean fees and expenses paid by any party for any
services rendered during the Fund's organization and acquisition phase including
Organization and Offering Expenses, Leasing Fees, Acquisition Fees, Acquisition
Expenses, and any other similar fees, however designated. Notwithstanding the
foregoing, Front-End Fees shall not include any Acquisition Fees or Acquisition
Expenses paid by a manufacturer of Equipment to any of its employees unless such
Persons are Affiliates of the Manager.
B-3
<PAGE>
"Full Payout Lease" shall mean a lease under which the non-cancellable
rental payments due during the initial term of the lease are at least sufficient
to cover the purchase price of the Equipment leased.
"Fund" shall mean the limited liability company created under this
Agreement.
"Fund Minimum Gain" shall have the meaning ascribed to the term
"partnership minimum gain" in Regulations Section 1.704-2(d)(1).
"Gross Income" shall mean the gross income of the Fund within the
meaning of section 61(a) of the Code.
"Gross Proceeds" shall mean the aggregate total of the Original
Invested Capital of the initial and all of the additional Holders.
"Gross Lease Revenues" shall mean all revenues attributable to the
Equipment other than from security deposits paid by lessees thereof. The term
"Gross Lease Revenues" shall not include revenues from the sale, refinancing or
other disposition of Equipment.
"High Payout Lease" shall mean a lease under which the noncancellable
rental payments and other payment obligations of the lessee due through the
initial term of the lease are equal to at least 90% of the original purchase
price paid by the Fund for the Equipment.
"Holders" shall mean owners of Units who are either Members or
Assignees of Record, and reference to a "Holder" shall be to any one of them.
The Manager shall not be considered to be a Holder except to the extent it also
owns Units.
"Incentive Management Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of the Operating Agreement as provided therein.
"Independent Expert" shall mean a person with no current material or
prior business or personal relationship with the Manager or any of its
Affiliates who is engaged to a substantial extent in the business of rendering
opinions regarding the value of assets of the type held by the Fund, and who is
qualified to perform such work.
"IRA" shall mean an individual retirement account qualifying under
Section 408 of the Code.
"Investment in Equipment" shall mean the amount of Gross Proceeds
actually paid or allocated to the purchase of Equipment acquired by the Fund,
any amount of Gross Proceeds reserved pursuant to Section 9.4 hereof up to a
maximum of 3% of Gross Proceeds and other cash payments such as interest and
taxes, but excluding Front-End Fees.
"Leasing Fees" shall mean the total of all fees and commissions paid by
any party in connection with the initial lease of equipment acquired by the
Fund.
"Manager" or "Managing Member" shall mean ATEL Financial Corporation
("ATEL"), a California corporation, or any other Person or Persons which succeed
it in such capacity.
B-4
<PAGE>
"Members" shall mean the Manager, the initial Members and any other
Persons who are admitted to the Fund as additional or substituted Members.
Reference to a "Member" shall refer to any one of them.
"Member Nonrecourse Debt" has the meaning ascribed to the term "partner
nonrecourse debt" in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" shall have the meaning ascribed
to the term "partner nonrecourse debt minimum gain" in Regulations Sections
1.704-2(i)(2).
"Net Income" or "Net Loss" shall mean the taxable income or taxable
loss of the Fund (including the Fund's share of income or loss of any
partnership, venture or other entity which owns a particular item of Equipment),
as determined for federal income tax purposes, computed by taking into account
each item of Fund income, gain, loss, deduction or credit not already included
in the computation of taxable income and taxable loss.
"Net Lease Provisions" shall mean contractual arrangements under which
the lessee assumes responsibility for, and bears the cost of, insurance, taxes,
maintenance, repair and operation of the leased asset and where non-cancellable
rental payments under the lease are absolutely net to the lessor,
notwithstanding that some minor costs or responsibilities remain with the Fund
as lessor or that the Fund retains the option to require and pay for a higher
standard of care or greater level of maintenance or insurance than would be
imposed on the lessee under the terms of the lease.
"Net Proceeds" shall mean the total Gross Proceeds less Organization
and Offering Expenses.
"Nonrecourse Deductions" shall mean items of Fund loss, deductions or
Code Section 705(a)(2)(B) expenditures which are attributable to Nonrecourse
Liabilities.
"Nonrecourse Liability" means a Fund liability with respect to which no
Member or Related Person bears the economic risk of loss.
"Operating Agreement" or "Agreement" shall mean this Limited Liability
Company Operating Agreement of ATEL Capital Equipment Fund IX, LLC, as it may be
amended from time to time.
"Operating Lease" shall mean a lease under which the aggregate rental
payments due during the initial term of the lease are less than the purchase
price of the Equipment leased.
"Operating Revenues" means the total for any period of all Gross Lease
Revenues plus all Cash from Sales or Refinancing.
"Organization and Offering Expenses" shall mean those expenses incurred
in connection with preparing the Fund for registration and subsequently offering
and distributing Units to the public, including selling commissions and all
advertising expenses except advertising expenses related to the leasing of
Equipment.
"Original Invested Capital" shall mean the original gross purchase
price of the Units contributed by each Member to the capital of the Fund for his
interest in the Fund, which amount shall be attributed to Units in the hands of
a subsequent Holder.
B-5
<PAGE>
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
"Priority Distribution" shall mean a hypothetical amount determined
solely for purposes of the alternative fee schedule calculation to determine the
Asset Management Fee Limit under the provisions of Section 8.3 of this
Agreement. Such amount will equal, for any calendar year or other period with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during such period multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the capital contribution of the initial purchaser of
such Units was received by the Fund and pro rated for any fraction of a calendar
year for which such calculation is made).
"Prospectus" shall mean the final prospectus filed in connection with
the registration of the Units with the Securities and Exchange Commission on
Form S-1, as amended, together with any supplement thereto which may be
subsequently filed with such Commission.
"Purchase Price of Equipment" shall mean the price paid upon the
purchase or sale of a particular item of equipment, including the amount of
Acquisition Fees and all liens and mortgages on the equipment, but excluding
points and prepaid interest.
"Qualified Plan" shall mean employee trusts (or employer individual
retirement accounts), Keogh Plans and corporate retirement plans qualifying
under Section 401(a) of the Code.
"Regulations" shall mean the income tax regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Reimbursable Administrative Expenses" shall mean the ordinary
recurring administration expenses incurred by the Manager and reimbursed by the
Fund. Such expenses shall not include interest, depreciation, equipment
maintenance or repair, third party services or other non-administrative
expenses.
"Reinvestment Period" shall mean the period commencing with the Initial
Closing Date and ending on a date 72 months after the last day of the fiscal
year during which the Final Closing Date occurs.
"Related Person" means a Person having a relationship with a Member
that is described in Regulations Section 1.752-4(b).
"Resident Alien" shall mean a resident alien as defined within the
Federal Aviation Act of 1958, as amended from time to time, or any successor
statute, or any regulations adopted pursuant to such Act or any successor
statute.
"Roll-Up" shall mean a transaction involving the acquisition, merger,
conversion or consolidation, either directly or indirectly, of the Fund and the
issuance of securities of a Roll-Up Entity. Such term does not include:
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(a) any transaction if the securities of the Fund have been for at
least twelve months traded through the National Association of Securities
Dealers, Inc. Automated Quotation National Market System; or
(b) a transaction involving the conversion to corporate, trust or
association form of only the Fund, if, as a consequence of the transaction,
there will be no significant adverse change in any of the following:
(i) the Members voting rights;
(ii) the term of existence of the Fund;
(iii) the terms of compensation of the Manager
and its Affiliates; or
(iv) the Fund's investment objectives.
"Roll-Up Entity" means the partnership, trust, corporation or other
entity that would be created or would survive after the successful completion of
a proposed Roll-Up transaction.
"Service" shall mean the United States Internal Revenue Service or its
successor.
"Sponsor" shall mean any Person directly or indirectly instrumental in
organizing, wholly or in part, a Program or any Person who will manage or
participate in the management of a Program, and any Affiliate of any such
Person. Sponsor does not include the Program itself or a Person whose only
relation with the Program is that of an independent equipment manager and whose
only compensation is as such. Sponsor does not include wholly independent third
parties such as attorneys, accountants and underwriters whose only compensation
is for professional services rendered in connection with the offering of Program
interests.
"Substantially All of the Assets" shall mean, unless the context
otherwise dictates, Equipment representing 66 2/3% or more of the net book value
of all Equipment as of the end of the most recently completed fiscal quarter.
"Unit" shall mean the interest in the Fund representing Original
Invested Capital in the amount of $10 and shall entitle the Holder thereof to
the rights herein provided.
"United States Citizen" shall mean a "citizen of the United States" as
defined within the Federal Aviation Act of 1958, as amended from time to time,
or any successor statute, or any regulations adopted pursuant to such Act or any
successor statue.
3. BUSINESS AND PURPOSE
The primary purpose of the Fund is to purchase, own, lease and sell
various types of Equipment pursuant to such arrangements as the Manager in its
discretion may enter into on behalf of the Fund. The Fund may enter into
ventures, partnerships and other business arrangements with respect to Equipment
to the extent deemed prudent by the Manager in order to achieve successful
operations for the Fund, subject to the provisions of Section 15.4.8. The Fund
may also engage in such other lawful activities as may be deemed by the Manager
to be incident to its primary purpose or prudent and in the Fund's best
interest. The Fund's investment objectives shall be those set forth in the
Prospectus, and the Manager may not make any material change to such investment
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objectives without first obtaining the written consent or approval of
Members owning more than 50% of the total outstanding Units entitled to vote.
4. TERM
The Fund commenced as of the 27th day of September, 2000 and shall
continue until the 31st day of December, 2020, unless previously terminated in
accordance with the provisions of this Agreement.
5. MANAGER
The Manager has contributed $100 in cash to the Fund and at all times
during the existence of the Fund the Manager shall have a present and continuing
interest in Net Income, Net Losses and Distributions according to the provisions
of Article 10.
6. INITIAL AND ADDITIONAL MEMBERS
6.1 Initial Members. ATEL Capital Group, as the initial Member, has
contributed the sum of $500 to the capital of the Fund and has received 50 Units
in return therefor.
6.2 Additional Members. The Fund intends to sell and issue to Holders
not less than 120,000 nor more than 15,000,000 additional Units and to admit as
additional Members the Persons who contribute cash to the capital of the Fund
for such Units.
6.3 Conditions to Admission. Subject to the provisions of Section 6.6,
each Person who acquires any such additional Units shall become a Member in the
Fund at such time as he has: (i) purchased 250 or more Units (200 Units in case
of an IRA or Keogh Plan), (ii) contributed the sum of $10 in cash for each Unit
purchased (or such lesser net amount as may be provided in accordance with the
terms described in the Prospectus under "Plan of Distribution"), (iii) executed
and filed with the Fund a written instrument which sets forth an intention to
become a Member and requests admission to the Fund in that capacity, together
with such other instruments as the Manager may deem necessary or desirable to
effect such admission, including the written acceptance and adoption by such
Person of the provisions of this Agreement, and the execution, acknowledgment
and delivery to the Manager of a special power of attorney, the form, style and
content of which are more fully described herein, and (iv) the Manager accepts
such Person as a Member in the Fund.
6.4 Admission as a Member. Each Person who subscribes for Units under
Section 6.2 shall be admitted to the Fund promptly after the Manager's
acceptance of such subscription, but, except as provided in Section 6.6, in no
event later than 30 days after the receipt by the Fund of such subscription.
6.5 Limitation on Additional Issuance. The Fund shall not issue any
additional Units after the Final Closing Date.
6.6 Escrow. All Original Invested Capital of Holders shall be received
by the Fund in trust, and shall be deposited in an escrow account with a banking
institution designated by the Manager as escrow holder for the Original Invested
Capital, until such time as subscriptions for a total of 120,000 Units, in
addition to the Unit purchased by the initial Holder, representing Original
Invested Capital of $1,200,000 have been deposited therein. Not less than 15
days after receipt of a minimum of $1,200,000 of such additional Original
Invested Capital, the Fund will admit subscribers into the Fund as additional
Holders. At the time a subscriber is admitted as a Holder, the escrow holder
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shall transfer the subscriber's Original Invested Capital to the Fund. If
the $1,200,000 minimum is not obtained on or before a date one year from the
date of the Prospectus, all Original Invested Capital will be promptly refunded
to the investors. In any event, any interest earned on Original Invested Capital
while in escrow shall be paid to investors.
6.7 Capital Account. An individual Capital Account shall be maintained
for each Member. The Capital Account of a Member shall consist of the Original
Invested Capital of such Member, increased by (i) any additional contributions
to capital and (ii) such Member's share of Fund Net Income, and decreased by (i)
Distributions to such Member and (ii) such Member's share of Fund Net Loss. In
the event a Member transfers all or a portion of his Units, the Assignee shall
succeed to the Capital Account of the transferor (as adjusted for all events
preceding the date the transferee is deemed admitted to the Fund under Section
10.3.1) according to the number of Units, and the allocable portion of the
transferor's Capital Account, so transferred. No Holder shall have the
obligation to restore any deficit in his Capital Account upon termination or
dissolution of the Fund. The foregoing provisions of this Section 6.7 are
intended to comply with Regulation Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations.
7. LIABILITY AND STATUS OF MEMBERS
Holders shall not be bound by, or be personally liable for, the
expenses, liabilities or obligations of the Fund, except to the extent, but only
to the extent, a Holder would be required to return any Distribution from the
Fund pursuant to Section 17254(e) of the California Act.
8. COMPENSATION TO THE MANAGER AND/OR AFFILIATES
8.1 General Limitation. The Manager and its Affiliates shall receive
compensation only as specified by this Agreement. In addition to the
compensation provided herein, the Manager will hold the Carried Interest and be
entitled to receive Distributions as provided in Article 10, and receive
reimbursement of costs and expenses advanced as provided in Article 9. The
Manager may delegate to its Affiliates all or a portion of its management duties
hereunder, as described in the Prospectus, and may assign all or a portion of
its compensation hereunder to one or more such Affiliates or other parties in
its discretion.
8.2 Asset Management Fee. The Fund will pay the Manager an Asset
Management Fee in an amount equal to 4.5% of Operating Revenues as compensation
for the Manager's services in establishing and supervising management of the
Fund's portfolio of Equipment and its operations. The Asset Management Fee will
be paid on a monthly basis. The amount of the Asset Management Fee payable in
any year will be reduced for that year to the extent it would otherwise exceed
the Asset Management Fee Limit.
8.3 Asset Management Fee Limit. The Asset Management Fee Limit will be
calculated each year during the Fund's term by calculating the total fees that
would be paid to the Manager for the year in question if the Manager were to be
compensated on the basis of an alternative fee schedule, to include an Equipment
Management Fee, Incentive Management Fee, and Equipment Resale/Re-Leasing Fee,
together with the Carried Interest, as provided herein. To the extent that the
total amount paid to the Manager for the year as the Asset Management Fee and
the Carried Interest would exceed the aggregate amount of fees that would have
been payable as calculated under this alternative fee schedule for that year,
the Asset Management Fee for that year will be reduced to equal the maximum
aggregate fees under the alternative fee schedule. The limitations set forth in
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this Section 8.3 will be subject to adjustment pursuant to the limitations
imposed under Section 15.7 relating to the Minimum Investment in Equipment.
Under Section 15.7, a separate calculation will be performed upon completion of
the offering of Units, final commitment of Net Proceeds to acquisition of
Equipment and establishment of final levels of permanent portfolio debt
encumbering such Equipment, and then annually thereafter. To the extent required
under the provisions of Section 15.7, the alternative fee schedule set forth
below will first be adjusted as provided therein. Thereafter, the Asset Fee
Limitation, using the alternative fee schedule as so adjusted, will be imposed
under this Section 8.3 and applied to the total Asset Management Fee and Carried
Interest for the year. The alternative fee schedule to be used for calculating
the Asset Management Fee Limit shall include:
8.3.1 An Equipment Management Fee calculated for each fiscal
quarter and in an amount equal to (i) 3.5% of the Gross Lease Revenues from
Operating Leases, except that if the services are performed by nonaffiliated
Persons under the active supervision of the Manager or its Affiliate, then the
amount payable to the Manager or such Affiliate shall be 1% of the Gross
Revenues from such Operating Leases, and (ii) 2% of Gross Revenues from Full
Payout Leases which contain Net Lease Provisions;
8.3.2 An Equipment Resale/Re-Leasing Fee calculated in an
amount equal to the following: for resale services, the lesser of (i) 3% of the
sales price of the Equipment, or (ii) one-half the normal competitive equipment
sale commission charged by unaffiliated parties for such services, but in either
case payable only after the Holders have received a return of their Original
Invested Capital plus a Priority Distribution; plus, for re-leasing services, an
amount equal to the lesser of (i) the competitive rate for comparable services
for similar equipment, or (ii) 2% of gross rental payments derived from the
re-lease of such Equipment after the time the re-lease is consummated as a
result of the recipient's efforts, payable as each rental payment is received by
the Fund over the term of the re-lease. No such re-lease fee will be calculated
in connection with the re-lease of Equipment to a previous lessee or its
Affiliates; and such fee will be calculated only to the extent the Manager or
its Affiliates have rendered substantial re-leasing services in connection with
such re-lease;
8.3.3 An Incentive Management Fee will be calculated in an
amount equal to (i) 4% of all Distributions of Cash from Operations until such
time as the Holders have received aggregate Distributions in an amount equal to
their Original Invested Capital plus a Priority Distribution, and (ii)
thereafter, in an amount equal to 7.5% of all Distributions of Cash from
Operations and Cash from Sales or Refinancing. For the purposes of calculating
the Incentive Management Fee for any period during which the Fund has available
both Cash from Operations and Cash from Sales or Refinancing, Distributions to
Holders shall first be treated as consisting of Cash from Operations unless
specifically designated otherwise by the Manager; and
8.3.4 The alternative fee schedule will include the Carried
Interest in Distributions provided in Article 10.
8.4 Other Services. Except as set forth in this Article 8 and Article 9
hereof, no other services may be performed by the Manager or its Affiliates for
the Fund except in extraordinary circumstances (which shall be defined as an
emergency situation requiring immediate action by the Manager or its Affiliate
and the service is not immediately available from an unaffiliated party). Any
such other services must meet the following criteria: (i) the compensation,
price or fee therefor must be comparable and competitive with the compensation,
price or fee of any other Person who is rendering comparable services or selling
or leasing comparable goods which could reasonably be made available to the Fund
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and shall be on competitive terms, (ii) the fees and other terms of the contract
shall be fully disclosed to Holders, (iii) the Manager or its Affiliates must be
previously engaged in the business of rendering such services or selling or
leasing such goods, independently of the Fund and as an ordinary and ongoing
business and at least 75% of such Person's gross revenues from such activity
must be derived from other than Affiliates of the Manager, and (iv) all services
for which the Manager or its Affiliates are to receive compensation shall be
embodied in a written contract which precisely describes the services to be
rendered and all compensation to be paid, which contract may only be modified by
a vote of the majority of the Holders. Said contract shall contain a clause
allowing termination without penalty on 60 days notice.
8.5 Payment of Fees on Removal. Should the Manager be removed from the
Fund according to provisions of Article 17, any portion of any fee payable to
the Manager according to the provisions of this Article 8 which is then accrued
and due, but not yet paid, shall be paid by the Fund to the Manager in cash
within 30 days of the date of expulsion as stated in the written notice of
expulsion.
8.6 Employment of Broker-Dealers. The Fund may employ underwriters and
selected broker-dealers, including Affiliates of the Manager as set forth in the
Prospectus, for the sale of Units.
9. FUND EXPENSES AND RESERVES
9.1 Reimbursement of Manager. Except as set forth in this Article 9,
all of the Fund's expenses shall be billed directly to and paid by the Fund. The
Manager and its Affiliates may be reimbursed for the following Fund expenses:
(i) Organization and Offering Expenses not in excess of 15% of Gross Proceeds up
to $25,000,000 plus 14% of all Gross Proceeds in excess of $25,000,000 (or an
amount equal to 12% of the Gross Proceeds if, upon termination of the offering
of Units, the total Gross Proceeds are in an amount less than $2,000,000); (ii)
the actual cost of goods and materials used for and by the Fund and obtained
from entities unaffiliated with the Manager; and (iii) administrative services
necessary to the prudent operation of the Fund, provided that such reimbursement
for administrative services will be at the lower of (A) the actual cost of such
services, or (B) the amount which the Fund would be required to pay independent
parties for comparable administrative services in the same geographic location;
provided further that, beginning with the first full year after the termination
of the offering of Units, the total amount of Reimbursable Administrative
Expenses payable by the Fund for the remainder of its term may not exceed a
cumulative limit. This cumulative limit on such Reimbursable Administrative
Expenses will equal, as of any date, a maximum of (i) 0.5% of the Gross Proceeds
per annum if the total Gross Proceeds are at least 90% of the maximum Gross
Proceeds; (ii) 0.75% of the Gross Proceeds per annum if the total Gross Proceeds
are at least 75%, but less than 90%, of the maximum Gross Proceeds; and (iii) 1%
of the Gross Proceeds per annum if the total Gross Proceeds are less than 75% of
the maximum Gross Proceeds. In addition, beginning with the first full year
after the termination of the offering of Units, the maximum amount of
Reimbursable Administrative Expenses payable by the Fund for any single year
shall be limited to an amount equal to 1% of the Gross Proceeds.
9.2 Limitation on Reimbursement. The Manager and its Affiliates will not
be reimbursed by the Fund for the following expenses:
9.2.1 Services for which the Manager or its Affiliates are
entitled to compensation in the form of a separate fee pursuant to Article 8
hereof;
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9.2.2 Rent or depreciation, utilities or capital equipment and
other administrative items of the Sponsor;
9.2.3 Salaries, fringe benefits, travel expenses or
administrative items incurred by or allocated to any Controlling Person of the
Manager or its Affiliates. For purposes of this subparagraph, "Controlling
Person" shall mean any person, regardless of title, who performs executive or
senior management functions for the Manager or its Affiliates similar to those
of executive management or senior management, and directors, or those holding 5%
or more equity interest in the Manager or its Affiliates; or persons having the
power to direct or cause the direction of the Manager or Affiliates through
ownership of voting securities, by contract or otherwise. It is not intended
that every person who carries a title such as vice president, senior vice
president, secretary, controller or treasurer be considered a Controlling
Person;
9.2.4 Organization and Offering Expenses of the Fund to the
extent such Organization and Offering Expenses exceed 15% of the Gross Proceeds
up to $25,000,000 plus 14% of all Gross Proceeds in excess of $25,000,000 (or an
amount equal to 12% of the Gross Proceeds if, upon termination of the offering
of Units, the total Gross Proceeds are in an amount less than $2,000,000), and
the Manager guarantees payment of any such excess expenses, which guarantee is
without recourse to, or reimbursement by, the Fund; and
9.2.5 All other expenses which are unrelated to the business
of the Fund.
9.3 Fund Expenses. Subject to Sections 9.1 and 9.2, the Fund shall pay
all expenses of the Fund which may include, but are not limited to: (i) all
costs of personnel employed by the Fund and involved in the business of the Fund
(which may include personnel who are employed by a Manager or one or more
Affiliates), (ii) all taxes and assessments on Equipment and other taxes
applicable to the Fund, (iii) legal, appraisal, audit, accounting, brokerage and
other fees, (iv) 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 Fund or in connection
with the business of the Fund, (v) fees and expenses paid to independent
contractors, brokers and servicers, leasing agents, consultants, equipment lease
brokers, insurance brokers and other agents, (vi) expenses in connection with
the acquisition, disposition, replacement, alteration, repair, leasing and
operation of Equipment (including the costs and expenses of insurance premiums,
equipment lease brokerage and leasing commissions and of maintenance of such
Equipment), (vii) the cost of insurance as required in connection with the
business of the Fund, (viii) expenses of organizing, revising, amending,
converting, modifying or terminating the Fund, (ix) the cost of preparation and
dissemination of the informational material and documentation relating to
potential sale or other disposition of Equipment, (x) costs incurred in
connection with any litigation in which the Fund is involved, as well as the
examination, investigation or other proceedings conducted by any regulatory
agency, including legal and accounting fees incurred in connection therewith,
(xi) costs of any computer equipment or services used for or by the Fund, (xii)
costs of any accounting, or statistical bookkeeping equipment necessary for the
maintenance of the books and records of the Fund, and (xiii) the costs of
supervision and expenses of professionals employed by the Fund in connection
with any of the foregoing, including attorneys, accountants and appraisers;
provided, however, that the cost of any services relating to items (vi) or (vii)
above must either be attributable to services performed by Persons other than
the Manager or its Affiliates, be compensated by a specific fee described in
Article 8 (and thus would not be reimbursable by the Fund, as provided in
Section 9.2.1) or comply with the requirements for compensation for "other
services" as provided in Section 8.3.5.
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9.4 Reserves. The Fund shall initially establish a cash reserve for
general working capital purposes in an amount equal to at least one-half of 1%
of the Gross Proceeds. Upon the disposition of each item of Equipment, any cash
reserve which was specifically allocated to that Equipment need not be
maintained thereafter, but may be applied as reserves for other Equipment. Any
cash reserve used as aforesaid need not be restored and if restored, may be
restored out of Gross Lease Revenues.
10. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS
10.1 Allocation of Net Income and Net Loss Prior to Initial Closing
Date. From the commencement of the Fund until the Initial Closing Date Net
Income and Net Loss shall be allocated 99% to the Manager and 1% to the initial
Holders.
10.2 Allocation of Net Income and Net Loss After Initial Closing Date.
10.2.1 Commencing with the Initial Closing Date, Net Income
and Net Loss shall be allocated 92.5% to the Holders and 7.5% to the Manager.
10.2.2 Notwithstanding Section 10.2.1 of this Agreement, items
of Net Loss arising out of the Fund's payment of expenditures classified as
syndication expenses pursuant to Regulations section 1.709-2(b) with respect to
each Unit shall be specially allocated to the Holder who acquires such Unit.
10.3 Special Allocations
10.3.1 Except as provided in section 10.3.2, Net Income, Net
Loss and Distributions allocable to the Holders shall be determined on a
quarterly basis and shall be allocated among the Holders in the ratio in which
the number of Units held by each of them bears to the total number of Units held
by all Holders as of the last day of the fiscal quarter with respect to which
such Net Income, Net Loss and Distributions are attributable; provided, however,
that, with respect to Net Income, Net Loss and Distributions attributable to the
offering period of the Units (including the full quarter in which the offering
terminates), such Net Income, Net Loss and Distributions shall be apportioned
among the Holders in the ratio in which (i) the number of Units held by each
Holder multiplied by the number of days during such period that such Holder was
the owner of such Units bears to (ii) the amount obtained by totaling the number
of Units outstanding on each day during such period. No Net Income, Net Loss or
Distributions with respect to any quarter shall be allocated to Units
repurchased by the Fund during such quarter, and such Units shall not be deemed
to have been outstanding during such quarter for purposes of the foregoing
allocations.
10.3.2 Notwithstanding anything in this Agreement to the
contrary, the following items of Fund income and loss shall be specially
allocated to the Members in the manner described below:
(i) Gain characterized as recapture income under Sections 1245
or 1250 of the Code shall be allocated to those Members who
claimed the deductions giving rise to such recapture income.
(ii) Except as provided in Section 10.3.2(iii) and 10.3.2(iv),
in the event any Member unexpectedly receives any
adjustments, allocations or distributions described
in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of
the Regulations or any other event creates an
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Adjusted Capital Account Deficit for such Member, items of
Fund gross income and gain (consisting of a pro rata portion
of each item of the Fund's income, including gross income, and
gain for such year) shall be allocated to such Member in an
amount and manner sufficient to eliminate, to the extent
required by Regulations, the Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as
quickly as possible. This Section 10.3.2(ii) is intended to
comply with the qualified income offset requirement in Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
(iii) If there is a net decrease in Member Nonrecourse Debt
Minimum Gain, each Member with a share of the Member
Nonrecourse Debt Minimum Gain (as determined in accordance
with Regulations Section 1.704-2(i)(5)) shall be specially
allocated items of Fund income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Member's
share of the net decrease in Member Nonrecourse Debt Minimum
Gain during such year. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-
2(i)(4). This Section 10.3.2(iii) is intended to comply with
the minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(iv) If there is a net decrease in Fund Minimum Gain during
any Fund taxable year, each Member shall be specially
allocated items of Fund income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Member's
share of the net decrease in Fund Minimum Gain during such
year (within the meaning of Section 1.704-2(g)(2) of the
Regulations). The items to be so allocated shall be determined
in accordance with Section 1.704-2(f) of the Regulations. This
Section 10.3.2(iv) is intended to comply with the minimum gain
chargeback requirement contained in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(v) After giving effect to the allocations set forth in
Sections 10.3.2(ii), (iii) and (iv), in the event any Member
receives any actual or deemed distribution (i.e., under
section 752 of the Code) during a taxable year which exceeds
the adjusted tax basis of such Member's Units at the end of
such taxable year (determined immediately before giving effect
to such distribution), such Member shall be allocated an
amount of gross income or gain equal to such excess.
(vi) In the event any fee to which the Manager or an Affiliate
thereof is entitled is treated as a Fund distribution by the
Service, a special allocation of Fund gross income shall be
made annually to the Manager or an Affiliate thereof in an
amount equal to any such recharacterized fee for that taxable
year.
(vii) The Manager will specifically allocate items of gain
from the sale or other disposition of items of Equipment for
any year in which the sale or disposition of any item of
Equipment occurs (and, if necessary, subsequent years) to any
Holder in such amounts and in such manner so as to equalize
the Capital Account balances of the Holders; provided,
however, that such allocations are reasonably consistent with,
and reasonably supportable under, the Code.
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(viii) Net Loss shall not be allocated to any Holder if such
allocation would cause or increase an Adjusted Capital Account
Deficit for such Holder at the end of any Fund taxable year,
and any such Net Loss shall instead be allocated to the
Manager. This limitation shall be applied on a Holder by
Holder basis so as to allocate the maximum permissible Net
Loss to each Holder under Section 1.704-1(b)(2)(ii)(d) of the
Regulations.
(ix) To the extent an adjustment is made to the adjusted tax
basis of any Fund asset pursuant to Code Section 734(b) or
Code Section 743(b), the Members, Capital Accounts shall be
adjusted as provided in Regulations Section
1.704-1(b)(2)(iv)(m).
(x) Except as otherwise provided herein, Nonrecourse
Deductions shall be allocated 92.5% to the Holders and 7.5% to
the Manager.
(xi) Any deduction attributable to Member Nonrecourse Debt
shall be allocated to the Members that bear the economic risk
of loss for the Member Nonrecourse Debt.
10.4 Distribution of Cash From Operations. Cash from Operations shall
be distributed 92.5% to the Holders and 7.5% to the Manager.
10.5 Distribution of Cash From Sales or Refinancing. Cash from Sales
or Refinancing shall be distributed 92.5% to the Holders and 7.5% to the
Manager.
Notwithstanding anything to the contrary herein, however, no cash
Distribution shall be made to a Holder to the extent that, after giving effect
to all allocations under sections 10.1, 10.2 and 10.3 which would accompany such
Distribution (including allocations of gross income and gain under section
10.3.2(iv)), such Distribution would exceed the tax basis of the Holder to whom
such Distribution is otherwise payable.
10.6 Distributions of Cash from Reserve Account. Distributions of Cash
from Reserve Account, if any, shall be distributed in the same manner as Cash
from Sales or Refinancing.
10.7 Determination of Amounts to be Distributed. The Manager shall have
sole discretion in determining the amount of any Distributions. Subject to
provisions of Section 15.4.18 of this Agreement, the Manager may use any funds
of the Fund not distributed to Holders to purchase additional Equipment during
the Reinvestment Period or otherwise as permitted by this Agreement; provided,
however, that the Manager will not reinvest in Equipment, but will distribute,
subject to payment of any obligations of the Fund, such available Cash from
Operations and Cash from Sales or Refinancing as may be necessary to cause total
Distributions to Holders to equal the following amounts for the specified
periods:
10.7.1 Through the first full fiscal quarter ending at least
six months after termination of the offering of Units, an amount equal to the
lesser of (a) a rate of return on their original capital contribution equal to
3.5% over the average yield on five-year United States Treasury Bonds for the
fiscal quarter immediately preceding the date of distribution, as published in a
national financial newspaper from time to time (with a minimum of 8% per annum
and a maximum of 10% per annum), or (b) 90% of the total amount of cash
available for distributions; and
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10.7.2 For each quarter during the balance of the Reinvestment
Period, an amount equal to a rate of return on their original capital
contribution equal to 3.5% over the average yield on five-year United States
Treasury Bonds for the period from the commencement of the offering of Units
through a date six months following the termination date of the offering (with a
minimum of 8% per annum and a maximum of 10% per annum), as published in a
national financial newspaper.
10.7.3 Such amounts with respect to each year which are
sufficient to allow a Holder in a 31% federal income tax bracket (but not a
higher bracket) to pay the federal income taxes and state income taxes due with
respect to Net Income derived by him from the Fund for such year.
10.8 Consent to Allocations. The methods hereinabove set forth by which
Distributions and allocations of Net Income and Net Loss are made and
apportioned are hereby expressly consented to by each Member as an express
condition to becoming a Member.
10.9 Limitation on Distributions. All Distributions are subject to the
payment of Fund expenses and to maintenance and repair of Equipment.
10.10 Allocation to Manager. To the extent that the Fund shall be
entitled to any deduction for federal income tax purposes as a result of any
interest in Net Income or Net Loss granted to a Manager, such deduction shall be
allocated for federal income tax purposes to such Manager.
10.11 Return of Unused Capital. In the event that any portion of the
Net Proceeds received by the Fund during the first twelve months after the date
of the Prospectus is not invested or committed for investment within eighteen
months of the date of the Prospectus, or in the event any portion of the Net
Proceeds received by the Fund thereafter is not invested or committed for
investment within six months from the Final Closing Date (except for any amounts
used to pay Fund operating expenses, including amounts set aside for reserves as
set forth in Section 9.4), such portion of the Net Proceeds shall be distributed
to the Holders pro rata by the Fund as a return of capital. In addition, the
Manager shall contribute to the Fund, and the Fund shall distribute pro rata to
the Holders, the amount by which (x) the amount of unused capital distributed
pursuant to the foregoing sentence, divided by (y) the percentage of the Gross
Proceeds which remain after payment of all Front End Fees, exceeds the unused
capital so distributed. For the purposes of this Section 10.11, funds will be
deemed to have been committed to investment and will not be returned to the
Holders to the extent written agreements in principle or letters of
understanding were executed at any time prior to the end of said period,
regardless of whether any such investment is actually consummated, and to the
extent any funds have been reserved to make contingent payments in connection
with any Equipment, regardless of whether any such payment is actually made.
10.12 Distributions in Kind. Distributions in kind shall not be
permitted except upon dissolution and liquidation, and then only to a
liquidating trust which has been established for the purpose of the liquidation
of the assets of the Fund, and the distribution of cash in accordance with the
terms of the Agreement.
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10.13 Withholding Taxes.
10.13.1 In the event the Fund pays to any federal, state or
local government authority any amount of tax, penalty, interest, fee or other
expenditure which is attributable to the particular status of one or more
Holders including, without limitation, the status of a Holder as a nonresident
of California or any other state imposing such a charge, the Manager shall treat
such tax, penalty, interest or fee, and in its discretion may treat other
related Fund expenditures, as a distribution of Cash from Operations or Cash
from Sales or Refinancing as appropriate, to such Holders. Such a distribution
shall reduce the amount of Cash from Operations or Cash from Sales or
Refinancing otherwise payable by the Fund to such Holders. Such Holders shall be
distributed any refund of any such tax, penalty, interest or other amounts
received by the Fund; provided, however, that the distribution due such Holders
shall be reduced by any Fund expenses (and such expenses shall be specially
allocated to such Holders) incurred in connection with the payment or obtaining
of the refund of such taxes, penalties, interest or other amounts and the Fund
shall have no duty or obligation to seek to obtain or collect any such refund or
expend any amount to reduce the amount of any withholding, penalty, interest or
other amount otherwise payable to any government authority. The Manager may
require from a Holder the appropriate documentation with respect to any
distribution hereunder.
10.13.2 As security for any withholding tax or other amount
referred to in section 10.14.1 or other liability or obligation to which the
Fund may be subject as a result of any act or status of any Holder, the Fund
shall have (and each Holder hereby grants to the Fund) a security interest in
all Cash from Operations or Cash from Sales or Refinancing distributable to such
Holder to the extent of the amount of such withholding tax or other liability or
obligation. The Fund shall have a right of set-off against any such
distributions of Cash from Operations or Cash from Sales or Refinancing in the
amount of such withholding tax or other liability or obligation.
11. ASSIGNMENT OF FUND INTERESTS
11.1 Limitations on Transfer. A Holder may not transfer all or part of
his legal and equitable interest in his Units except in compliance with the
provisions of this Agreement. The Manager may condition any proposed transfer on
receipt by the Fund of such representations and warranties of the transferor and
the assignee, opinions of counsel for the Fund and other assurances as it may
deem necessary and appropriate to ensure that:
11.1.1 such assignments or transfers do not result, in the
opinion of counsel for the Fund, in the Fund being considered to have terminated
within the meaning of Section 708 of the Code;
11.1.2 the assignee is not a minor or an incompetent;
11.1.3 the transfer or assignment does not violate federal or
state securities laws;
11.1.4 the transferor or the assignee does not hold Units
representing Original Invested Capital of less than $2,500 ($2,000 in the case
of IRAs and Keogh Plans);
11.1.5 such assignee is a Citizen of the United States;
11.1.6 such assignment or transfer does not cause the assets
of the Fund to be deemed "plan assets" for ERISA purposes;
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11.1.7 such assignment or transfer does not constitute a
transfer "on a secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code or otherwise adversely affecting the tax
status of the Fund; and
11.1.8 the transferor files with the Fund a duly executed and
acknowledged counterpart of the instrument effecting such assignment or
transfer, which instrument evidences the written acceptance by the assignee or
transferee of all of the terms and provisions of this Agreement, contains a
representation that such assignment or transfer was made in accordance with all
applicable laws and regulations (including any investor suitability
requirements) and in all other respects being satisfactory in form and substance
to the Manager.
11.2 Distributions and Effective Date of Transfer. An Assignee of
Record shall be entitled to receive Distributions from the Fund attributable to
the Units acquired by reason of such assignment from and after the effective
date of the assignment of such Units; provided, however, that notwithstanding
anything herein to the contrary, the Fund and the Manager shall be entitled to
treat the assignor of such Units as the absolute owner thereof in all respects,
and shall incur no liability for allocations of Net Income, Net Loss or
Distributions, or transmittal of reports and notices required to be given to
Holders hereunder, which are made in good faith to such assignor until such time
as the written instrument of assignment has been received by the Fund and
recorded on its books and the effective date of the assignment has passed. The
effective date of such assignment on which the Assignee shall be deemed an
Assignee of Record shall be the last day of the first full calendar month
following the later of (i) the date set forth on the written instrument of
assignment or (ii) the date on which the Fund has actual notice of the
assignment of Units and has received complete documentation of the assignment.
Notwithstanding anything to the contrary contained herein, no Distributions
shall be made in any calendar quarter with respect to Units repurchased by the
Fund during such calendar quarter.
11.3 Governmental Restrictions. No assignment, sale, transfer, exchange
or other disposition of Units may be made except in compliance with the then
applicable rules of any other applicable governmental authority. All Units
originally issued pursuant to qualification under the California Corporate
Securities Law of 1968 shall be subject to, and all documents of assignment and
transfer evidencing such securities shall bear, the following legend condition:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, 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."
No transfer of any such Unit shall be made unless the transferor shall have
obtained, if necessary, the written consent of the California Commissioner of
Corporations to such transfer.
11.4 Non-Complying Transfers. Any assignment, sale, exchange or other
transfer in contravention of any of the provisions of this Article 11 shall be
void and shall not bind or be recognized by the Fund.
11.5 Misrepresentation and Forfeit. Subject to the discretion of the
Manager, in the event a Holder who originally obtained Units in the Fund's
offering misrepresented that he was a Citizen of the United States, or that it
was not an IRA or Qualified Plan or purchasing on behalf of an IRA or Qualified
Plan, such person fails to remain a Citizen of the United States, or a
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<PAGE>
subsequent transferee of Units is not or fails to remain a Citizen of the
United States, such Person may, in the Manager's discretion if it deems that the
Fund will fail certain citizenship requirements with respect to its Equipment,
be required to forfeit such Units to the Fund and no longer be entitled to cash
Distributions or allocations of the Fund, receipt of Fund reports and voting
privileges, although he may realize proceeds upon the transfer of his Units to a
Citizen of the United States, which subsequent transferee would be entitled to
the full economic benefits and other privileges attributable to such Units.
12. SUBSTITUTED MEMBERS
12.1 Limitations on Substitution. No Assignee shall have the right to
become a substituted Member of the Fund in place of his assignor unless all of
the following conditions are first satisfied:
12.1.1 A duly executed and acknowledged written instrument of
assignment covering no less than 250 Units (200 in the case of an IRA or Keogh
Plan) shall have been filed with the Fund, which instrument shall specify the
number of Units being assigned and set forth the intention of the assignor that
the Assignee succeed to the assignor's interest as a substituted Member.
12.1.2 The assignor and Assignee shall have executed and
acknowledged such other instruments as the Manager may deem necessary or
desirable to effect such substitution, including the written acceptance and
adoption by the Assignee of the provisions of this Agreement, as the same may be
amended and his execution, acknowledgment and delivery to the Manager of a
special power of attorney, the form and content of which are described herein;
12.1.3 The written consent of the Manager to such substitution
shall have been obtained, the granting of which may be withheld by the Manager
in its sole discretion, and any exercise of such discretion intended to preserve
the tax consequences of Unit ownership shall presumptively be deemed reasonable;
12.1.4 A transfer fee not to exceed $100 shall have been paid
to the Fund to cover all reasonable expenses connected with such substitution;
and
12.1.5 The provisions of Section 11.1 and 11.3 of this
Agreement are complied with.
12.2 Consent to Admission. By executing or adopting this Agreement,
each Holder hereby consents to the admission of additional or substituted
Holders by the Manager and to any Assignee becoming a substituted Holder, in
accordance with the provisions herein.
12.3 Amendment of Agreement. The Manager shall cause this Agreement to
be amended to reflect the admission and/or substitution of Members at least once
in each fiscal quarter.
13. REPURCHASE OF FUND INTERESTS
13.1 In the event a Holder ceases to be a United States Citizen or
Resident Alien for any reason whatsoever, he may be required, in the Manager's
discretion, to tender his Units to the Fund for repurchase as of the date of
such event. The Fund will have the absolute right to purchase such Units at a
price equal to 100% of the Holder's Capital Account as of such date, in all
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cases determined as of the last day of the quarter prior to the fiscal
quarter during which such Units are repurchased. IT SHOULD BE NOTED THAT THE
FUND WILL NOT BE OBLIGATED TO PURCHASE UNITS FROM HOLDERS WHO CEASE TO BE UNITED
STATES CITIZENS OR RESIDENT ALIENS.
13.2 The Manager may otherwise use available Reserves to repurchase
Units, in its discretion and on terms it determines to be appropriate under
given circumstances, in the event the Fund Manager deems such repurchase to be
in the best interest of the Fund; provided, the Fund shall never be required to
repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered
Units shall be canceled and shall no longer be deemed to represent an interest
in the Fund; and, provided further, that any such repurchase shall not impair
the capital of the Fund, or cause the Fund or any of its remaining Members to
incur an adverse tax consequence as a result of such repurchase.
13.3 The Manager shall cause this Agreement to be amended to reflect
the change in the interests of the Holders (including the person whose Units
were repurchased) in the Net Income, Net Loss and Distributions of the Fund at
least once in each fiscal quarter.
13.4 Neither the Manager nor its Affiliates may request the Fund to
repurchase any Units owned by them.
14. BOOKS, RECORDS, ACCOUNTINGS AND REPORTS
14.1 Books of Account and Records. The Manager shall, for income tax
purposes, keep on an accrual basis adequate books of account and records of the
Fund wherein shall be recorded and reflected all of the contributions to the
capital of the Fund and all of the expenses and transactions of the Fund.
14.1.1 Such books of account and records shall include the
following:
(i) A current list of the full name and last known
business or residence address and business telephone
number of each Member set forth in alphabetical order
together with the Original Invested Capital, the
Units held and the share in Net Income and Net Loss
of each Member, which list shall be updated at least
quarterly to reflect changes in the information
contained therein;
(ii) A copy of the Articles of Organization and all
amendments, together with executed copies of any
powers of attorney pursuant to which any certificate
has been executed;
(iii) Copies of the Fund's federal, state and local
income tax or information returns and reports, if
any, for the six most recent taxable years;
(iv) Copies of the original of this Agreement and
all amendments;
(v) Financial statements of the Fund for the six most
recent fiscal years; and
(vi) The Fund's books and records for at least the
current and past three fiscal years.
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14.1.2 Such books of account and records shall be kept at the
principal place of business of the Fund in the State of California, and each
Member and his authorized representatives shall have, at all times during normal
business hours and at any other reasonable time, free access to and the right to
inspect and copy at their expense such books of account and all records of the
Fund.
14.1.3 Upon the request of a Member, the Manager shall mail to
such Member within ten days of the request a copy of the information described
in Section 14.1.1(i), (ii) and (iv). The information described in Section
14.1.1(i) shall be printed in alphabetical order, on white paper, and in a
readily readable type size (in no event smaller than ten-point type). The Fund
may require payment of a reasonable charge for copy work.
14.1.4 If the Manager neglects or refuses to exhibit, produce
or mail a copy of the information in Section 14.1.1(i) above as requested and
required under this Agreement, the Manager shall be liable to the Member
requesting the information for the costs, including attorneys' fees, incurred by
the Member for compelling production of the information and for actual damages
suffered by the Member by reason of such refusal or neglect. It shall be a
defense that the actual purpose and reason for the requests for inspection or
for a copy of the information is to secure the list of Members or other
information for the purpose of selling such list or copies thereof, or of using
the same for a commercial purpose other than in the interest of the requesting
person as a Member relative to the affairs of the Fund. The Manager may require
that a Member requesting the information in Section 14.1.1(i) above represent
that the list is not requested for a commercial purpose unrelated to the
Member's interest in the Fund. The remedies provided hereunder to Members
requesting copies of the information in Section 14.1.1(i) above are in addition
to, and shall not in any way limit, other remedies available to Limited Members
under federal law or the laws of any state.
14.1.5 Subject to any change pursuant to Section 15.2.8, all
books and records of the Fund shall be kept on the basis of an annual accounting
period ending December 31, except for the final accounting period which shall
end on the dissolution or termination of the Fund. All references herein to a
"year of the Fund" are to such an annual accounting period, and all references
to a Fund "quarter" shall refer to a calendar quarter unless and until such
periods are changed by an amendment hereto. Accelerated methods of depreciation
with respect to Fund assets and other elections available to the Fund may be
used by the Fund for purposes of reporting federal or state income taxes.
14.2 Audited Annual Financial Statements. The Manager shall have
prepared and distributed to the Holders at least annually, at Fund expense,
financial statements (each of which shall include a balance sheet, statement of
income or loss, statement of Members' equity, and statement of cash flow)
prepared in accordance with generally accepted accounting principles and
accompanied by a report thereon containing an opinion of an independent
certified public accounting firm. Such opinion shall also state that reported
"Cash from Operations" is consistent with the definition of Cash from Operations
herein. Copies of such statements and report shall be distributed to each Holder
within 120 days after the close of each taxable year of the Fund.
14.3 Other Annual Reporting. The Manager shall have prepared and
distributed to the Holders at least annually, at Fund expense: (i) a statement
of cash flow, (ii) Fund information necessary in the preparation of the Holders'
and Assignees' federal income tax returns; (iii) a report of the business of the
Fund, which shall include for each piece of Equipment which individually
represents at least 10% of the Fund's total investment in Equipment, a status
report to indicate: (a) the condition of the Equipment, (b) how the Equipment is
being used as of the end of the year (leased, operated, held for lease, repair,
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<PAGE>
or sale), (c) the remaining term of the Equipment leases, (d) the projected
use of Equipment for the next year (renewal of lease, re-lease, retirement, or
sale), and (e) such other information relevant to the value or use of the
Equipment as the Manager deems appropriate, including the method used as basis
for valuation; (iv) a statement as to the compensation received by the Manager
and its Affiliates from the Fund during the year, which statement shall set
forth the services rendered or to be rendered by the Manager and its Affiliates
and the amount of fees received; (v) a report identifying Distributions from:
(a) Cash from Operations for that year, (b) Gross Revenues of prior years held
in reserves, (c) Cash from Sales or Refinancing, and (d) Cash from Reserve
Account and other sources; and (vi) a special report prepared in accordance with
the American Institute of Certified Public Accountants United States Auditing
Standards relating to special reports, containing an opinion of an independent
certified public accounting firm, to report the breakdown of the costs
reimbursed by the Fund to the Manager or its Affiliates. Such special report
shall at a minimum provide: (a) a review of the time records of individual
employees, the costs of whose services were reimbursed, and (b) a review of the
specific nature of the work performed by each such employee. The additional
costs of such special report shall be itemized by the auditors among all
programs sponsored by the Manager and its Affiliates on a program-by-program
basis and may be reimbursed to the Manager or its Affiliates to the extent that
such reimbursement, when added to the cost for administrative services rendered,
does not exceed the competitive rate for comparable services performed by
independent parties in the same geographic location. Copies of the reports
hereunder shall be distributed to each Holder within 120 days after the close of
each taxable year of the Fund; provided, however, that all Fund information
necessary in the preparation of the Holders' and Assignees' federal income tax
returns shall be distributed to each Holder and Assignee not later than 75 days
after the close of each taxable year of the Fund.
14.4 Quarterly Reports. The Manager shall have prepared quarterly, at
Fund expense, commencing with the first full quarter after the Closing Date: (i)
a statement as to the compensation received by the Manager during such quarter
from the Fund which statement shall set forth the services rendered or to be
rendered by the Manager during such quarter from the Fund and the amount of fees
received, and (ii) other relevant information. Copies of such statements shall
be distributed to each Holder within 60 days after the end of each quarterly
period.
14.5 Unaudited Quarterly Financial Statements. The Manager shall have
prepared, at Fund expense, a quarterly report covering each of the first three
quarters of Fund operations in each calendar year, unaudited financial
statements (each of which shall include a balance sheet, statement of income or
loss for said quarterly period and statement of Cash from Operations and Cash
from Sales or Refinancing for said quarterly period) and a statement of other
pertinent information regarding the Fund and its activities during the quarterly
period covered by the report. Copies of such statements and other pertinent
information shall be distributed to each Holder within 60 days after the close
of the quarterly period covered by the report of the Fund.
14.6 Other Quarterly Reports. The Manager shall have prepared, at Fund
expense, after the end of each quarter in which Equipment is acquired and until
the Net Proceeds are fully invested or returned to investors, a notice which
shall describe therein: (i) a statement of the actual purchase price of the
Equipment, including the terms of the purchase, (ii) a statement of the total
amount of cash expended by the Fund to acquire such items of Equipment
(including and itemizing all commissions, fees, expenses and the name of each
payee), and (iii) a statement of the amount of proceeds in the Fund which remain
unexpended or uncommitted. Copies of such notice shall be distributed to each
Holder within 60 days after the end of such quarter. If deemed appropriate by
the Manager such notice may be prepared and distributed to each Holder more
frequently than quarterly.
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14.7 Tax Returns. The Manager, at Fund expense, shall cause income tax
returns for the Fund to be prepared and timely filed with appropriate
authorities.
14.8 Governmental Reports. The Manager, at Fund expense, shall cause to
be prepared and timely filed with appropriate federal and state regulatory and
administrative bodies, all reports required to be filed with such entities under
then current applicable laws, rules and regulations. Such reports shall be
prepared on the accounting or reporting basis required by such regulatory
bodies. Any Holder shall be provided with a copy of any such report upon request
without expense to him.
14.9 Maintenance of Suitability Records. The Manager, at Fund expense,
shall maintain for a period of at least six years, a record of the information
obtained to indicate that a Holder meets the suitability standards set forth in
the Prospectus.
15. RIGHTS, AUTHORITY, POWERS AND RESPONSIBILITIES OF THE MANAGER.
15.1 Services of the Manager. The Manager shall be responsible for
providing the following services to the Fund:
15.1.1 Supervising the organization of the Fund and the
offering and sale of Units;
15.1.2 Supervising Fund management, which includes (i)
establishing policies for the operation of the Fund; (ii) causing the Fund's
agents or employees to arrange for the provision of services necessary to the
operation of the Fund (including Equipment management and investor, accounting
and legal services, and services relating to Distributions by the Fund); (iii)
approving actions to be taken by the Fund; (iv) providing advice, consultation,
analysis and supervision with respect to the functions of the Fund as an owner
of the Equipment (including, without limitation, decisions regarding adjustments
to rental schedules, the sale or disposition of Equipment and compliance with
federal, state and local regulatory requirements and procedures); (v) executing
documents on behalf of the Fund; (vi) having a fiduciary responsibility for the
safekeeping and use of all funds of the Fund, whether or not in the Manager's
immediate possession or control; and (vii) making all decisions as to accounting
matters; and
15.1.3 Approval of the terms of the sale or other disposition
of Equipment, including establishing the terms for and arranging any such
transaction.
15.2 Authority of the Manager. The conduct of the Fund's business shall
be controlled solely by the Manager in accordance with this Agreement. The
Manager shall have fiduciary responsibility for the safekeeping and use of all
funds and assets of the Fund, whether or not in its immediate possession or
control, and shall have all authority, rights and powers conferred by law and
those required or appropriate to the management of the Fund business which, by
way of illustration but not by way of limitation, shall, subject only to the
provisions of Section 15.4, include the right, authority and power:
15.2.1 To acquire, lease, sell, hold and dispose of Equipment,
interests therein or appurtenances thereto, as well as personal or mixed
property connected therewith, including the purchase, lease, improvement,
maintenance, exchange, trade or sale of such Equipment, at such price, rental or
amount, for cash, securities (in compliance with appropriate securities
regulations) or other property, and upon such terms, as the Manager deems in its
sole discretion, to be in the best interest of the Fund; provided that, as of
the date of the final investment of Net Proceeds and completion of the
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<PAGE>
permanent financing of the Equipment portfolio, at least 50% of the Fund's
Equipment, by aggregate purchase cost, shall be subject to initial leases which
are High Payout Leases.
15.2.2 To place record title to, or the right to use Fund
assets in, the name or names of a nominee or nominees, trustee or trustees for
any purpose convenient or beneficial to the Fund;
15.2.3 To acquire and enter into any contract of insurance
which the Manager deems necessary or appropriate for the protection of the Fund
and the Manager, for the conservation of Fund assets, or for any purpose
convenient or beneficial to the Fund;
15.2.4 To employ Persons in the operation and management of
the business of the Fund including, but not limited to, supervisory managing
agents, insurance brokers and equipment lease brokers and Persons to perform, on
behalf of the Fund, the activities enumerated in Section 15.2.1, on such terms
and for such compensation as the Manager shall determine, subject, however, to
the limitations with respect thereto as set forth in Article 8; provided that no
Person is employed to provide duplicative services; and provided further that
agreements with the Manager or their Affiliates for the services set forth in
Article 8 shall contain the terms and limitations as to fees and expenses as set
forth in said Article 8 and any of such agreements shall be terminable
immediately upon dissolution of the Fund under Section 19.1;
15.2.5 To prepare or cause to be prepared reports, statements
and other relevant information for distribution to Holders, as provided in
Article 14 and as they otherwise deem appropriate;
15.2.6 To open accounts and deposit and maintain funds in the
name of the Fund in banks or savings and loan associations; provided, however,
that the Fund funds shall not be commingled with the funds of any other Person;
15.2.7 To cause the Fund to make or revoke any of the
elections referred to in the Code;
15.2.8 To select as the Fund's accounting year a calendar
year or such fiscal year as approved by the Service;
15.2.9 To determine the appropriate accounting method or
methods to be used by the Fund;
15.2.10 To offer and sell Units in the Fund directly or
through any licensed Affiliate of the Manager or nonaffiliate and to employ
personnel, agents and dealers for such purpose;
15.2.11 To amend this Agreement to reflect the addition or
substitution of Holders, the reduction of capital accounts upon the return of
capital to Members or the change in the interests of the Holders in the Net
Income, Net Loss and Distributions of the Fund after the repurchase of Units;
15.2.12 To require in all Fund obligations that the Manager
shall not have any personal liability thereon but that the Person contracting
with the Fund is to look solely to the Fund and its assets for satisfaction of
such obligations; and in the event that the Manager has personal liability with
respect to any such obligation, the Manager may require its satisfaction prior
to obligations with respect to which the Manager has no personal liability;
provided, however, that the inclusion of the aforesaid provisions shall not
materially affect the cost of the service or material being supplied and all
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<PAGE>
Fund obligations are satisfied in accordance with prudent business
practices as to the time and manner of payment;
15.2.13 To execute and file certificates of amendment and
cancellation of the articles of organization, and certificates of dissolution of
the Fund;
15.2.14 Subject to the provisions of Article 10, to determine
the amount of Cash from Operations and Cash from Sales or Refinancing used to
purchase additional Equipment and to make Distributions;
15.2.15 To purchase Equipment in its own name, the name of an
Affiliate or in the name of a nominee, a trust or a corporation or otherwise and
hold title thereto on a temporary or interim basis (generally not in excess of
six months) for the purpose of facilitating the acquisition of such Equipment or
completion of manufacture of the Equipment, or any other purpose related to the
business of the Fund; provided, however that: (i) the transaction is in the best
interest of the Fund; (ii) such Equipment is purchased by the Fund for a
purchase price no greater than the cost of such Equipment to the Manager or
Affiliate (including any out-of-pocket carrying costs), except for compensation
permitted by this Agreement; (iii) there is no difference in interest terms of
the loans secured by the Equipment at the time acquired by the Manager or
Affiliate and the time acquired by the Fund; (iv) there is no benefit arising
out of such transaction to the Manager or its Affiliate apart from the
compensation otherwise permitted by this Agreement; and (v) all income generated
by, and all expenses associated with, Equipment so acquired shall be treated as
belonging to the Fund.
15.2.16 Subject to Sections 15.4.21 and 15.4.22, to borrow
money and, if security is required therefor, to mortgage or subject any
Equipment to any other security device, to obtain replacements of any mortgage
or other security device, and to prepay, in whole or in part, refinance,
increase, modify, consolidate or extend any mortgage or other security device,
all of the foregoing at such terms and in such amounts as the Manager, in its
sole discretion, deems to be in the best interests of the Fund;
15.2.17 To invest (i) the Gross Proceeds or Net Proceeds
temporarily prior to investment in Equipment, (ii) other funds of the Fund prior
to the investment in Equipment or the distribution to Holders and (iii) the
Fund's capital reserves, in short-term, highly liquid investments where there is
appropriate safety of principal;
15.2.18 In addition to any amendments otherwise authorized
herein, this Agreement may be amended from time to time by the Manager, without
the consent of any of the Holders
(i) to add to the representations, duties or obligations of
the Manager or its Affiliates or surrender any right or power
granted to the Manager or its Affiliates herein, for the
benefit of the Holders;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect
to matters or questions arising under this Agreement which
will not be inconsistent with the provisions of this Agreement
provided that no amendment hereunder will change the voting
rights of Holders;
(iii) to delete or add any provision of this Agreement
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<PAGE>
required to be so deleted or added by the staff of the
Securities and Exchange Commission or by a state "Blue Sky"
administrator or similar such official, which addition or
deletion is deemed by such staff or official to be for the
benefit or protection of the Holders; or
(iv) to amend the provisions of Article 10 of this Agreement
relating to the allocations of Net Income, Net Loss and
Distributions among Members or any other provisions hereof if
the Fund is advised at any time by the Fund's accountants or
legal counsel that the allocations or such other provisions
set forth in this Agreement are unlikely to be respected,
either because of promulgation of Regulations under Sections
704 or 706 of the Code or other developments in the law, but
only to the minimum extent necessary in accordance with such
advice of accountants and/or counsel to cause such provisions
of this Agreement to be respected. Such amendment or
amendments made by the Manager in reliance upon the advice of
the accountants or counsel described above shall be deemed to
be made pursuant to the fiduciary obligation of the Manager to
the Fund and the Holders, and no such amendment or amendments
shall give rise to any claim or cause of action by any Holder.
15.2.19 To execute, acknowledge and deliver any and all
instruments to effectuate the foregoing, and to take all such action in
connection therewith as the Manager shall deem necessary or appropriate.
15.3 General Powers and Fiduciary Duty. The Manager shall, except as
otherwise provided in this Agreement, have all the rights and powers and shall
be subject to all the restrictions and liabilities provided for the manager of a
limited liability company under the California Act. Notwithstanding any other
provision of this Agreement, in no event may the Manager modify or compromise,
by contract or otherwise, its fiduciary duty to the Fund or the Holders, whether
such duty is imposed under the common law or by statute.
15.4 Limitations on Manager's Authority. Neither the Manager nor any
Affiliate shall have the authority to:
15.4.1 Enter into contracts with the Fund which would bind the
Fund after the expulsion, adjudication of bankruptcy or insolvency of a Manager,
or continue the business of the Fund with Fund assets after the occurrence of
such an event;
15.4.2 Grant to the Manager or any Affiliate an exclusive
listing for the sale of Fund assets, including Equipment;
15.4.3 Sell Substantially All of the Assets in a single sale,
or in multiple sales in the same twelve-month period, except in the orderly
liquidation and winding up of the business of the Fund upon its termination and
dissolution;
15.4.4 Pledge or encumber Substantially All of the Assets in a
single transaction or in multiple transactions in the same twelve-month period
other than in connection with the acquisition or improvement of assets or the
refinancing of existing obligations;
15.4.5 Alter the primary purpose of the Fund as set forth in
Article 3;
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15.4.6 Receive from the Fund a rebate or give-up or
participate in any reciprocal business arrangements which would circumvent the
provisions of this Agreement, nor shall any such person permit any reciprocal
business arrangement which would circumvent the restrictions herein against
dealing with the Manager and its Affiliates;
15.4.7 Sell or lease any Equipment to any entity in which a
Manager or any Affiliate has an interest, other than a joint venture or similar
program which complies with the conditions set forth in Section 15.4.8 hereof;
15.4.8 Cause the Fund to invest in any program, partnership or
other venture unless: (i) the other Member or joint owner is not a Manager (but
it may be an Affiliate of a Manager, provided the Affiliate is formed and
operated for the primary purpose of investment in and operation of or gain from
an interest in equipment, and has substantially identical investment objectives
to those of the Fund); (ii) such joint venture owns and operates particular
Equipment and the Fund or the Fund and Affiliate, as the case may be, acquire
the controlling interest in such partnership, or joint venture; (iii) the
agreement of joint venture does not authorize the Fund to do anything as a
Member or joint venturer with respect to the Equipment which the Fund, or a
Manager, could not do directly because of the provisions of this Agreement; (iv)
the Fund's investment is on substantially the same terms and conditions as the
investment of any Affiliate; (v) no compensation (other than as provided for by
this Agreement) is received in connection therewith by the Manager or any of its
Affiliates, there are no duplicate equipment management or any other duplicate
fees and such investment shall not result in the impairment, abrogation or
circumvention of any of the terms or provisions of this Agreement; (vi) the
joint venture is in the best interest of both co-venturers; and (vii) in joint
venture arrangements with an Affiliate of a Manager, if all of the following
additional conditions are met: the compensation of the Manager is substantially
identical to that received by the sponsor of such Affiliate, the Fund has a
right of first refusal to buy, if such Affiliate wishes to sell, equipment held
in the joint venture, and the joint venture is established either for the
purpose of effecting appropriate diversification of the Fund's investment
portfolio or for the purpose of relieving the Manager or its Affiliates or
nominees from a commitment entered into pursuant to Section 15.2.15 of this
Agreement; for the purposes of this Section, a controlling interest shall
include: (1) ownership of more than 50% of the venture's capital or profits; or
(2) provisions in the venture agreement giving the Fund effective control;
15.4.9 Except as provided in the Sections 15.2.15, 15.4.7 and
15.4.8, purchase or lease Equipment from the Fund or sell or lease Equipment to
the Fund;
15.4.10 Cause the Fund to loan any funds or property to any
Manager or Affiliate of a Manager;
15.4.11 Cause the Fund to borrow from any of the Manager or
its Affiliates on terms which provide for interest, financing charges or fees in
excess of the amounts charged by unrelated lending institutions on comparable
loans for the same purpose, or in excess of the ledger's cost of funds, or, in
any event, to cause the Fund to obtain "permanent financing" (defined as
financing with a term in excess of 12 months) from any such Person;
15.4.12 Cause the Fund to exchange Units for property other
than cash;
15.4.13 Do any action in contravention of this Agreement or
which would make it impossible to carry on the ordinary business of the Fund;
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15.4.14 Confess a judgment against the Fund in connection
with any threatened or pending legal action;
15.4.15 Possess any Equipment or assign the rights of the
Fund in specific Equipment for other than a Fund purpose;
15.4.16 Admit a Person as a Manager except with the consent
of the Holders as provided in Article 17 hereof;
15.4.17 Perform any act (other than an act required by this
Agreement or any act taken in good faith reliance upon counsel's opinion) which
would, at the time such act occurred, subject any Holder to liability as a
Manager in any jurisdiction;
15.4.18 Reinvest any funds of the Fund after the end of the
Reinvestment Period other than to invest in Equipment pursuant to commitments
entered into prior to the expiration of the Reinvestment Period or in Equipment
to be used in connection with Equipment under an existing lease, or reinvest any
funds of the Fund during the Reinvestment Period unless such reinvestment is
effected for all Holders on the same terms and is otherwise in compliance with
Section 10.7 hereof;
15.4.19 Invest any of the Gross Proceeds in Equipment which
is non-income producing;
15.4.20 Employ, or permit any Person to employ, the funds or
assets of the Fund in any manner except for the exclusive benefit of the Fund;
this provision shall not prohibit the Manager from causing Fund funds to be
deposited in a separate Fund account with a bank or other financial institution
which aggregates all funds held on behalf of the Manager and its Affiliates in
calculating qualifying balances for purposes of discounts on service charges or
other account benefits, provided that the Fund benefits on a pro rata basis from
any such discounts or other favorable terms, and, provided further, that no
creditor of any party other than the Fund shall have any recourse to funds held
in the Fund's separate account;
15.4.21 Incur any indebtedness wherein the lender will have or
acquire, at any time as a result of making the loan, any direct or indirect
interest in the profit, capital or property of the Fund other than as a secured
creditor; or incur any indebtedness specifically for the purpose of funding
operating distributions, provided however that the Fund may enter into
refinancing transactions with respect to its Equipment and distribute net
proceeds from any such refinancing to the extent consistent with its investment
objectives;
15.4.22 Incur aggregate Fund borrowings which, as of the date
of the final investment of the Net Proceeds and, thereafter, on the date any
subsequent indebtedness is incurred, are in excess of 50% of the purchase price
of all Equipment on a combined basis. "Purchase price" for purposes of this
Section 15.4.22 shall mean the sum of the cash downpayment and any indebtedness
incurred in connection with the acquisition of an item of Equipment by the Fund,
or to which the Equipment is taken subject, plus any Acquisition Fees paid, but
does not include loan points, prepaid interest, or other prepaid expenses;
15.4.23 Commingle Fund funds with those of any other Person;
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15.4.24 Except as otherwise provided herein, cause the Fund to
enter into any transaction with any other partnership in which a Manager or any
of its Affiliates have an interest, including, but not limited to, any
transaction involving the sale, lease or purchase of any Equipment to or from
the Fund, the rendering of services to or from the Fund, or the lending of any
monies or other property to or from the Fund;
15.4.25 Directly or indirectly pay or award any finder's fees,
commissions or other compensation to any Person engaged by a potential investor
for investment advice as an inducement to such advisor to advise the purchaser
regarding the purchase of Units; provided, however, that the Manager shall not
be prohibited from paying the normal sales commissions payable to a registered
broker-dealer or other properly-licensed Person for selling Units;
15.4.26 Operate the Fund in such a manner as to have the Fund
classified as an "investment company" for purposes of the Investment Company Act
of 1940;
15.4.27 Except as provided herein, invest any of the Gross
Proceeds in units of limited partnership interest, junior mortgages, deeds of
trust or other similar instruments or obligations;
15.4.28 Cause the Fund to enter into any agreements with a
Manager or any Affiliate of a Manager which are not subject to termination
without penalty by either party upon not more than 60 days' written notice,
except for agreements which comply with the provisions of Section 15.2.15 or
those which comply with the provisions of Section 15.4.8 and relate to the
purchase of Equipment by the Fund and an Affiliate as joint venturers;
15.4.29 Cause the Fund to acquire any single item of Equipment
that has a contract purchase price in excess of $1,000,000 unless prior to final
funding of the acquisition it obtains a future value appraisal of the Equipment
from a qualified independent third party appraiser;
15.4.30 Cause the Fund to invest cash in an aggregate amount
in excess of $30,000,000 in Equipment leased to a single lessee.
15.5 Limitation on Manager's Liability. The Manager shall have no
personal liability for the repayment of the Original Invested Capital of any
Holder or to repay the Fund any portion or all of any negative balance in its
Capital Account, except as otherwise provided in Section 5.2.
15.6 Tax Matters Member. ATEL is hereby designated as the "Tax Matters
Member" in accordance with Section 6231(a)(7) of the Code and, in connection
therewith and in addition to all other powers given therein, shall have all
other powers needed to perform fully hereunder including, without limitation,
the power to retain all attorneys and accountants of its choice and the right to
settle any audits without the consent of Members. The designation made in this
paragraph is hereby consented to by each Member as an express condition to
becoming a Member. The Fund hereby indemnifies ATEL from and against any damages
or losses (including attorney's fees) arising out of or incurred in connection
with any action taken or omitted to be taken by it in carrying out its
responsibilities as tax matters Member, subject to the same conditions under
which indemnification is provided the Manager in Article 21 hereof.
15.7 Minimum Investment in Equipment / Maximum Front-End Fees. The
Manager must commit not less than 85.875% of the Gross Proceeds to Investment in
Equipment, with the balance thereof available to pay Organization and Offering
Expenses and Front End Fees, however designated.
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Under the North American Securities Administrators Association, Inc. ("NASAA")
Statement of Policy concerning Equipment Programs, as amended through October
24, 1991 (referred to herein as the "NASAA Guidelines"), the Fund is required to
commit a minimum percentage of the Gross Proceeds to Investment in Equipment,
calculated as the greater of: (i) 80% of the Gross Proceeds reduced by 0.0625%
for each 1% of indebtedness encumbering the Fund's Equipment; or (ii) 75% of
such Gross Proceeds. Based on the formula in the NASAA Guidelines, with 50%
portfolio leverage the Fund's minimum Investment in Equipment would equal
76.875% of Gross Proceeds (80% - [50% x .0625%] = 76.875%), and the Fund's
minimum Investment in Equipment would therefore exceed the NASAA Guideline
minimum by 9%. The NASAA Guidelines permit the Manager and its Affiliates to
receive compensation in the form of a carried interest in Fund Net Income, Net
Loss and Distributions equal to 1% for the first 2.5% of excess Investment in
Equipment over the NASAA Guidelines minimum, 1% for the next 2% of such excess,
and 1% for each additional 1% of excess Investment in Equipment. With a minimum
Investment in Equipment of 85.875% and 50% leverage, the Manager and its
Affiliates may receive an additional carried interest equal to 6.5% of Net
Profit, Net Loss and Distributions under the foregoing formula (2.5% + 2% + 4.5%
= 9%; 1% + 1% + 4.5% = 6.5%]. At the lowest permitted level of minimum
Investment in Equipment, the NASAA Guidelines would permit the Manager and its
Affiliates to receive a promotional interest equal to 5% of Distributions of
Cash from Operations and 1% of Distributions of Sale or Refinancing Proceeds
until Members have received total Distributions equal to their Original Invested
Capital plus an 8% per annum cumulative return on their Adjusted Invested
Capital, and, thereafter, the promotional interest could increase to 15% of all
Distributions. With the additional carried interest calculated as described
above, the maximum aggregate fees payable to the Manager and Affiliates under
the NASAA Guidelines as carried interest and promotional interest would equal
11.5% of Distributions of Cash from Operations (6.5% + 5% = 11.5%), and 7.5% of
Distributions of Sale or Refinancing Proceeds (6.5% + 1% = 7.5%), before the
subordination level was reached, and 21.5% of all Distributions thereafter. The
maximum amounts to be paid under the terms of this Agreement are subject to the
application of the Asset Management Fee Limit provided in Section 8.3, which
limits the annual amount payable to the Manager and its Affiliates as the Asset
Management Fee and the Carried Interest to an aggregate not to exceed the total
amount of fees that would be payable to the Manager and its Affiliates under the
alternative fee schedule set forth in Section 8.3. This overall limitation on
annual fees will include, in addition to the Equipment Management Fee and
Equipment Resale/Releasing Fee, amounts equal to 11.5% of Distributions of Cash
from Operations (4% as an Incentive Management Fee plus 7.5% as the Fund
Manager's Carried Interest) and 7.5% of Distributions of Sale or Refinancing
Proceeds (as the Fund Manager's 7.5% Carried Interest) before the Priority
Return, and 15% of all Distributions thereafter (7.5% as an Incentive Management
Fee plus 7.5% as the Carried Interest). Upon completion of the offering of
Units, final commitment of Net Proceeds to acquisition of Equipment and
establishment of final levels of permanent portfolio debt encumbering such
Equipment, the Manager shall calculate the maximum carried interest and
promotional interest payable to the Manager and its Affiliates under the NASAA
Guidelines and compare such total permitted fees to the total of the Incentive
Management Fees and Carried Interest. If and to the extent that the fees
calculated under the alternative fee schedule provided in Section 8.3 as the
Incentive Management Fee and the Carried Interest should exceed the maximum
promotional interest plus carried interest permitted under the NASAA Guidelines,
as described above, the fees payable to the Manager and its Affiliates shall be
reduced as described herein. In such event, Section 8.3 of this Agreement shall
be amended immediately to reduce the amounts calculated as the Incentive
Management Fee and/or the Carried Interest by an amount sufficient to cause the
total of such compensation to comply with the limitations in the NASAA
Guidelines on the aggregate of promotional interests and carried interests. A
comparison of the Front End Fees actually paid by the Fund and the NASAA
Guideline maximums shall be repeated, and any required adjustments shall be
made, at least annually thereafter.
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15.8 Reliance on Manager's Authority. The Manager shall conduct the
business of the Fund, devoting such time thereto as it, in its sole discretion,
shall determine to be necessary to manage the Fund business and affairs in an
efficient manner. Any Person dealing with the Fund or the Manager may rely upon
a certificate signed by the Manager as authority with respect to: (i) the
identity of the Manager or any Holder hereof; (ii) the existence or
non-existence of any fact or facts which constitute a condition precedent to
acts by the Manager or are in any other manner germane to the affairs of the
Fund; (iii) the Persons who are authorized to execute and deliver any instrument
or document on behalf of the Fund; or (iv) any act or failure to act by the Fund
as to any other matter whatsoever involving the Fund or any Members.
16. RIGHTS, POWERS AND VOTING RIGHTS OF THE MEMBERS
16.1 Limitation on Member Authority. Members shall take no part in the
control, conduct or operation of the Fund and shall have no right or authority
to act for or bind the Fund except as expressly provided herein.
16.2 Voting Rights. Members shall have the right, by the vote of
Members who own more than 50% of the total outstanding Units entitled to vote (a
"majority-in-interest"), to approve the following matters affecting the basic
structure of the Fund:
16.2.1 Removal or withdrawal of a Manager;
16.2.2 Subject to the further requirements of Article 17,
continuation of the Fund and election of a successor Manager upon the
termination of a Manager;
16.2.3 Termination and dissolution of the Fund;
16.2.4 Amendment of this Agreement, provided such amendment is
not for any of the purposes set forth in Sections 16.4 or 16.5, and provided,
further, that the Members shall have the right to approve or disapprove by
separate vote each proposed amendment to this Agreement;
16.2.5 The pledge or granting of a security interest in, or
sale of, Substantially All of the Assets in a single transaction, or in multiple
transactions in the same twelve-month period, except in the liquidation and
winding up of the business of the Fund upon its termination and dissolution; and
16.2.6 The extension of the term of the Fund.
16.3 Voting Procedures. In any vote of the Members, each Member shall
be entitled to cast one vote for each Unit which he owns as of the designated
record date. Notwithstanding any other provision of this Agreement, any Units
held by a Manager or an Affiliate of a Manager will not be entitled to vote, and
will not be considered to be "outstanding" Units for purposes of any vote, upon
matters which involve a conflict between the interests of such Manager and the
Fund, including, but not limited to, any vote on the proposed removal or
withdrawal of such Manager or on any proposed amendment to this Agreement which
would expand or extend the rights, authorities or powers of such Manager.
16.3.1 Meetings of the Members to vote upon any matters as to
which the Members are authorized to take action under this Agreement, as the
same may be amended from time to time, may be called at any time by the Manager
or by one or more Members holding more than 10% of the outstanding
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Units by delivering written notice, either in person or by registered mail, of
such meeting to the Manager. Promptly, but in any event within 10 days following
receipt of such request, the Manager shall cause a written notice, either in
person or by certified mail, to be given to the Members entitled to vote at such
meeting, which notice shall state that a meeting will be held at a time and
place fixed by the Manager, which is to be convenient to the Members as a group,
and which is not less than 15 days nor more than 60 days after the mailing of
the notice of the meeting; provided, however, that such maximum period for the
giving of notice and the holding of meetings may be extended for an additional
60 days if such extension is necessary to obtain the qualification with the
California Commissioner of Corporations of the matters to be acted upon at such
meeting, the clearance by the Securities and Exchange Commission or other
appropriate governing agency of the solicitation materials to be forwarded to
Members in connection with such meeting or any other administrative
authorizations which may be required. Included with the notice of a meeting
shall be a detailed statement of the action proposed, including a verbatim
statement of the wording of any resolution proposed for adoption by the Members
and of any proposed amendment to this Agreement. All expenses of the meeting and
notification shall be borne by the Fund.
16.3.2 In order to establish the Members of record entitled to
act upon matters by vote or written consent, the Manager or Members holding more
than 10% of the Units may fix in advance a record date (the "Record Date") which
is not more than 60 nor less than 10 days prior to the date of the meeting or
the date upon which written consents are to be delivered. If no Record Date is
fixed in the notice of meeting or action by written consent, the Record Date
shall be deemed to be at the close of business on the business day next
preceding the date on which notice is given. A new Record Date shall be fixed if
a meeting is adjourned for more than 45 days from the date set for the original
meeting.
16.3.3 Upon adjournment of a meeting to another time or place,
notice of the new time or place shall be announced at the meeting at which
adjournment is taken. If the adjournment is for more than 45 days or if, after
the adjournment, a new Record Date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Member of record entitled to
vote at the meeting.
16.3.4 Personal presence of the Members at a meeting shall not
be required, provided that sufficient Units are represented at the meeting, by
Members appearing in person and/or by duly executed proxies, to take any action
proposed for a vote at such meeting. Attendance by a Member at any meeting and
voting in person shall revoke any proxies of such Member submitted with respect
to action proposed to be taken at such meeting. Submission of a later proxy with
respect to any action shall revoke an earlier one as to such action. Only the
votes, whether in person or by proxy, of Members holding Units as of the Record
Date established for such meeting shall be counted.
16.3.5 Any matter as to which the Members are authorized to
take action under this Agreement or under law may be taken by the Members
without a meeting and shall be as valid and effective as action taken by the
Members at a meeting duly assembled, if written consents to such action by the
Members are (i) signed by the Members entitled to vote upon such action at a
meeting who held, as of the Record Date for such actions, the number of Units
required to authorize such action and (ii) delivered to the Manager as of the
date set for such action. Any action taken without a meeting shall be effective
15 days after the required minimum number of Members have signed the consent and
shall be effective immediately if the Manager and Limited Members holding at
least 90% of the outstanding Units as of the Record Date have signed the
consent.
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16.3.6 In the event that there shall be no Manager, the
Members may take action without a meeting by the written consent of Members
having the requisite voting power of the Members entitled to vote.
16.4 Limitations on Member Rights. No Holder shall have the right or
power to: (i) withdraw or reduce his contribution to the capital of the Fund
except as a result of the repurchase of the Units as provided in Article 13, the
dissolution of the Fund or as otherwise provided by law, (ii) bring an action
for partition against the Fund, (iii) cause the termination and dissolution of
the Fund by court decree or otherwise, except as set forth in this Agreement, or
(iv) demand or receive property other than cash in return for his contribution.
No Holder shall have priority over any other Holder either as to the return of
contributions of capital or as to Net Income, Net Loss or Distributions. Other
than upon the termination and dissolution of the Fund as provided by this
Agreement there has been no time agreed upon when the contribution of each
Holder may be returned.
16.5 Limitations on Power to Amend Agreement. Except as provided in
Section 15.2.18, and notwithstanding anything to the contrary contained in this
Agreement, this Agreement may not, without the consent of each of the Members
who would be adversely affected thereby, be amended to:
16.5.1 Convert a Holder into a Manager;
16.5.2 Modify the limited liability of a Holder;
16.5.3 Alter the interest of any Member in Net Income, Net
Loss or Distributions; or
16.5.4 Affect the status of the Fund as a partnership for
federal income tax purposes.
16.6 Member List. Upon the written request of a Member and for any
non-commercial purpose reasonably related to the exercise of rights under this
Agreement, the Manager will furnish to such Member or his representative, at his
expense, a list containing the name and address of, and the Units held of record
by, each Member, as provided in Section 14.1.3.
16.7 Dissenters' Rights and Limitations on Mergers and Roll-ups.
16.7.1 Any proposal that the Fund enter into a Roll-Up will
require approval by Members of not less than 90% of the outstanding Units.
Members who dissent with respect to a Roll-Up proposal will have the rights of a
dissenting Member as provided under Sections 15679.1 through 15679.14 of the
California Act. The Fund shall not reimburse the sponsor of a proposed Roll-Up
for the costs of its proxy contest or any other costs of the transaction in the
event the Roll-Up is not approved by the Members as provided herein.
16.7.2 In connection with a proposed Roll-Up, an appraisal of
all Fund assets shall be obtained from a competent, independent expert (defined
as a Person with no current material or prior business or personal relationship
with the Manager or its Affiliates who is engaged to a substantial extent in the
business of rendering opinions regarding the value of assets of the type held by
the Fund, and who is qualified to perform such work). If the appraisal will be
included in a Prospectus used to offer the securities of a Roll-Up Entity, the
appraisal shall be filed with the SEC and the states as an Exhibit to the
Registration Statement for the offering. Accordingly, an issuer using the
appraisal shall be subject to liability for violation of Section 11 of the
Securities Act of 1933 and comparable provisions under state
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laws for any material misrepresentations or material omissions in the appraisal.
Fund assets shall be appraised on a consistent basis. The appraisal shall be
based on an evaluation of all relevant information, and shall indicate the value
of the Fund's assets as of a date immediately prior to the announcement of the
proposed Roll-Up transaction. The appraisal shall assume an orderly liquidation
of Fund assets over a 12-month period. The terms of the engagement of the
Independent Expert shall clearly state that the engagement is for the benefit of
the Fund and its Holders. A summary of the independent appraisal, indicating all
material assumptions underlying the appraisal, shall be included in a report to
the Holders in connection with a proposed Roll-Up transaction.
16.7.3 In connection with a proposed Roll-Up, the Person
sponsoring the Roll-Up transaction shall offer to Holders who vote "no" on the
proposal the choice of:
(a) accepting the securities offered in the proposed Roll-Up
transaction; or
(b) one of the following:
(i) remaining as Holders in the Fund, and preserving
their interests therein on the same terms and conditions as existed previously;
or
(ii) receiving cash in an amount equal to the
Holders' pro-rata share of the appraised value of the net assets of the Fund.
16.7.4 The Fund shall not participate in any proposed Roll-Up
transaction which would result in Holders having democracy rights which are less
than those provided for under this Agreement. If the resulting entity is a
corporation, the voting rights of Holders shall correspond to the voting rights
provided for in this Agreement to the greatest extent possible.
16.7.5 The Fund shall not participate in any proposed Roll-Up
transaction which includes provisions which would operate to materially impede
or frustrate the accumulation of shares by any purchaser of the securities of
the Roll-Up Entity (except to the minimum extent necessary to preserve the tax
status of the entity). The Fund shall not participate in any proposed Roll-Up
transaction which would limit the ability of a Holder to exercise the voting
rights of the securities of the Roll-Up Entity on the basis of the number of
Units held by that Holder.
16.7.6 The Fund shall not participate in any proposed Roll-Up
Transaction in which Holders' rights of access to the records of the Roll-Up
Entity will be less than those provided for under this Agreement.
17. TERMINATION OF A MANAGER AND TRANSFER OF THE MANAGER'S INTEREST
17.1 Removal or Withdrawal. The following conditions shall govern the
voluntary withdrawal or removal of the Manager:
17.1.1 The Manager may not voluntarily withdraw from the Fund
without the approval of Members holding more than 50% of the total outstanding
Units entitled to vote.
17.1.2 The Manager may be removed upon a vote of Holders
owning more than 50% of the total outstanding Units entitled to vote. Written
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notice of removal of the Manager shall be served either by certified or by
registered mail, return receipt requested, or by personal service. Such notice
shall set forth the date upon which the removal is to become effective.
17.2 Other Terminating Events. In the event of the adjudication of
bankruptcy, filing of a certificate of dissolution, death or adjudication of
insanity or incompetency of the Manager (each of such events, as well as
removal, resignation and withdrawal of a Manager, being herein referred to as a
"Terminating Event"), the Fund shall be dissolved and shall be liquidated under
the provisions of Article 19, subject to the provisions of Section 17.3.
17.3 Election of Successor Manager; Continuation of Fund Business. The
following provisions shall govern the election of a successor Manager and
continuation of the business of the Fund upon the occurrence of a Terminating
Event with respect to a Manager (the "Retiring Manager"):
17.3.1 If at the time of a Terminating Event the Fund has one
or more Managers other than the Retiring Manager, any remaining Manager or a
majority-in-interest of the Limited Members may elect, within 90 days
thereafter, to continue the Fund business, in which case the Fund shall not
dissolve. So long as there is at least one remaining Manager which so elects, or
if a majority-in-interest of the Members so elect and a remaining Manager does
not so elect, any remaining Manager which is not willing to elect to continue
the Fund business will be deemed to have been removed from the Fund by vote of
the Members.
17.3.2 If at the time of a Terminating Event the Retiring
Manager is the sole remaining Manager, the Fund shall be dissolved unless a
majority-in-interest of the Members elect to continue the Fund business. In the
event of such election, the Fund business may be continued if the Members making
such election, within 90 days after the occurrence of the Terminating Event,
elect a successor Manager and continue the Fund's business on the same terms and
conditions as are contained herein, but with a name which does not include or in
any way refer to the name of any Retiring Manager.
17.4 Admission of Successor or Additional Manager. The following
conditions shall be satisfied before any Person shall become a successor Manager
or an additional Manager:
17.4.1 Such Person shall have been elected in accordance with
Section 17.3 or 17.6;
17.4.2 Such Person shall have accepted and agreed to be bound
by all the terms and provisions of this Agreement;
17.4.3 If such Person is a corporation, it shall have provided
the Fund with evidence satisfactory to counsel for the Fund of its authority to
become a Manager and to be bound by this Agreement; and
17.4.4 Any amendments and filings required or appropriate
under the California Act shall have been made.
17.5 Effect of a Terminating Event. Upon the occurrence of a Terminating
Event, the following provisions shall be applicable:
17.5.1 The Retiring Manager shall immediately cease to be a
Manager and shall not have any right to participate in the management of the
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affairs of the Fund or to receive any fees under this Agreement not already
paid or earned; provided, however, that the Retiring Manager shall receive all
amounts then accrued and payable by the Fund and shall be, and shall remain,
liable as a Manager for all obligations and liabilities incurred by the Fund
prior to the effective date of the Terminating Event, but shall be free from any
obligation or liability incurred on account of the activities of the Fund from
and after such time.
17.5.2 If the business of the Fund is continued, as aforesaid,
the Retiring Manager shall be entitled to receive from the Fund the then present
fair market value of its interest in the Fund, determined by agreement of the
Retiring Manager and the remaining or new Managers, or, if they cannot agree, by
arbitration in accordance with the then current rules of the American
Arbitration Association. The expense of such arbitration shall be borne equally
by the Fund and the Retiring Manager, and such arbitration shall be conducted in
San Francisco, California unless otherwise agreed by both parties. The Fund
shall forthwith pay to the Retiring Manager an amount equal to the then present
fair market value of the interest so determined. If the Retiring Manager has
voluntarily withdrawn from the Fund, payment shall be in the form of a
non-interest bearing unsecured promissory note with principal payable, if at
all, out of Distributions the Retiring Manager would otherwise have received
under this Agreement had such Manager not been terminated. If the Retiring
Manager has been terminated involuntarily, the payment shall be in the form of
an interest bearing promissory note payable in equal annual installments over a
term of not less than five years. Such payment when made shall constitute
complete and full discharge of all amounts to which the Retiring Manager is
entitled in respect to such interest.
17.5.3 All executory contracts between the Fund and the
Retiring Manager or any Affiliate thereof (unless such Affiliate is also an
Affiliate of the remaining or new Manager or Members) may be terminated by the
Fund effective upon written notice to the party so terminated. The Retiring
Manager or any Affiliate thereof (unless such Affiliate is also an Affiliate of
the remaining or new Manager or Members) may also terminate and cancel any such
executory contract effective upon 60 days' prior written notice of such
termination and cancellation given to the remaining or new Manager or Members,
if any, or to the Fund.
17.6 Election of Additional Manager. Members owning in excess of 50% of
the outstanding Units may at any time and from time to time elect an additional
Manager, and, upon satisfaction of the conditions set forth in Section 17.4, the
Person so elected shall be admitted as an additional Manager. Admission of an
additional Manager shall not cause dissolution of the Fund.
17.7 Assignment of Manager's Interest. The Manager may not transfer its
Membership in the Fund without the consent of Members owning in excess of 50% of
the total outstanding Units, unless such an assignment is to an entity which
succeeds to all of the assets of the assigning Manager and of which at least 80%
of the voting and beneficial interest is controlled by Persons controlling 80%
or more of the voting and beneficial interest of the assigning Manager. Any
entity to which the entire interest of a Manager in the Fund is assigned in
compliance with this Section 17.7 shall be substituted as a Manager by the
filing of appropriate amendments to this Agreement. Notwithstanding the
foregoing, the Manager may delegate to any of its subsidiaries or other
Affiliates responsibility for specific services to be performed for the Fund and
may assign all or a portion of the compensation due the Manager to such
subsidiaries or other Affiliates.
17.8 Members' Participation in Manager's Bankruptcy. In the event the
Manager is subject to a voluntary or involuntary petition for reorganization or
liquidation under the federal Bankruptcy Act, the Manager will cause separate
counsel to be retained on behalf of the Fund, at Fund expense, to represent
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the Members' interests in the bankruptcy action. In such event, the Fund will
also bear any reasonable and necessary expenses of a duly appointed committee of
Members incurred while acting on behalf of all of the Members as a group in
connection with such bankruptcy action.
18. CERTAIN TRANSACTIONS
18.1 The Manager and its Affiliates, the Holders, any shareholder,
officer, director, Member or employee thereof, or any Person owning a legal or
beneficial interest therein, may engage in or possess an interest in any other
business or venture of every nature and description, independently or with
others, including, but not limited to, the ownership, financing, leasing,
operation, management and brokerage of equipment. Except as described in the
Prospectus, and subject to their fiduciary duties to the Fund, neither the
Manager nor its Affiliates shall be obligated to present to the Fund any
particular investment opportunity, regardless of whether such opportunity is of
such character that the Fund could take advantage thereof if it were presented
to the Fund, and the Manager and its Affiliates shall have the right to take for
their own accounts (individually or otherwise) or to recommend to others any
such investment opportunity.
19. TERMINATION AND DISSOLUTION OF THE FUND
19.1 Termination and Dissolution. The Fund shall be terminated
and dissolved upon the earliest to occur of the following:
19.1.1 The withdrawal, removal, adjudication of bankruptcy,
insolvency, insanity or incompetency, death or dissolution of a Manager unless a
remaining Manager or a majority-in-interest of the Members, within 90 days of
the date of such event, elects to continue the business of the Fund, and, if
necessary, elects a replacement Manager, in the manner provided in Article 17;
provided that expenses incurred on behalf of the Manager and/or Members in the
continuation or reformation, or attempted continuation or reformation, of the
Fund hereunder shall be deemed expenses of the Fund;
19.1.2 The Members owning more than 50% of the total
outstanding Units vote in favor of dissolution and termination of the Fund;
19.1.3 The term of the Fund expires; or
19.1.4 The Fund disposes of all interests in Equipment and its
other assets and receives final payment in cash of the proceeds of such
dispositions.
19.2 Accounting and Liquidation. Upon the dissolution and termination
of the Fund for any reason, the Manager shall take full account of the Fund
assets and liabilities, shall liquidate the assets as promptly as is consistent
with obtaining the fair value thereof, and shall apply and distribute the
proceeds therefrom in the following order:
19.2.1 To the payment of creditors of the Fund but excluding
secured creditors whose obligations will be assumed or otherwise transferred on
the liquidation of Fund assets;
19.2.2 To the repayment of any outstanding loans made by the
Manager to the Fund; and
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19.2.3 To the Manager and Holders in accordance with their
respective Capital Account balances, after giving effect to all allocations
described in Article 10 of this Agreement; provided, however, that prior to any
allocation under Section 10 of this Agreement, Gross Income shall be specially
allocated to the Manager to the extent, if any, necessary to cause its Capital
Account balance to be zero as of the close of such final taxable year (after
crediting the Manager's Capital Account with the Manager's share of Fund Minimum
Gain). For purposes of making the foregoing allocation, Net Income and Net Loss
for the final taxable year of the Fund shall first tentatively be computed by
including all Gross Income as an element thereof; then, to the extent, if any,
that the Capital Account balance of the Manager is negative as of the close of
such final taxable year (after giving effect to all Fund distributions), Gross
Income shall be separately stated and allocated away from the Holders and to the
Manager pursuant to this Section 19.2.3.
19.2.4 Distributions in liquidation shall be made by the end
of the taxable year in which the liquidation occurs or, if later, within 90 days
of the liquidating event and shall otherwise comply with Regulations Section
1.704-1(b).
20. SPECIAL POWER OF ATTORNEY
20.1 Execution of Power of Attorney. By executing this Agreement, each
Holder is hereby granting to the Manager a special power of attorney irrevocably
making, constituting and appointing ATEL, its duly appointed officers, and any
one of them, as the attorney-in-fact for such Holder, with power and authority
to act alone in his name and on his behalf to execute, acknowledge and swear to
the execution, acknowledgement and filing of the following documents:
20.1.1 This Agreement, the Articles of Organization, any
separate certificates, as well as any amendments to the foregoing which, under
the laws of the State of California or the laws of any other state, are required
to be filed or which the Manager deems advisable to file;
20.1.2 Any other instrument or document which may be required
to be filed by the Fund under the laws of any state or by any governmental
agency, or which the Manager deems advisable to file; and
20.1.3 Any instrument or document which may be required to
effect the continuation of the Fund, the admission of an additional or
substituted Holder, or the dissolution and termination of the Fund (provided
such continuation, admission or dissolution and termination are in accordance
with the terms of this Agreement), or to reflect any reductions in amount of
contributions of Members.
20.2 Special Power of Attorney. The special power of attorney being
granted hereby:
20.2.1 Is a special power of attorney coupled with an
interest, is irrevocable, shall survive the death or legal incapacity of the
granting Holder, and is limited to those matters herein set forth;
20.2.2 May be exercised by the Manager acting alone for each
Holder by a facsimile signature of such Manager or by one of its officers, or by
listing all of the Holders executing any instrument with a single signature of a
Manager, or of one of the Manager's officers, acting as attorney-in-fact; and
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20.2.3 Shall survive an assignment by a Holder of all or any
portion of his Units except that, where the Assignee of the Units owned by a
Holder has been approved by the Manager for admission to the Fund as a
substituted Holder, the special power of attorney shall survive such assignment
for the sole purpose of enabling the Manager to execute, acknowledge and file
any instrument or document necessary to effect such substitution.
21. INDEMNIFICATION
21.1 Indemnification of the Manager. The Fund, its receiver or its
trustee, shall indemnify, save harmless and pay all judgments and claims against
the Manager and any of its Affiliates who perform services for the Fund from any
liability, loss or damage incurred by them or the Fund by reason of any act
performed or omitted to be performed by them when acting in connection with the
business of the Fund, including costs and attorneys' fees and any amounts
expended in the settlement of any claims or liability, loss or damage; provided,
however, that, if such liability, loss or claim arises out of any action or
inaction of the Manager or Affiliates who perform services for the Fund, the
Manager or Affiliates who perform services for the Fund must have determined, in
good faith, that such course of conduct was in the best interest of the Fund and
did not constitute fraud, negligence, breach of fiduciary duty or misconduct by
the Manager or Affiliates who perform services for the Fund; and provided
further, that any such indemnification shall be recoverable only from the assets
of the Fund and not from the assets of the Holders. All judgments against the
Fund and the Manager, wherein a Manager is entitled to indemnification, must
first be satisfied from Fund assets before such Manager may be held responsible.
Persons entitled to indemnification hereunder shall be entitled to receive
advances for attorney's fees and other legal costs and expenses arising out of
claims made against them, provided that (i) no such advances may be made for
such fees, costs or expenses resulting from claims made by Holders; and (ii)
advances for such fees and expenses relating to claims made by parties other
than Holders may only be made if the action relates to the performance of duties
or services by the indemnified party on behalf of the Fund, the indemnified
party obtains an opinion of independent counsel that such party will be entitled
to indemnification pursuant to this Agreement under the specific circumstances
of the claim in question, and the indemnified party undertakes in writing prior
to receipt of such advances that such party will repay in full any such advanced
funds together with interest thereon in the event that, upon the ultimate
disposition of the claim, the party would not be entitled to indemnification
hereunder. Nothing contained herein shall constitute a waiver by a Holder of any
right which he may have against any party under federal or state securities
laws.
21.2 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in the foregoing Section 21.1, neither the Manager nor any of
its Affiliates performing services for the Fund nor any party acting as a
broker-dealer shall be indemnified from any liability, loss or damage incurred
by them in connection with (i) any claim or settlement involving violations of
state or federal securities laws by the Manager or by any Affiliate performing
services for the Fund; or (ii) any liability imposed by law, such as liability
for fraud, bad faith or negligence; provided, however, that indemnification will
be allowed for settlements and related expenses of lawsuits alleging securities
law violations, and for expenses incurred in successfully defending such
lawsuits, provided that a court either (x) approves the settlement and finds
that indemnification of any payment in settlement and related costs should be
made; or (y) approves indemnification of litigation costs if a successful
defense is made, or a dismissal with prejudice is obtained, as to the indemnitee
on the merits of each count involving alleged securities law violations; and (z)
the parties seeking indemnification apprise the court of the positions of the
securities law administrators of any state in which the Units were offered or
sold, including the Massachusetts Securities Division, and the Securities and
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Exchange Commission with respect to indemnification for securities laws
violations before seeking court approval for indemnification. Furthermore, the
Manager shall indemnify the Fund against any loss or liability which it may
incur as a result of the violation by the Manager or any of its Affiliates
performing services for the Fund of any state or federal securities laws.
21.3 Insurance. The Fund shall not pay for any insurance covering
liability of the Manager or any of its Affiliates for actions or omissions for
which indemnification is not permitted hereunder; provided, however, that
nothing contained herein shall preclude the Fund from purchasing and paying for
such types of insurance, including extended coverage liability and casualty and
worker's compensation, as would be customary for any Person owning comparable
Equipment and engaged in a similar business or from naming the Manager and any
of its Affiliates as additional insured parties thereunder, provided that such
addition does not add to the premiums payable by the Fund.
22. MISCELLANEOUS
22.1 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
parties hereto, notwithstanding that all of the parties are not signatory to the
original or the same counterpart.
22.2 Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the successors and
assigns of the respective Members.
22.3 Severability. In the event any sentence or paragraph of this
Agreement is declared by a court of competent jurisdiction to be void, such
sentence or paragraph shall be deemed severed from the remainder of this
Agreement and the balance of this Agreement shall remain in effect.
22.4 Notices. All notices under this Agreement shall be in writing and
shall be given to the Person entitled thereto, by personal service or by mail,
posted to the address maintained by the Fund for such Person or at such other
address as he may specify in writing.
22.5 Captions. Article and section titles or captions contained in this
Agreement are inserted only as a matter of convenience and for reference. Such
titles and captions in no way define, limit, extend or describe the scope of
this Agreement nor the intent of any provision hereof.
22.6 Number and Pronouns. Whenever required by the context hereof, the
singular shall include the plural, and vice-versa; the masculine gender shall
include the feminine and neuter genders, and vice-versa.
22.7 Manager Address. The address of the Manager is:
ATEL Financial Corporation
235 Pine Street, 6th Floor
San Francisco, California 94104
22.8 Member Addresses. The names, addresses and capital contributions
of the Members are set forth on Exhibit I attached hereto, which exhibit shall
be maintained at the principal place of business of the Fund.
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22.9 Construction. Notwithstanding the place where this Agreement may
be executed by any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be construed under the laws of the State
of California and that the Fund shall be governed by the California Act, as
amended, governing limited liability companies formed under California law.
22.10 Qualification to Do Business. In the event the business of the
Fund is carried on or conducted in states in addition to the State of
California, then the parties agree that this Fund shall exist under the laws of
each state in which business is actually conducted by the Fund, and they
severally agree to execute such other and further documents as may be required
or requested in order that the Manager may qualify the Fund to conduct business
in such states. The power of attorney granted to the Manager by each Holder in
Article 20 shall constitute authority for the Manager to perform the ministerial
duty of qualifying the Fund under the laws of any state in which it is necessary
to file documents or instruments of qualification. A Fund office or principal
place of business in a state may be designated from time to time by the Manager.
INITIAL MEMBERS:
ATEL FINANCIAL CORPORATION, Manager
By: /s/ A. J. BATT
----------------------------------------
A. J. Batt, President
ATEL CAPITAL GROUP, Initial Member
By: /s/ A. J. BATT
----------------------------------------
A. J. Batt, President
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EXHIBIT I
Schedule of Members
Capital
Name Address Contribution
ATEL Capital Group $500/50 Units
235 Pine Street
6th Floor
San Francisco, CA 94104
ATEL Financial Corporation $100
235 Pine Street
6th Floor
San Francisco, CA 94104
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<PAGE>
EXHIBIT C
HOW TO INVEST
TO THE INVESTOR:
Prior to the satisfaction of the escrow condition (sale of 120,000 Units), make
your check payable to "U.S. Bank - ACEF IX Escrow". Thereafter, make your check
payable to"ATEL Capital Equipment Fund IX". Investments must be made in
increments of $10, minimum of $2,500 (or $2,000 for an IRA, Keogh or qualified
plan) in most states. See the discussion under Plan of Distribution-State
Requirements in the prospectus for exceptions.
IMPORTANT INSTRUCTIONS:
----------------------
Fully complete sections 1, 2, and 3 of the Subscription Agreement.
All subscribers must:
1) sign each appropriate section where indicated, 2) initial each appropriate
section (sections 3A - 3D) where indicated on the bottom of the subscription
agreement.
If you would like your distributions sent to an address other than your own
(mutual fund, bank, etc.). please fill in the optional check address section
(section 6).
ADD-ON INVESTMENTS
The subscription agreement accompanying additional investments in Fund IX must
have an authorized signature of a Broker/Dealer, but does not require the
signature of the investor. Add-on investments must bear the exact name in which
the previous investment was registered, or a new signed subscription form will
be required.
FOREIGN INVESTOR OPTION
As described in the Prospectus, the Manager has elected to permit limited
investment in Units by nonresident alien investors. In section 1 of the
Subscription Agreement there are three boxes, one of which must be checked to
indicate whether an investor is a resident alien, nonresident alien or U.S.
citizen residing outside the United States. If none of the three boxes is
checked, the executed Subscription Agreement will constitute the investor's
representation that he or she is a U.S. citizen residing in the United States.
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TO THE SELLING REPRESENTATIVE:
Please complete the Broker/Dealer Information section (Box 7) using your office
address rather than the home office address. This section must be completed for
all investments, including add-on investments by previous subscribers. Please
make sure that the exact same name is used for the registered owner if the
investment is an additional subscription.
Please have the subscription document signed by your branch manager or other
authorized signatory.
Mail original white, pink and yellow copies
Retain blue copy for Broker/Dealer
Retain green copy for the investor unless otherwise specified by your home
office, (all IRA investments must be submitted directly to the custodian and
they will then forward the subscription on to ATEL) to:
ATEL SECURITIES CORPORATION
SUBSCRIPTION PROCESSING DESK
235 PINE STREET, Suite 600
SAN FRANCISCO, CA 94104
(415) 989-8800
(800) 543-ATEL
E-mail: [email protected]
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The investor whose signature appears in Section 2 on the reverse side hereof
(the "Investor") hereby subscribes for the number of Units of ATEL Capital
Equipment Fund IX, LLC (the "Fund") set forth in Section I of this subscription
Agreement in the manner described in the prospectus to which this agreement is
an exhibit (the "Prospectus"). Prior to the satisfaction of the escrow condition
(sale of 120,000 Units), there is transmitted herewith as the subscription price
a check payable to "U.S. Bank - ACEF IX Escrow" in the amount required to
purchase such Units ($10 per Unit). Such funds will be promptly transmitted (as
defined in Rule 15c2-4 under the Securities Exchange Act of 1934 and NASD Notice
to members 84-64). No subscription funds will be released to the Fund unless and
until subscriptions for a minimum of 120,000 units have been received and
collected by the escrow agent prior to a date 12 months after the date of the
Prospectus. After the escrow condition of 120,000 Units sold has been satisfied,
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checks should be made payable to "ATEL Capital Equipment Fund IX". Minimum
initial investment is 250 Units (200 Units for Individual Retirement Accounts or
Qualified Plans).
The Investor agrees that if this subscription is accepted it will be held,
together with the accompanying payment, on the terms described in the Prospectus
and that, if accepted as a holder of the Units ("Holder"), the Investor shall be
bound by the terms and conditions of the Operating Agreement set forth as
Exhibit B to the Prospectus, including the special power of attorney set forth
therein. The subscription may be cancelled by the subscriber at any time during
a period of five days after the subscriber has submitted this executed
subscription agreement to the Fund.
The assignability and transferability of the Units will be governed by the
Agreement and all applicable laws, and the Investor must have adequate means of
providing for his current needs and personal contingencies and must have no need
for liquidity in this investment.
The Investor may not be able to consummate a sale or transfer of the Units, or
any interest therein, or 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, and the Units, or any document
of assignment or transfer evidencing the Units, will bear a legend reflecting
the substance of the foregoing understanding if such Units have been issued
pursuant to qualification under the California Corporate Securities Law of 1968.
The undersigned acknowledges that U.S. Bank Trust National Association is acting
only as an escrow agent in connection with the offering of the Units, and has
not endorsed, recommended or guaranteed the purchase, value or repayment of such
Units.
INSTRUCTIONS FOR COMPLETING THE SUBSCRIPTION AGREEMENT Note- Please type or
print legibly when completing the Subscription Agreement.
Section 1: Units Purchased.
- Fill in the total dollar amount and the number of Units to be acquired.
Please note there are no fractional Units. All purchases must be in
increments of $10.
- Indicate whether this is an original investment in the Fund or an
additional investment to an existing Fund account with the exact same
registration by checking the appropriate box. Please note the minimum
requirements. Only the dollar amount, subscriber name and broker/dealer
information sections of the subscription forms need be completed for
additional subscriptions by the same investor.
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Section 2: Registered Owner.
- Fill in the name(s) and addresses for the investment as they should
appear in the registration.
- Check the applicable citizen status boxes.
- Enter the appropriate taxpayer identification number for this
investment, depending on the type of ownership. For IRAs and Keoghs
please include both the custodian's taxpayer identification and
investor's social security number.
- Check whether monthly or quarterly distributions are desired.
- Please read the Subscription Agreement, then sign and date the form.
- Single Ownership - one signature required
- Joint Tenants - all parties must sign
- Community Property - one signature required
- Tenants in Common - all parties must sign
- Tenants in Entirety - one signature required
- In all other cases, the custodian, trustee, general partner or authorized
corporate officer must sign. Where the documents establishing such
representative capacity require more than one signature for execution
of instruments on behalf of the represented entity, then all signatures
required by such documents are required here.
Section 3: Subscriber Confirmation of Suitability
- Each item must be initialed.
Section 4: Legal Form of Ownership.
- Mark only one box. Fill in any information requested and note whose
signature(s) is (are) required in Section 2.
Section 5: Investor Mailing Addresses.
- Fill in name and address if different from Section 1, as with IRAs and
Keoghs.
Section 6: Optional Check Addresses.
- Complete this section only if you want your distribution checks mailed
to an address other than that shown in Section 2.
Section 7: Broker/Dealer Information.
- Fill in the name of the licensed Broker/Dealer firm, the name of the
Account Executive, and the telephone number and mailing address of the
Account Executive. The name, address and phone number of the Account
Executive are required so he/she can receive copies of all investor
communications.
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- An authorized Branch Manager or Registered Principal of the
Broker/Dealer firm must sign the form. Orders cannot be accepted
without Broker/Dealer authorization.
Mailing Address.
- Mail the completed form with a check payable as indicated in Section 1
to:
ATEL Securities Corporation
Attention: Subscription Processing Desk
235 Pine Street, Suite 600
San Francisco, CA 94104
If you have any additional questions about completing this Subscription
Agreement, please call ATEL Securities Corporation Subscription Processing Desk
at (800) 543-ATEL.
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ATEL CAPITAL EQUIPMENT FUND IX, LLC - SUBSCRIPTION AGREEMENT
Please type or print the following information: 1.UNITS PURCHASED Make checks
payable to "ATEL Capital Equipment Fund IX" $_________ is for the purchase, as a
Holder, of _______ Units
and should be registered as indicated in the Registered Owner section
below.
2. REGISTERED OWNER.
Name(s) and addresses will be recorded exactly as printed below.
(Include custodial address if applicable.)
___Mr. ___Ms. ___Mr. and Mrs. ___Mrs.
Investor(s) Name and/or
Custodian/Nominee_________________________________________________________
Investor Name(s)__________________________________________________________
Address___________________________________________________________________
City ______________________________________State_____ZipCode______________
Investor Phone Number (____)______________E-mail__________________________
Investor Account # (if any)_______________________________________________
X______________________________________________Date_______________________
Subscriber's Signature
X______________________________________________Date_______________________
Subscriber/Custodian/Nominee or Authorized Signature
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___INITIAL INVESTMENT $10 per unit ($2,500/250 Unit Minimum, $2,000/200 Unit
Minimum for IRA or Qualified Plan, unless a higher minimum is required in the
investor's state - see the Prospectus)
___ ADDITIONAL INVESTMENT ($500/50 Units, unless a higher minimum is required in
the investor's state - see the Prospectus)
___ Check if you are a resident alien.
___ Check if you are a nonresident alien (please include W-8 form).
___ Check if you are a U.S. citizen residing outside the U.S.
TAXPAYER IDENTIFICATION NUMBER
Note: If the account is in more than one name, the number should be that of
the first person listed.
-- -- -- -- -- -- -- -- --
Include BOTH numbers for IRAs and Keoghs.
SOCIAL SECURITY NUMBER
-- -- -- -- -- -- -- -- --
HAVE YOU INVESTED IN ANY PRIOR ATEL FUND?
___YES ___NO
DISTRIBUTION OPTION (check one)
___ Quarterly ___Monthly
PRIVACY ELECTION (check if desired)
____ By checking this box the undersigned directs the Manager to treat all
information concerning the undersigned as confidential, and not to disseminate
any such information to any party, without the undersigned's consent, except as
may be required under an applicable statute or regulation or by the order of a
court or governmental agency.
No representations should be relied upon other than those contained in the
Prospectus, as amended and/or supplemented. The subscriber represents, warrants
and agrees as set forth on the reverse side of this signature page; further, the
undersigned declares under penalty of perjury that to the best of his knowledge
the information supplied above is true and correct and may be relied upon by the
Manager and the Fund in connection with his investment as a Holder in the Fund.
The subscriber hereby subscribe(s) for the purchase of fully-paid and
nonassessable Units of the Fund as indicated.
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3. SUBSCRIBER AGREES AS FOLLOWS (EACH ITEM MUST BE INITIALED):
In order to induce the Manager to accept this subscription, the
Investor hereby represents to you as follows (initial in the space provided):
A. The Investor has (a) a net worth of at least $150,000 in excess of his
investment in Units, or (b) has a net worth of at least $45,000 in excess of his
investment in Units and had during the last tax year or estimates that he will
have during the current tax year a minimum of $45,000 annual gross income. In
all cases net worth is exclusive of home, home furnishings and automobiles. The
Investor further represents that he/she satisfies any other minimum income
and/or net worth standards imposed by the jurisdiction in which he/she resides,
if any different standards are set forth in the Prospectus or any supplement
thereto.
INITIAL HERE________
B. If the undersigned is acting in a representative capacity for a corporation,
partnership, trust or other entity, or as agent for any person or entity, he
hereby represents and warrants that he has full authority to enter into this
agreement in such capacity.
INITIAL HERE________
C. If the undersigned is purchasing the Units subscribed for hereby in a
fiduciary capacity, the representations and warranties herein shall be deemed to
have been made on behalf of the person or persons for whom the undersigned is so
purchasing.
INITIAL HERE________
D. Under the penalties of perjury, the undersigned certifies that (l) the number
provided herein is his correct Taxpayer Identification Number; and (2) he is not
subject to backup withholding either because he has not been notified that he is
subject to backup withholding as a result of a failure to report all interest or
dividends, or the Internal Revenue Service has notified him that he is no longer
subject to backup withholding. (If the undersigned is currently subject to
backup withholding, he has stricken the language under clause (2) above before
signing).
INITIAL HERE________
4. LEGAL FORM OF OWNERSHIP (Check Only One)
___ Single Ownership
___ Joint Tenants With Rights of Survivorship
___ Husband and Wife as Community Property
___ Tenants in Common
___ Tenants in Entirety
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___ Sep IRA
___ IRA __regular __rollover
___ Trust - Trust Date (Month/Day/Year) ___/___/___
___ Custodian
___ Custodian for___________________________________
___ UGMA / UTMA - State of:_______
___ Pension Plan
___ Profit Sharing Plan
___ Corporation
___ Partnership
___ Non-Profit Organization
___ Other__________________
5. INVESTOR MAILING ADDRESS
(if different from above, as with IRAs and Keoghs)
Name________________________________________________________________________
Name________________________________________________________________________
Address_____________________________________________________________________
City__________________________________________State_____Zip Code____________
Investor Phone Number (_____)_______________________________________________
6. OPTIONAL CHECK ADDRESS If you would like your distribution checks mailed to
an address other than registered owner's address, please complete.
___ Designated for all Units or,
___ Designated for Partial Units ________
Receiving Entity____________________________________________________________
Address_____________________________________________________________________
City__________________________________________State_____Zip Code____________
Fund Name______________________________Account Number_______________________
7. BROKER/DEALER INFORMATION The Broker/Dealer must sign below to complete
order. Broker/Dealer hereby warrants that it is a duly licensed Broker/Dealer
and may lawfully offer Units in the state designated as the Investor's residence
and, further, that it has reasonable grounds to believe, based on information
obtained from the Subscriber concerning his investment objectives, other
investments, financial situation and needs and any other information known by
the Broker/Dealer, that investment in the Fund is suitable for the Subscriber in
light of his/her financial position, net worth and other suitability
characteristics, and that the Broker/Dealer has informed the Subscriber as to
the limited liquidity and marketability of the Units. The undersigned
Broker/Dealer warrants that a current Prospectus was delivered to the
Subscriber.
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Licensed Firm Name__________________________________________________________
Account Executive Name_________________________________B/D Rep #____________
A/E Mailing Address____________________________________________Suite#_______
City__________________________________________State_____Zip Code____________
Telephone(____)____________________ NumberFax(____)_________________________
E-mail______________________________________________________________________
X_____________________________________________________Date__________________
Authorized signature (Branch Manager or Registered Principal).
Order cannot be accepted without signature.
This transaction, for Blue Sky purposes, took place in the State of ______.
ACCEPTANCE BY MANAGER
FOR MANAGER'S USE ONLY
Received and Subscription Accepted
ATEL Financial Corporation, Manager
By__________________________________________________________________________
Amount___________________________ Date______________ B/D Rep #______________
RETURN TOP 3 COPIES: WHITE - ATEL COPY, YELLOW - BROKER/DEALER COPY,
PINK - INVESTOR COPY
RETAIN: BLUE - BROKER/DEALER COPY, GREEN - INVESTOR COPY
ATEL SECURITIES CORPORATION
235 PINE STREET - 6th FLOOR - SAN FRANCISCO, CA 94104
(800) 543-2835 - E-Mail: [email protected]
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Assuming the offer and sale of the maximum offering of Units,
estimated expenses in connection with the issuance and distribution of the
Units, other than Sales Commissions, in the aggregate are as follows:
Registration fee .........................$ 39,600
Printing costs............................ 450,000
Advertising expenses...................... 450,000
Legal fees and expenses .................. 200,000
Accounting fees........................... 125,000
Blue Sky fees and expenses................ 250,000
NASD fees and expenses.................... 15,500
Travel, telephone and
mailing expenses....................... 450,000
Broker-Dealer due
diligence reimbursements............... 625,000
Broker-Dealer seminars.................... 415,000
Investor seminar expense reimbursements.. 125,000
Other wholesaling fees and expense
reimbursements.................. .... 500,000
Other..................................... 554,900
-------
Total............................. $4,205,000
----------------
ITEM 14. Indemnification of Directors and Officers.
(a) The directors and officers of ATEL Financial Corporation,
the Registrant's Manager, may be indemnified by such corporation for certain
liabilities, including liabilities under the Securities Act of 1933 and the
Securities Exchange Act of 1934, pursuant to its Articles of Incorporation and
Bylaws and Section 317 of the California Corporations Code.
Generally, directors and officers of ATEL Financial
Corporation may seek indemnification from the corporation for liabilities,
damages, costs, attorney's fees and other charges assessed or otherwise payable
by them arising in connection with the discharge of their duties as directors or
officers (unless such liabilities arise as the result of willful or deliberate
misconduct) under one or more of the governing instruments referenced above.
(b) The Registrant has agreed, pursuant to the Limited
Liability Company Operating Agreement included as Exhibit B to the Prospectus,
to indemnify the Manager and its Affiliates against certain liabilities,
excluding liabilities under the Securities Act of 1933.
ITEM 15. Recent Sales of Unregistered Securities.
The Registrant has recently been formed but has not issued any
securities other than (i) The Manager's interest to ATEL Financial Corporation,
for a capital contribution of $100, and (ii) 50 units of limited liability
company interest issued to ATEL Capital Group as the original Member of the
Registrant, for a price of $10 per Unit. These sales occurred in September 2000
in reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended. These sales were for the purpose of
organizing the Registrant as a limited liability company and for investment
purposes and not with a view to the distribution of such securities.
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ITEM 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Number Exhibits
1.1 Form of Dealer Manager Agreement
1.2 Form of Selected Dealer Agreement
3.1 Limited Liability Company Operating Agreement
(incorporated by reference to Exhibit B to
Prospectus)
5.1 Opinion regarding legality
8.1 Opinion regarding tax matters
10.1 Form of Escrow Agreement
23.1 Consent of Ernst & Young [TO BE PROVIDED BY
AMENDMENT]
23.2 Consent of Derenthal & Dannhauser (included
in Exhibit 5.1 to this Registration
Statement)
23.3 Consent of Derenthal & Dannhauser (included
in Exhibit 8.1 to this Registration
Statement)
24.1 Powers of Attorney are set forth in this
Part II of the Registration Statement on Form S-1
(b) Financial Statements Included in the Prospectus.
ATEL Capital Equipment Fund IX, LLC
[TO BE PROVIDED BY AMENDMENT]
ATEL Financial Corporation
[TO BE PROVIDED BY AMENDMENT]
ITEM 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this
Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the
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aggregate, represent a fundamental change in the information
set forth in this Registration Statement; and
(iii) To include any material information
with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material
change to such information in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That all post-effective amendments will
comply with the applicable forms, rules and regulations of the commission in
effect at the time such post-effective amendments are filed.
(5) To send to each Member at least on an annual
basis a detailed statement of any transactions with the Manager or its
affiliates, and of fees, commissions, compensation and other benefits paid,
or accrued to the Manager or its affiliates for the fiscal year completed,
showing the amount paid or accrued to each recipient and the services performed.
(6) To send to the Members, within 45 days after
the close of each quarterly fiscal period, the information specified by the
Form 10-Q, if such report is required to be filed with the Commission.
(7) To send to the Members the financial
statements required by Form 10-K for the first full fiscal year of operations of
the Fund.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to the Manager of the Registrant (or
controlling persons of the Manager or of the Registrant) pursuant to the
provisions described under Item 14 above or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by the Manager or controlling person of
the Registrant in the successful defense of any action suit or proceeding) is
asserted by any such Manager or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The registrant further undertakes (i) to file a sticker supplement
pursuant to Rule 424(c) under the Act describing each lease transaction not
described in the prospectus or a prior supplement promptly after there arises a
reasonable probability that such transaction will be acquired if the transaction
would require commitment by the registrant of an amount of offering proceeds in
excess of 10% of the offering proceeds received as of that date by the
registrant; and (ii) to consolidate all such sticker supplements into a
post-effective amendment filed at least once every three months during the
offering period.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 2nd day of October, 2000.
ATEL CAPITAL EQUIPMENT FUND IX, LLC
By: ATEL Financial Corporation,
a California corporation,
Manager
By: /s/ A.J. BATT
A. J. Batt
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS that the undersigned each hereby
constitutes and appoints A.J. Batt and Dean L. Cash jointly and severally, their
true and lawful attorneys-in-fact, each with power of substitution, for them in
any and all capacities, to do any and all acts or things and to execute any and
all instruments which said attorneys, or any of them, may deem necessary or
advisable to enable ATEL Capital Equipment Fund IX, LLC (the "Fund"), to comply
with the Securities Act of 1933, as amended (the "Act"), and any rules and
regulations thereunder, in connection with the registration under the Act of up
to 15,000,000 Units of limited liability company interest in the Fund (the
"Units"), including, but not limited to, the power and authority to sign the
name of the undersigned, in any and all capacities, to a Registration Statement
on Form S-1 relating to the Units to be filed with the Securities and Exchange
Commission, to any and all amendments thereto, and to any and all documents or
instruments filed in connection therewith; and the undersigned each hereby
ratifies and confirms all that each of said attorneys, or his substitute or
substitutes, shall do or cause to be done by virtue hereof.
Signature Capacity Date
/s/ A. J. BATT Principal executive October 2, 2000
A. J. Batt officer of
Registrant; chief
executive officer
and director of
ATEL Financial
Corporation
/s/ DEAN L. CASH Director and October 2, 2000
Dean L. Cash Executive Vice
President of ATEL
Financial Corporation
/s/ PARITOSH CHOKSI Principal financial October 2, 2000
Paritosh Choksi officer and principal
accounting officer of
Registrant; chief
financial officer and
chief accounting officer
of ATEL Financial
Corporation
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INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibit Numbered Page
1.1 Form of Dealer Manager Agreement
1.2 Form of Selected Dealer Agreement
3.1 Limited Liability Company Operating
Agreement (incorporated by reference to
Exhibit B to Prospectus)
5.1 Opinion regarding legality
8.1 Opinion regarding tax matters
10.1 Form of Escrow Agreement
23.1 Consent of Ernst & Young [TO BE PROVIDED BY AMENDMENT]
23.2 Consent of Derenthal & Dannhauser (included
in Exhibit 5.1 to this Registration
Statement)
23.3 Consent of Jackson, Tufts, Cole &
Black (included in Exhibit 8.1 to
this Registration Statement)
24.1 Powers of Attorney are set forth
in Part II of the Registration
Statement on Form S-1
---------------------
