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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) September 30, 1996
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American Income 4 Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 0-15320 04-2917030
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
98 North Washington Street, Boston, MA 02114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
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(Former name or former address, if changed since last report.)
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American Income 4 Limited Partnership
Form 8-K
Page 2 of 6
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ITEM 2. Acquisition or Disposition of Assets.
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This report on Form 8-K provides information concerning the sale of all of the
tangible equipment assets, lease receivables, and lease contracts of American
Income 4 Limited Partnership (the "Registrant") and the expected wind-up of the
Registrant's business operations on or before December 31, 1996.
Background
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The Registrant was organized in 1986 as a direct-participation equipment leasing
program to acquire a diversified portfolio of capital equipment subject to lease
agreements with third parties. The Registrant's stated investment objectives
and policies contemplated that the Registrant would wind-up its business
operations within approximately seven years of its inception. During the second
quarter of 1996, AFG Leasing Associates II (the "General Partner" of the
Registrant) engaged (i) an investment adviser (the "Adviser") to solicit
interested third-party buyers for all of the Registrant's equipment assets and
associated lease contracts and (ii) an independent appraisal firm (the
"Appraiser") to provide an estimate of the amount that a third party might be
willing to pay for such assets.
The entire remarketing effort was undertaken jointly by 15 individual equipment
leasing programs, consisting of the Registrant and 14 affiliates (the "Other
Affected Partnerships"). Collectively, the Registrant and the Other Affected
Partnerships offered for sale all or a portion of their equipment assets (the
"Sale Assets"). Thirteen of the programs, including the Registrant, offered to
sell all of their equipment assets and are expected to wind-up business
operations in 1996; the remaining two programs, which will continue their
business operations beyond 1996, offered to sell only their interests in certain
assets owned jointly with one or more of the 13 programs anticipating wind-up.
Substantially all of the Registrant's equipment assets of material value
represented partial ownership interests, whereby the Registrant owned less than
a 100% interest in the equipment it offered for sale. The remaining interests
in such assets were owned by one or more of the Other Affected Partnerships.
Equis Financial Group ("Equis", which serves as the Equipment Manager of the
Registrant and the Other Affected Partnerships) and the Adviser believed the
joint approach to remarketing the Sale Assets would maximize the disposition
prices of the Sale Assets and facilitate an efficient wind-up of the
Registrant's business operations.
The Sale Process
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To start the process of soliciting bids, the Adviser and Equis assembled a list
of 48 prospective purchasers, some of whom had conducted prior business with the
Registrant, Equis, the Other Affected Partnerships, or their affiliates. Each
recipient was provided abbreviated information concerning the remarketing effort
and asked to request, if interested in bidding, an Information Memorandum
containing, among other information, a listing of the equipment rental schedules
being offered for sale, a description of the assets and their original cost, and
a summary of the remaining lease payments expected to be collected from each
rental schedule, assuming no future
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American Income 4 Limited Partnership
Form 8-K
Page 3 of 6
ITEM 2. Acquisition or Disposition of Assets (Continued).
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The Sale Process (Continued)
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default events. Additional background was provided about the business
operations and credit ratings of significant lessees. All financial information
assumed an August 1, 1996 sale date. Fourteen of the 48 prospective purchasers
requested and received an Information Memorandum. After the Information
Memoranda were distributed, and prior to submitting a bid, the recipients were
given the opportunity to request additional information or ask questions. In
addition, the recipients were offered the opportunity, but were not required, to
engage the equipment management services of Equis subject to agreed-upon terms.
Bidders were encouraged to make all-cash bids.
On September 30, 1996, the Registrant and the Other Affected Partnerships
executed individual purchase and sale agreements with RSL Finance Limited
Partnership II (the "Buyer") for all Sale Assets, except one McDonnell Douglas
MD-82 aircraft leased to Northwest Airlines, Inc. (the "NWA Aircraft"),
hereafter the "Sale Assets, as Revised," for total cash consideration of $35
million. The Appraiser had estimated the potential sale value of the Sale
Assets, as Revised to be between $33 million and $38 million, assuming an August
1, 1996 sale date. Accordingly, the Buyer's purchase price was established as
of August 1, 1996 and any remarketing proceeds or contracted lease rents earned
after July 31, 1996 accrue to the benefit of the Buyer. The Buyer's cash
remuneration to the Registrant and the Other Affected Partnerships was increased
by an interest factor, at the annualized rate of 8%, which was applied to the
sales price for the period commencing August 1, 1996 and ending on September 30,
1996, the date of closing.
In a separate negotiation, Equis, on behalf of the Registrant and the Other
Affected Partnerships owning an interest in the NWA Aircraft, arranged to sell
the NWA Aircraft to the lessee for $13,200,000. A purchase and sale agreement
for the NWA Aircraft was executed and the closing was concluded on September 30,
1996. The Registrant had no ownership interest in this aircraft.
As a result of both sale events, the Registrant and the Other Affected
Partnerships received aggregate sale proceeds of $48,200,000 for all Sale
Assets. Four other parties submitted bids to purchase the Sale Assets for
prices ranging from $34 million to $44 million, including the NWA Aircraft.
Pursuant to terms of their respective purchase and sale agreements, the Buyer
and Northwest Airlines, Inc. agreed to purchase the Sale Assets on a non-
recourse basis to the Registrant, the Other Affected Partnerships, and the
general and limited partners of each. In addition, the Registrant, together
with all of the Other Affected Partnerships, engaged the Adviser to provide a
fairness opinion with respect to whether the sale consideration, taken as a
whole, is fair from a financial standpoint. Equis believes the sale to be in
the best interests of the Registrant and the Other Affected Partnerships.
<PAGE>
American Income 4 Limited Partnership
Form 8-K
Page 4 of 6
ITEM 2. Acquisition or Disposition of Assets (Continued).
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Relationship with the Buyer
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The Buyer is a limited partnership established to acquire the Sale Assets, as
Revised and has no direct affiliation with the Registrant, the Other Affected
Partnerships, the General Partner, Equis, or its predecessor, American Finance
Group ("AFG"). The sole general partner of the Buyer is RSL Holdings, Inc. An
affiliate of the Buyer purchased a significant limited partner interest in a
direct-participation equipment leasing program co-sponsored by AFG in 1992. AFG
acquired this interest in 1993 for cash and assumption of indebtedness. There
have been no other business dealings between the Buyer and Equis (or AFG) and
their affiliates.
The Buyer paid cash for its acquisition of the Sale Assets, as Revised, a
significant portion of which was borrowed from three third-party institutional
lenders (the "Lenders"). Equis explored financing options and negotiated
certain terms of the financings on behalf of the Buyer. In addition, Equis and
the Buyer agreed to terms of a management contract whereby Equis will provide
equipment management services to the Buyer following the sale. Pursuant to the
terms of the management contract, Equis will earn a remarketing fee equal to 3%
of the gross disposition proceeds realized by the Buyer upon any subsequent re-
sale of the Sale Assets, as Revised and has agreed to subordinate, in favor of
the Lenders, its right to collect (i) an equipment management fee equal to 5% of
lease revenues and (ii) an initial documentation and set-up fee equal to 3% of
the Buyer's base purchase price for the Sale Assets, as Revised, until such time
as the Lenders' loans are fully repaid. Equis will accrue, but also has agreed
to subordinate in favor of the Lenders, interest on all subordinated fees at the
rate of 15% per annum until collected.
Relationship with Northwest Airlines, Inc.
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Equis (and AFG) and its affiliates, including the Registrant and certain of the
Other Affected Partnerships, have had a long-standing relationship with
Northwest Airlines, Inc. ("NWA"). NWA has leased commercial jet aircraft from
one or more of the parties in the ordinary course of business and has purchased
certain leased aircraft from the parties on prior occasions.
Terms of Sale
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The Registrant and the Other Affected Partnerships received aggregate cash
consideration of $48,200,000 for the Sale Assets, of which $13,200,000 was
allocated to the owners of the NWA Aircraft according to their respective
percentage ownership interests. The remaining $35 million, after closing
adjustments, was allocated proportionately among the Registrant and the
<PAGE>
American Income 4 Limited Partnership
Form 8-K
Page 5 of 6
ITEM 2. Acquisition or Disposition of Assets (Continued).
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Terms of Sale (Continued)
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Other Affected Partnerships based upon the Appraiser's estimated sale prices for
each partnership's respective share of the Sale Assets, as Revised. This
calculation resulted in the Registrant receiving $2,906,492 as its proportionate
share of the net sale proceeds. The appraised value of the Registrant's
equipment assets was estimated by the Appraiser to range between $2.8 million
and $3.3 million.
All expenses directly associated with the sale will be allocated first, to the
extent that such expenses pertain to the NWA Aircraft, to each of the respective
owners of the NWA Aircraft, and second, for all other costs, proportionately
among the Registrant and the Other Affected Partnerships according to the
Appraiser's estimated sale prices for each partnership's respective share of the
Sale Assets, as Revised. The Registrant's share of all such expenses is
expected to be approximately $76,000. In addition, the General Partner will
reserve approximately $325,000 to cover any unforeseen liabilities. See
"Dissolution of the Registrant" herein.
Dissolution of the Registrant
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The General Partner anticipates that the Registrant will be dissolved on or
before December 31, 1996 in accordance with the Registrant's Restated Agreement
and Certificate of Limited Partnership, as amended. During the period between
the closing of the Sale Assets and December 31, 1996, the General Partner will
wind-up the operations of the Registrant and make one or more cash distributions
to the partners of the Registrant. The amount of cash distributed prior to the
Registrant's dissolution will be net of reserves, currently expected to be
approximately $325,000, which the General Partner will deposit in a separate
account to cover any unforeseen liabilities which may arise in future periods.
At such time as the General Partner considers appropriate, any balance in the
reserve account will be distributed to the partners of the Registrant according
to their respective ownership interests in the Registrant at the date of its
dissolution.
Future Filings with the United States Securities and Exchange Commission
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The Registrant expects to file Form 10-Q, "Quarterly Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934" for the quarter ending
September 30, 1996. Upon its dissolution, the Registrant expects to file Form
15, "Certification and Notice of Termination of Registration Under Section 12(g)
of the Securities Exchange Act of 1934 or Suspension of Duty to File Reports
Under Sections 13 and 15(d) of the Securities Exchange Act of 1934."
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American Income 4 Limited Partnership
Form 8-K
Page 6 of 6
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ITEM 7. Financial Statements and Exhibits.
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Exhibits filed herewith pursuant to Item 601 of Regulation S-K:
Exhibit
Number
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99.1(C) Purchase and Sale Agreement by and between American Income 4
Limited Partnership and RSL Finance Limited Partnership II.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN INCOME 4 LIMITED PARTNERSHIP
(Registrant)
By: AFG Leasing Associates II,
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 Date: October 3, 1996
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Gary M. Romano
Clerk
(Principal Financial Officer)
By: /s/ Michael J. Butterfield Date: October 3, 1996
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Michael J. Butterfield
Treasurer
(Principal Accounting Officer)
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EXHIBIT 99.1(C)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of this 30th day of
September, 1996 by and between RSL Finance Limited Partnership II, a Florida
limited partnership with its principal place of business at 2300 Miami Center,
201 South Biscayne Boulevard, Miami, FL 33131-4329 ("Purchaser") and the
undersigned, a Massachusetts limited partnership, with its principal place of
business at 98 North Washington Street, Boston, MA 02114 ("Seller").
Seller, directly as lessor or indirectly through limited partnership
or trust title holding vehicles, has entered into various rental schedules (in
each case, a "Rental Schedule" or a "Lease" and collectively the "Rental
Schedules" or the "Leases") to master lease agreements (in each case a "Master
Lease" and collectively, the "Master Leases") or various single purpose leases
(also hereinafter referred to individually as a "Lease" and collectively as
"Leases") with various parties as lessees (in each case a "Lessee"), with
respect to the leasing by each Lessee of various types of equipment, including
some or all of the following: aircraft, shipping vessels, motor vehicles,
construction and mining equipment, communications equipment, computer equipment
and other like equipment, as more fully described in each Lease (individually
and collectively, the "Equipment"), all as further described on Schedule A
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hereto.
Seller desires to sell and assign, and Purchaser desires to purchase
and assume, all of Seller's right, title, interest, duties and obligations in,
to and under the Equipment and the Leases (collectively, the "Transferred
Assets") all on the terms and conditions as hereinafter set forth.
In consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser hereby agree as follows:
ARTICLE I
SUBJECT MATTER
Subject to the terms and provisions of this Agreement, Seller agrees
to sell and Purchaser agrees to purchase all of Seller's right, title and
interest in and to the Equipment, and Seller hereby further agrees to assign,
and Purchaser agrees to assume, all of Seller's right, title, interest, duties
and obligations in, to and under the Leases, including all receivables relating
to Seller, from and after the closing (the "Closing"), except that Seller hereby
reserves and does not agree to transfer its right, title and interest in and to
the Reserved Rights. As used herein, "Reserved Rights" shall mean all
indemnities, including tax indemnities, liability insurance and the like to the
extent that such right, title and interest in such indemnities or liability
insurance proceeds have accrued in favor of Seller or the Owner Trustee (as
defined below) prior to the Closing. Seller shall and does hereby also agree to
assign to Purchaser, to the extent permitted by the terms thereof and by
applicable law, all of Seller's rights, whether express or implied, under any
vendor's or manufacturer's warranties, relating to the Equipment. Purchaser
acknowledges and agrees that title to certain Equipment ("Trust Equipment" or
"SPLP Equipment", as applicable) is held in, and the lessor of such Equipment
is, one or more equipment trusts (in each case, an "Equipment Trust" or
"Equipment Trusts") or special purpose limited partnerships (in each case, an
"SPLP" or "SPLPs"), beneficial interests ("Beneficial Interests") in which
trusts or limited partnerships are owned by Seller and legal title to which is
held by an owner trustee (in each case, the "Owner Trustee") or the SPLP, as
applicable.
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ARTICLE II
PRICE AND PAYMENT
The purchase price (the "Purchase Price") of the Transferred Assets
shall be as set forth on Schedule B hereto and shall be payable in full in cash
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at the Closing by wire or other transfer of immediately available funds to
Seller's account as follows:
Fleet Bank, N.A.
New York, NY
ABA no. 021-200-339
AFG Rent Escrow Account
Account no. 2181-01-7572
or to such other bank account or accounts as may be designated in writing by
Seller at least one (1) business day prior to the Closing Date. The Purchase
Price shall be determined as of the Closing as if the Closing had occurred on
August 1, 1996 and shall be adjusted by deducting therefrom (i) the net sales
proceeds or casualty payments in respect of any equipment described for sale in
that certain Dabney/Resnick Inc. memorandum previously delivered to Purchaser
(excluding the MD-82 Aircraft on lease to Northwest Airlines, Inc.) to the
extent that such proceeds are received by Seller prior to closing, and (ii) all
base and month to month rents attributable to the period beginning August 1,
1996 and received by Seller prior to Closing. The Purchase Price shall be
increased by (i) the face value of all base rents receivable (unless such rent
receivable is attributable to a lessee in bankruptcy) attributable to the period
ending July 31, 1996, and (ii) an amount equal to interest at an annualized rate
of 8% for the period August 1, 1996 through the Closing Date.
ARTICLE III
TAXES
Seller shall be responsible for all Taxes (as hereinafter defined),
and for the submission of all filings required by the applicable taxing
authorities, relating to (i) the acquisition, ownership, use or leasing of the
Equipment by Seller, and (ii) the payment of periodic rentals or other sums due
under each Lease, including without limitation all sales, use and property
taxes, including interest and penalties thereon ("Taxes"), for all periods
through but not including the Closing. Purchaser shall be responsible for all
Taxes and for the submission of all filings required by the applicable taxing
authorities from and after the Closing. All taxes of any nature whatsoever,
including without limitation all sales or transfer taxes arising out of or in
connection with the assignment of the Leases or the sale of the Equipment
contemplated herein, shall be solely for the account of Purchaser.
ARTICLE IV
TITLE AND RISK OF LOSS
Title and risk of loss or damage to the Equipment shall pass to
Purchaser at the Closing.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser on and as of the
date hereof and the Closing Date as follows:
5.1 Authority. Seller is a limited partnership duly organized and
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validly existing under the laws of the jurisdiction of its organization with
adequate power to enter into this Agreement and each instrument and document
executed by Seller in connection with the transactions contemplated hereby (the
"Transaction Documents") to which Seller is a party and to consummate the
transactions contemplated hereby and thereby, and is duly qualified to do
business in every jurisdiction in which its failure to so qualify would have a
material adverse effect upon the transactions contemplated by this Agreement and
the Transaction Documents.
5.2 Execution, Delivery and Effect of Documents. Each of this
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Agreement and the Transaction Documents to which Seller is a party has been duly
authorized, executed and delivered by Seller and, assuming their due
authorization, execution and delivery by each of the other parties thereto,
constitutes a valid, legal and binding agreement of Seller enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights.
5.3 Inconsistent Agreements. The entering into and performance of
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this Agreement and each of the Transaction Documents by Seller do not and will
not violate any provision of law, or any rule, regulation, order, decree or
judgment ("Applicable Law") applicable to Seller and do not conflict with any
provision of Seller's organizational documents or result in any breach of, or
constitute a default under, any indenture, mortgage, deed of trust, contract,
agreement or instrument to which Seller is a party or by which it or its assets
may be bound.
5.4 Legal Proceedings. There are no pending or, to the actual
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knowledge of Seller, threatened actions or proceedings to which Seller is a
party, or otherwise affecting Seller or the Transferred Assets, before any court
or public board or body ("Governmental Body"), which if determined adversely
against Seller, either individually or in the aggregate, would adversely affect
the ability of Seller to perform its obligations under, or comply with the terms
of, this Agreement and the Transaction Documents.
5.5 No Consents Required. No consent, approval or other
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authorization of or by any Governmental Authority is required in connection with
the execution, delivery or performance by Seller of, or the consummation by
Seller of the transactions contemplated by, this Agreement and the Transaction
Documents, except that no representation or warranty is made hereby in respect
to the applicability of the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(Pub. L. No.94-435, 90 Stat. 1383 (1976) (the "Hart-Scott-Rodino Act") or the
necessity to make the filings required thereunder to the transactions
contemplated by this Agreement or the Transaction Documents.
5.6 Securities Laws. Seller has not, directly or indirectly,
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offered the Transferred Assets or any interest in the Transferred Assets or any
interest or security (as defined in Section 2(1) of the Securities Act of 1933,
as amended) relating to an interest in the Transferred Assets for sale to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any person in violation of the federal or any
applicable state securities laws, and Seller will not, directly or indirectly,
make any such offer, solicitation or sale in violation of the federal or
applicable state securities laws.
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5.7 No Brokers, Etc. No agent, broker, person or firm acting on
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behalf of Seller or any Owner Trustee or any SPLP, or under the authority of
Seller or any Owner Trustee or any SPLP, is or shall be entitled to any
commission or broker's fee from Purchaser in connection with the transactions
contemplated hereby.
5.8 Operative Documents. Not later than five (5) business days prior
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to the Closing, Seller will furnish or make available to Purchaser a true,
correct and complete copy of each and every operative document delivered to
Seller in connection with the purchase of the Equipment by Seller.
5.9 Good Title, Etc. On and as of the Closing, Seller will convey to
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Purchaser good title to the Equipment, free and clear of all liens and
encumbrances created or arising by reason of the action or inaction of Seller
other than (i) the leasehold estate of each Lessee under each Lease, (ii) any
liens created by any Owner Trustee and SPLP disclosed to Purchaser, and
(iii) liens created by such Lessees under and pursuant to such Leases or
otherwise (collectively, the "Permitted Liens").
5.10 Disclaimer of Other Warranties. EXCEPT AS OTHERWISE EXPRESSLY
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PROVIDED HEREIN, THE SALE OF THE EQUIPMENT IS HEREBY MADE ON AN "AS-IS WHERE-IS"
BASIS. SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED,
WITH RESPECT TO (i) THE EQUIPMENT, INCLUDING, WITHOUT LIMITATION OF THE
FOREGOING, ITS SELECTION, QUALITY, DESIGN, CAPACITY, CONDITION, MERCHANTABILITY
OR ITS FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE AND FREEDOM FROM CLAIMS OF
COPYRIGHT OR PATENT INFRINGEMENT OR ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR NEGLIGENCE, (ii) THE FREEDOM OF THE EQUIPMENT (OR ANY PART
OR PORTION THEREOF) FROM ANY LATENT OR OTHER DEFECT (WHETHER OR NOT
DISCOVERABLE), (iii)THE COMPLIANCE OF ANY OF THE EQUIPMENT (OR ANY PART OR
PORTION THEREOF) WITH ANY APPLICABLE LAWS OR REGULATIONS, (iv) THE
CREDITWORTHINESS OF EACH LESSEE OR ANY OTHER PERSON UNDER THE LEASES AND THE
TRANSACTION DOCUMENTS, (v) THE COLLECTIBILITY OF ANY AMOUNT UNDER THE LEASES AND
ANY OF THE TRANSACTION DOCUMENTS, (vi) THE TAX CHARACTERIZATION OF THE LEASES,
OR (vii) THE DUE AUTHORIZATION, EXECUTION AND DELIVERY BY, OR THE ENFORCEABILITY
AGAINST, ANY PERSON WHO IS OR HAS BEEN A PARTY TO THE LEASES AND ANY OF THE
TRANSACTION DOCUMENTS (WITH THE EXCEPTION OF THE SELLER) AND SELLER HEREBY
DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller on and as of the
date hereof and the Closing Date as follows:
6.1 Authority. Purchaser is a Florida limited partnership duly
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organized and validly existing under the laws of the jurisdiction of its
organization with adequate power to enter into this Agreement and the
Transaction Documents to which Purchaser is a party and to consummate the
transactions contemplated hereby and thereby and is duly qualified to do
business in every jurisdiction in which its failure to so qualify would have a
material adverse effect upon the transactions contemplated by this Agreement and
the Transaction Documents.
4
<PAGE>
6.2 Execution, Delivery and Effect of Documents. Each of this
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Agreement and the Transaction Documents to which Purchaser is a party has been
duly authorized, executed and delivered by Purchaser and, assuming their due
authorization, execution and delivery by each of the other parties thereto,
constitutes a valid, legal and binding agreement of Purchaser enforceable in
accordance with its terms except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights.
6.3 Inconsistent Agreements. The entering into and performance of
-----------------------
this Agreement and each of the Transaction Documents by Purchaser do not and
will not violate any provision of Applicable Law applicable to Purchaser and do
not conflict with any provision of Purchaser's organizational documents or
result in any breach of, or constitute a default under, any indenture, mortgage,
deed of trust, contract, agreement or instrument to which Purchaser is a party
or by which it or its assets may be bound.
6.4 Legal Proceedings. There are no pending or, to the actual
-----------------
knowledge of Purchaser, threatened actions or proceedings to which Purchaser is
a party, or otherwise affecting Purchaser, before any Governmental Body, which
if determined adversely against Purchaser, either individually or in the
aggregate, would adversely affect the ability of Purchaser to perform its
obligations under, or comply with the terms of, this Agreement and the
Transaction Documents.
6.5 No Consents Required. No consent, approval or other
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authorization of or by any Governmental Authority is required in connection with
the execution, delivery or performance by Purchaser of, or the consummation by
Purchaser of the transactions contemplated by, this Agreement and the
Transaction Documents. Neither Seller nor Purchaser is required to make the
filings required by the Hart-Scott-Rodino Act and such statute is not applicable
to the transactions contemplated by this Agreement or the Transaction Documents.
6.6 No Brokers, Etc. No agent, broker, person or firm acting on
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behalf of Purchaser or under the authority of Purchaser is or shall be entitled
to any commission or broker's fees in connection with the transactions
contemplated hereby.
6.7 Securities Laws. Purchaser is acquiring the Transferred Assets
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for its own account for investment and not with a view to, or for sale in
connection with, any distribution thereof except as otherwise permitted by Rule
144A or another exemption from registration under the Securities Act of 1933, as
amended. Neither it nor anyone authorized to act on its behalf has directly or
indirectly offered any interest in the Transferred Assets for sale to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any person, and it will not directly or
indirectly make any such offer, solicitation or sale in violation of the
Securities Act of 1933, as amended, or applicable state laws.
6.8 ERISA. No part of the funds to be used by Purchaser to acquire
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the Transferred Assets under this Agreement constitutes assets of an employee
benefit plan within the meaning of Section 3(3) of ERISA or any trust created
under any such plan, or assets of a plan as defined in Section 4975(e)(1) of the
Code, or any trust created under any such plan. Purchaser will take no action
with respect to its participation in the transactions contemplated hereby which
would cause such participation to be a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code or any applicable regulation
under such sections.
ARTICLE VII
5
<PAGE>
CLOSING; CONDITIONS PRECEDENT; SURVIVAL
7.1 Closing. The closing of the transactions contemplated hereby
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shall take place at the offices of Seller or Seller's counsel or such other
place as determined by Seller on September 30, 1996 or such later date which
shall not be later than October 15, 1996, as the parties hereto shall mutually
agree (the "Closing Date"). If the Closing has not occurred by the Closing Date
for any reason, this Agreement shall terminate.
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<PAGE>
7.2 Conditions Precedent.
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(a) The obligations of Seller hereunder are subject to satisfaction
of the following conditions at or prior to the Closing:
(i) Purchaser shall have performed all of its obligations specified
herein, to the reasonable satisfaction of Seller.
(ii) Each Lessee shall have consented to the sale of the Equipment
and the transfer of the Transferred Assets to Purchaser.
(iii) The representations and warranties of Purchaser contained in
this Agreement shall be true and correct on and as of the Closing Date.
(iv) Purchaser shall have delivered to Seller documentation
reasonably supporting the validity and enforceability of Purchaser's obligations
under this Agreement, which may include, without limitation, a clerk's or
secretary's or assistant clerk's or assistant secretary's certificate regarding
incumbency and authorizing resolutions and an opinion of counsel reasonably
acceptable to Seller.
(v) Purchaser shall have delivered to Seller a resale certificate
for each taxing jurisdiction in which the Equipment is located.
(vi) No action or proceeding shall have been instituted nor shall
any action or proceeding be threatened before any Governmental Body at the time
of the Closing to set aside, restrain, enjoin or prevent the execution and
delivery of this Agreement or any Transaction Document or the completion and
consummation of the transactions contemplated hereby and thereby.
(vii) Seller shall have received such other documents, instruments,
certificates and assurances as are reasonably requested by Seller or Seller's
counsel.
(viii) Seller shall have received the Purchase Price in accordance
with Article II of this Agreement.
(b) Purchaser's obligations hereunder are subject to the
satisfaction of the following conditions at or prior to the Closing:
(i) Seller shall have executed and delivered to Purchaser and
Purchaser shall have received an Assignment and Assumption Agreement, Bill of
Sale and Assignment of Interests in substantially the form of Exhibit A hereto.
(ii) Seller shall have delivered or made available to Purchaser an
originally duly executed copy of each Lease, and a certified true and complete
copy of each Master Lease, if applicable, all as may have been amended from time
to time up to and including the Closing Date.
(iii) Seller shall have delivered to Purchaser documentation
reasonably supporting the validity and enforceability of Seller's obligations
under this Agreement, which may include, without limitation a clerk's or
assistant clerk's certificate regarding incumbency and authorizing resolutions
and an opinion of counsel reasonably acceptable to Purchaser.
7
<PAGE>
(iv) Seller shall have delivered appropriate precautionary UCC-1
Financing Statements against each Lessee, assigned to Purchaser and
terminations, as requested, with respect thereto, except with respect to Trust
Equipment and SPLP Equipment.
(v) Seller shall have delivered to Purchaser a Release of
Lien/UCC-3 Termination Statements (if applicable) executed by each institution
(a "Lender") which financed the acquisition or purchase of the Equipment by
Seller except with respect to liens constituting Permitted Liens.
(vi) Seller shall have provided or made available to Purchaser with
original, or certified copies of, invoices or other appropriate purchase
documentation establishing Seller's title in and to the Equipment, or that of
the Owner Trustee or SPLP, as appropriate.
(vii) Purchaser shall have received all documents and assurances,
including evidence of insurance coverage satisfactory to it, as required by each
Lease.
(viii) Seller shall have delivered to Purchaser a notice and
acknowledgment of assignment in form and substance reasonably acceptable to
Purchaser executed by Lessees leasing Equipment having an original equipment
cost equal to at least 25% of the original equipment cost of all of the
Equipment (provided that Equipment held in Equipment Trusts or SPLPs and for
which no assignment of lease is being made shall count toward such percentage).
(ix) Seller shall have performed all of its obligations specified
herein, to the reasonable satisfaction of Purchaser.
(x) The representations and warranties of Seller contained in this
Agreement shall be true and correct on and as of the Closing.
(xi) Purchaser shall have received such other documents,
instruments, certificates and assurances from Seller as are reasonably requested
by Purchaser or Purchaser's counsel.
7.3 Survival; Recourse. PURCHASER ACKNOWLEDGES THAT THE PRINCIPAL
------------------
PURPOSE OF SELLER IN SELLING THE TRANSFERRED ASSETS IS TO LIQUIDATE SUCH ASSETS
AND DISTRIBUTE THE CASH TO ITS INVESTORS. THEREAFTER, SELLER AND ITS GENERAL
PARTNER INTEND TO TERMINATE THEIR RESPECTIVE BUSINESSES AND WINDUP OR DISSOLVE
THEIR AFFAIRS. ACCORDINGLY, PURCHASER ACKNOWLEDGES AND AGREES THAT ALL OF
SELLER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS CONTAINED HEREIN
SHALL TERMINATE AND BE OF NO FURTHER FORCE OR EFFECT AND SHALL NOT SURVIVE ON
AND AFTER THE CLOSING. IN ADDITION, PURCHASER'S SOLE AND EXCLUSIVE REMEDY FOR A
BREACH BY SELLER OF ANY REPRESENTATION OR WARRANTY CONTAINED HEREIN OR IN ANY
TRANSACTION DOCUMENT OR A FAILURE TO PERFORM ANY OBLIGATION CONTAINED HEREIN OR
IN ANY TRANSACTION DOCUMENT SHALL BE TO NOT CLOSE THE TRANSACTIONS CONTEMPLATED
HEREBY. ACCORDINGLY, NEITHER SELLER NOR SELLER'S GENERAL PARTNER NOR ANY OF
THEIR PARTNERS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, AND
ATTORNEYS, TOGETHER WITH THEIR PERSONAL REPRESENTATIVES, HEIRS, SUCCESSORS AND
ASSIGNS AND THE AFFILIATES OF ANY OF THE FOREGOING (THE "INDIRECT PARTIES")
SHALL, AT ANY TIME, HAVE ANY PERSONAL LIABILITY FOR ANY OBLIGATIONS HEREUNDER.
IN FURTHERANCE OF THE FOREGOING, PURCHASER HEREBY AGREES NOT TO SEEK A PERSONAL
JUDGMENT AGAINST SELLER OR SELLER'S GENERAL PARTNER OR ANY OF THE INDIRECT
PARTIES AT ANY TIME,
8
<PAGE>
WHETHER BEFORE OR AFTER THE CLOSING OR ANY SUCH WINDING UP OR DISSOLUTION OF
SELLER OR SELLER'S GENERAL PARTNER AND NOT TO SEEK TO OVERTURN OR RESCIND ANY
SUCH WINDING UP OR DISSOLUTION IN ORDER TO ASSERT ANY PERSONAL LIABILITY AGAINST
SELLER OR SELLER'S GENERAL PARTNER OR ANY OF THE INDIRECT PARTIES. PURCHASER
ACKNOWLEDGES AND AGREES THAT IT FULLY UNDERSTANDS THE FOREGOING LIMITATIONS ON
RECOURSE, THAT IT PERFORMED ITS DUE DILIGENCE IN RESPECT OF THE TRANSFERRED
ASSETS WITH SUCH LIMITATION IN MIND AND THAT THE PURCHASE PRICE REFLECTS THE
RISKS ASSOCIATED WITH SUCH LIMITATION.
ARTICLE VIII
DELIVERY
At the Closing, concurrently with Seller's performance of the
conditions set forth in Article VII, each of Purchaser shall accept delivery of
the Equipment and Seller shall acknowledge receipt of the Purchase Price by
executing and delivering to the other party a cross receipt in the form of
Exhibit B hereto.
ARTICLE IX
RECORDS
Contemporaneous with the Closing hereunder, Seller shall provide or
make available to Purchaser or its designee originals or copies of all log
books, service manuals, maintenance records and other similar documents in its
possession relating to the Equipment, including such documentation stored or
imaged on computer media.
ARTICLE X
INDEMNITY
10.01 Indemnity. Seller hereby agrees to indemnify, defend and hold
----------
Purchaser, together with its officers, directors, shareholders, partners,
employees, agents, and other similar parties, together with their successors and
assigns ("Indemnities") harmless from and against any and all claims, losses,
costs, damages, liabilities, injuries or expenses (including court costs and
reasonable attorneys' fees) wheresoever and howsoever arising which Purchaser
may incur by reason of any breach, violation or untruth of any of the terms,
conditions, representations, warranties, covenants and agreements set forth
herein or in any other Transaction Document to which Seller is a party, except
any of the foregoing resulting from Purchaser's gross negligence or willful
misconduct. Purchaser hereby agrees to indemnify, defend and hold Seller and
each Owner Trustee and each SPLP, their Indemnities and Equis Financial Group
("EFG") and its and Seller's Affiliates, harmless from and against any and all
claims, losses, costs, damages, liabilities, injuries or expenses (including
court costs and reasonable attorneys' fees) wheresoever and howsoever arising
which any of the foregoing parties may incur by reason of (i) any breach,
violation or untruth of any of the terms, conditions, representations,
warranties, covenants and agreements set forth herein or in any other
Transaction Document to which Purchaser is a party, or (ii) any interference
with the contractual or other relationships between any of the foregoing parties
and the Lessees under and pursuant to other leases between any of the foregoing
parties and such Lessees
9
<PAGE>
relating to other equipment, whether in the context of returning, re-leasing,
purchasing or otherwise; except any of the foregoing resulting from Seller's
gross negligence or willful misconduct, provided, however, that notwithstanding
the foregoing, Purchaser shall have the right at all times to strictly enforce
its legal rights and remedies under the Leases, irrespective of any purely
coincidental impact on such relationship. EFG and its and Seller's Affiliates
shall be third party beneficiaries of this Article X. As used herein,
"Affiliates" shall mean, with respect to any Person, any other Person which is
directly or indirectly controlling, controlled by or under common control with
such Person. The term "control" means the possession, directly or indirectly, of
the power, whether or not exercised, to direct or cause the direction of the
management or policies of any Person, whether through ownership of voting
securities, by contract or otherwise.
10.02 Indemnification Procedure.
-------------------------
(i) The party seeking indemnification under this Article X
(the "Indemnified Party") shall, promptly after the Indemnified Party has notice
or knowledge of any proposed settlement, agreement, claim, action or proceeding
giving rise to such claim for indemnification, give to the party obliged to
provide indemnification hereunder (the "Indemnitor") a notice (a "Claim Notice")
describing in reasonable detail the facts giving rise to its claim for
indemnification hereunder, and shall include in such Claim Notice (if then
known) the amount or method of computation of the amount of the claim, and a
reference to the clause of Section 10.01 hereof upon which such claim is based;
provided, however, that the failure to so notify the Indemnitor shall not affect
the indemnity made hereunder or relieve the Indemnitor of its obligation to
indemnify such Indemnified Party, except and only to the extent that such
Indemnitor shall be unable to exercise its rights under clause (ii) below or
shall otherwise be materially prejudiced by such failure.
(ii) The Indemnitor, upon presentation of a Claim Notice,
shall retain counsel reasonably satisfactory to the Indemnified Party to
participate in and, to the extent the Indemnitor desires, to assume and control
the defense of any matter giving rise to a claim for indemnification, and shall
pay the fees and disbursements of such counsel relating to such claim for
indemnification. Any Indemnified Party shall be entitled, at its own expense, to
participate in any action, suit, claim or proceeding, the defense of which has
been assumed by the Indemnitor.
(iii) No Indemnified Party shall enter into any settlement or
other compromise with respect to any action, suit, claim or proceeding without
the prior written consent of the Indemnitor, which consent will not be
unreasonably withheld or delayed unless such Indemnified Party waives its right
to be indemnified under this Section. Without the prior written consent of the
Indemnified Party, the Indemnitor shall not effect any settlement of any claim
or pending or threatened proceeding in respect of which the Indemnified Party is
a party and indemnity could have been sought hereunder by the Indemnified Party,
unless such settlement includes an unconditional release of the Indemnified
Party from all liability or claims that are the subject matter of such
proceeding. Provided that an Indemnified Party has complied with this
Section 10.02 in all material respects, if such Indemnified Party shall be
required under any order, writ or judgment of any applicable court or
administrative agency or authority to pay any amounts subject to the indemnity
set forth herein, the Indemnified Party shall be entitled to a prompt
reimbursement of such amount from the Indemnitor, and the provisions of this
Section 10.02 shall otherwise apply.
10.03 Tax Gross Up. With respect to any indemnity payment made
------------
pursuant to this Article, such indemnity payment shall include any amount
necessary to hold the Indemnified Party harmless on an after-tax basis from all
federal and state income taxes required to be paid by the Indemnified Party with
respect to such indemnity payment; provided, however, that if the Indemnified
Party realizes a tax
10
<PAGE>
benefit by reason of such indemnity payment, the Indemnified Party shall pay the
Indemnitor an amount equal to the net value to the Indemnified Party of such tax
benefit when, and to the extent, realized (such payments by the Indemnified
Party not to exceed in the aggregate the amount of related indemnity paid by the
Indemnitor), but not before the Indemnitor shall have made all indemnity
payments to or on behalf of the Indemnified Party required pursuant to this
Article X; provided, further, however, that if the Indemnified Party loses such
tax benefit subsequent to any payment to the Indemnitor with respect thereto,
the Indemnitor shall indemnify the Indemnified Party with respect to such loss
pursuant to the provisions of Section 10.02 hereof.
11
<PAGE>
ARTICLE XI
RESERVED RIGHTS; MISTAKEN PAYMENTS
11.1 Reserved Rights, Etc. If Purchaser shall collect any amount
---------------------
under any Lease or any Transaction Document or otherwise relating to the
Reserved Rights it shall, upon it being known to Purchaser to be an amount to
which Seller or an Owner Trustee or SPLP is entitled, promptly remit such amount
to Seller or the appropriate Owner Trustee or SPLP, as appropriate, and, until
so delivered, any such amount collected by Purchaser shall be held in trust by
Purchaser for the benefit of Seller or the Owner Trustee or SPLP, as applicable.
Purchaser agrees that, in matters relating to the Reserved Rights, it shall act
in a manner consistent with the rights of Seller as the predecessor owner and
lessor of the Equipment or as the predecessor beneficial owner under the
Equipment Trust(s) or SPLPs, and the Owner Trustee and the SPLP. If Seller
shall receive any amount under any Lease or any Transaction Document or
otherwise relating to the period from and after the Closing (other than any
amounts in respect of Reserved Rights and other than rent attributable to
periods prior to the Closing), it shall promptly remit such amount to Purchaser
and, until so delivered, any such amount collected by Seller shall be held in
trust by Seller for the benefit of Purchaser. Seller agrees that, in matters
relating to amounts received by it relating to any Lease or Transaction Document
and pertaining to periods subsequent to the Closing (other than any amounts in
respect of Reserved Rights and other than rent attributable to periods prior to
the Closing), it shall act in a manner consistent with the rights of Purchaser
herein.
11.2 Mistaken Payments. Purchaser acknowledges that many of the
-----------------
Lessees will continue to lease equipment not being sold to Purchaser hereunder
from one or more Affiliates of Seller or EFG. It is likely that,
notwithstanding the efforts of Seller and Purchaser, certain of such Lessees may
from time to time mistakenly make a payment to Purchaser due to Seller under one
or more such other leases. Purchaser agrees to promptly remit any such amount
to Seller and, until so delivered, hold such payment in trust for Seller.
ARTICLE XII
CONFIDENTIALITY
Purchaser covenants and agrees to keep the terms of this Agreement and
the other Transaction Documents confidential and agrees not to disclose the same
to any person without the prior written consent of Seller or Seller's
Affiliates, provided that Purchaser shall have the right to disclose the same
(i) to its directors, officers, employees, auditors or counsel to
whom it is necessary to disclose such information, each of which shall be
informed of the confidential nature of the information;
(ii) to Fleet Bank, N.A. in connection with its financing of the
purchase of the Transferred Assets by Purchaser;
(iii) in any statement or testimony pursuant to a subpoena or order
of any Governmental Body or as otherwise required by law (provided that
Purchaser shall use its best efforts to give Seller prior written notice of such
intended disclosure unless such notice shall be prohibited by law); and
12
<PAGE>
(iv) to the extent required in its financial statements.
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses. Whether or not the transactions contemplated hereby
--------
shall be consummated, each of Seller and Purchaser shall be obligated in respect
of all of its own costs and expenses, including reasonable attorneys' fees, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the Transaction Documents.
13.2 Notices. Any communication to be given hereunder shall be
-------
given in writing and shall be sufficiently given when mailed prepaid, first
class, registered or certified mail return receipt requested or sent by
facsimile transmission to the party to which said notice is to be given at its
address in the preamble hereof unless such address is changed by notice given to
the other party. Notices to Seller shall be sent to the attention of Gary D.
Engle, and notices to Purchaser shall be sent to the attention of Roland St.
Louis, President, RSL Holdings, Inc., General Partner.
13.3 Successors and Assigns. Neither party to this Agreement may
----------------------
assign its rights or obligations hereunder to any person or entity other than an
Affiliate, except that Purchaser shall have the right to collaterally assign its
rights hereunder to an institution financing Purchaser's obligations hereunder.
This Agreement shall inure to the benefit of and be binding upon each of the
parties hereto and their respective successors and permitted assigns.
13.4 Headings and Gender. Section headings are not to be considered
-------------------
part of this Agreement. They are included solely for convenience, and are not
intended to be full or accurate descriptions of the contents thereof. As used
in this Agreement, the masculine, feminine or neuter gender and the singular and
plural number shall each be deemed to include the others whenever the context so
indicates.
13.5 Documents. All schedules, documents or exhibits referred to in
---------
this Agreement are integral parts of this Agreement and are incorporated herein
by this reference.
13.6 Entire Agreement. This Agreement and the other Transaction
----------------
Documents and all other documents and instruments referred to herein and
appended hereto as exhibits and/or schedules constitute the entire Agreement
between the parties and supersede and cancel all prior representations,
negotiations, undertakings, letters, acceptances, agreements, understandings,
contracts and communications, whether verbal or written, between the parties
hereto or their agents, with respect to or in connection with the subject matter
of this Agreement and no agreement or understanding varying the terms and
conditions hereof shall be binding on either party hereto unless in writing and
duly signed by authorized representatives of both parties.
13.7 Further Assurances. The parties hereto agree to execute and
------------------
deliver, or cause to be executed and delivered, such further instruments or
documents and take such other action as may be reasonably required effectively
to carry out the transactions contemplated herein.
13.8 Laws. This Agreement shall be governed by and interpreted in
----
accordance with the internal laws of The Commonwealth of Massachusetts.
13
<PAGE>
13.9 Jurisdiction and Venue. The parties hereto hereby irrevocably
----------------------
submit and consent to the non-exclusive personal jurisdiction of the appropriate
state or federal court located in Boston, Massachusetts, in any action or
proceeding relating in any way to this Agreement or the other Transaction
Documents. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
venue in any of such courts, and any claim that any such action or proceeding
has been brought in an inconvenient forum.
13.10 Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts shall together constitute but one
and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this instrument.
SELLER:
AMERICAN INCOME 4 LIMITED
PARTNERSHIP
Witness:
By: AFG Leasing Associates II,
- ------------------------- its sole general partner
By: AFG Leasing Incorporated,
a general partner
By: /s/ James F. Livesey
------------------------------
Its: Vice President
------------------------------
PURCHASER:
RSL FINANCE LIMITED PARTNERSHIP II
By: RSL Holdings, Inc., its sole general
partner
By: /s/ Roland St. Louis
- ------------------------- ------------------------------
Its: President
------------------------------
15
<PAGE>
SCHEDULES: A - Description of Transferred Assets, Etc.
B - Purchase Price Breakdown
EXHIBITS: A - Form of Assignment and Assumption, Bill of Sale and Assignment
of Interests
B - Form of Cross Receipt
16
<PAGE>
AMERICAN INCOME 4 LIMITED PARTNERSHIP
SCHEDULE A
<TABLE>
<CAPTION>
MASTER RENTAL OWNERSHIP
LEASE NO. SCHEDULE PERCENTAGE
-------------------------------------------------------------------
<S> <C> <C> <C>
EQUIPMENT
Lessee Name:
Economics Laboratory, Inc. 8509MNG204 C-1 100.0000000%
BENEFICIAL INTERESTS
Trust Name:
AMCOMP AI-4/AI-5 Trust, Investors Asset 05/10/88 ARL1RN2 30.0000000%
Holding Corp., Trustee [Comair, Inc., lessee]
AMCOMP 86-1 Trust, Investors Asset Holding A-1 A-1RN-1 19.3000000%
Corp., as Trustee [Northwest Airlines, Inc., lessee]
AFG/UTC Trust, Investors Asset Holding Corp., as 8409CTG172 A-6RN1 14.8041700%
Trustee [United Technologies Corporation, lessee]
AFG/UTC Trust, Investors Asset Holding Corp., as 8409CTG172 A-7RN1 14.8041700%
Trustee [United Technologies Corporation, lessee]
<CAPTION>
ASSET DESCRIPTION
------------------------
<S> <C>
EQUIPMENT
Lessee Name:
Economics Laboratory, Inc. GREAT DANES
BENEFICIAL INTERESTS
Trust Name:
AMCOMP AI-4/AI-5 Trust, Investors Asset SAAB SF340A
Holding Corp., Trustee [Comair, Inc., lessee]
AMCOMP 86-1 Trust, Investors Asset Holding TWO DC-10 AIRCRAFT
Corp., as Trustee [Northwest Airlines, Inc., lessee] N133JC & N144JC
AFG/UTC Trust, Investors Asset Holding Corp., as FLIGHT SIMULATOR
Trustee [United Technologies Corporation, lessee]
AFG/UTC Trust, Investors Asset Holding Corp., as FLIGHT SIMULATOR
Trustee [United Technologies Corporation, lessee]
</TABLE>
<PAGE>
AMERICAN INCOME 4 LIMITED PARTNERSHIP
SCHEDULE B
<TABLE>
<CAPTION>
================================================================================
ADJUSTED PURCHASE PRICE BREAKDOWN
<S> <C>
PURCHASE PRICE $35,000,000.00
PLUS: RECEIVABLES PURCHASED $344,961.62
LESS: ADJUSTMENTS ($2,003,128.27)
==============
ADJUSTED PURCHASE PRICE $33,341,833.35
================================================================================
PROGRAM'S SHARE OF TOTAL PROCEEDS FROM SALE $2,906,492.41
</TABLE>
<PAGE>
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT,
BILL OF SALE AND ASSIGNMENT OF BENEFICIAL INTERESTS
THIS ASSIGNMENT AND ASSUMPTION, BILL OF SALE AND ASSIGNMENT OF
BENEFICIAL INTERESTS (this "AGREEMENT") dated as of September 30, 1996, by and
between the undersigned, a Massachusetts limited partnership having its
principal place of business at 98 North Washington Street, Boston, Massachusetts
02114 ("Seller"), and RSL Finance Limited Partnership II, a Florida limited
partnership, having a principal place of business at 2300 Miami Center, 201
South Biscayne Boulevard, Miami, FL 33131-4329 ("Purchaser"). Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
them in that certain Purchase and Sale Agreement between Seller and Purchaser
dated as of September 30, 1996 (the "P&S Agreement").
1. ASSIGNMENT OF LEASE.
Seller hereby sells, assigns, transfers and conveys to Purchaser all
of Seller's right, title, interest, duties and obligations (whether direct or
indirect, known or unknown, contingent or otherwise) in and to each Lease as set
forth on Schedule A hereto between Seller, as lessor and each lessee described
----------
therein (in each case a "Lessee"), with respect to the leasing by each Lessee of
certain equipment (as further described in each Lease, individually and
collectively, the "Equipment"), except that Seller hereby reserves and does not
transfer its right, title and interest in and to the Reserved Rights.
2. SALE OF THE EQUIPMENT.
Seller hereby sells and transfers to Purchaser all of its right, title
and interest in and to the Equipment, together with all warranties, express or
implied, received from the manufacturer or vendor thereof. Seller hereby
represents and warrants to Purchaser that subject to Section 3 hereof, Seller is
conveying good title to the Equipment, free and clear of all liens and
encumbrances other than Permitted Liens.
3. ASSIGNMENT OF BENEFICIAL INTERESTS.
Seller hereby sells, assigns, transfers and conveys to Purchaser all
of Seller's right, title, interest, duties and obligations in and to the
Beneficial Interests owned by Seller in each Equipment Trust and SPLP holding
title to the Equipment, all as further set forth on Schedule A hereto. Seller
-----------------
hereby represents and warrants to Purchaser that each such Beneficial Interest
is free and clear of all liens and encumbrances except Permitted Liens.
4. TAXES
All taxes in any way arising out of this transaction, including
without limitation transfer taxes arising out of the assignment of each Lease,
the assignment of the Beneficial Interests, and the sale of the Equipment shall
be solely for the account of the Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
19
<PAGE>
(a) Seller, in order to induce Purchaser to enter into this
Agreement, hereby ratifies and confirms each of its representations and
warranties as contained in the P&S Agreement, which provisions are incorporated
herein by reference.
(b) Seller has delivered or made available to Purchaser a complete
and correct original counterpart of each Lease, and no other agreements,
instruments or documents exist between Seller or each Owner Trustee or each SPLP
and each Lessee relating to the Equipment and the Lease that are in force and
effect. Each Lease constitutes the entire agreement between the Lessee and
Seller with respect to the Equipment and no other assignments, amendments,
modifications, waivers or consents have been entered into with respect to each
Lease. Each Lease is in full force and effect and, to Seller's actual knowledge,
(i) no event of default has occurred and is continuing thereunder; (ii) the
rents payable under each Lease are not subject to any defenses, setoffs, or
counterclaims; and (iii) Seller has not made any assignment of any Lease except
to a Lender.
(c) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE SALE OF THE
EQUIPMENT IS HEREBY MADE ON AN "AS-IS WHERE-IS" BASIS. SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, WITH RESPECT TO (i) THE
EQUIPMENT, INCLUDING, WITHOUT LIMITATION OF THE FOREGOING, ITS SELECTION,
QUALITY, DESIGN, CAPACITY, CONDITION, MERCHANTABILITY OR ITS FITNESS FOR USE OR
FOR ANY PARTICULAR PURPOSE AND FREEDOM FROM CLAIMS OF COPYRIGHT OR PATENT
INFRINGEMENT OR ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
NEGLIGENCE, (ii) THE FREEDOM OF THE EQUIPMENT (OR ANY PART OR PORTION THEREOF)
FROM ANY LATENT OR OTHER DEFECT (WHETHER OR NOT DISCOVERABLE), (iii)THE
COMPLIANCE OF ANY OF THE EQUIPMENT (OR ANY PART OR PORTION THEREOF) WITH ANY
APPLICABLE LAWS OR REGULATIONS, (iv) THE CREDITWORTHINESS OF EACH LESSEE OR ANY
OTHER PERSON UNDER THE LEASES OR THE TRANSACTION DOCUMENTS, (v) THE
COLLECTIBILITY OF ANY AMOUNT UNDER THE LEASES OR ANY OF THE TRANSACTION
DOCUMENTS, (vi) THE TAX CHARACTERIZATION OF THE LEASES, OR (vii) THE DUE
AUTHORIZATION, EXECUTION AND DELIVERY BY, OR THE ENFORCEABILITY AGAINST, ANY
PERSON WHO IS OR HAS BEEN A PARTY TO THE LEASES OR ANY OF THE TRANSACTION
DOCUMENTS (WITH THE EXCEPTION OF THE SELLER) AND SELLER HEREBY DISCLAIMS ALL
SUCH REPRESENTATIONS AND WARRANTIES.
(d) PURCHASER ACKNOWLEDGES THAT THE PRINCIPAL PURPOSE OF SELLER IN
SELLING THE TRANSFERRED ASSETS IS TO LIQUIDATE SUCH ASSETS AND DISTRIBUTE THE
CASH TO ITS INVESTORS. THEREAFTER, SELLER AND ITS GENERAL PARTNER INTEND TO
TERMINATE THEIR RESPECTIVE BUSINESSES AND WINDUP OR DISSOLVE THEIR AFFAIRS.
ACCORDINGLY, PURCHASER ACKNOWLEDGES AND AGREES THAT ALL OF SELLER'S
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS CONTAINED HEREIN AND IN
THE P&S AGREEMENT SHALL TERMINATE AND BE OF NO FURTHER FORCE OR EFFECT AND SHALL
NOT SURVIVE ON AND AFTER THE CLOSING. ACCORDINGLY, NEITHER SELLER NOR SELLER'S
GENERAL PARTNER NOR ANY OF THEIR PARTNERS, OFFICERS, DIRECTORS, SHAREHOLDERS,
INVESTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, TOGETHER WITH THEIR PERSONAL
REPRESENTATIVES, HEIRS, SUCCESSORS AND ASSIGNS AND THE AFFILIATES OF ANY OF THE
FOREGOING (THE "INDIRECT PARTIES") SHALL, AT ANY TIME, HAVE ANY PERSONAL
LIABILITY FOR ANY OBLIGATIONS HEREUNDER. IN FURTHERANCE OF THE FOREGOING,
PURCHASER HEREBY AGREES NOT TO SEEK A PERSONAL JUDGMENT AGAINST SELLER OR
SELLER'S GENERAL PARTNER OR ANY OF THE INDIRECT PARTIES AT ANY TIME, AND NOT TO
SEEK
20
<PAGE>
TO OVERTURN OR RESCIND ANY SUCH WINDING UP OR DISSOLUTION IN ORDER TO ASSERT ANY
PERSONAL LIABILITY AGAINST SELLER OR SELLER'S GENERAL PARTNER OR ANY OF THE
INDIRECT PARTIES. PURCHASER ACKNOWLEDGES AND AGREES THAT IT FULLY UNDERSTANDS
THE FOREGOING LIMITATIONS ON RECOURSE, THAT IT PERFORMED ITS DUE DILIGENCE IN
RESPECT OF THE TRANSFERRED ASSETS WITH SUCH LIMITATION IN MIND AND THAT THE
PURCHASE PRICE REFLECTS THE RISKS ASSOCIATED WITH SUCH LIMITATION.
6. REPRESENTATIONS AND WARRANTIES.
Each of Purchaser, in order to induce Seller to enter into this
Agreement, and Seller, in order to induce Purchaser to enter into this
Agreement, hereby ratifies and confirms each of its respective representations
and warranties as contained in the P&S Agreement, which provisions are
incorporated herein by reference.
7. ASSUMPTION OF OBLIGATIONS, ETC.
Purchaser hereby accepts the foregoing sale, assignment, transfer and
conveyance of all of Seller's right, title and interest, duties and obligations
under each Lease and each Beneficial Interest assigned to Purchaser hereby, and
agrees to assume and be bound by all the terms of, and to undertake all of the
obligations of Seller contained in each Lease, including the covenant of quiet
enjoyment contained therein, and in each Equipment Trust and SPLP and to accept
the status of a substitute beneficiary of each Equipment Trust and substitute
limited partner in each SPLP. Purchaser (i) adopts and confirms the powers of
attorney, if any, granted by the agreements of limited partnership and trust
agreements, to the general partner and Owner Trustee, respectively, of such
entities, (ii) agrees to amendments to the organizational documents of the SPLPs
and the Equipment Trusts naming Purchaser as a substitute or additional limited
partner or beneficiary, as applicable, with the capital contribution as so
required, and (iii) confirms the aforesaid power of attorney may be exercised by
the general partner or Owner Trustee in the name of and on behalf of Purchaser
to accomplish the foregoing.
21
<PAGE>
8. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the internal laws of The Commonwealth of Massachusetts.
9. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of
which, taken together, shall constitute one and the same instruments.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
this instrument.
<TABLE>
<CAPTION>
<S> <C>
AMERICAN INCOME 4 LIMITED PARTNERSHIP RSL FINANCE LIMITED PARTNERSHIP II
By: AFG Leasing Associates II, By: RSL Holdings, Inc., its sole general partner
a Massachusetts general parternship
and the General Partner of the
Registrant.
By: AFG Leasing Incorporated,
a Massachusetts corporation and
general partner in such general
partnership.
By: /s/ James F. Livesey By: /s/ Roland St. Louis
------------------------------ -----------------------------
Its: Vice President Its: President
------------------------------ -----------------------------
</TABLE>
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<PAGE>
EXHIBIT B
Cross Receipt
Reference is hereby made to that certain Purchase and Sale Agreement
dated as of September 30, 1996 (the "P&S Agreement") between the person
designated as "Seller" below and RSL Finance Limited Partnership II, as
purchaser. Purchaser hereby accepts delivery of the Equipment (as defined in the
P&S Agreement) as more fully described on Exhibit A attached hereto and Seller
acknowledges receipt of the Purchase Price (as defined in the P&S Agreement) all
on and as of the date set forth below.
RSL FINANCE LIMITED PARTNERSHIP II
By: RSL Holdings, Inc., its sole
general partner
Dated: September 30, 1996 By: /s/ Roland St. Louis
------------------ ----------------------------
Its: President
----------------------------
AMERICAN INCOME 4 LIMITED PARTNERSHIP
By: AFG Leasing Associates II,
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/ James F. Livesey
----------------------------
Its: Vice President
----------------------------
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