<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
AMERICAN INCOME PARTNERS III-C
LIMITED PARTNERSHIP
(NAME OF SUBJECT COMPANY)
ATLANTIC ACQUISITION LIMITED PARTNERSHIP
(BIDDER)
UNITS REPRESENTING LIMITED PARTNERSHIP INTERESTS
(TITLE OF CLASS OF SECURITIES)
NONE
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
COPY TO:
GARY D. ENGLE, PRESIDENT THOMAS F. GLOSTER III, ESQ.
AAL, INC. PEABODY & BROWN
98 NORTH WASHINGTON STREET 101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02114 BOSTON, MASSACHUSETTS 02110
(617) 854-5800 (617) 345-1141
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
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H
<PAGE>
CUSIP No. None
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1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person
Gary D. Engle
S.S. No. ###-##-####
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2. Check the Appropriate Box if a Member of a Group
(a)[_]
(b)[X]
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3. SEC Use Only
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4. Source of Funds
PF
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item
2(e) or 2(f)
[_]
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6. Citizenship or Place of Organization
U.S.A.
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7. Aggregate Amount Beneficially Owned by Reporting Person
None
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
[_]
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9. Percent of Class Represented by Amount in Row (7)
N/A
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10. Type of Reporting Person
IN
2
<PAGE>
CUSIP No. None
- --------------------------------------------------------------------------------
1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person
Geoffrey A. MacDonald
S.S. No. ###-##-####
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2. Check the Appropriate Box if a Member of a Group
(a)[_]
(b)[X]
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3. SEC Use Only
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4. Source of Funds
PF
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item
2(e) or 2(f)
[_]
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6. Citizenship or Place of Organization
U.S.A.
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Reporting Person
None
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
[_]
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9. Percent of Class Represented by Amount in Row (7)
N/A
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10. Type of Reporting Person
IN
3
<PAGE>
CUSIP No. None
- --------------------------------------------------------------------------------
1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person
James A. Coyne
S.S. No. ###-##-####
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2. Check the Appropriate Box if a Member of a Group
(a)[_]
(b)[X]
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3. SEC Use Only
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4. Source of Funds
PF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item
2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
U.S.A.
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Reporting Person
None
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
[_]
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9. Percent of Class Represented by Amount in Row (7)
N/A
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10. Type of Reporting Person
IN
4
<PAGE>
INTRODUCTION
This Amendment No. 2 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed by Atlantic Acquisition Limited Partnership, a
Massachusetts limited partnership (the "Purchaser"), relating to an offer by
the Purchaser to purchase up to 270,946 (as changed hereby) of the outstanding
Units representing limited partnership interests of American Income Partners
III-C Limited Partnership, a Massachusetts limited partnership, at a purchase
price of $1.97 (as changed hereby) per Unit, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated August 18, 1995 (the "Offer to Purchase"), as
amended by the supplementary Letter to Unitholders dated September 27, 1995
(the "Supplementary Letter"), and as further amended by the Supplement to
Offer to Purchase dated October 3, 1995 (the "Supplement"), a copy of which is
attached hereto as Exhibit (a)(5), and the related Letter of Transmittal
(which together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
The response to Item 1(b) is amended by incorporating herein by reference
the information as to the exact amount of the securities being sought and the
consideration being offered therefor set forth on the Cover Page of the
Supplement and in the portion of the Supplement which supplements the
"INTRODUCTION" of the Offer to Purchase.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The response to Item 4(a)-(b) is amended by incorporating herein by
reference the information set forth in the portions of the Supplement which
supplement "THE TENDER OFFER--Item 10. Conflicts of Interest and Transactions
with Affiliates and Related Parties" and "--Section 12. Source of Funds" of
the Offer to Purchase.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The response to Item 5(a), (b) and (d) is amended by incorporating herein by
reference the information as to future plans set forth in the portions of the
Supplement which supplement the "INTRODUCTION" and "THE TENDER OFFER--Section
10. Conflicts of Interest and Transactions with Affiliates and Related
Parties" of the Offer to Purchase.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The response to Item 7 is amended by incorporating herein by reference the
information set forth in the portion of the Supplement which supplements "THE
TENDER OFFER--Section 12. Source of Funds" of the Offer to Purchase.
ITEM 10. ADDITIONAL INFORMATION.
The response to Item 10(e) is amended by incorporating herein by reference
the information set forth in the portion of the Supplement which amends "THE
TENDER OFFER--Section 15. Certain Legal Matters" of the Offer to Purchase.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(5) Supplement to Offer to Purchase dated October 3, 1995.
(a)(6) Letter of Transmittal with respect to the Supplement.
(a)(7) Form of Letter dated October 3, 1995 from Atlantic Acquisition
Limited Partnership to Unitholders.
(b)(2) Commitment Letter dated August 31, 1995 between NatWest Bank N.A. and
Atlantic Acquisition Limited Partnership.
5
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: October 3, 1995
ATLANTIC ACQUISITION
LIMITED PARTNERSHIP
By: AAL, Inc., its general partner
By: /s/ Gary D. Engle
------------------------------
Name: Gary D. Engle
Title:President
/s/ Gary D. Engle
---------------------------------
Gary D. Engle
/s/ Geoffrey A. MacDonald
---------------------------------
Geoffrey A. MacDonald
/s/ James A. Coyne
---------------------------------
James A. Coyne
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
(a)(5) Supplement to Offer to Purchase dated October 3, 1995.
(a)(6) Letter of Transmittal with respect to the Supplement.
(a)(7) Form of Letter dated October 3, 1995 from Atlantic
Acquisition Limited Partnership to Unitholders.
(b)(2) Commitment Letter dated August 31, 1995 between
NatWest Bank N.A. and Atlantic Acquisition Limited
Partnership.
</TABLE>
7
<PAGE>
SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
UP TO 270,946 UNITS OF LIMITED PARTNERSHIP INTEREST
OF
AMERICAN INCOME PARTNERS III-C LIMITED PARTNERSHIP
AT
$1.97 NET PER UNIT
BY
ATLANTIC ACQUISITION LIMITED PARTNERSHIP
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THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 5:00
P.M., EASTERN TIME, ON OCTOBER 20, 1995, UNLESS EXTENDED.
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This Supplement to Offer to Purchase (this "Supplement") is being made in
connection with the proposed settlement of class action litigation hereinafter
described (the "Settlement"). The Purchaser hereby supplements and amends its
offer to purchase outstanding units (the "Units") of limited partnership
interest of American Income Partners III-C Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), for the purchase price
of $1.97 per Unit (the "Purchase Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated August 18, 1995, the Supplementary Letter dated September
27, 1995, this Supplement and the related Letter of Transmittal, as each may
be supplemented or amended from time to time. Capitalized terms used in the
Offer to Purchase and this Supplement and not otherwise defined herein have
the meanings ascribed to them in the Offer to Purchase.
In accordance with the Settlement, the Purchase Price has been increased
from $1.85 per Unit, as specified in the Offer to Purchase, to $1.97 per Unit.
Further, the number of Units sought pursuant to the Offer has been decreased
to 270,946 Units, representing approximately 35% of the Units outstanding as
of August 10, 1995. In addition, the Offer has been extended and will now
expire at 5:00 p.m., Eastern time, on October 20, 1995 (the "Expiration Date")
unless further extended.
The Purchaser was recently organized by certain principals of American
Finance Group, the sponsor of the Partnership, and is related to the General
Partner. As principals of the Purchaser Messrs. Gary D. Engle, Geoffrey A.
MacDonald and James A. Coyne may be deemed to be "co-bidders" with the
Purchaser. (See "THE TENDER OFFER--Section 11. Certain Information Concerning
the Purchaser.")
Each Unitholder should consider carefully the following factors:
. The Purchase Price was established by the Purchaser with the intention of
making a profit. Therefore, the Purchaser was motivated to set the lowest
price for Units to the extent consistent with its objective of acquiring
a sufficient number of Units to justify the effort and expense of
proceeding with the Offer. This conflicts with the desire of the
Unitholders tendering Units to receive the highest price therefor.
(Cover continued on following page.)
----------------
The Information Agent for the Offer is:
D.F. King & Co., Inc.
----------------
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
----------------
H
<PAGE>
. The Purchase Price of $1.97 per Unit is substantially less than the sum
of the Net Finance Value of $1.69 per Unit (using a 15% discount rate)
and the estimated residual value ("ERV") of $3.01 per Unit (for a total
of $4.70 per Unit). (If the Net Finance Value were calculated using a 9%
discount rate, the Net Finance Value would be $1.75 per Unit (for a total
of $4.76 per Unit).) (See "Section 13. Background of the Offer" for a
discussion of the Purchaser's determination of the Purchase Price, and
the related assumptions and other factors relating to such
determination.)
. The Purchaser and the General Partner are related parties and,
accordingly, have conflicts of interest with respect to the Offer. (See
"Section 10. Conflicts of Interest and Transactions with Affiliates and
Related Parties.")
. As a result of the Offer, the Purchaser could be in a position to
influence significantly all Partnership decisions on which Unitholders
may vote.
. Although the secondary market is limited, it may be possible for certain
of the Unitholders to obtain a higher price for their Units by selling
such Units in the secondary market.
. Unitholders who tender Units will not be entitled to any future
distributions from the Partnership, including, without limitation, any
distributions to be made to Unitholders upon liquidation of the
Partnership. (The distribution to tendering Unitholders of record as of
September 30, 1995 will either be assigned to the Purchaser or will
correspondingly reduce the Purchase Price.) The sum of such future
distributions is expected by the General Partner to exceed the Purchase
Price substantially.
. In deciding whether or not to tender their Units, Unitholders should
consider the relatively short time (presently anticipated to be December
31, 1998) until the Partnership's assets are liquidated, any liquidation
proceeds are distributed to the Unitholders and the Partnership
terminates.
October 3, 1995
<PAGE>
To the Holders of Units of Limited Partnership Interest of American Income
Partners III-C Limited Partnership
This Supplement to Offer to Purchase (this "Supplement") amends and
supplements the Offer to Purchase dated August 18, 1995 and is being made in
connection with the proposed settlement of class action litigation hereinafter
described (the "Settlement").
INTRODUCTION
The following amends and supplements the Introduction to the Offer to
Purchase. (Cross-references in this Supplement are to Sections of the Offer to
Purchase, unless otherwise indicated. To the extent statements are made in
this Supplement which are inconsistent with statements made in the Offer to
Purchase, the statements herein shall control.)
Atlantic Acquisition Limited Partnership, a newly-formed Massachusetts
limited partnership (the "Purchaser"), hereby offers to purchase up to 270,946
of the outstanding Units (the "Units") of limited partnership interest of
American Income Partners III-C Limited Partnership, a Massachusetts limited
partnership (the "Partnership"), at a purchase price of $1.97 per Unit (the
"Purchase Price"), net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, as
supplemented hereby, and in the related Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer").
In accordance with the Settlement, the Purchase Price has been increased
from $1.85 per Unit, as specified in the Offer to Purchase, to $1.97 per Unit.
Further, the number of Units sought pursuant to the Offer has been decreased
to 270,946 Units, representing approximately 35% of the Units outstanding as
of August 10, 1995. In addition, the Offer has been extended and will now
expire at 5:00 p.m., Eastern time, on October 20, 1995 (the "Expiration Date")
unless further extended. All references in the Offer to Purchase to the
Purchase Price shall mean $1.97 per Unit and all references to the Expiration
Date shall mean October 20, 1995.
The Purchaser was recently organized by certain principals of American
Finance Group, the sponsor of the Partnership, and is related to the General
Partner. It is expected that employees and other persons or entities related
to or affiliated with American Finance Group may become additional limited
partners of the Purchaser. (See "Section 10. Conflicts of Interest and
Transactions with Affiliates and Related Parties" and "Section 11. Certain
Information Concerning the Purchaser.")
Each Unitholder should carefully consider the following factors:
. The Purchase Price was established by the Purchaser with the intention of
making a profit. Therefore, the Purchaser was motivated to set the lowest
price for Units to the extent consistent with its objective of acquiring
a sufficient number of Units to justify the effort and expense of
proceeding with the Offer. This conflicts with the desire of the
Unitholders tendering Units to receive the highest price therefor.
. The Purchase Price of $1.97 per Unit is substantially less than the sum
of the Net Finance Value of $1.69 per Unit (using a 15% discount rate)
and the estimated residual value ("ERV") of $3.01 per Unit (for a total
of $4.70 per Unit). (If the Net Finance Value were calculated using a 9%
discount rate, the Net Finance Value would be $1.75 per Unit (for a total
of $4.76 per Unit).) (See "Section 13. Background of the Offer" for a
discussion of the Purchaser's determination of the Purchase Price, and
the related assumptions and other factors relating to such
determination.)
. The Purchaser and the General Partner are related parties and,
accordingly, have conflicts of interest with respect to the Offer. (See
"Section 10. Conflicts of Interest and Transactions with Affiliates and
Related Parties.")
1
<PAGE>
. As a result of the Offer, the Purchaser could be in a position to
influence significantly all Partnership decisions on which Unitholders
may vote.
. Although the secondary market is limited, it may be possible for certain
of the Unitholders to obtain a higher price for their Units by selling
such Units in the secondary market.
. Unitholders who tender Units will not be entitled to any future
distributions from the Partnership, including, without limitation, any
distributions to be made to Unitholders upon liquidation of the
Partnership. (The distribution to tendering Unitholders of record as of
September 30, 1995 will either be assigned to the Purchaser or will
correspondingly reduce the Purchase Price.) The sum of such future
distributions is expected by the General Partner to exceed the Purchase
Price substantially.
. In deciding whether or not to tender their Units, Unitholders should
consider the relatively short time (presently anticipated to be December
31, 1998) until Partnership's assets are liquidated, any liquidation
proceeds are distributed to the Unitholders and the Partnership
terminates.
The Offer will provide Unitholders with an opportunity to liquidate their
investment without the usual transaction costs associated with market sales.
Unitholders may no longer wish to continue their investment in the Partnership
for a number of reasons, including:
. The absence of a formal trading market for Units, although there are some
limited resale mechanisms which may be available to Unitholders wishing
to sell their Units
. General disenchantment with long-term investments in limited partnerships
. The complexities and costs of preparing and filing personal federal,
state and local income tax returns resulting from an investment in the
Units, particularly for Unitholders with a small investment in the
Partnership
. For Unitholders which are IRAs or other qualified pension, profit-sharing
or stock bonus plans (collectively, "Qualified Plans"), the further
complexity and costs of preparing income tax returns, and the potential
tax liability, resulting from the generation by the Partnership of
"unrelated business taxable income"
. The opportunity to transfer Units without the commissions and other costs
normally associated with a transfer
. More immediate use for the cash tied up in an investment in the Units
As discussed in the Prospectus for the original offering of Units, the
Partnership was to be terminated upon the sale of its last remaining item of
equipment, which at present is expected to be by December 31, 1998.
The General Partner has advised the Purchaser that it expects that the third
quarter distributions from the Partnership to Unitholders of record on
September 30, 1995 will be approximately $0.3125 per Unit and distributed
prior to October 31, 1995. As noted in the Offer to Purchase, such
distributions with respect to tendered Units will either be made to the
Purchaser or, to the extent such distributions are made to the tendering
Unitholders, will correspondingly reduce the Purchase Price for such Units.
Whether or not the Offer is consummated, the Partnership will continue to be
managed by the General Partner in accordance with the investment objectives
and policies set forth in the Prospectus (to the extent still relevant). (See
"Section 9. Certain Information Concerning the Partnership--General
Information.") The General Partner did not consider alternative transactions
to the Offer because the General Partner believes it to be in the best
interest of the Unitholders who do not tender their Units for the Partnership
to continue to operate in the manner for which it was organized. Alternative
transactions would, in the judgment of the General Partner, result in material
changes in the original investment objectives and policies of the Partnership.
2
<PAGE>
THE TENDER OFFER
"SECTION 2. PRORATION: ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS" is
hereby supplemented to include the following:
In the event that proration is required because the number of Units validly
tendered on or prior to the Expiration Date and not withdrawn exceeds 270,946
(which the Purchaser does not expect to be the case), the Purchaser will
announce the results of prorations promptly after such results become
available but in no event more than seven business days following the
Expiration Date.
"SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT" is hereby
supplemented to include the following:
The Purchaser intends to consummate the transactions contemplated by the
Offer if the conditions for closing, in the reasonable judgment of the
Purchaser, are satisfied.
"SECTION 6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES" is hereby supplemented
as follows:
Because of the increase in the Purchase Price to $1.97 per Unit, it is now
estimated that a Unitholder who tenders Units that were acquired by such
Unitholder at the time of the Partnership's original offering of Units will
recognize capital loss of $1.55 per Unit for federal income tax purposes.
"SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP" is hereby
supplemented by including the following information which is in addition to
that included in, and should be read in conjunction with, the Offer to
Purchase (an additional copy of the Offer to Purchase may be obtained by each
Unitholder upon request of the Information Agent):
In the opinion of AFG, the $3,253,510 carrying value of the equipment owned
by the Partnership at June 30, 1995 and summarized in Section 9 of the Offer
to Purchase does not exceed its fair market value.
AFG annually receives an estimated valuation of the Partnership's equipment
from an independent valuation company solely for the purpose of determining
whether or not the aggregate carrying value of the equipment for financial
statement purposes should be adjusted. The valuation company does not inspect
the equipment or consider the specific characteristics of the equipment, nor
does it estimate the expected value of the equipment at the end of the related
lease. These valuations generally are substantially higher than either the sum
of NFV and ERV or the carrying value. The Purchaser did not consider such
valuation in determining the Purchase Price. Instead, the Purchaser examined
the estimated residual value of the equipment after the related leases expire.
(See "Section 13. Background of the Offer--Establishment of Purchase Price.")
Major individual lessees that accounted for 10% or more of the Partnership's
$1,559,404 of lease revenue in 1994 are Northwest Airlines, Inc. ($339,581),
Marriott Corporation ($187,762), Equicor, Incorporated ($187,196) and Bally's
Health and Tennis Corporation ($185,940).
Rents are payable to the Partnership monthly, quarterly or semi-annually and
no significant amounts are calculated on factors other than the passage of
time. The leases are accounted for as operating leases and are noncancelable.
Rents received prior to their due dates are deferred. At June 30, 1995 future
minimum rents of $1,141,998 were due as follows:
<TABLE>
<S> <C>
For the year ending June 30, 1996.............................. $ 599,468
1997........................................................... 396,210
1998........................................................... 132,104
1999........................................................... 14,216
----------
Total.......................................................... $1,141,998
==========
</TABLE>
3
<PAGE>
During 1994, the Partnership and other affiliated partnerships executed a
renewal lease agreement in connection with an MD-82 aircraft leased by
Northwest. Pursuant to the agreement, Northwest will continue to lease the
aircraft until July 31, 1997. The Partnership, which owns an 11% interest in
this aircraft, will receive $214,292 in lease revenue during the years ending
December 31, 1995 and 1996 and $125,004 during the year ending December 31,
1997. Such rents are included in the future minimum rents above.
The Partnership re-leased the L1011-100 in which it owns an 18.03% interest
to Ing Aviation in 1994. This re-lease will generate approximately $427,000 in
additional lease revenue for the Partnership through December 1997.
The $50,000 amount reserved at December 31, 1993 against potentially
uncollectable rents was reviewed and considered adequate as of December 31,
1994. It cannot be determined whether the Partnership will recover any past
due rents in the future; however, the Managing General Partner will pursue the
collection of all such items.
The Partnership supplied the Purchaser with the following information
detailing the expiration dates of the Partnership's leases. The percentages
are based upon the Partnership's original cost of equipment remaining:
<TABLE>
<S> <C>
1995................................................................ 2.4%
1996................................................................ 8.1%
1997................................................................ 87.3%
Thereafter.......................................................... 2.2%
-----
100.0%
</TABLE>
At the end of each such lease, equipment generally is either renewed by the
current lessee, re-leased to a new lessee, or sold.
The schedule of distributions to the Unitholders set forth on page 13 of the
Offer to Purchase is based upon the assumption that the Units were purchased
on or before December 30, 1987 and continue to be held by the original
purchasers thereof.
The minimum investment in the Partnership was 100 Units ($2,500) or 80 Units
($2,000) for IRAs and other Qualified Plans. The schedule of distributions on
page 13 of the Offer to Purchase should be considered by each Unitholder in
terms of the actual number of Units purchased by such Unitholder.
Cash distributions do not represent and are not indicative of yield on
investment. Actual yield on investment cannot be determined with any certainty
until termination of the Partnership and will be dependent upon the collection
of future contracted rents, the amount of renewal and/or re-lease rents and
the residual values realized for each asset as of its disposal date. However,
Unitholders tendering their Units (assuming such Units were purchased on or
before December 30, 1987 and continue to be held by the original purchaser)
will receive total distributions (including the Purchase Price) of
approximately $25.51 per Unit, of which $25.00 will constitute a return of
capital and the $0.51 balance will constitute a return on capital.
"SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES AND
RELATED PARTIES" is hereby supplemented to include the following:
The Loan or the Alternate Loan (as defined below) is expected to be serviced
by the Purchaser with cash distributions attributable to the Units it
acquires. Because the Loan or the Alternate Loan will relate to all AFG
Partnerships, the General Partner will have a conflict of interest in
determining whether to sell equipment of a particular Partnership or
Partnerships in order to service the Loan or the Alternate Loan.
4
<PAGE>
"SECTION 12. SOURCE OF FUNDS" is hereby supplemented to include the
following:
As described in the Offer to Purchase, the Purchaser has received the
Commitment Letter from SunAmerica Life Insurance Company ("SunAmerica") to
provide for the Loan in an amount of approximately $28,000,000 in connection
with all the AFG Partnerships. (Because of the reduction in the percentage of
Units tendered for from 45% to 35%, the loan will be in the maximum amount of
approximately $21,778,000.)
Further, the Purchaser now has an alternative source of funds that it may
utilize in order to consummate the Offer. The balance of the funds not
obtained by the Purchaser from capital contributions from its partners may be
obtained from a term loan (the "Alternate Loan") to be provided by NatWest
Bank N.A. ("NatWest") concurrently with the consummation of the Offer pursuant
to the terms of a commitment letter (the "NatWest Commitment Letter") between
NatWest and the Purchaser. The Purchaser has not yet determined whether to
obtain the loan from NatWest or SunAmerica.
The terms of the NatWest Commitment Letter are as follows. As is the case
with the proposed loan from SunAmerica, the Alternate Loan will be made to the
Purchaser in order to enable the Purchaser to consummate the Offer as well as
the Tender Offers for units of or representing limited partnership interests
of 20 other AFG Partnerships. NatWest has agreed to provide funds of
approximately $27,000,000 in connection with all the AFG Partnerships.
(However, because of the reduction in the percentage of Units tendered for
from 45% to 35%, the Alternate Loan is not expected to exceed $21,000,000.)
The Purchaser expects that the amount of the Alternate Loan, on a per Unit
basis, will approximate the amount that is available from the Loan. The
remainder of such funds required to purchase Units and to pay related fees and
expenses will be funded by the Purchaser from capital contributions from its
partners.
NatWest will have the right to sell-down a portion of its commitment to
another lender or lenders or to sell participations to another lender or
lenders. In the event of a sell-down, an agency administration fee (the
"Agency Administration Fee") in the amount of $40,000 per annum, payable
quarterly, is to be paid by the Purchaser.
The proceeds of the Alternate Loan will be used by the Purchaser solely to
fund the acquisition of the Tendered Units and to pay related costs and
expenses ("Offering Expenses") of up to $680,000 and the Upfront Fee (as
defined below).
There will be a separate drawdown of Alternate Loan proceeds for each
closing of a Tender Offer. Each drawdown shall be in a minimum amount of
$500,000 and no drawdown shall be made later than 90 days after the initial
drawdown.
The Alternate Loan will bear interest at the LIBOR (reserve adjusted) rate
plus 350 basis points (as of September 22, 1995, the rate on the Alternate
Loan would have approximated 9.25%). Payment of interest on the principal
amount outstanding under the Alternate Loan will be payable quarterly in
arrears based on a 360 day year. Within 90 days from the final drawdown of the
Alternate Loan, the Purchaser will hedge its interest rate risk through an
interest rate swap or cap with a counterparty acceptable to NatWest.
Each drawdown of the Alternate Loan will be payable in 16 consecutive
quarterly installments of principal (the "Scheduled Principal Payments") to be
calculated based on the projected amount of cash flow available from the
related AFG Partnership's firm term lease payments and to be agreed to by
NatWest and the other lenders, if any, prior to such drawdown. In addition, a
mandatory prepayment of principal outstanding on each drawdown (the "Mandatory
Prepayments") shall be made quarterly on the due date of each Scheduled
Principal Payment in an amount equal to the Distributable Cash Amount (as
defined below) for the immediately preceding calendar quarter. Such Mandatory
Prepayments shall be applied pro rata to the remaining Scheduled Principal
Payments with respect to each drawdown. "Distributable Cash Amount" means cash
received from all sources less current and accrued interest and principal
payments and less accounting, legal, printing and other third party expenses
("Operating Expenses") and any Agency Administration Fee. Operating Expenses
may not exceed
5
<PAGE>
$200,000 per year. The final maturity of each drawdown will be four years from
the closing of such drawdown. (See "Section 10. Conflicts of Interest and
Transactions With Affiliates and Related Parties" for a discussion of certain
conflicts of interest which will be created as a result of the Purchaser's
obligation to prepay the Alternate Loan with Distributable Cash Amounts.)
The Purchaser shall also have the right to make optional prepayments of the
Alternate Loan at the end of each interest period in minimum principal amounts
of $250,000.
As security for the Alternate Loan, NatWest will have a first priority
security interest in the Tendered Units and all other assets of the Purchaser,
the stock of AAL, Inc., the interests of the general and limited partners in
the Purchaser and the collection account into which the Purchaser's
distributions from the AFG Partnerships will be paid. The obligations under
the Alternate Loan will be fully recourse to the Purchaser and to AAL, Inc.
The initial limited partners of the Purchaser will severally guarantee
repayment of that portion of the Alternate Loan drawn to cover Offering
Expenses. Otherwise, the Alternate Loan will be non-recourse to the limited
partners of the Purchaser. (The Loan from SunAmerica is non-recourse to the
limited partners of the Purchaser, as described in the Offer to Purchase.)
There will be various conditions precedent to the closing of the Alternate
Loan, including that the Tender Offer documentation shall be in full force and
effect; that all conditions under the Tender Offer materials precedent to the
consummation of the Tender Offers shall have been satisfied, including that
all necessary governmental, regulatory and other third party approvals shall
have been obtained; that the Purchaser shall have received cash proceeds
aggregating at least 10% of the aggregate Purchase Price of the Tendered Units
representing equity contributions from its partners and shall have utilized
such proceeds to purchase the Tendered Units and to pay any related fees and
expenses not funded through drawdowns; and that no material adverse event in
the judgment of NatWest and the other lenders, if any, shall have occurred
with respect to any of the AFG Partnerships or the Purchaser which would, in
turn, have a material adverse effect on the Purchaser's ability to service the
Alternate Loan. Accordingly, there is no assurance that any drawdowns of the
Alternate Loan will actually occur.
The Purchaser anticipates that the loan agreement governing the Alternate
Loan will contain certain customary representations and warranties,
affirmative and negative covenants, events of default and other terms and
conditions.
The Purchaser will pay an upfront fee (the "Upfront Fee") equal to 2% on the
amount of each drawdown to be paid at each drawdown. The maximum aggregate
Upfront Fee will be $353,750 and the minimum Upfront Fee will be $100,000. In
addition, an arrangement fee of $100,000 (the "Arrangement Fee") will be
payable if the closing of the Alternate Loan does not occur by October 15,
1995 or if the closing does occur by such date but the Purchaser does not draw
down any funds under the Alternate Loan by January 15, 1996, provided that (a)
no Arrangement Fee will be payable if NatWest declines to close the Alternate
Loan or to fund under the Alternate Loan because of a material adverse change
or for a reason other than breach by the Purchaser of a representation,
warranty or covenant or failure of a condition and (b) if NatWest or the
Purchaser declines to close the Alternate Loan or declines to fund under the
Alternate Loan because of litigation pending, threatened or commenced with
respect to the Tender Offers, the AFG Partnerships or the Alternate Loan, the
payment of the Arrangement Fee shall be postponed until the earliest of the
date of the expiration or termination of the NatWest Commitment Letter, the
date of termination of such litigation or January 15, 1996. If NatWest or the
Purchaser declines to close the Alternate Loan or declines to fund under the
Alternate Loan on or before January 15, 1996 because of such litigation, then
the arrangement fee payable by the Purchaser to NatWest shall be $50,000.
Further, the Purchaser will pay all legal fees and disbursements of NatWest
and any other lenders in connection with the closing of the Alternate Loan.
"SECTION 13. BACKGROUND OF THE OFFER" is hereby supplemented and amended as
follows:
In connection with the settlement of the class action litigation described
herein, the Purchaser agreed to increase the Purchase Price to $1.97 per Unit.
The Purchase Price continues to represent the price at which the Purchaser is
willing to purchase Units and is in an amount which the Purchaser expects will
enable it to realize a profit.
6
<PAGE>
The Partnership's Net Finance Value or NFV was determined to be $1,310,887
or $1.69 per Unit. Certain financial information supplied to the SunAmerica
and NatWest employed a discount rate of 9%. If the Purchaser in calculating
NFV had applied a 9% discount rate to the NFV as opposed to 15%, the NFV would
be $1,354,727 or $1.75 per Unit. The Purchaser believes the discount rates
utilized are reasonable but other discount rates might also be deemed
appropriate. Unitholders should be aware that the lower the discount rate used
the higher the NFV.
For purposes of NFV, the Purchaser determined the amount of Distributable
Cash Flow ("DCF") based upon its estimates of contracted rents and other
relevant factors as of July 1, 1995.
The residual percentages that the Purchaser supplied to the SunAmerica and
NatWest showing AFG's historical track record with respect to residual
realization are shown in Schedule 1 to this Supplement (the "Percentages").
The Percentages were calculated by dividing residual proceeds (which include
sale, re-lease and renewal proceeds) of equipment of varying age by the
original cost of such equipment. In determining ERV, the Purchaser used a
subset of the AFG historical track record information that incorporated the
age data most closely related with the age of the Partnership's asset when the
related lease expires and no residual value was assigned to equipment off-
lease. Because the Percentages group assets of varying age, the Percentages
may be different from the residual percentages used by the Purchaser in
determining the ERV. The methodology described above was used in all cases
except for aircraft. The residual percentage used in estimating the residual
value of the Partnership's aircraft is shown below. The Purchaser believes
that the historical residual percentages supplied to SunAmerica and NatWest
with respect to aircraft are not appropriate as such percentages relate to
(i) specific types of aircraft which may be different from the Partnership's,
(ii) aircraft that were generally sold subject to lease (the Purchaser
accounted for any value of Partnership lease receivables in determining the
NFV), and (iii) aircraft generally sold in the 1980's when the market for used
aircraft was different from that which exists at present. Following are the
residual percentages applied to the Partnership's equipment (excluding
equipment sold or awaiting sale) for purposes of calculating ERV:
<TABLE>
<S> <C>
Aircraft............................................................... 59%
Communications......................................................... 3%
Computers & Peripherals................................................ 10%
Railroad............................................................... 7%
Manufacturing.......................................................... 39%
Materials Handling Equipment........................................... 22%
Medical................................................................ 12%
Photocopying........................................................... 10%
Research & Test........................................................ 0%
Retail Store Fixtures.................................................. 6%
</TABLE>
The Partnership's auditors evaluate the carrying value of the Partnership's
commercial aircraft solely for financial statement purposes. As part of this
evaluation, the auditors review an independent appraisal and perform their own
appraisal of the estimated value of the subject aircraft at the end of the
lease taking into consideration the specific characteristics of the aircraft.
The Purchaser did not consider these appraisals in determining Purchase Price.
If the Purchaser, in its calculation of ERV, had used the average of the
independent appraisal and auditors appraisal (using the mid-point when a range
was provided for as an appraised value) as provided for in conjunction with
the Partnership's 1994 audit, the present value of the estimated residual
value of the Partnership's equipment, based upon the same methodology used to
determine ERV, would be $2,442,273 or $3.15 per Unit. (As noted in the Offer
to Purchase, the Purchaser determined ERV to be $2,329,654 or $3.01 per Unit.)
No liquidation value for the Partnership has been calculated by the
Purchaser or the General Partner although the Purchaser believes, as indicated
by NFV and ERV, that liquidation would result in distributions to the
Unitholders in excess of the Purchase Price.
7
<PAGE>
The default rate factor of 1.5% used in calculating NFV is based upon an
estimate of the historic default rate realized in general equipment
transactions sponsored by AFG and is not based upon the actual default rate
experienced by the Partnership.
For purposes of determining the present value of the Partnership's assets, a
Unitholder may consider adding NFV per Unit and ERV per Unit and compare such
total to the Purchase Price. The sum of NFV per Unit calculated using a
discount rate of 15% and ERV per Unit is $4.70 per Unit. The sum of NFV per
Unit calculated using a discount rate of 9% and ERV per Unit is $4.76 per
Unit. It should be noted that the Purchaser believes that the realization of
NFV is very predictable and that the realization of ERV is less predictable.
The Purchaser primarily considered NFV in determining the Purchase Price as it
believes that any lender to the Purchaser will determine the amount of its
loan based primarily on the Partnership's NFV.
"SECTION 14. CONDITIONS OF THE OFFER" is hereby amended as follows:
The Purchaser will purchase the Units tendered in accordance with the Offer
if, in the exercise of its reasonable judgment, it determines that the
conditions to the Offer have been satisfied.
"SECTION 15. CERTAIN LEGAL MATTERS" is hereby supplemented as follows:
On September 6, 1995, City Partnerships Co. ("CPC"), commenced an action in
the United States District Court for the District of Massachusetts against the
Purchaser, the General Partner and various affiliates. The action alleges,
among other things, that the Offer constitutes (1) a violation of the Williams
Act Amendments to the Securities Exchange Act of 1934; (2) breach of
provisions of the partnership agreements of the AFG Partnerships; and (3)
breach of fiduciary duty owed to the Unitholders of the AFG Partnerships. The
action, which has been brought as a class action on behalf of such
Unitholders, seeks to enjoin the Offer and monetary damages in an unspecified
amount.
A proposed settlement of this litigation (the "Settlement") has been reached
by the parties. The terms of the Settlement are set forth in a Notice of Class
Action Determination, Proposed Settlement and Hearing Thereon (the "Notice"),
a copy of which is being provided to the Unitholders as to Schedule 2 to this
Supplement, and a Stipulation of Settlement dated September 27, 1995 filed
with the Court. On September 27, 1995, the Court entered an order
preliminarily approving the Settlement and certifying the class for settlement
purposes. A final settlement hearing is presently scheduled to be held on
November 15, 1995, at 3:00 p.m., in the United States District Court for the
District of Massachusetts.
On September 7, 1995, Marcella Levy and Richard Hodgson, who represented
that they are Unitholders of American Income Partners V-B Limited Partnership
and American Income Partners III-C Limited Partnership, respectively,
commenced an action in the Massachusetts Superior Court against the Purchaser,
the General Partner and various affiliates and related parties. The action
alleges, among other things, that the Offer constitutes a breach of fiduciary
duty owed to the Unitholders of the AFG Partnerships. The action, which has
been brought as a class action on behalf of such Unitholders, seeks to enjoin
the Offer as well as monetary damages in an unspecified amount. No hearing
dates are presently scheduled.
In connection with this Supplement, the Purchaser has filed with the
Commission an amended Schedule 14D-1, pursuant to Rule 14d-3 under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file further amendments thereto. The Schedule 14D-1 and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth in Section 9
of the Offer to Purchase (except that they will not be available at the
regional offices of the Commission).
ATLANTIC ACQUISITION LIMITED
PARTNERSHIP
October 3, 1995
8
<PAGE>
SCHEDULE 1
RESIDUAL PROCEEDS BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
RESIDUAL PROCEEDS AS
EQUIPMENT TYPE A PERCENTAGE OF OEC (1)(2)
- -------------- --------------------------
<S> <C>
Aircraft............................................. 75.22%
Commercial Printing.................................. 36.81%
Communications....................................... 9.64%
Computers & Peripherals.............................. 14.60%
Construction & Mining................................ 45.63%
Fitness.............................................. 20.12%
Furniture & Fixtures................................. 11.29%
General Purpose Plan/Warehouse....................... 35.38%
Railroad............................................. 68.75%
Manufacturing........................................ 44.42%
Materials Handling Equipment......................... 23.89%
Medical.............................................. 18.75%
Motor Vehicles....................................... 22.95%
Photocopying......................................... 12.16%
Research & Test...................................... 33.03%
Retail Store Fixtures................................ 18.65%
Tractors & Heavy Duty Trucks......................... 35.28%
Trailers/Intermodal Containers....................... 32.44%
Miscellaneous........................................ 15.61%
</TABLE>
- --------
(1) OEC = Original Equipment Cost
(2) Residual Proceeds includes all amounts received after initial lease
expiration. Such amounts are primarily re-lease, renewal and sale
proceeds. The figures include residual proceeds for equipment of varying
age.
9
<PAGE>
SCHEDULE 2
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
- ------------------------------------------------
)
CITY PARTNERSHIPS CO., A New )
York General Partnership, on Behalf of )
Itself and All Others Similarly Situated, )
)
Plaintiff )
v. ) Civil Action No.
) 95-11990-PBS
ATLANTIC ACQUISITION LIMITED )
PARTNERSHIP, A Massachusetts )
Limited Partnership; AFG PROGRAMS, )
INC.; AAL, Inc., a Massachusetts )
Corporation; AMERICAN FINANCE )
GROUP, INC., a Delaware Corporation; )
AFG LEASING CORPORATION IV, )
INC., a Massachusetts Corporation; )
GEOFFREY A. MACDONALD; )
GARY ENGLE; and JAMES COYNE, )
)
Defendants. )
)
- ------------------------------------------------
NOTICE OF CLASS ACTION DETERMINATION
PROPOSED SETTLEMENT AND HEARING THEREON
TO: ALL PERSONS AND ENTITIES WHO WERE UNITHOLDERS OF RECORD AS OF
AUGUST 10, 1995 OF LIMITED PARTNERSHIP UNITS IN ANY OF THE FOLLOWING
LIMITED PARTNERSHIPS:
American Income 4 Limited Partnership;
American Income 5 Limited Partnership;
American Income 6 Limited Partnership;
American Income 7 Limited Partnership;
American Income 8 Limited Partnership;
American Income Partners III-A Limited Partnership;
American Income Partners III-B Limited Partnership;
American Income Partners III-C Limited Partnership;
American Income Partners III-D Limited Partnership;
American Income Partners IV-A Limited Partnership;
American Income Partners IV-B Limited Partnership;
American Income Partners IV-C Limited Partnership;
American Income Partners IV-D Limited Partnership;
American Income Partners V-A Limited Partnership;
American Income Partners V-B Limited Partnership;
American Income Partners V-C Limited Partnership;
American Income Partners V-D Limited Partnership;
American Income Fund I-B, a Massachusetts Limited Partnership;
American Income Fund I-C, a Massachusetts Limited Partnership;
American Income Fund I-D, a Massachusetts Limited Partnership; and
American Income Fund I-E, a Massachusetts Limited Partnership.
THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THE LITIGATION REFERRED TO
IN THE CAPTION. PLEASE READ THIS NOTICE CAREFULLY. YOUR RIGHTS WILL BE
AFFECTED BY THE PROCEEDINGS IN THIS LITIGATION.
<PAGE>
THE PROPOSED SETTLEMENT, IN CONNECTION WITH A PENDING TENDER OFFER FOR
REDEMPTION OF THE UNITS, CALLS FOR THE PAYMENT OF A PREMIUM OF UP TO $1,500,000
TO THE UNITHOLDERS WHO TENDER THEIR UNITS, AND ALSO PROVIDES THAT CERTAIN
ADDITIONAL INFORMATION CONCERNING THE TENDER OFFER SHALL BE DISSEMINATED BY THE
DEFENDANTS TO THE UNITHOLDERS.
PLEASE BE ADVISED THAT:
1. This Notice is given pursuant to Rule 23 of the Federal Rules
of Civil Procedure and a Preliminary Order of the United States District
Court for the District of Massachusetts ("the Court") dated September
27, 1995 (the "Preliminary Order"), entered in the above class action
("the Action"), to notify you of the pendency of the litigation as a
class action under Rule 23(b)(3), the proposed settlement of the
litigation, the Court's certification of the class as defined below for
the purposes of this settlement, and of a settlement hearing (the
"Settlement Hearing") and your rights with respect thereto.
2. A proposed settlement of this litigation (the "Settlement")
has been reached by the parties. The proposed Settlement, the terms of
which are only summarized in this Notice, is embodied in an Amended
Stipulation of Settlement dated September 27, 1995 (the "Stipulation")
which has been filed with the Court.
3. The Settlement Hearing will be held on November 15, 1995, at
3:00 PM before the Honorable Patti B. Saris, United States District
Court Judge, at the United States District Courthouse, Post Office
Square, Boston, MA. The purpose of the hearing is to determine whether
the Settlement should be approved by the Court as fair, reasonable and
adequate and in the best interests of the Class (as defined below),
whether the Court should approve the application of plaintiff's counsel
for an award of attorneys' fees and reimbursement of expenses to
plaintiff's counsel, and whether final judgment should be entered
thereon.
4. Unless you properly request an exclusion from the Class (as
defined below) as set forth in Section II below, you will be bound by
the terms and conditions of the proposed Settlement described in more
detail in this Notice.
5. The proposed Settlement will become effective only if the
Court approves it. If the Court approves the proposed Settlement, and
you have not requested exclusion as provided in Section II you may be
forever barred from contesting the fairness, reasonableness or adequacy
of it, or from pursuing the Settled Claims (as defined below) against
the defendants.
The term "Defendants" means each and all of the following persons and
entities: Atlantic Acquisition Limited Partnership; AFG Programs, Inc.;
AAL, Inc.; American Finance Group, Inc.; AFG Leasing Corporation IV, Inc.;
Geoffrey A. MacDonald; Gary Engle; and James Coyne. The term "Individual
Defendants" means Geoffrey A. MacDonald, Gary Engle, and James Coyne.
I.
DESCRIPTION OF THE LITIGATION
A. History of the Litigation
On or about August 18, 1995, defendant Atlantic Acquisition Limited
Partnership ("Atlantic Limited"), a newly-formed Massachusetts limited
partnership, commenced a tender offer for up to 45% of the outstanding units in
the twenty-one partnerships listed herein (the "Subject Partnerships").
Defendant Atlantic Limited's tender offer prices differed with respect to each
of the Subject Partnerships, but each of the individual tender offers, except
for relevant partnership specific information, included essentially the same
information and financial disclosure to each of the unitholders.
On September 6, 1995 City Partnerships, Co. commenced a lawsuit in this
jurisdiction against Atlantic Limited and related entities in connection with
the Tender Offers for up to 45% of the outstanding units in said partnerships
scheduled to close on September 29, 1995. The complaint included claims against
Atlantic Limited and related entities for, inter alia, violation of Section
14(e) of the Securities and Exchange Act of 1934, breach of fiduciary duty by
certain of the general partners of the Subject Partnerships, and breach of the
partnership agreements.
-2-
<PAGE>
B. Defendants' Denial of All Allegations
Each Defendant has at all times denied the allegations of wrongdoing and
the merits of any and all claims asserted in the Action.
THE FACTUAL STATEMENTS HEREIN ARE BASED ON INFORMATION PROVIDED TO THE COURT
BY COUNSEL FOR THE PARTIES AND DO NOT CONSTITUTE FINDINGS OF THE COURT.
THIS NOTICE IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS, AN
EXPRESSION OF ANY OPINION BY THE COURT WITH RESPECT TO THE TRUTH OF THE
ALLEGATIONS IN THE LITIGATION OR THE MERITS OF THE CLAIMS OR DEFENSES ASSERTED.
THE PURPOSE OF THIS NOTICE IS TO ADVISE YOU OF THE PROPOSED SETTLEMENT OF THE
LITIGATION AND YOUR RIGHTS WITH REGARD TO IT.
C. Class Action Determination
For purposes of the proposed Settlement the Court has, by order dated
September 27, 1995, certified the following class (the "Class") for settlement
purposes:
All persons and entities who were unitholders of record as of August 10,
1995 of limited partnership units in any of the following limited
partnerships: American Income 4 Limited Partnership;
American Income 5 Limited Partnership;
American Income 6 Limited Partnership;
American Income 7 Limited Partnership;
American Income 8 Limited Partnership;
American Income Partners III-A Limited Partnership;
American Income Partners III-B Limited Partnership;
American Income Partners III-C Limited Partnership;
American Income Partners III-D Limited Partnership;
American Income Partners IV-A Limited Partnership;
American Income Partners IV-B Limited Partnership;
American Income Partners IV-C Limited Partnership;
American Income Partners IV-D Limited Partnership;
American Income Partners V-A Limited Partnership;
American Income Partners V-B Limited Partnership;
American Income Partners V-C Limited Partnership;
American Income Partners V-D Limited Partnership;
American Income Fund I-B, a Massachusetts Limited Partnership;
American Income Fund I-C, a Massachusetts Limited Partnership;
American Income Fund I-D, a Massachusetts Limited Partnership; and
American Income Fund I-E, a Massachusetts Limited Partnership.
Excluded from the Class are the Defendants, members of the immediate families of
each of the Individual Defendants, any entity in which any Defendant has a
controlling interest, and the legal representatives, heirs, successors,
predecessors in interest, or assigns of any of the Defendants. Also for purposes
of the proposed Settlement the Court has certified plaintiff City Partnership
Co. as the Class Representative.
II.
YOUR RIGHT TO BE EXCLUDED FROM THE CLASS
If you are a unitholder of one or more of the limited partnerships as
described above, and are not a Defendant herein, or other excluded person, you
are a member of the Class. You may request exclusion from the Class in writing
mailed by first class mail addressed to:
Berman, DeValerio & Pease
One Liberty Square
Boston, MA 02109
Attn: Norman Berman, Esq.
-3-
<PAGE>
Your request for exclusion must clearly indicate that you request to be
excluded from the Class and must state: your name and address; and identify
the limited partnerships and the units thereof that you held as of record on
August 10, 1995. Also identify the record holder if you were the beneficial
holder, but not the holder of record. The request for exclusion will not be
effective unless all of the above information is provided and unless the
request for exclusion is postmarked no later than November 3, 1995.
If you request exclusion, you will not be bound by any judgment in this
Action, and will be free to pursue your own remedy, if any, against the
Defendants in this Action. If you request exclusion you may nevertheless
accept or decline the Tender Offer for your units of the limited partnerships.
Any Class Member who does not request exclusion may, if he or she desires,
enter an appearance through his or her counsel by sending such entry of
appearance to the above address.
All members of the Class who do not request to be excluded will
participate in and be bound by the proposed Settlement. If you wish to remain a
member of the Class, you need do nothing and your rights will be represented by
the following counsel for plaintiff and the Class ("Class Counsel"):
BERMAN, DEVALERIO & PEASE LAW OFFICES OF HAROLD B. OBSTFELD,
One Liberty Square 500 Fifth Avenue, 56th Floor
Boston, MA 02109 New York, NY 10110
III.
REASONS FOR THE SETTLEMENT
Class Counsel obtained and analyzed thousands of pages of relevant
documents in expedited discovery during the prosecution of the litigation, and
had access to depositions of Defendants in this litigation. Class Counsel
produced to Defendants relevant documents concerning the litigation on an
expedited basis. Counsel also interviewed some of the Individual Defendants to
obtain information relevant to all partnerships, the General Partners, the
Individual Defendants and their affiliates, and Counsel relied upon certain
representations made during those interviews in reaching the settlement
described herein. Class Counsel and Counsel for Defendants have engaged in
extensive arm's length negotiations with respect to the settlement of claims of
the members of the Class. Class Counsel recognizes and acknowledges the expense
and length of time for continued proceedings necessary to prosecute the
litigation against the Defendants through trial and through potential appeals.
Class Counsel also have taken into account the applicable law, the uncertain
outcome and the risk of any litigation, especially in complex actions such as
this litigation, as well as the difficulties and delays inherent in such
litigation. Class Counsel have further taken into account the strengths and
uncertainties of the claims asserted in the litigation, the possible defenses to
the claims asserted and the substantial benefits of the Settlement for the
Class. Class Counsel have therefore determined that the Settlement is fair,
reasonable, adequate, and in the best interests of the Class.
Defendants have maintained throughout the litigation of this Action that
all allegations of wrongdoing and all claims asserted in the Action are without
merit. Defendants, however, desire that the Action be settled in order to
eliminate the cost and uncertainty of future litigation and to achieve the final
resolution and complete settlement of any and all of the Settled Claims (as
defined below).
IV.
SUMMARY OF THE PROPOSED SETTLEMENT
The following description of the proposed Settlement of the Action is
only a summary. Reference may be made to the text of the Stipulation, on file
with the Court, for a full statement of its provisions. The major terms of the
Settlement are as follows.
(a) In full and final disposition, settlement, discharge,
release, and satisfaction of any and all claims, individual, class or
derivative in nature, including those claims asserted in the Action,
that have been or could be asserted by or on behalf of any member of the
Class against any Defendant or a general partner of the Subject
Partnerships (as more fully defined in the term "Releasees" contained in
the Stipulation) with respect to any transaction or occurrence
constituting the subject matter of the Action ("Settled Claims," as
defined more fully below), Defendants agree to provide the following
consideration:
-4-
<PAGE>
(b) The Defendants agree to disseminate a Supplement to the
Offers, provided herewith, providing additional information to each of
the unitholders in the Subject Partnerships, as defined in and attached
to the Stipulation, and as filed with the Court.
(c) Additionally, Defendants agree that the tender offer prices
will be increased to reflect a premium. Defendants agree to pay
unitholders a premium of $1,500,000 to be spread equally across all the
tendering unitholders of the Subject Partnerships, resulting in an
approximately 6.6% premium in the tender offer price for each limited
partnership.
(d) Defendants agree to purchase up to 35% of the outstanding
units of the Subject Partnerships.
The Amended Stipulation of Settlement is subject to the following
conditions and, except by mutual consent of the parties' counsel as provided
therein, shall be canceled and terminated unless:
(a) The Court shall enter a Final Judgment approving the
Settlement as fair and adequate to the Class; and
(b) The Court's Final Judgment becomes final, binding and
nonappealable, as set forth in the Amended Stipulation of Settlement.
This Notice is not intended to be a complete description of the
Stipulation. The Stipulation contains the full and complete terms of the
Settlement.
V.
EFFECT OF APPROVAL OF THE PROPOSED SETTLEMENT
If the Court approves the proposed Settlement, judgment will be entered:
(a) Approving the Settlement as fair, reasonable, adequate and
in the best interests of the Class; determining the reasonable amount of
attorneys' fees and reimbursement of costs and disbursements to be
awarded to Class Counsel, and retaining jurisdiction for the purposes of
effectuating the terms and provisions of the Settlement;
(b) Dismissing with prejudice, and releasing and discharging,
any and all claims, demands, rights, liabilities, and causes of action
of every nature and description whatsoever, including, without
limitation, individual, class or derivative claims, known or unknown,
asserted or that might have been asserted, including without limitation,
claims for negligence, gross negligence, breach of duty of care and/or
breach of duty of loyalty and/or breach of duty of candor, fraud,
negligent misrepresentation, breach of fiduciary duty, or violations of
any state or federal statutes, rules or regulations, whether directly,
in a representative capacity or in any other capacity, by any Class
Member against any of the Defendants or the Releasees arising out of,
relating to, or in connection with (i) any of the Subject Partnerships
and arising out of any of the Tender Offers; (ii) any of the acts,
omissions, misrepresentations, facts, events, matters, transactions or
occurrences referred to or which could have been referred to in the
complaint or in other pleadings filed in the litigation, including all
claims which were or could have been asserted in the litigation; (iii)
any filing with the Securities and Exchange Commission or other public
filing or statement relating to the Tender Offers; and/or (iv) the
terms, the fact, fairness, or adequacy of this Settlement.
VI.
TERMINATION OF PROPOSED SETTLEMENT
If there is no final Court approval of the proposed Settlement in this
case, or if for any reason there is a failure to satisfy any of the conditions
of the Stipulation, the Stipulation will become null and void, and the parties
will resume their former positions in this action.
VII.
APPROVAL OF APPLICATION FOR ATTORNEYS' FEES AND EXPENSES
If this Settlement is approved by the Court, in conjunction with the
Settlement Hearing, Class Counsel will request the Court to approve Class
Counsel's application for attorneys' fees and expenses, not to exceed $250,000,
in prosecuting this Action and securing a benefit for the members of the Class.
Members of the Class will not incur
-5-
<PAGE>
any obligation for such fees and expenses, and the fees and expenses will
not be deducted from the premium to be paid to unitholders as a result of the
Settlement
VIII.
THE SETTLEMENT HEARING
IF YOU DO NOT WISH TO OBJECT TO THE PROPOSED SETTLEMENT OR REQUEST FOR
ATTORNEYS' FEES AND EXPENSES YOU NEED NOT APPEAR AT THE HEARING.
The Settlement Hearing will be held on November 15, 1995 at 3:00 PM
before the Honorable Patti B. Saris, U.S. District Court Judge, at the United
States District Courthouse, Post Office Square, Boston, MA:
(a) to determine whether the Settlement of the Action as set
forth in the Amended Stipulation of Settlement is fair, reasonable,
adequate and in the best interests of plaintiff and members of the Class
and should be approved by the Court;
(b) to determine whether an order and final judgment dismissing
the Action should be entered thereon; and
(c) to determine whether to approve Class Counsel's application
for attorneys' fees and expenses , incurred in this action, not to
exceed $250,000.
The Court may adjourn the Settlement Hearing, or any adjournment thereof,
without further notice to members of the Class other than by announcement at the
Settlement Hearing or any adjournment thereof. The Court reserves the right to
approve the Settlement as it may be modified by the parties or the Court,
according to its terms and conditions, with or without further notice to members
of the Class.
At the Settlement Hearing, any member of the Class, who has provided a
notice of appearance which is served and filed as hereinafter provided, may
object to or support the Settlement, or may object to or support the Court's
allowance of reasonable fees and expenses to Class Counsel for their services
and actual expenses incurred herein to be paid by the Defendants. However,
unless the Court in its discretion otherwise directs, members of the Class, and
all others (excluding the parties), shall not be heard or be entitled to oppose
the approval of the terms and conditions of the Settlement or (if approved) the
judgment to be entered thereon, or the allowance of fees and expenses to
plaintiff's counsel, and no papers, briefs, pleadings or other documents
submitted by any member of the Class, or any other person (excluding the
parties) shall be received and considered, except by order of the Court for good
cause shown, unless, no later than 10 days prior to the Settlement Hearing, such
person has served and filed the following documents in the manner provided
below:
(a) A Notice of Intention to Appear; and
(b) A detailed statement of such person's specific objections to
any matter before the Court, the grounds for such objections and any
reasons why such person desires to appear and to be heard, and enclosing
all documents and writings that such person desires the Court to
consider.
Such documents shall be filed with the Court, at the address noted above and
served by first class mail upon the following counsel:
Norman Berman, Esq. Deborah L. Thaxter, Esq.
BERMAN, DeVALERIO & PEASE PEABODY & BROWN
One Liberty Square 101 Federal Street
Boston, MA 02109 Boston, MA 02110
Representing Plaintiff and the Class Representing Defendants
ANY CLASS MEMBER WHO DOES NOT OBJECT IN THE MANNER DESCRIBED HEREIN WILL BE
DEEMED TO HAVE WAIVED ANY OBJECTION, AND SHALL FOREVER BE FORECLOSED FROM
MAKING ANY OBJECTION TO THE PROPOSED SETTLEMENT.
-6-
<PAGE>
IX.
SPECIAL NOTICE TO BROKERS, BANKS AND OTHER NOMINEES
Brokerage firms, banks or other persons or entities who are current
holders for the benefit of others of limited partnership units in the Subject
Partnerships are directed to send this Notice promptly to all such beneficial
owners. In the alternative, record holders may forward the names and addresses
of the members of the Class and beneficial owners to Berman, DeValerio & Pease
at the above address, who in turn will cause copies of this Notice to be sent by
Defendants to such persons or entities.
X.
FURTHER INFORMATION
For a more detailed statement of the matters involved in this
litigation, you are referred to the papers on file in this Action, including the
Stipulation, which may be inspected during regular business hours at the Office
of the Clerk of the United States District Court, Post Office Square, Boston,
PLEASE DO NOT CALL OR WRITE THE COURT DIRECTLY. IF YOU HAVE ANY QUESTIONS,
PLEASE CONTACT THE FOLLOWING COUNSEL REPRESENTING PLAINTIFF AND THE CLASS:
BERMAN, DEVALERIO & PEASE
One Liberty Square
Boston, MA 02109
(617) 542-8300
Dated: September 27, 1995 BY ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS
-7-
<PAGE>
AMERICAN INCOME PARTNERS III-C LIMITED PARTNERSHIP
LETTER OF TRANSMITTAL
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M.,
EASTERN TIME, ON THE EXPIRATION DATE, UNLESS EXTENDED.
- -------------------------------------------------------------------------------
To Depositary:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By First Class Mail: By Overnight Courier: By Hand:
Corporate Reorganization c/o Boston Financial Data Services Corporate Reorganization
P.O. Box 9061 Corporate Reorganization 225 Franklin Street
Boston, MA 02205-8686 Two Heritage Drive Concourse Level
North Quincy, MA 02171 Boston, MA 02110
or
By Facsimile: Corporate Reorganization
61 Broadway
(617) 774-4519 Concourse Level
New York, NY 10006
Confirm Facsimile by Telephone:
(617) 774-4511
</TABLE>
To participate in the Offer, a duly executed copy of this Letter of
Transmittal (or facsimile hereof) must be received by the Depositary on or
prior to the Expiration Date. Delivery of this Letter of Transmittal or any
other required documents to an address or facsimile number other than as set
forth above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Unitholder. If the
method of delivery is by First Class Mail, please use the pre-addressed,
postage-paid envelope provided.
This Letter of Transmittal is to be completed by Unitholders of record as of
August 10, 1995, of American Income Partners III-C Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), pursuant to the
procedures set forth in the Offer to Purchase (as defined below).
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to Atlantic Acquisition Limited Partnership,
a Massachusetts limited partnership (the "Purchaser"), the following-described
Units at $1.97 per Unit, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated August 18, 1995, as
supplemented and amended (the "Offer to Purchase"), and this Letter of
Transmittal (which together constitute the "Offer"). Receipt of the Offer to
Purchase is hereby acknowledged.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF UNITS TENDERED
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
NUMBER
OF UNITS
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK) TENDERED(1)
- ----------------------------------------------------------------------------------------------------------------
(i) All [_]
(Please check box if all
Units tendered)
OR
(ii) Number
Tendered: ____
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- -------
(1) In order for the tender to be valid, a Unitholder must tender either (i)
all Units owned by such Unitholder OR (ii) a portion of the Units but not
fewer than 100 Units (80 Units for IRAs or other Qualified Plans) (the
"Minimum Investment Amount"). If a Unitholder does not indicate the number
of Units tendered, the Purchaser will assume that such Unitholder has
tendered all Units owned of record by him. If a Unitholder who tenders
only a portion of his Units indicates a number of Units tendered that is
less than the Minimum Investment Amount, the Purchaser will assume that
such Unitholder has tendered the Minimum Investment Amount.
H
<PAGE>
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to such
Units tendered hereby. The undersigned hereby irrevocably (i) constitutes and
appoints the Purchaser as the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Units, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with
an interest), to deliver such Units and transfer ownership of such Units on
the books of the Partnership, together with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser and, upon
payment of the purchase price in respect of such Units by the Purchaser, to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Units and (ii) assigns to the Purchaser all future distributions from
the Partnership with respect to such Units for periods ending after June 30,
1995, to the extent such distributions are not paid to the undersigned (the
undersigned recognizes that future distributions with respect to such Units
for periods ending after June 30, 1995, that are paid to the undersigned will
automatically reduce the purchase price for such Units by a like amount), all
in accordance with the terms of the Offer. Subject to and effective upon
acceptance for payment of any Units tendered hereby, the undersigned hereby
requests that the Purchaser be recognized as a Unitholder under the terms of
the Partnership Agreement of the Partnership. Upon the purchase of Units
pursuant to the Offer, all prior proxies, assignments and consents given by
the undersigned with respect to such Units will be revoked and no subsequent
proxies, assignments or consents may be given (and if given will not be deemed
effective).
The undersigned recognizes that, if more than 270,946 Units are validly
tendered prior to or on the Expiration Date and not properly withdrawn, the
Purchaser will, upon the terms of the Offer, accept for payment from among
those Units tendered prior to or on the Expiration Date 270,946 Units on a pro
rata basis, with adjustments to avoid purchases of certain fractional Units,
based upon the number of Units validly tendered prior to the Expiration Date
and not withdrawn. The undersigned further recognizes that if no more than
270,946 Units are validly tendered prior to the Expiration Date and not
withdrawn, the Purchaser will, upon the terms of the Offer, accept for payment
all such Units.
The undersigned hereby represents and warrants that the undersigned owns the
Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, and such Units
will not be subject to any adverse claim. Upon request, the undersigned will
execute and deliver any additional documents deemed by the Purchaser to be
necessary or desirable to complete the assignment, transfer and purchase of
Units tendered hereby.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that in certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Units
tendered hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment will be destroyed by the
Depositary. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
THERE ARE NO CERTIFICATES TO BE INCLUDED
WITH THIS LETTER OF TRANSMITTAL
<PAGE>
The Unitholder hereby tenders Units pursuant to the terms of the Offer. The
Unitholder hereby certifies, under penalties of perjury, that the information
and representations provided herein, including in Box A of this Letter of
Transmittal, which has been duly completed by the Unitholder, are true,
complete and correct as of the date hereof.
-----------------------------------------------------
OWNERS SIGN HERE TO TENDER
(ATTACH ADDITIONAL SHEETS, IF NECESSARY)
If this Letter of Transmittal is not signed exactly
as a name(s) appear(s) above, or if this Letter of
Transmittal is signed by a general partner,
corporate officer or other person acting in a
fiduciary or representative capacity, please
complete BOX B. (See Instruction 1)
SIGN -- X ___________________________________________________ -- SIGN
HERE -- X ___________________________________________________ -- HERE
Taxpayer Identification Number:
_____________________________________________________
Date: _____________________ , 1995
Bus. Tel.: ( )_____________________________________
-----------------------------------------------------
<PAGE>
BOX A
- --------------------------------------------------------------------------------
PART I--Please provide the Social Security Number
TIN of the Unitholder or Employer
submitting that Letter of Identification Number:
SUBSTITUTE Transmittal in the box at
FORM W-9 right or, if applicable,
DEPARTMENT OF write "Applied For" in such
THE TREASURY box. ----------------------
INTERNAL
REVENUE Please check the Individual, Sole
SERVICE appropriate box describing Proprietor Corporation
(SEE the Unitholder: Partnership
INSTRUCTION 3)
(ATTACH -----------------------
ADDITIONAL Other
COPIES FOR -------------------------------------------------------
JOINT PART II--Certification--The Unitholder submitting
UNITHOLDERS) this Letter of Transmittal hereby certifies the
following:
(1) The TIN shown in Part 1 above is the correct TIN
of the Unitholder who is submitting this Letter of
Transmittal. If the box in Part 1 states the words
"Applied For," a TIN has not been issued to the
Unitholder, and either (a) the Unitholder has mailed
or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Adminis-
PAYER'S REQUEST FOR tration Office, or (b) the Unitholder intends to
TAXPAYER IDENTIFICATION mail or deliver an application in the near future.
NUMBER ("TIN") The Unitholder understands that if such Unitholder
does not provide a TIN to the Purchaser within sixty
(60) days, 31% of all reportable payments made to
the Unitholder thereafter will be withheld until a
TIN is provided to the Purchaser; and
(2) Unless this box [_] is checked, such Unitholder
is not subject to backup withholding either because
such Unitholder has not been notified by the IRS
that such Unitholder is subject to backup withhold-
ing as a result of a failure to report all interest
or dividends, or because the IRS has notified such
Unitholder that such Unitholder is no longer subject
to backup withholding.
(Note: You must place an "X" in the box in (2) above
if you have been notified by the IRS that you are
currently subject to backup withholding because of
underreporting of interest or dividends on your tax
return.)
- -------------------------------------------------------------------------------
BOX B
- -------------------------------------------------------------------------------
NON-CONFORMING SIGNATURES AND FIDUCIARIES SIGN HERE
(SEE INSTRUCTION 1)
(ATTACH ADDITIONAL COPIES FOR JOINT UNITHOLDERS)
The undersigned, if signing this Letter of Transmittal on behalf of the
Unitholder, hereby declares that he, she or it has the authority to sign
this document on behalf of such Unitholder.
Fiduciary: X _______________________
Printed Name: ______________________ Address: ___________________________
Title: _____________________________ ____________________________________
Bus. Tel.: (___)____________________
NOTARIZATION OF SIGNATURE
(IF REQUIRED. SEE INSTRUCTION 1)
))
State of )
))
County of )
))
On this ___ day of ______, 1995, before me came personally _________________
to me known to be the person who executed the foregoing Letter of Transmittal.
____________________________________
Notary Public
OR
GUARANTEE OF SIGNATURE
(IF REQUIRED. SEE INSTRUCTION 1)
Name of Firm: ______________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
AMERICAN INCOME PARTNERS III-C LIMITED PARTNERSHIP
LETTER OF TRANSMITTAL INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. TENDER, SIGNATURE REQUIREMENTS; DELIVERY. After carefully reading and
duly completing this Letter of Transmittal, to tender Units a Unitholder must
sign in the signature block on the front of this Letter of Transmittal. If
this Letter of Transmittal is signed by the registered Unitholder(s) of the
Units as printed on the front of this Letter of Transmittal without any change
whatsoever, no notarization or signature guarantee on this Letter of
Transmittal is required. Similarly, if Units are tendered for the account of a
member firm of a registered national security exchange, a member firm of the
National Association of Securities Dealers, Inc. or a commercial bank, savings
bank, credit union, savings and loan association or trust company having an
office, branch or agency in the United States (each, an "Eligible
Institution"), no notarization or signature guarantee is required on this
Letter of Transmittal. In all other cases, signatures on this Letter of
Transmittal must either be notarized or guaranteed by an Eligible Institution,
by completing the Notarization or Guarantee of Signature set forth in BOX B of
this Letter of Transmittal. If any tendered Units are registered in the names
of two or more joint holders, all such holders must sign this Letter of
Transmittal. If this Letter of Transmittal is signed by trustees,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing and must submit proper evidence satisfactory to the
Purchaser of their authority to so act. For Units to be validly tendered, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required notarizations or signature guarantees in
BOX B and any other documents required by this Letter of Transmittal must be
received by the Depositary prior to or on the Expiration Date at its address
or to its facsimile number set forth herein. No alternative, conditional or
contingent tenders will be accepted. All tendering Unitholders by execution of
this Letter of Transmittal waive any right to receive any notice of the
acceptance of their tender.
2. TRANSFER TAXES. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable on the transfer to it of Units pursuant to the Offer.
3. SUBSTITUTE FORM W-9. In order to avoid 31% federal income tax backup
withholding on the payment of the purchase price for Units purchased, the
tendering Unitholder must provide to the Purchaser the Unitholder's correct
Taxpayer Identification Number ("TIN") and certify, under penalties of
perjury, that such Unitholder is not subject to such backup withholding by
completing the Substitute Form W-9 set forth in BOX A of this Letter of
Transmittal. If a correct TIN is not provided, penalties may be imposed by the
Internal Revenue Service ("IRS") in addition to the Unitholder being subject
to backup withholding. Certain Unitholders (including, among others, all
corporations) are not subject to backup withholding. Backup withholding is not
an additional tax. If withholding results in an overpayment of taxes, a refund
may be obtained from the IRS.
The TIN that must be provided on the Substitute Form W-9 is that of the
registered Unitholder(s) indicated on the front of this Letter of Transmittal.
Write the words "Applied For" in the box in Part I of the Substitute Form W-9
if the tendering Unitholder has applied for but has not been issued a TIN or
intends to apply for a TIN in the near future. If the words "Applied For" are
written in the box in Part I of the Substitute Form W-9 and the Purchaser is
not provided with the Unitholder's TIN within 60 days, the Purchaser will
withhold 31% of all payments of the purchase price for the Units until such
TIN is provided to the Purchaser.
4. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF
TRANSMITTAL. Requests for assistance or additional copies of the Offer to
Purchase and this Letter of Transmittal may be obtained from the Information
Agent at the address or telephone number set forth below:
The Information Agent is:
D.F. King & Co., Inc.
77 WATER STREET
NEW YORK, NY 10005
1-800-848-3051
IMPORTANT: IN ORDER TO PARTICIPATE IN THE OFFER, THIS LETTER OF TRANSMITTAL
(OR FACSIMILE HEREOF) MUST BE RECEIVED BY THE DEPOSITARY ON OR
PRIOR TO THE EXPIRATION DATE.
<PAGE>
ATLANTIC ACQUISITION
LIMITED PARTNERSHIP
98 North Washington Street
Boston, Massachusetts 02114
October 3, 1995
Dear Unitholder:
The enclosed Supplement dated October 3, 1995 supplements and amends the
Offer to Purchase dated August 18, 1995 previously provided to you. As
described in the Offer to Purchase and the Supplement, Atlantic Acquisition
Limited Partnership (the "Purchaser") is offering to purchase Units you own
representing limited partnership interests of American Income Partners III-C
Limited Partnership.
The Supplement is being provided to you in connection with the proposed
settlement of class action litigation brought against the Purchaser and others
in connection with the Offer. In accordance with the proposed settlement, the
Purchase Price has been increased from $1.85 per Unit to $1.97 per Unit, and
the number of Units sought pursuant to the Offer has been decreased to 270,946
Units. In order to permit all Unitholders adequate time to evaluate the
additional information in the Supplement, the Purchaser has decided to extend
the date for the expiration of the Offer until 5 p.m., Eastern time, on
October 20, 1995. THE INCREASED PURCHASE PRICE WILL BE PAID FOR ALL UNITS
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT THE UNITS WERE
TENDERED PRIOR TO THE INCREASE.
We suggest that you review the enclosed Supplement and the Offer to Purchase
with your personal financial and tax advisor. After carefully reading the
enclosed Supplement in conjunction with the Offer to Purchase, if you elect to
tender your Units and have not already done so, deliver (using the enclosed
pre-addressed, postage-paid envelope if delivery is by First Class Mail) or
telecopy a duly completed and executed copy of the Letter of Transmittal, and
any documents required by the Letter of Transmittal, to:
State Street Bank and Trust Company
By First Class Mail: By Facsimile:
(617) 774-4519
Corporate Reorganization
P.O. Box 9061 Confirm Facsimile by
Telephone:
Boston, MA 02205-8686
(617) 774-4511
IF YOU HAVE ALREADY TENDERED YOUR UNITS BY COMPLETING AND RETURNING THE BLUE
LETTER OF TRANSMITTAL PREVIOUSLY PROVIDED TO YOU, YOU DO NOT NEED TO EXECUTE
AN ADDITIONAL LETTER OF TRANSMITTAL. ALL UNITS ACCEPTED FOR PAYMENT WILL
RECEIVE THE INCREASED PURCHASE PRICE.
IF YOU HAVE ANY QUESTIONS, PLEASE CALL D.F. KING & CO., INC. AT 1-800-848-
3051.
ATLANTIC ACQUISITION
LIMITED PARTNERSHIP
H
<PAGE>
NATWEST BANK N.A.
175 WATER STREET
NEW YORK, NEW YORK 10038
August 31, 1995
Atlantic Acquisition Limited Partnership
c/o American Finance Group
98 North Washington Street
Boston, MA 02114
Gentlemen:
Atlantic Acquisition Limited Partnership, a Massachusetts limited
partnership (the "Borrower"), has requested that NatWest Bank N.A. ("NatWest")
provide a term loan facility (the "Facility") in the principal amount not to
exceed Twenty-Seven Million Dollars ($27,000,000.00) Dollars, the proceeds of
which will be used by the Borrower to purchase (the "Acquisition") limited
partnership interests (the "Units") in publicly-owned limited partnerships
sponsored by American Finance Group (the "Public Programs").
Based on our discussions and on the projections, financial statements, both
pro forma and historical, and other information furnished by the Borrower to
NatWest, and subject to the conditions set forth below and in the Facility
Outline (as defined below), this letter evidences the willingness of NatWest,
on the terms and conditions set forth or referred to herein, to provide the
Facility to the Borrower.
Attached to and forming part of this letter as Schedule A is an outline of
the principal terms and conditions of the Facility (the "Facility Outline").
Various terms essential to the Facility are not set forth in the Facility
Outline, and must still be developed and agreed upon. Moreover, the Facility
Outline does not purport to include all of the conditions, covenants,
representations, warranties, defaults, and other terms customary to
transactions of this nature or otherwise appropriate in the context of these
transactions which would be contained in the definitive documents for the
Facility, all of which must be satisfactory in form and substance to us and
our counsel prior to our proceeding with the proposed Facility. We
specifically reserve the right to propose additional terms, conditions,
covenants, representations, warranties and defaults for the final documents
that are not specified in the Facility Outline and which are not materially
inconsistent with the terms in the Facility Outline. Furthermore, all
documents and other matters relating to the transactions being financed with
the Facility, including, without limitation, all underlying acquisition
documents for the Units, must be in form and substance satisfactory to us and
our counsel.
In providing the Facility, we may sell participations and/or admit syndicate
lenders (for which we will act as agent) who will assume a portion of our
commitment to make loans under the Facility. You agree to provide NatWest,
promptly upon request, with all information (such information to remain
confidential by and among NatWest and any participants or syndicate lenders)
which NatWest deems appropriate or advisable to provide potential purchasers
of a participation or syndicate interest in the Facility. You further agree to
use your reasonable efforts to make the appropriate officers and
representatives of the Borrower and American Finance Group available to
participate in information meetings for potential syndicate members and
participants at such times and places as NatWest may reasonably request.
You represent and warrant that (a) all information which has been or is
hereafter made available to NatWest by you or any of your representatives in
connection with the transactions contemplated hereby is and will be complete
and correct in all material respects for the purposes prepared and does not
and will not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such
statements are made, and (b) all financial projections that have been or will
hereafter be prepared by you and made available to NatWest or any other
syndicate lenders or participants in the Facility have been or will be
prepared in good faith based upon reasonable assumptions, which assumptions
shall be disclosed as part of such projections. You agree
<PAGE>
at the request of NatWest to supplement the information and projections
referred to in clauses (a) and (b) above from time to time so that the
representation and warranty in the preceding sentence remains correct.
Our willingness to provide the Facility is conditioned upon, among other
things, (i) there being no material adverse change in our judgment in the
business, assets, results of operations, financial condition or prospects of
the Public Programs or the Borrower since the date of the last audited
financial statements of the Public Programs furnished to us which would, in
turn have a material adverse effect on the Borrower's ability to service the
Facility, (ii) all information, including all financial information, which is
furnished to us being true, accurate and complete in all material respects and
(iii) all legal matters relating to the Acquisition being acceptable to us and
our counsel, including, without limitation, receipt of an opinion of counsel
in form and substance satisfactory to us that the offering and acquisition of
the Units has been conducted in accordance with all applicable securities laws
and other laws and regulations. If in the course of documenting the proposed
transactions and our continued analysis of financial and other information
relating to the Borrower and the transactions to be financed by the Facility,
we discover that any of the foregoing conditions or any other conditions
specified in the Facility Outline will in our judgment not be met, we reserve
the right to terminate any commitment which we have to provide the Facility.
The Borrower, by its acceptance of this letter, hereby agrees to the terms
and provisions governing the Facility set forth herein and in the Facility
Outline. Whether or not the Facility is provided or any loan documents are
executed or the transactions contemplated hereby are consummated, the Borrower
by its acceptance of this letter hereby agrees (i) to pay NatWest the
arrangement fee referred to in the Facility Outline (but only on the terms and
conditions referred to in the Facility Outline) (ii) to pay on demand all out-
of-pocket costs and expenses incurred by us in connection with this letter and
the preparation, negotiation, execution and delivery of the loan agreement,
guaranties, security documents and all other agreements, documents and
instruments executed in connection herewith and therewith, including, without
limitation, our attorneys' fees and expenses (subject to a mutually agreed-
upon limitation of $60,000 for fees (assuming the documents for each Public
Partnership are substantially the same) plus disbursements and $2,000 to
$2,500 for fees plus disbursements for each drawdown after the initial
drawdown) and (iii) to indemnify, defend and hold harmless us and each
participant and syndicate lender and our and their respective directors,
officers, agents, employees and counsel from and against any and all losses,
claims, judgments or expenses incurred by us or any of them in connection
with, whether directly or indirectly, our commitment, the Facility, the loans
made thereunder, the Acquisition and other transactions to which the Facility
relates, or otherwise, including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any litigation, investigation, claim or proceeding, except
where the proposed indemnitee has been finally determined by a court of
competent jurisdiction to have committed willful misconduct or acted with
gross negligence. The Borrower's obligations in this paragraph shall survive
any termination of this letter or the transactions contemplated herein.
If the foregoing is acceptable to you, kindly sign and return a copy of this
letter to us by no later than August 31, 1995. In the event we do not receive
from you an executed copy of this letter by our close of business on such date
then this letter shall be deemed null and void in all respects and of no force
and effect. If we are unable to agree to definitive terms and conditions and
enter into definitive agreements by October 15, 1995 (provided that if we are
unable to enter into definitive agreements by October 15, 1995 because of
litigation pending, threatened or commenced with respect to the Acquisition,
the Public Programs or this proposed Facility, then such date shall be
extended to January 15, 1996), neither of us shall have any obligation with
respect to the proposed Facility, except for the Borrower's obligations under
the preceding paragraph of this letter, which shall continue in full force and
effect.
This letter shall not be assignable by the Borrower, except with our prior
written consent, and any attempted or purported assignment without such
consent shall be void. If this letter becomes the subject of a dispute, each
of the parties hereto waives trial by jury in such dispute. This letter shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely therein.
2
<PAGE>
Neither NatWest nor any participant or syndicate lender shall be liable
under this letter or any loan documents or in respect of any act, omission or
event relating to the Acquisition or financing transactions contemplated
herein or therein, on any theory of liability, for any special, indirect,
consequential or punitive damages.
This letter is confidential, and is furnished solely for the Borrower's
benefit and may not be relied upon by any other person or entity. The Borrower
is not authorized to show or circulate this letter to any person or entity
(other than its legal and financial advisors in connection with its evaluation
hereof, who shall agree to maintain their confidentiality) until such time as
the Borrower has accepted this letter as provided in the immediately preceding
paragraph. If this letter is not accepted by the Borrower as provided above,
the Borrower is directed to immediately return this letter (and any copies
hereof) to the undersigned.
Very truly yours,
NatWest Bank N.A.
By: /s/ Harris C. Mehos
----------------------------------
Title: Vice President
The foregoing is hereby
agreed to and accepted
this 31st day of August, 1995
Atlantic Acquisition Limited Partnership
By: AAL Inc., its general partner
By: /s/ James A. Coyne
_______________________________
Title: Clerk
3
<PAGE>
TENDER OFFER ACQUISITION FACILITY
SUMMARY OF TERMS
SCHEDULE A
Borrower: Atlantic Acquisition Limited Partnership, a special
purpose Massachusetts limited partnership (the
"Borrower") of which the General Partner is AAL, Inc.
("GP").
Facility: A multi-draw term loan (the "Term Loan") facility
with all take downs required to be made not later
than 90 days from initial drawdown.
Use of Proceeds: The proceeds of the Term Loan will be used by the
Borrower solely to fund the Acquisition (the
"Acquisition") and related costs and expenses,
initiated by the Borrower, of up to 45% of each of
the limited partnership units ("the LP Units") of
certain of the public partnerships currently managed
by American Finance Group ("AFG") and in which
affiliates of AFG are the sole general partners (the
"Public Partnerships").
Lenders: NatWest Bank N.A. will propose to underwrite the
entire commitment amount with the right to sell-down
a portion of its commitment to another lender or
lenders or to sell participations to another lender
or lenders. In the event of a sell-down, an Agency
Administration Fee is to be paid by the Borrower in
the amount of $40,000 per annum payable quarterly.
Agent: NatWest Bank N.A. (in such capacity, the "Agent").
Amount: All as set forth in Schedule B hereto, up to
$27,000,000; provided, however, that in no event
shall (i) with respect to the financing of the
Acquisition by the Borrower of LP Units, aggregate
drawdowns exceed the maximum Program Amount, and (ii)
the aggregate of all drawdowns exceed the Maximum
Loan Amount. As shown in Schedule B, the Maximum Loan
Amount includes third party offering and
organizational expenses (including, but, not limited
to, legal, accounting, printing, mailing, financial
institution fees and expenses, information agent and
depositary costs and fees, and any and all other out
of pocket costs, expenses and fees incurred by or on
behalf of the Borrower of a similar nature) in an
amount not to exceed $680,000 (the "Offering
Expenses") and the Upfront Fee described below.
All initial limited partners of the Borrower shall
severally unconditionally guarantee (by way of
additional capital contributions to be made to the
Borrower) repayment of that portion of the Term Loan
that was drawn to cover Offering Expenses, provided,
however, that at all times that the Borrower shall be
in compliance with the Maintenance Covenant described
below, then the Bank's right to enforce such
guarantee shall be suspended but further provided
that any such suspension shall cease and the Bank
shall have the right to enforce such guarantee in the
event and at any time that the Borrower is not in
compliance with the Maintenance Covenant.
Final Maturity: Four years from closing of each drawdown.
Interest: LIBOR (reserve adjusted) plus 350 basis points.
Upfront Fee: 2% on the amount of each drawdown to be paid at each
drawdown. Maximum aggregate fee will be $353,750 and
minimum fee will be $100,000.
4
<PAGE>
Arrangement Fee: An arrangement fee of $100,000 will be payable by the
Borrower to NatWest Bank if the closing of the
facility does not occur by October 15, 1995 or if the
closing does occur by such date but the Borrower does
not draw down any funds under the facility by January
15, 1996, provided that:
(a) no arrangement fee will be payable if NatWest
Bank declines to close the Facility or fund under
the Facility because of (i) a material adverse
change in any of the Public Programs or the
Borrower which would have, in turn, a material
adverse effect on the Borrower's ability to
service the Term Loan or (ii) NatWest Bank
declines to proceed for a reason other than
breach by the Borrower of a representation,
warranty or covenant or failure of a condition or
other reason expressly set forth herein; and
(b) if NatWest Bank or the Borrower declines to close
the Facility or declines to fund under the
Facility because of litigation pending,
threatened or commenced with respect to the
Acquisition, the Public Programs or this proposed
Facility, then payment of the arrangement fee
shall be postponed until the earliest of i) the
date of the expiration or termination of this
letter, or ii) the date of termination of such
litigation, or iii) January 15, 1996. If NatWest
Bank or the Borrower declines to close this
Facility or declines to fund under the Facility
on or before January 15, 1996 because of such
litigation, then the arrangement fee payable by
the Borrower to NatWest Bank, shall be $50,000.
Drawdowns: Each drawdown shall be in a minimum amount of
$500,000 and no drawdown shall be made later than 90
days after the initial drawdown. Initial drawdown to
occur no later than October 15, 1995, provided that
such date shall be extended to a date no later than
January 15, 1996 in the event that initial drawdown
does not occur by October 15, 1995 because of
litigation pending, threatened or commenced with
respect to the Acquisition, the Public Programs or
this proposed Facility. In the event of such an
extension, all drawdowns must be made by January 15,
1996.
Interest Payments: Payments of interest on the principal amount
outstanding under the Term Loan will be payable
quarterly in arrears based on a 360 day year.
Borrower shall hedge interest rate risk through
interest rate swap or cap within 90 days from final
drawdown with counterparty acceptable to NatWest
Bank.
Scheduled Principal
Payments: Each drawdown of the Term Loan will be payable in
sixteen (16) consecutive quarterly installments to be
calculated based on the projected amount of cash flow
available from the firm term lease payments and to be
agreed to by Lenders prior to drawdown.
Mandatory Pre-Payments: A mandatory prepayment of principal outstanding on
the Term Loan shall be made quarterly on the
Scheduled Principal Payment date in an amount equal
to the Distributable Cash Amount (as defined below)
for the immediately preceding calendar quarter.
Mandatory prepayments of the Term Loan described in
the preceding paragraph shall be applied pro rata to
the remaining scheduled installments of principal
with respect to each drawdown of the Term Loan.
5
<PAGE>
"Distributable Cash Amount" shall mean cash received
from all sources less current and accrued interest
and principal payments and less accounting, legal,
printing and other third party expenses ("Operating
Expenses") and any Agency Administration Fee.
Operating Expenses not to exceed $100,000 per year.
Optional Pre-Payments: The Borrower shall have the right to make optional
prepayments of the Term Loan at the end of each
interest period in minimum principal amounts of
$250,000.
Collection Account: Until repayment in full of all outstanding principal
of the Term Loan together with all interest, all
distributions from Programs payable to the Borrower
shall be paid directly by the Programs into a
Collection Account maintained by the Agent from which
all scheduled principal amounts together with accrued
interest, when and as due, shall be deducted. The
Borrower shall have the right to request the Agent to
make withdrawals from the Collection Account for
payments of any and all Operating Expenses and any
Agency Administration Fee.
Collateral: The Agent shall have a first priority perfected
security interest subject to no other liens in:
1. All assets of the Borrower including without
limitation the Purchased Units;
2. The stock of the GP;
3. All the Partners', including the GP's interest in
the Borrower; and
4. The Collection Account;
Recourse: The obligations under the Term Loan will be fully
recourse to the Borrower and to the GP.
Conditions Precedent: Customary and usual for transactions of this type by
the Agent and others appropriate in the context of
the proposed transaction, including but not limited
to:
1. The Acquisition and the Tender Offer documentation
shall be in full force and effect and shall have
been provided to the Lenders and shall be in form
and substance satisfactory to NatWest Bank and its
counsel;
2. All conditions under the Tender Offer Materials
precedent to the consummation of the Tender Offers
with respect to the LP Units then being acquired
shall have been satisfied. The Borrower shall have
received all necessary governmental, regulatory
and other third party approvals and the Tender
Offer and the Acquisition shall have complied with
all legal and regulatory requirements including
securities laws and regulations, and the Lenders
and the Agent shall have received an opinion of
counsel satisfactory to them to the effect of all
of the foregoing;
3. The Borrower shall have received cash proceeds
aggregating 10% of the aggregate purchase price of
the Purchased Units representing equity
contributions from its partners and shall have
utilized such proceeds in the manner set forth on
Schedule B (use of proceeds) hereto to purchase
the LP Units and to pay any related fees and
expenses as contemplated above under "Use of
Proceeds" not funded through drawdowns.
6
<PAGE>
4. Each of the Programs and each of the general
partners thereof shall be in legal existence and
in good standing in each of the jurisdictions of
their organization and in all other applicable
jurisdictions;
5. Each of the documents relating to the structure
and operation of the Borrower shall be
satisfactory in form and substance to the Lenders;
6. The Lenders and the Agent shall have received
evidence (including legal opinions and certified
copies of applicable partnerships and operating
documents) satisfactory in form and substance to
the Lenders and the Agent that the documents to be
furnished to the Lenders and the Agent in
connection with this financing have been duly
authorized, executed and delivered by all
necessary parties and constitute the legal, valid
and binding obligations of the parties thereto,
enforceable in accordance with their terms,
compliance with all applicable laws including the
Securities Laws and Regulations G, U, T, X of the
Federal Reserve System, and absence of any liens
on the collateral except those in favor of the
Agent;
7. A field examination of the servicer and of
financial information provided to Lenders in
connection with this transaction to include a
review of asset collateral values shall occur
prior to closing.
8. All documentation relating to the programs,
including without limitation, provisions as to the
transferability of LP Units and the rights of
holders of L.P. units to participate in cash flows
and distribution of programs shall be satisfactory
in all respects to the Lenders and the Agent.
9. All legal matters shall be satisfactory in all
respects to counsel for the Agent.
10. No material adverse event in the judgment of the
Lenders occurring with respect to any of the
Public Programs or the Borrower, which would, in
turn, have a material adverse effect on the
Borrower's ability to service the Term Loan.
11. No litigation with respect to the Acquisition or
this financing transaction shall be pending,
threatened or commenced.
12. The limited partners of the Borrower to be no one
other than Geoffrey MacDonald, James Coyne, Gary
Engle, and any entity affiliated with one or more
of them (the "Initial Limited Partners.")
13. Most recent audited annual and unaudited
quarterly financial statements for all
partnerships shall have been delivered to the
Lenders and the Agent and shall be acceptable to
the Lenders and the Agent.
Representations and
Warranties: Customary and usual for transactions of this type by
the Agent and others appropriate in the context of
the proposed transaction, including, without
limitation, that all financial information and other
materials furnished to the Lenders and the Agent
shall be true and complete and that the Maximum
Program Amount on Schedule B shall not exceed 90% of
the Net Present Value of the amount to be distributed
to LP Unitholders from cash and the firm term lease
payments allocable for each LP Unit purchased
pursuant to the Tender Offer.
7
<PAGE>
Covenants: Customary and usual for transactions of this type by
the Agent and others appropriate in the context of
the proposed transaction, to include without
limitation the following:
1. A minimum net worth covenant on the Borrower (to
be determined) not to exceed $1,000,000.
2. A maintenance covenant whereby outstanding
advances less Upfront Fees and Offering Expenses
under the Term Loan will never exceed 90% of the
net present value of the lease payments and cash
on hand (the "Maintenance Covenant"). For the
purposes of the Maintenance Covenant only,
Offering Expenses shall be reduced on a pro-rata
basis with reductions in the overall outstanding
principal advance.
In the event that the Maintenance Covenant is
violated, each of the General Partner and the
Initial Limited Partners (collectively the
"Partners") will cause the Borrower to take all
action necessary to effect a cure of such
violation. Further, the Partners will use their
reasonable best efforts with respect to the Public
Partnerships managed by AFG (but only to the
extent consistent with any fiduciary duties they
may have to investors in the Public Partnerships
and any powers that they may have with respect to
the Public Partnerships) to reduce aggregate
lessee concentrations of the Public Partnerships
so that the lessees with the three largest lease
obligations to the Public Partnerships will not
individually constitute more than 10% of the
future minimum rents to be collected from all
lessees in the Public Partnerships. For purposes
of the preceding sentence, "reasonable best
efforts" shall be satisfied if the Partners make
good faith inquiries of not less than two third
party independent institutional lenders seeking
non-recourse financing and proceed in good faith
to close any such financings committed to by such
institutional lenders, on terms reasonable and
customary in the equipment leasing industry, of
the future minimum rents of the leases to which
such lessees are parties.
In no event shall the obligations of the Initial
Limited Partners set forth above constitute a
guarantee of payment or performance of the
Borrower's obligations to the Lenders or
constitute an obligation on the part of such
Limited Partners to make additional capital
contributions in any amount to the Borrower.
Except for claims for breach of the limited
obligations of the Initial Limited Partners as set
forth above, there shall be no other recourse to
such Initial Limited Partners for such
obligations.
3. The Borrower shall not have any assets other than
Purchased Units and the Collection Account and no
liabilities other than the Term Loan and Operating
Expenses and Agency Administration Fee.
4. No change in partners of the Borrower without
Lenders' prior approval which shall not be
unreasonably withheld.
Events of Default: Customary and usual for transactions of this type
by the Agent and others appropriate in the context
of the proposed transaction (subject to customary
and reasonable cure periods where applicable),
including but not limited to:
1. Failure to pay principal or interest when due;
2. Failure to make required deposits into the
Collection Account;
8
<PAGE>
3. Failure to pay taxes or other impositions;
4. Any representation or warranty in the loan
documents having been untrue in any material
respect as of the date made or deemed made;
5. Bankruptcy or insolvency of the Borrower or the
GP;
6. Direct or indirect change in control of the
Borrower or control or management of the Borrower;
7. Dissolution or other termination of the Borrower
or the GP;
8. Breach of other covenants in the loan documents;
9. Failure of any security for the Term Loan;
10. Material adverse change in any of the Public
Programs or the Borrower which would, in turn
have in the Lenders' judgment, causing a material
adverse impact on the Borrower's ability to
service the Term Loan.
Other: Legal fees and expenses for the account of the
Borrower. Legal fees of the Agent and the Lenders in
connection with the closing of this financing not to
exceed $60,000 (assuming that the documents for each
of the Public Partnerships are substantially the
same) plus disbursements with an additional $2,000 to
$2,500 plus disbursements for each set of Public
Partnership documents received after the first one.
Out-of-pocket expenses associated with pre-closing
field examination and third party appraisals to be
for the account of the Borrower not to exceed
$10,000.
Documentation, including opinions of counsel, in
satisfactory form and substance to the Agent, Lenders
and the Agent's Counsel.
9
<PAGE>
ATLANTIC ACQUISITION LIMITED PARTNERSHIP
SCHEDULE B
<TABLE>
<CAPTION>
OFFER NUMBER MAXIMUM
PRICE OF UNITS ESTIMATED LOAN INDIVIDUAL
PER TENDERED PURCHASE PER LOAN
PROGRAM UNIT FOR PRICE UNIT AMOUNTS
------- ----- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C>
American Income 4 Limited Partner-
ship............................. 16.00 36,000 576,000 14.18 510,480
American Income 5 Limited Partner-
ship............................. 17.00 32,083 545,411 15.23 488,624
American Income 6 Limited Partner-
ship............................. 18.50 27,234 503,829 16.65 453,446
American Income 7 Limited Partner-
ship............................. 17.56 32,133 564,255 15.80 507,701
American Income 8 Limited Partner-
ship............................. 19.13 33,683 644,356 17.22 580,021
American Income Partners III-A
Limited Partnership.............. 1.30 454,056 590,273 1.13 513,083
American Income Partners III-B
Limited Partnership.............. 1.50 507,299 760,949 1.35 684,854
American Income Partners III-C
Limited Partnership.............. 1.85 348,359 644,464 1.67 581,760
American Income Partners III-D
Limited Partnership.............. 1.50 233,967 350,951 1.34 313,516
American Income Partners IV-A Lim-
ited Partnership................. 2.60 422,820 1,099,332 2.33 985,171
American Income Partners IV-B Lim-
ited Partnership................. 3.00 393,271 1,179,813 2.56 1,006,774
American Income Partners IV-C Lim-
ited Partnership................. 5.00 571,780 2,858,900 4.51 2,578,728
American Income Partners IV-D Lim-
ited Partnership................. 8.03 488,673 2,946,698 5.75 2,809,870
American Income Partners V-A Lim-
ited Partnership................. 5.25 621,297 3,261,809 4.73 2,938,735
American Income Partners V-B Lim-
ited Partnership................. 4.50 696,569 3,134,561 3.75 2,612,134
American Income Partners V-C Lim-
ited Partnership................. 4.22 418,699 1,766,910 3.80 1,591,056
American Income Partners V-D Lim-
ited Partnership................. 3.49 216,102 754,196 3.14 678,560
American Income Fund I-B,
a Massachusetts Limited Partner-
ship............................. 4.00 129,020 518,080 2.54 327,711
American Income Fund I-C,
a Massachusetts Limited Partner-
ship............................. 5.00 361,555 1,807,775 4.46 1,612,535
American Income Fund I-D,
a Massachusetts Limited Partner-
ship............................. 5.00 373,285 1,866,425 4.41 1,646,187
American Income Fund I-E,
a Massachusetts Limited Partner-
ship............................. 7.10 397,723 2,823,833 6.39 2,541,450
-----------
Maximum Program Amount.......... $25,962,395
Offering Expenses............. 680,000
Estimated Upfront Fee......... 353,750
"Maximum Loan Amount" $26,966,145
</TABLE>
10
