<TABLE>
<S> <C>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
to
For Quarter Ended September 30, 1995 Commission File No. 0-14415
American Income 2 Limited
- - ------------------------------------------------------------------------------------------------------------
Partnership
(Exact name of registrant as specified in its charter)
Massachusetts
04-2809330
(State or other jurisdiction of (IRS
Employer
incorporation or organization) Identification No.)
98 North Washington Street, Boston, MA
02114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)
-----
854-5800
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by
Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under
a plan confirmed by a court during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
</TABLE>
<TABLE>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
FORM 10-Q
INDEX
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Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Net Assets in Liquidation
at September 30, 1995 and December 31, 1994 3
Statement of Changes in Net Assets in Liquidation
for the nine months ended September 30, 1995 and
for the period July 1, 1994 to September 30, 1994 4
Statement of Operations
for the period January 1, 1994 to June 30, 1994 5
Statement of Cash Flows
for the period January 1, 1994 to June 30, 1994 6
Notes to the Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II. OTHER INFORMATION:
Items 1 - 6 12
</TABLE>
<PAGE>
The accompanying notes are an integral part
6
of these financial statements.
<TABLE>
<CAPTION>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
STATEMENT OF NET ASSETS IN LIQUIDATION
September 30, 1995 and December 31, 1994
(Unaudited)
September 30,December 31,
1995 1994
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 356,118 $ 768,694
Accounts receivable - affiliate -- 1,092
------------------ ------------------
Total assets $ 356,118 $ 769,786
=================== ===================
LIABILITIES
Accrued liabilities $ 20,873 $ 61,090
Accrued liabilities - affiliate 4,491 12,169
Cash distributions payable to partners 62,799 62,799
------------------ ------------------
Total liabilities 88,163 136,058
------------------ ------------------
Net assets $ 267,955 $ 633,728
=================== ===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(Unaudited)
For the Nine For the Period
Months Ended July 1, 1994 to
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Lease revenue -- $ 400
Interest income $ 21,822 8,827
Gain on sale of equipment -- 150,000
Cash distributions (188,397) (62,799)
Interest expense - affiliate -- (5,575)
Equipment management fees - affiliate -- (20)
Operating expenses - affiliate (199,198) (51,793)
-------- -------
Net increase (decrease) in net assets
in liquidation during the period (365,773) 39,040
Net assets in liquidation at
the beginning of the period
633,728 661,202
------- -------
Net assets in liquidation at
the end of the period
============= =======
267,955 700,242
============= =======
Cash distributions declared
per limited partnership unit $3.38 $1.12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the period January 1, 1994 to June 30, 1994
(Unaudited)
Income:
<S> <C>
Lease revenue $ 109,424
Interest income 5,728
Gain on sale of equipment 127,954
Total income 243,106
Expenses:
Depreciation 87,173
Equipment management fees - affiliate 5,471
Operating expenses - affiliate 83,209
-----------------
Total expenses 175,853
Net income $ 67,253
==================
Net income
per limited partnership unit $ 1.20
====================
Cash distributions declared
per limited partnership unit $ 2.25
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the period January 1, 1994 to June 30, 1994
(Unaudited)
Cash flows from (used in) operating activities:
<S> <C>
Net income $ 67,253
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation 87,173
Gain on sale of equipment (127,954)
Changes in assets and liabilities Decrease in:
accounts receivable - affiliate 19,117
Increase (decrease) in:
accrued liabilities 3,250
accrued liabilities - affiliate (87,867)
----------------
Net cash used in operating activities (39,028)
----------------
Cash flows from investing activities:
Proceeds from equipment sales 949,402
Net cash from investing activities 949,402
Cash flows used in financing activities:
Distributions paid (125,598)
Net cash used in financing activities (125,598)
----------------
Net increase in cash and cash equivalents 784,776
Cash and cash equivalents at beginning of period 27,816
----------------
Cash and cash equivalents at end of period $ 812,592
================
</TABLE>
<PAGE>
12
AMERICAN INCOME 2 LIMITED PARTNERSHIP
Notes to the Financial Statements
September 30, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial statements presented herein are prepared in conformity
with generally accepted accounting principles and the instructions for preparing
Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not include
all information and footnote disclosures required under generally accepted
accounting principles for complete financial statements and, accordingly, the
accompanying financial statements should be read in conjunction with the
footnotes presented in the 1994 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1994 Annual Report.
Beginning July 1, 1994, the General Partner initiated the liquidation of
the Partnership in accordance with the Amended and Restated Agreement and
Certificate of Limited Partnership (the "Restated Agreement, as amended").
Accordingly, the financial statements herein for the nine months ended September
30, 1995 and for the period July 1, 1994 to September 30, 1994 have been
prepared on a liquidation basis of accounting.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the Partnership's
net assets in liquidation at September 30, 1995 and December 31, 1994, its
changes in net assets in liquidation for the nine months ended September 30,
1995 and for the period July 1, 1994 to September 30, 1994, and results of its
operations and its cash flows for the period January 1, 1994 to June 30, 1994
have been made and are reflected.
NOTE 2 - CASH
At September 30, 1995, the Partnership had $355,000 invested in reverse
repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities.
NOTE 3 - REVENUE RECOGNITION
All of the Partnership's primary and renewal leases had expired and all
of the associated equipment was sold as of December 31, 1994. No future rents
are due.
<TABLE>
<CAPTION>
NOTE 4 - RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by American
Finance Group ("AFG") on behalf of the Partnership and AFG is reimbursed at its
actual cost for such expenditures. Fees and other costs incurred during the nine
month periods ended September 30, 1995 and 1994, which were paid or accrued by
the Partnership to AFG or its Affiliates, are as follows:
1995 1994
-------------- ---------
<S> <C>
Interest expense - affiliate -- $ 5,575
Equipment management fees -- 5,491
Administrative charges $ 13,476 9,000
Reimbursable operating expenses
due to third parties 185,722 126,002
------------ ------------
Total $ 199,198 $ 146,068
=========== ===========
</TABLE>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
NOTE 5 - LEGAL PROCEEDINGS
On February 24, 1992 Investors Asset Holding Corp. ("I.A.H.C."), as
trustee of a trust of which the Partnership is the sole beneficiary, commenced
an action in the United States District Court for the District of Puerto Rico
(the "District Court") against L.A.P.S.A., Inc. to recover possession of a
Shorts SD-330 aircraft pursuant to a defaulted conditional sales agreement and
for related monetary damages. I.A.H.C., on behalf of the Partnership, also
commenced action to recover the aircraft in the Dominican Republic, which action
resulted in the recovery of the aircraft and its removal to the U.S. in
February, 1993. L.A.P.S.A. filed counterclaims and one of its principals, Louis
Perez Gonzales ("Perez"), filed a second action in the District Court against
I.A.H.C. and AFG seeking monetary damages in excess of $1,000,000. On July 18,
1994, the Partnership sold the aircraft to a third party for $150,000, which
event resulted in a net gain of equal amount, for financial statement purposes.
On December 23, 1994, the District Court dismissed all of L.A.P.S.A.'s claims as
a result of L.A.P.S.A.'s failure to comply with several discovery requests and a
discovery order. On January 31, 1995, the District Court confirmed its position
by denying L.A.P.S.A.'s motion for reconsideration.
<TABLE>
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In a jury trial held in District Court in San Juan, Puerto Rico between April 24, 1995 and May 1, 1995,
I.A.H.C., obtained a favorable verdict in its case against L.A.P.S.A. and was awarded approximately $569,000 for lost
profits, costs to repossess the aircraft and legal fees. In the separate case of Perez vs. I.A.H.C. and AFG, the
jury entered a verdict for Perez and against I.A.H.C. in the amount of $125,000. Immediately following the verdicts,
L.A.P.S.A. filed for protection under Chapter 7 of the Bankruptcy Code in the District of Puerto Rico and, through
post-verdict discovery I.A.H.C. made the determination that L.A.P.S.A. is judgment-proof. The parties agreed to
settle the matter for a mutual cancellation of the claims and a settlement agreement was executed on July 20, 1995.
</TABLE>
Additionally, Victoria Air, an unauthorized user of the aircraft at the
time when I.A.H.C. repossessed the aircraft, commenced an action against
I.A.H.C. in the Dominican Republic demanding monetary damages in the amount of
approximately $1,000,000 for loss of revenues from use of the aircraft and
related damages. Currently, Victoria Air is not pursuing its claims and any
further prosecution of this matter is considered unlikely. The term for
prescription of this case for inactivity runs through July 1996.
On August 8, 1995 AFG, on behalf of the Partnership, commenced an action
in the United States District Court for the Eastern District of Wisconsin
against Air Cargo Carriers, Inc. and its President, James M. Germek, for damages
in connection with an alleged breach in the parties' agreement pursuant to which
Air Cargo Carriers, Inc. assumed custody and control of the aircraft while it
was stored at Miami International Airport and promised to maintain, preserve and
protect the plane. Currently, it is not possible to determine the ultimate
outcome of this matter.
NOTE 6 - LIQUIDATION PROCEEDINGS
On October 31, 1995, the General Partner as trustee (the "Trustee")
executed a Declaration of Trust establishing a Liquidating Trust (the "Trust")
to satisfy any unforeseen expenses of the Partnership that may arise after the
dissolution date as a result of the Partnership's equipment leasing activities.
Organization of the Trust will have the additional benefit of terminating the
Partnership's income tax reporting obligations after 1995. To the extent that
the pending matter of litigation described in Note 5 to the accompanying
financial statements is settled as expected before the end of 1995, the General
Partner will transfer all undistributed cash held by the Partnership at its
dissolution date, expected to be approximately $268,000 or $4.80 per limited
partnership unit at September 30, 1995, into a non-interest bearing custodian
account (the "Account") of the Trust. Amounts held in the Account will be
reserved for a period not to exceed seven years (or such shorter time as counsel
for the Partnership advises will be sufficient to assure that all claims against
the
AMERICAN INCOME 2 LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
Partnership have been presented). To the extent that such funds exceed the
ultimate liabilities of the Partnership, the Trustee will distribute such
remaining balance to the beneficiaries of the Trust, which beneficiaries will
consist of the General Partner and the Limited Partners in accordance with their
respective percentage ownership interests in the Partnership as of the
dissolution date.
<PAGE>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
On July 1, 1994, the General Partner initiated the liquidation of the
Partnership. The Partnership was organized in 1985 to acquire and lease a
diversified portfolio of capital equipment to third-party lessees and to
distribute the net proceeds from operating and remarketing activities, after
satisfaction of all expenses and debt service obligations, to the Partners. The
Partnership was capitalized with $13,815,750 of equity from the Limited Partners
and $50,000 of equity from the General Partner and acquired $24,676,869 of
equipment, subject to related indebtedness. All of the Partnership's equipment
was sold by the end of 1994. Dissolution of the Partnership is anticipated on or
before December 31, 1995, provided the litigation described in Note 5 to the
accompanying financial statements is resolved.
Results of Operations
The Statement of Changes in Net Assets in Liquidation is presented for
the nine months ended September 30, 1995 and reflects the liquidation of assets
during the period. As a result, a comparison between current and prior year
reporting periods is not meaningful and is not presented.
For the nine month period ended September 30, 1995, the Partnership
recognized $21,822 of interest income generated from the temporary investment of
cash. Operating expenses paid or accrued consisted principally of administrative
charges, professional service costs, such as audit and legal fees, as well as
printing and distribution expenses. These charges amounted to $59,749 during the
period ended September 30, 1995. In addition, the Partnership incurred $139,449
of legal costs related to the aircraft litigation described in Note 5 to the
financial statements herein. The Partnership has accrued for operating expenses
anticipated through its dissolution date.
Liquidity and Capital Resources
Aggregate cash distributions were adversely affected by the loss of
stipulated rent payments associated with the aircraft described in Note 5 to the
financial statements included herein and the cost of associated legal actions.
Future operating and dissolution expenses as well as the third quarter
distribution to Partners will reduce the Partnership's cash balance of $356,118
held at September 30, 1995. Substantially all of this amount was invested in
interest-bearing investments at September 30, 1995. See Note 2 to the financial
statements herein.
On October 31, 1995, the General Partner as trustee (the "Trustee")
executed a Declaration of Trust establishing a Liquidating Trust (the "Trust")
to satisfy any unforeseen expenses of the Partnership that may arise after the
dissolution date as a result of the Partnership's equipment leasing activities.
Organization of the Trust will have the additional benefit of terminating the
Partnership's income tax reporting obligations after 1995. To the extent that
the pending matter of litigation described in Note 5 to the accompanying
financial statements is settled as expected before the end of 1995, the General
Partner will transfer all undistributed cash held by the Partnership at its
dissolution date, expected to be approximately $268,000 or $4.80 per limited
partnership unit at September 30, 1995, into a non-interest bearing custodian
account (the "Account") of the Trust. Amounts held in the Account will be
reserved for a period not to exceed seven years (or such shorter time as counsel
for the Partnership advises will be sufficient to assure that all claims against
the Partnership have been presented). To the extent that such funds exceed the
ultimate liabilities of the Partnership, the Trustee will distribute such
remaining balance to the beneficiaries of the Trust, which beneficiaries will
consist of the General Partner and the Limited Partners in accordance with their
respective percentage ownership interests in the Partnership as of the
dissolution date.
AMERICAN INCOME 2 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
(Continued)
For the nine months ended September 30, 1995, the Partnership declared
total distributions of $188,397. In accordance with the Restated Agreement, as
amended, the Limited Partners were allocated 99% of these distributions, or
$186,513 and the General Partner was allocated 1%, or $1,884. The third quarter
1995 cash distribution was paid on October 13, 1995. Since inception, the
Partnership has distributed $14,956,922 to the Limited Partners and $151,080 to
the General Partner. The Partnership expects to make no further quarterly
distributions of cash to its Partners, except as may be available in the Trust
(described above) at the date of its liquidation. Cash distributions paid to the
Limited Partners consist of both a return of and a return on capital. Final
yield on investment will be determined at the Partnership's dissolution date.
<PAGE>
AMERICAN INCOME 2 LIMITED PARTNERSHIP
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response:
Refer to Note 5 herein and Note 6 in
the 1994 Annual Report.
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of
Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6(a). Exhibits
99(d) Declaration of Trust to establish a
liquidating trust
Item 6(b). Reports on Form 8-K
Response: None
<PAGE>
13
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on behalf of the registrant and in the
capacity and on the date indicated.
AMERICAN INCOME 2 LIMITED PARTNERSHIP
By: AFG Leasing Associates, a Massachusetts
general partnership and the General Partner of
the Registrant.
By: AFG Leasing Incorporated, a Massachusetts
corporation and general partner in such general
partnership.
By:
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date:
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on behalf of the registrant and in the
capacity and on the date indicated.
AMERICAN INCOME 2 LIMITED PARTNERSHIP
By: AFG Leasing Associates, a Massachusetts
general partnership and the General Partner of
the Registrant.
By: AFG Leasing Incorporated, a Massachusetts
corporation and general partner in such general
partnership.
By: /s/ Gary M. Romano
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 356,118
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 356,118
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 356,118
<CURRENT-LIABILITIES> 88,163
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 356,118
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 199,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
DECLARATION OF TRUST
THIS DECLARATION OF TRUST, made October 31, 1995 (this "Declaration"), by and
among AMERICAN INCOME 2 LIMITED PARTNERSHIP, a Massachusetts limited
partnership, as grantor (the "Grantor" or the "Partnership"), AFG LEASING
ASSOCIATES, a Massachusetts partnership, as trustee (in such capacity, together
with its successors as Trustee hereunder, the "Trustee") and the general and
limited partners of the Grantor as beneficiaries (the "Beneficiaries").
Preliminary Statement
The Partnership is being terminated in accordance with the Amended and
Restated Agreement and Certificate of Limited Partnership of the Partnership
dated as of December 28, 1983, as amended from time to time through the date
hereof (as so amended, the "Partnership Agreement"). Capitalized terms used and
not otherwise defined herein have the respective meanings set forth in the
Partnership Agreement.
In accordance with the Partnership Agreement, the Grantor intends to
deposit in a non-interest bearing custodian account (the "Account") funds (the
"Funds") in an amount sufficient in the judgment of the Trustee, to satisfy any
remaining liabilities of the Partnership (the "Liabilities") and thereafter to
distribute the balance of the Funds in the Account, if any (the "Net Funds"), to
the Beneficiaries.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Establishment of Trust; Name
A trust is hereby established to be known as the American Income 2
Limited Partnership Liquidating Trust (the "Trust")
2. Beneficiaries
The Beneficiaries of the Trust are the general and limited partners of
the Grantor and their respective percentage interests in the Funds and the Net
Funds (the "Respective Interests") are their respective Interests in the
termination distributions of the Partnership, as provided in the Partnership
Agreement.
3. Trust Property
(a) The Grantor hereby assigns, transfers and conveys to the Trustee, in
trust, all right, title and interest of theGrantor in and to the Funds.
(b) The Trustee shall hold the Funds in order to pay for any Liabilities in
accordance with Article VI of thePartnership Agreement and thereafter to
distribute the Net Funds to the Beneficiaries in accordance with their
Respective Interests.
(c) The Trustee shall not otherwise deal with the Funds unless directed by a
majority-in-interest of theBeneficiaries.
<PAGE>
4. Acts of Trustees
(a)Except as expressly provided herein, the Trustee shall have no power to
deal in or with the Funds.
(b) Notwithstanding any provisions contained herein, the Trustee shall never
be required to take any action which will, in its opinion, cause it to incur any
personal liability unless first indemnified to its satisfaction. The Funds will
be available for purposes of indemnification. Any Person dealing with the
Trustee shall be fully protected in accordance with the provisions of Section 7.
5. Termination of Trust
This Trust shall terminate within a reasonable period of time after all
Liabilities of the Partnership have been satisfied in full in the judgment of
the Trustee but in any event no later than December 31, 2002. Upon such
termination, the Trustee shall transfer and convey the balance of the Net Funds
in the Account to the Beneficiaries in proportion to their Respective Interests.
6. Resignation and Succession
(a) The Trustee may resign at any time, and any Trustee may be
removed at any time by the majority-in-interest of the Beneficiaries.
(b) The cessation of service by any Trustee (whether resulting from the
death, incapacity, resignation or removal of such Trustee for any other cause)
shall be evidenced by a certificate thereof signed by the Beneficiaries and the
appointment of a succeeding Trustee shall be evidenced by a certificate signed
by the succeeding Trustee. The Beneficiaries shall have the power to appoint one
or more successor Trustees hereunder.
(c) Upon the appointment or succession of any succeeding Trustee to the
position of Trustee hereunder, title to the Funds and all portions thereof shall
thereupon be vested in said succeeding Trustee without the necessity of any
conveyance or instrument. Each succeeding Trustee shall have all of the rights,
powers, authority, and privileges as if named as the original Trustee hereunder;
and no Trustee, original or succeeding, shall be required to furnish a bond or a
surety on a bond.
7. Compensation; Liability and Authority
(a)No compensation will be paid to any Trustee hereunder.
(b) No Trustee hereunder shall be liable for any error of judgment nor for
any loss arising out of any act or omission in good faith, but shall be
responsible only for his own willful breach of trust. No license of court shall
be requisite to the validity of any transaction entered into by the Trustee.
(c) Every agreement or other instrument executed by the Trustee shall be
conclusive evidence in favor of every person relying thereon or claiming
thereunder that, at the time of the delivery thereof, this Trust was in full
force and effect and that the execution and delivery thereof was duly authorized
hereunder. Any person dealing with the Trustee may always rely, without further
inquiry, on a certificate signed by the Trustee hereof, as to who is the
Trustee, or as to the authority of the Trustee to act, or as to the existence or
non-existence of any fact or facts which constitute conditions precedent to acts
by the Trustee, or which are in any other way germane to the affairs of this
Trust.
8. Amendment
This Declaration may be amended from time to time by an instrument in
writing, signed by all of the then Beneficiaries and by the then Trustee hereof.
<PAGE>
9. Execution
The execution of a counterpart of this Declaration or any other
instrument referred to herein by any one or more of the parties thereto shall be
binding upon the signatories thereto whether or not other parties have executed
the same counterpart, provided each party thereto has executed at least one
counterpart of such instrument.
10. Liquidating Trust
The Grantor, the Trustee and the Beneficiaries intend that this Trust
shall be liquidating trust under the Code and Regulation Section 301.7701-4(d)
thereunder which has been formed with the objective of liquidating the Trust
property. The Grantor, the Trustee and Beneficiaries do not intend that this
Trust shall carry on a profit-making business.
<TABLE>
<S> <C>
EXECUTED UNDER SEAL, as of the date first above written.
GRANTOR TRUSTEE
AFG LEASING ASSOCIATES AFG LEASING ASSOCIATES
By: AFG Leasing Incorporated, By: AFG Leasing Incorporated,
a general partner a general partner
By: By:
Geoffrey A. MacDonald Geoffrey A. MacDonald
BENEFICIARIES
Each of those persons listed as General and Limited Partners in Schedule A to the Partnership
</TABLE>
By:
AFG Leasing Incorporated, as general partner of and for AFG Leasing
Associates, for itself and as an attorney-in-fact for each of the
above-named Limited Partners
