<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-19134
------------------------
AMERICAN INCOME PARTNERS V-C LIMITED
PARTNERSHIP
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3077437
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
88 BROAD ST., SIXTH FLOOR, BOSTON, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
Securities registered pursuant to Section 12(b) of the Act NONE
------------------------
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
---------------------------------------- ---------------------------------
Securities registered pursuant to Section 12(g) of the Act:
930,443 UNITS REPRESENTING LIMITED PARTNERSHIP INTEREST
(Title of class)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. Not applicable. Securities are nonvoting for this purpose.
Refer to Item 12 for further information.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to security holders for
the year ended December 31, 1998 (Part I and II)
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AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
PART I
Item 1. Business...................................................................................... 3
Item 2. Properties.................................................................................... 4
Item 3. Legal Proceedings............................................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........................................... 5
PART II
Item 5. Market for the Partnership's Securities and Related Security Holder Matters................... 5
Item 6. Selected Financial Data....................................................................... 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 7
Item 8. Financial Statements and Supplementary Data................................................... 7
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 7
PART III
Item 10. Directors and Executive Officers of the Partnership........................................... 8
Item 11. Executive Compensation........................................................................ 10
Item 12. Security Ownership of Certain Beneficial Owners and Management................................ 10
Item 13. Certain Relationships and Related Transactions................................................ 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................... 13-14
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS.
(a) General Development of Business
American Income Partners V-C Limited Partnership (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on December 27, 1989 for the purpose of
acquiring and leasing to third parties a diversified portfolio of capital
equipment. Partners' capital initially consisted of contributions of $1,000 from
the General Partner (AFG Leasing IV Incorporated) and $100 from the Initial
Limited Partner (AFG Assignor Corporation). On May 21, 1990, the Partnership
issued 930,443 units, representing assignments of limited partnership interests
(the "Units"), to 1,550 investors. Unitholders and Limited Partners (other than
the Initial Limited Partner) are collectively referred to as Recognized Owners.
The Partnership has one General Partner, AFG Leasing IV Incorporated, a
Massachusetts corporation and an affiliate of Equis Financial Group Limited
Partnership (formerly known as American Finance Group), a Massachusetts limited
partnership ("EFG"). The General Partner is not required to make any other
capital contributions except as may be required under the Uniform Act and
Section 6.1(b) of the Amended and Restated Agreement and Certificate of Limited
Partnership (the "Restated Agreement, as amended").
(b) Financial Information about Industry Segments
The Partnership is engaged in only one industry segment: the business of
acquiring capital equipment and leasing the equipment to creditworthy lessees on
a full payout or operating lease basis. Full payout leases are those in which
aggregate undiscounted noncancellable rents equal or exceed the acquisition cost
of the leased equipment. Operating leases are those in which the aggregate
undiscounted noncancellable rental payments are less than the acquisition cost
of the leased equipment. Industry segment data is not applicable.
(c) Narrative Description of Business
The Partnership was organized to acquire a diversified portfolio of capital
equipment subject to various full payout and operating leases and to lease the
equipment to third parties as income-producing investments. More specifically,
the Partnership's primary investment objectives were to acquire and lease
equipment that would:
1. Generate quarterly cash distributions;
2. Preserve and protect invested capital; and
3. Maintain substantial residual value for ultimate sale.
The Partnership has the additional objective of providing certain federal
income tax benefits.
The Closing Date of the Offering of Units of the Partnership was May 21,
1990. The initial purchase of equipment and the associated lease commitments
occurred on May 22, 1990. The acquisition of the equipment and its associated
leases is described in Note 3 to the financial statements included in Item 14,
herein. The Restated Agreement, as amended, provides that the Partnership is
expected to terminate no later than December 31, 2001. However, the Partnership
is a Nominal Defendant in a Class Action Lawsuit, the outcome of which could
significantly alter the nature of the Partnership's organization and its future
business operations. See Note 6 to the accompanying financial statements.
The Partnership has no employees; however, it is managed pursuant to a
Management Agreement with EFG or one of its affiliates (the "Manager"). The
Manager's role, among other things, is to (i) evaluate, select, negotiate, and
consummate the acquisition of equipment, (ii) manage the leasing, re-leasing,
financing, and refinancing of equipment, and (iii) arrange the resale of
equipment. The
3
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manager is compensated for such services as provided for in the Restated
Agreement, as amended, described in Item 13 herein, and in Note 4 to the
financial statements, included in Item 14, herein.
The Partnership's investment in equipment is, and will continue to be,
subject to various risks, including physical deterioration, technological
obsolescence and defaults by lessees. A principal business risk of owning and
leasing equipment is the possibility that aggregate lease revenues and equipment
sale proceeds will be insufficient to provide an acceptable rate of return on
invested capital after payment of all debt service costs and operating expenses.
In addition, the leasing industry is very competitive. The Partnership is
subject to considerable competition when equipment is re-leased or sold at the
expiration of primary lease terms. The Partnership must compete with lease
programs offered directly by manufacturers and other equipment leasing
companies, including limited partnerships and trusts organized and managed
similarly to the Partnership, and including other EFG-sponsored partnerships and
trusts, which may seek to re-lease or sell equipment within their own portfolios
to the same customers as the Partnership. Many competitors have greater
financial resources and more experience than the Partnership, the General
Partner and the Manager. In addition, default by a lessee under a lease may
cause equipment to be returned to the Partnership at a time when the General
Partner or the Manager is unable to arrange for the re-lease or sale of such
equipment. This could result in the loss of anticipated revenue.
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1998, 1997 and 1996 is
incorporated herein by reference to Note 2 to the financial statements in the
1998 Annual Report. Refer to Item 14(a)(3) for lease agreements filed with the
Securities and Exchange Commission.
EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the "Other Investment Programs"). The Company arranges to broker or originate
equipment leases, acts as remarketing agent and asset manager, and provides
leasing support services, such as billing, collecting, and asset tracking.
The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Mr. Engle
established Equis Corporation and GDE LP in December 1994 for the sole purpose
of acquiring the business of AFG.
In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group," and its acronym, to a third party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Partnership and the Other Investment Programs and to continue managing all
assets owned by the Partnership and the Other Investment Programs.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales
Not applicable.
ITEM 2. PROPERTIES.
Incorporated herein by reference to Note 3 to the financial statements in
the 1998 Annual Report.
4
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ITEM 3. LEGAL PROCEEDINGS.
Incorporated herein by reference to Note 6 to the financial statements in
the 1998 Annual Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S SECURITIES AND RELATED SECURITY HOLDER
MATTERS.
(a) Market Information
There is no public market for the resale of the Units and it is not
anticipated that a public market for resale of the Units will develop.
(b) Approximate Number of Security Holders
At December 31, 1998, there were 1,422 record holders of Units in the
Partnership.
(c) Dividend History and Restrictions
Pursuant to Article VI of the Restated Agreement, as amended, the amount of
cash distributions to be declared and paid to the Partners is determined on a
quarterly basis. Each quarter's distribution may vary in amount and is made 95%
to the Limited Partners and 5% to the General Partner. Generally, cash
distributions are paid within 30 days after the completion of each calendar
quarter.
Distributions in 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
GENERAL RECOGNIZED
TOTAL PARTNER OWNERS
---------- --------- -----------
<S> <C> <C> <C>
Total 1998 distributions...................................................... $ 330,573 $ 16,529 $ 314,044
Total 1997 distributions...................................................... 413,195 20,660 392,535
---------- --------- -----------
Total................................................................... $ 743,768 $ 37,189 $ 706,579
---------- --------- -----------
---------- --------- -----------
</TABLE>
Distributions payable were $82,643 at both December 31, 1998 and 1997.
There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket equipment upon lease expiration. Liquidity is
especially important as the Partnership matures and sells equipment, because the
remaining equipment base consists of fewer revenue-producing assets that are
available to cover prospective cash disbursements. Insufficient liquidity could
inhibit the Partnership's ability to sustain its operations or maximize the
realization of proceeds from remarketing its remaining assets. In particular,
the Partnership's ownership interests in commercial aircraft involve unique
risks resulting from the specialized nature of these assets and the potential
for the Partnership to incur significant remarketing costs at lease expiration.
Accordingly, the General Partner has maintained significant cash reserves within
the Partnership in order to minimize the risk of a liquidity shortage primarily
in connection with the Partnership's aircraft. At December 31, 1998, the
Partnership owned interests in two Boeing 727 aircraft, one of which was under
contract to be sold to a third party buyer subject to the buyer's right to
return the aircraft on or before May 15, 1999. See Notes 3 and 6 of the
accompanying financial statements concerning this aircraft. See also Note 7 of
the accompanying financial statements concerning the sale of the second aircraft
in January 1999.
5
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In addition, the Partnership is a Nominal Defendant in a Class Action
Lawsuit described in Note 6 to
the accompanying financial statements. A preliminary settlement agreement will
allow the Partnership to invest in new equipment or other activities, subject to
certain limitations, effective March 22, 1999. To the extent that the
Partnership has exposure to aircraft investments that could require capital
reserves, the General Partner does not anticipate that the Partnership will
invest in new assets, regardless of its authority to do so. Until the Class
Action Lawsuit is adjudicated, the General Partner does not expect that the
level of future quarterly cash distributions paid by the Partnership will be
increased above amounts paid in the fourth quarter of 1998. In addition, the
proposed settlement, if effected, will materially change the future
organizational structure and business interests of the Partnership, as well as
its cash distribution policies. See Note 6 to the accompanying financial
statements.
Cash distributions consist of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings.
"Distributable Cash From Operations" means the net cash provided by the
Partnership's normal operations after general expenses and current liabilities
of the Partnership are paid, reduced by any reserves for working capital and
contingent liabilities to be funded from such cash, to the extent deemed
reasonable by the General Partner, and increased by any portion of such reserves
deemed by the General Partner not to be required for Partnership operations and
reduced by all accrued and unpaid Equipment Management Fees and, after Payout,
further reduced by all accrued and unpaid Subordinated Remarketing Fees.
Distributable Cash from Operations does not include any Distributable Cash from
Sales or Refinancings.
"Distributable Cash From Sales or Refinancings" means Cash From Sales or
Refinancings as reduced by (i)(a) amounts realized from any loss or destruction
of equipment which the General Partner determines shall be reinvested in similar
equipment for the remainder of the original lease term of the lost or destroyed
equipment, or in isolated instances, in other equipment, if the General Partner
determines that investment of such proceeds will significantly improve the
diversity of the Partnership's equipment portfolio, and subject in either case
to satisfaction of all existing indebtedness secured by such equipment to the
extent deemed necessary or appropriate by the General Partner, or (b) the
proceeds from the sale of an interest in equipment pursuant to any agreement
governing a joint venture which the General Partner determines will be invested
in additional equipment or interests in equipment and which ultimately are so
reinvested and (ii) any accrued and unpaid Equipment Management Fees and, after
Payout, any accrued and unpaid Subordinated Remarketing Fees.
"Cash From Sales or Refinancings" means cash received by the Partnership
from sale or refinancing transactions, as reduced by (i)(a) all debts and
liabilities of the Partnership required to be paid as a result of sale or
refinancing transactions, whether or not then due and payable (including any
liabilities on an item of equipment sold which are not assumed by the buyer and
any remarketing fees required to be paid to persons not affiliated with the
General Partner, but not including any Subordinated Remarketing Fees whether or
not then due and payable) and (b) any reserves for working capital and
contingent liabilities funded from such cash to the extent deemed reasonable by
the General Partner and (ii) increased by any portion of such reserves deemed by
the General Partner not to be required for Partnership operations. In the event
the Partnership accepts a note in connection with any sale or refinancing
transaction, all payments subsequently received in cash by the Partnership with
respect to such note shall be included in Cash From Sales or Refinancings,
regardless of the treatment of such payments by the Partnership for tax or
accounting purposes. If the Partnership receives purchase money obligations in
payment for equipment sold, which are secured by liens on such equipment, the
amount of such obligations shall not be included in Cash From Sales or
Refinancings until the obligations are fully satisfied.
"Payout" is defined as the first time when the aggregate amount of all
distributions to the Recognized Owners of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings equals the aggregate amount of the
Recognized Owners' original capital contributions plus a cumulative annual
6
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return of 11% (compounded quarterly and calculated beginning with the last day
of the month of the Partnership's Closing Date) on their aggregate unreturned
capital contributions. For purposes of this definition, capital contributions
shall be deemed to have been returned only to the extent that distributions of
cash to the Recognized Owners exceed the amount required to satisfy the
cumulative annual return of 11% (compounded quarterly) on the Recognized Owners'
aggregate unreturned capital contributions, such calculation to be based on the
aggregate unreturned capital contributions outstanding on the first day of each
fiscal quarter.
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated herein by reference to the section entitled "Selected Financial
Data" in the 1998 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Incorporated herein by reference to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
1998 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Incorporated herein by reference to the financial statements and
supplementary data included in the 1998 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
7
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
(a-b) Identification of Directors and Executive Officers
The Partnership has no Directors or Officers. As indicated in Item 1 of this
report, AFG Leasing IV Incorporated is the sole General Partner of the
Partnership. Under the Restated Agreement, as amended, the General Partner is
solely responsible for the operation of the Partnership's properties. The
Limited Partners have no right to participate in the control of the
Partnership's general operations, but they do have certain voting rights, as
described in Item 12 herein. The names, titles and ages of the Directors and
Executive Officers of the General Partner as of March 15, 1999 are as follows:
DIRECTORS AND EXECUTIVE OFFICERS OF
THE GENERAL PARTNER (SEE ITEM 13)
<TABLE>
<CAPTION>
NAME TITLE AGE TERM
- ------------------------------------ --------------------------------------------- --- ---------------------
<S> <C> <C> <C>
Geoffrey A. MacDonald Chairman and a member of the Executive 50 Until a successor is
Committee of EFG and President and a Director duly elected and
of the General Partner qualified
Gary D. Engle President and Chief Executive Officer and 50
member of the Executive Committee of EFG and
a Director of the General Partner
Gary M. Romano Executive Vice President and Chief Operating 39
Officer of EFG and Clerk of the General
Partner
James A. Coyne Executive Vice President of EFG 38
Michael J. Butterfield Senior Vice President, Finance and Treasurer 39
of EFG and Treasurer of the General Partner
Sandra L. Simonsen Senior Vice President, Information Systems of 48
EFG
Gail D. Ofgant Senior Vice President, Lease Operations of 33
EFG
</TABLE>
(c) Identification of Certain Significant Persons
None.
(d) Family Relationship
No family relationship exists among any of the foregoing Partners, Directors
or Executive Officers.
(e) Business Experience
Mr. MacDonald, age 50, is a co-founder, Chairman and a member of the
Executive Committee of EFG and President and a Director of the General Partner.
Mr. MacDonald was also a co-founder, Director, and Senior Vice President of
EFG's predecessor corporation from 1980 to 1988. Mr. MacDonald is President of
American Finance Group Securities Corp. and a limited partner in Atlantic
Acquisition
8
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Limited Partnership ("AALP") and Old North Capital Limited Partnership ("ONC").
Prior to co-founding EFG's predecessors, Mr. MacDonald held various executive
and management positions in the leasing and pharmaceutical industries. Mr.
MacDonald holds a M.B.A. from Boston College and a B.A. degree from the
University of Massachusetts (Amherst).
Mr. Engle, age 50, is President and Chief Executive Officer of EFG and sole
shareholder and Director of its general partner, Equis Corporation and a member
of the Executive Committee of EFG and President of AFG Realty Corporation. Mr.
Engle joined EFG in 1990 as Executive Vice President and acquired control of EFG
and its subsidiaries in December 1994. Mr. Engle is Vice President and a
Director of certain of EFG's subsidiaries and affiliates, a limited partner in
AALP and ONC and controls the general partners of AALP and ONC. Mr. Engle is
also Chairman, Chief Executive Officer, and a member of the Board of Directors
of Semele Group, Inc. ("Semele"). From 1987 to 1990, Mr. Engle was a principal
and co-founder of Cobb Partners Development, Inc., a real estate and mortgage
banking company. From 1980 to 1987, Mr. Engle was Senior Vice President and
Chief Financial Officer of Arvida Disney Company, a large-scale community
development company owned by Walt Disney Company. Prior to 1980, Mr. Engle
served in various management consulting and institutional brokerage capacities.
Mr. Engle has a MBA from Harvard University and a BS degree from the University
of Massachusetts (Amherst).
Mr. Romano, age 39, became Executive Vice President and Chief Operating
Officer of EFG, and Secretary of Equis Corporation in 1996 and is Secretary or
Clerk of several of EFG's subsidiaries and affiliates. Mr. Romano joined EFG in
November 1989, became Vice President and Controller in April 1993 and Chief
Financial Officer in April 1995. Mr. Romano assumed his current position in
April 1996. Mr. Romano is also Vice President and Chief Financial Officer of
Semele. Prior to joining EFG, Mr. Romano was Assistant Controller for a
privately held real estate development and mortgage origination company that he
joined in 1987. Previously, Mr. Romano was an Audit Manager at Ernst & Whinney
(now Ernst & Young LLP), where he was employed from 1982 to 1986. Mr. Romano is
a Certified Public Accountant and holds a B.S. degree from Boston College.
Mr. Coyne, age 38, is Executive Vice President, Capital Markets of EFG and
President, Chief Operating Officer and a member of the Board of Directors of
Semele. Mr. Coyne joined EFG in 1989, remained until May 1993, and rejoined EFG
in November 1994. In September 1997, Mr. Coyne was appointed Executive Vice
President of EFG. Mr. Coyne is a limited partner in AALP and ONC. From May 1993
through November 1994, he was employed by the Raymond Company, a private
investment firm, where he was responsible for financing corporate and real
estate acquisitions. From 1985 through 1989, Mr. Coyne was affiliated with a
real estate investment company and an equipment leasing company. Prior to 1985,
he was with the accounting firm of Ernst & Whinney (now Ernst & Young LLP). He
has a BS in Business Administration from John Carroll University, a Masters
Degree in Accounting from Case Western Reserve University and is a Certified
Public Accountant.
Mr. Butterfield, age 39, is Senior Vice President, Finance and Treasurer of
EFG and certain of its affiliates and is Treasurer of the General Partner and
Semele. Mr. Butterfield joined EFG in June 1992, became Vice President, Finance
and Treasurer of EFG and certain of its affiliates in April 1996 and was
promoted to Senior Vice President, Finance and Treasurer of EFG and certain of
its affiliates in July 1998. Prior to joining EFG, Mr. Butterfield was an Audit
Manager with Ernst & Young LLP, which he joined in 1987. Mr. Butterfield was
employed in public accounting and industry positions in New Zealand and London
(UK) prior to coming to the United States in 1987. Mr. Butterfield attained his
Associate Chartered Accountant (A.C.A.) professional qualification in New
Zealand and has completed his CPA requirements in the United States. He holds a
Bachelor of Commerce degree from the University of Otago, Dunedin, New Zealand.
Ms. Simonsen, age 48, joined EFG in February 1990 and was promoted to Senior
Vice President, Information Systems of EFG in April 1996. Prior to joining EFG,
Ms. Simonsen was Vice President, Information Systems with Investors Mortgage
Insurance Company, which she joined in 1973.
9
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Ms. Simonsen provided systems consulting for a subsidiary of American
International Group and authored a software program published by IBM. Ms.
Simonsen holds a BA degree from Wilson College.
Ms. Ofgant, age 33, is Senior Vice President, Lease Operations of EFG and
certain of its affiliates. Ms. Ofgant joined EFG in July 1989, was promoted to
Manager Lease Operations in April 1994, and became Vice President of Lease
Operations in April 1996. In July 1998, Ms. Ofgant was promoted to Senior Vice
President of Lease Operations. Prior to joining EFG, Ms. Ofgant was employed by
Security Pacific National Trust Company. Ms. Ofgant holds a BS degree in Finance
from Providence College.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
See Item 10 (a-b) above.
ITEM 11. EXECUTIVE COMPENSATION.
(a) Cash Compensation
Currently, the Partnership has no employees. However, under the terms of the
Restated Agreement, as amended, the Partnership is obligated to pay all costs of
personnel employed full or part-time by the Partnership, including officers or
employees of the General Partner or its Affiliates. There is no plan at the
present time to make any officers or employees of the General Partner or its
Affiliates employees of the Partnership. The Partnership has not paid and does
not propose to pay any options, warrants or rights to the officers or employees
of the General Partner or its Affiliates.
(b) Compensation Pursuant to Plans
None.
(c) Other Compensation
Although the Partnership has no employees, as discussed in Item 11(a),
pursuant to section 10.4 of the Restated Agreement, as amended, the Partnership
incurs a monthly charge for personnel costs of the Manager for persons engaged
in providing administrative services to the Partnership. A description of the
remuneration paid by the Partnership to the Manager for such services is
included in Item 13, herein and Note 4 to the financial statements included in
Item 14, herein.
(d) Compensation of Directors
None.
(e) Termination of Employment and Change of Control Arrangement
There exists no remuneration plan or arrangement with the General Partner or
its Affiliates which results or may result from their resignation, retirement or
any other termination.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
By virtue of its organization as a limited partnership, the Partnership has
no outstanding securities possessing traditional voting rights. However, as
provided in Section 11.2(a) of the Restated Agreement, as amended (subject to
Sections 11.2(b) and 11.3), a majority interest of the Recognized Owners has
voting rights with respect to:
1. Amendment of the Restated Agreement;
2. Termination of the Partnership;
10
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3. Removal of the General Partner; and
4. Approval or disapproval of the sale of all, or substantially all, of the
assets of the Partnership (except in the orderly liquidation of the
Partnership upon its termination and dissolution).
As of March 1, 1999, the following person or group owns beneficially more
than 5% of the Partnership's 930,443 outstanding Units:
<TABLE>
<CAPTION>
NAME AND AMOUNT PERCENT
TITLE ADDRESS OF OF BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------- --------------------------------------------- -------------- -----------
<C> <C> <S> <C>
Units Representing Atlantic Acquisition Limited Partnership 59,877 Units 6.44%
Limited Partnership 88 Broad Street
Interests Boston, MA 02110
</TABLE>
Messrs. Engle, MacDonald and Coyne have ownership interests in AALP. The
general partner of AALP is controlled by Gary D. Engle. See Item 10 and Item 13
of this report.
The ownership and organization of EFG is described in Item 1 of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The General Partner of the Partnership is AFG Leasing IV Incorporated, an
affiliate of EFG.
(a) Transactions with Management and Others
All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during the years ended December 31,
1998, 1997 and 1996, which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Equipment management fees.................................................... $ 33,811 $ 48,207 $ 144,187
Administrative charges....................................................... 55,692 52,926 32,746
Reimbursable operating expenses due to third parties......................... 418,899 141,921 142,220
---------- ---------- ----------
Total...................................................................... $ 508,402 $ 243,054 $ 319,153
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership. Such services include acquisition and
management of equipment. For acquisition services, EFG is compensated by an
amount equal to 2.23% of Equipment Base Price paid by the Partnership. For
management services, EFG is compensated by an amount equal to 5% of gross
operating lease rental revenues and 2% of gross full payout lease rental revenue
received by the Partnership. Both acquisition and management fees are subject to
certain limitations defined in the Management Agreement.
Administrative charges represent amounts owed to EFG, pursuant to Section
9.4(c) of the Restated Agreement, as amended, for persons employed by EFG who
are engaged in providing administrative services to the Partnership.
Reimbursable operating expenses due to third parties represent costs paid by EFG
on behalf of the Partnership which are reimbursed to EFG at actual cost.
All equipment was purchased from EFG, one of its affiliates or from
third-party sellers. The Partnership's acquisition cost was determined by the
method described in Note 2 to the financial statements included in Item 14,
herein.
All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At December 31, 1998, the Partnership was owed $260,794 by EFG for such funds
and the
11
<PAGE>
interest thereon, including the proceeds from the sale of the Partnership's
interest in a Boeing 727-251 aircraft (see Note 3 to the financial statements
included in item 14, herein). These funds were remitted to the Partnership in
January 1999.
Certain affiliates of the General Partner own Units in the Partnership as
follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
AFFILIATE UNITS OWNED OUTSTANDING UNITS
- ------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Atlantic Acquisition Limited Partnership..................... 59,877 6.44%
Old North Capital Limited Partnership........................ 7,850 0.84%
</TABLE>
Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC") are both Massachusetts limited partnerships formed
in 1995 and affiliates of EFG. The general partners of AALP and ONC are
controlled by Gary D. Engle. In addition, the limited partnership interests of
ONC are owned by Semele Group, Inc. ("Semele"). Gary D. Engle is Chairman and
CEO of Semele.
On September 30, 1996, the Partnership sold a 36% ownership interest,
representing its entire ownership interest, in a cargo vessel leased by Gearbulk
Shipowning Ltd. ("Gearbulk"), formerly Kristian Gerhard Jebsen Skipsrederi A/S
(the "Vessel"), having an original cost to the Partnership of $2,782,137 and a
net book value at September 30, 1996 of $1,230,287. The Partnership received net
sale proceeds of $944,213, a portion of which was used to repay the outstanding
principal balance of notes payable associated with the Vessel of $102,818. The
Partnership sold its interest in the Vessel prior to the expiration of the
related lease term. This sale was effected in connection with a joint
remarketing effort involving 15 individual equipment leasing programs sponsored
by EFG, consisting of the Partnership and 14 affiliates.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management to the Partnership
None.
(d) Transactions with Promoters
See Item 13(a) above.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C> <C> <C>
(a) Documents filed as part of this report:
(1) Financial Statements:
Report of Independent Auditors................................................. *
Statement of Financial Position at December 31, 1998 and 1997.................. *
Statement of Operations for the years ended December 31, 1998, 1997 and 1996... *
Statement of Changes in Partners' Capital for the years ended December 31,
1998, 1997 and 1996............................................................ *
Statement of Cash Flows for the years ended December 31, 1998, 1997 and 1996... *
Notes to the Financial Statements.............................................. *
(2) Financial Statement Schedules:
None required.
(3) Exhibits:
Except as set forth below, all Exhibits to Form 10-K, as set forth in Item 601
of Regulation S-K, are not applicable.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------------
<C> <S>
4 Amended and Restated Agreement and Certificate of Limited Partnership included as Exhibit A to the
Prospectus, which is included in Registration Statement on Form S-1 (No. 33-27828).
13 The 1998 Annual Report to security holders, a copy of which is furnished for the information of the
Securities and Exchange Commission. Such Report, except for those portions thereof which are
incorporated herein by reference, is not deemed "filed" with the Commission.
23 Consent of Independent Auditors.
99(a) Lease agreement with Northwest Airlines, Inc. was filed in the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990 as Exhibit 28 (a) and is incorporated herein by reference.
99(b) Lease agreement with Gearbulk Shipowning Ltd. was filed in the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 as Exhibit 99 (b) and is incorporated herein by reference.
99(c) Lease agreement with Shell Oil Company was filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 as Exhibit 99 (c) and is incorporated herein by reference.
</TABLE>
- ------------------------
* Incorporated herein by reference to the appropriate portion of the 1998
Annual Report to security holders for the year ended December 31, 1998 (see
Part II).
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------------
<C> <S>
99(d) Lease agreement with Ford Motor Company was filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997 as Exhibit 99 (d) and is incorporated herein by reference.
99(e) Lease agreement with Transnet Limited was filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997 as Exhibit 99 (e) and is incorporated herein by reference.
99(f) Lease agreement with Westinghouse Electric Company was filed in the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997 as Exhibit 99 (f) and is incorporated herein by
reference.
99(g) Lease agreement with Zeigler Cole Holding Company is filed in the Registrant's Annual Report on Form
10-K for the year ended December 31, 1998 and is included herein.
99(h) Lease agreement with Rose's Stores, Inc. is filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998 and is included herein.
</TABLE>
(b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.
<TABLE>
<S> <C> <C>
AMERICAN INCOME PARTNERS V-C LIMITED
PARTNERSHIP
By: AFG Leasing IV Incorporated,
-----------------------------------------
a Massachusetts corporation and the
General Partner of the Registrant.
</TABLE>
<TABLE>
<S> <C> <C> <C>
By: /s/ GEOFFREY A. MACDONALD By: /s/ GARY D. ENGLE
---------------------------------------- ----------------------------------------
Geoffrey A. MacDonald Gary D. Engle
CHAIRMAN AND A MEMBER OF THE EXECUTIVE PRESIDENT AND CHIEF EXECUTIVE OFFICER AND
COMMITTEE OF EFG AND PRESIDENT AND A A MEMBER OF THE EXECUTIVE COMMITTEE OF
DIRECTOR OF THE GENERAL PARTNER EFG AND A DIRECTOR OF THE GENERAL PARTNER
(PRINCIPAL EXECUTIVE OFFICER)
Date: March 31, 1999 Date: March 31, 1999
By: /s/ GARY M. ROMANO By: /s/ MICHAEL J. BUTTERFIELD
---------------------------------------- ----------------------------------------
Gary M. Romano Michael J. Butterfield
EXECUTIVE VICE PRESIDENT AND CHIEF SENIOR VICE PRESIDENT, FINANCE AND
OPERATING OFFICER OF EFG AND CLERK OF THE TREASURER OF EFG AND TREASURER OF THE
GENERAL PARTNER (PRINCIPAL FINANCIAL GENERAL PARTNER (PRINCIPAL ACCOUNTING
OFFICER) OFFICER)
Date: March 31, 1999 Date: March 31, 1999
</TABLE>
15
<PAGE>
AMERICAN INCOME PARTNERS V
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
ANNUAL REPORT TO THE PARTNERS, DECEMBER 31, 1998
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
INDEX TO ANNUAL REPORT TO THE PARTNERS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SELECTED FINANCIAL DATA................................................................................... 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................... 3-8
FINANCIAL STATEMENTS:
Report of Independent Auditors............................................................................ 9
Statement of Financial Position at December 31, 1998 and 1997............................................. 10
Statement of Operations for the years ended December 31, 1998, 1997 and 1996.............................. 11
Statement of Changes in Partners' Capital for the years ended December 31, 1998, 1997 and 1996............ 12
Statement of Cash Flows for the years ended December 31, 1998, 1997 and 1996.............................. 13
Notes to the Financial Statements......................................................................... 14-24
ADDITIONAL FINANCIAL INFORMATION:
Schedule of Excess (Deficiency) of Total Cash Generated to Cost of Equipment Disposed..................... 25
Statement of Cash and Distributable Cash From Operations, Sales and Refinancings.......................... 26
Schedule of Costs Reimbursed to the General Partner and its Affiliates as Required by Section 10.4 of the
Amended and Restated Agreement and Certificate of Limited Partnership................................... 27
</TABLE>
<PAGE>
SELECTED FINANCIAL DATA
The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.
For each of the five years in the period ended December 31, 1998:
<TABLE>
<CAPTION>
SUMMARY OF
OPERATIONS 1998 1997 1996 1995 1994
- ------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Lease revenue.............................. $ 695,210 $ 1,192,858 $ 2,994,157 $ 3,617,207 $ 5,021,135
Net income................................. $ 735,038 $ 563,044 $ 2,350,010 $ 1,781,012 $ 554,771
Per Unit:
Net income............................... $ 0.75 $ 0.57 $ 2.40 $ 1.82 $ 0.57
Cash distributions....................... $ 0.34 $ 0.42 $ 4.97 $ 2.00 $ 2.37
FINANCIAL POSITION
- -------------------------------------------
Total assets............................... $ 3,244,118 $ 2,387,283 $ 2,642,076 $ 5,978,807 $ 8,276,250
Total long-term obligations................ $ -- $ -- $ 329,370 $ 786,755 $ 2,684,559
Partners' capital.......................... $ 2,678,829 $ 2,274,364 $ 2,124,515 $ 4,644,639 $ 4,822,454
</TABLE>
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1997
COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
Certain statements in this annual report of American Income Partner's V-C
Limited Partnership (the "Partnership") that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
outcome of the Class Action Lawsuit described in Note 6 to the accompanying
financial statements, the collection of all rents due under the Partnership's
lease agreements and the remarketing of the Partnership's equipment.
YEAR 2000 ISSUE
The Year 2000 Issue generally refers to the capacity of computer programming
logic to correctly identify the calendar year. Many companies utilize computer
programs or hardware with date sensitive software or embedded chips that could
interpret dates ending in "00" as the year 1900 rather than the year 2000. In
certain cases, such errors could result in system failures or miscalculations
that disrupt the operations of the affected businesses. The Partnership uses
information systems provided by EFG and has no information systems of its own.
EFG has adopted a plan to address the Year 2000 Issue that consists of four
phases: assessment, remediation, testing, and implementation and has elected to
utilize principally internal resources to perform all phases. EFG completed
substantially all of its Year 2000 project by December 31, 1998 at an aggregate
cost of less than $50,000 and at a di minimus cost to the Partnership. Remaining
items are expected to be minor and be completed by March 31, 1999. All costs
incurred in connection with EFG's Year 2000 project have been expensed as
incurred.
EFG's primary information software was coded by IBM at the point of original
design to use a four-digit field to identify calendar year. All of the
Partnership's lease billings, cash receipts and equipment remarketing processes
are performed using this proprietary software. In addition, EFG has gathered
information about the Year 2000 readiness of significant vendors and third party
servicers and continues to monitor developments in this area. All of EFG's
peripheral computer technologies, such as its network operating system and
third-party software applications, including payroll, depreciation processing,
and electronic banking, have been evaluated for potential programming changes
and have required only minor modifications to function properly with respect to
dates in the year 2000 and thereafter. EFG understands that each of its and the
Partnership's significant vendors and third-party servicers are in the process,
or have completed the process, of making their systems Year 2000 compliant.
Substantially all parties queried have indicated that their systems would be
Year 2000 compliant by the end of 1998.
Presently, EFG is not aware of any outside customer with a Year 2000 Issue
that would have a material effect on the Partnership's results of operations,
liquidity, or financial position. The Partnership's equipment leases were
structured as triple net leases, meaning that the lessees are responsible for,
among other things, (i) maintaining and servicing all equipment during the lease
term, (ii) ensuring that all equipment functions properly and is returned in
good condition, normal wear and tear excepted, and (iii) insuring the assets
against casualty and other events of loss. Non-compliance with lease terms on
the part of a lessee, including failure to address Year 2000 Issues, could
result in lost revenues and impairment of residual values of the Partnership's
equipment assets under a worst-case scenario.
EFG believes that its Year 2000 compliance plan will be effective in
resolving all material Year 2000 risks in a timely manner and that the Year 2000
Issue will not pose significant operational problems with respect to its
computer systems or result in a system failure or disruption of its or the
Partnership's
3
<PAGE>
business operations. However, EFG has no means of ensuring that all customers,
vendors and third-party servicers will conform ultimately to Year 2000
standards. The effect of this risk to the Partnership is not determinable.
OVERVIEW
The Partnership was organized in 1989 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment subject
to lease agreements with third parties. The value of the Partnership's equipment
portfolio decreases over time due to depreciation resulting from age and usage
of the equipment, as well as technological changes and other market factors. In
addition, the Partnership does not replace equipment as it is sold; therefore,
its aggregate investment value in equipment declines from asset disposals
occurring in the normal course of business. Presently, the Partnership is a
Nominal Defendant in a Class Action Lawsuit, the outcome of which could
significantly alter the nature of the Partnership's organization and its future
business operations. See Note 6 to the accompanying financial statements.
Pursuant to the Restated Agreement, as amended, the Partnership is scheduled to
be dissolved by December 31, 2001.
RESULTS OF OPERATIONS
For the year ended December 31, 1998, the Partnership recognized lease
revenue of $695,210 compared to $1,192,858 and $2,994,157 for the years ended
December 31, 1997 and 1996, respectively. The decrease in lease revenue from
1996 to 1998 resulted principally from lease term expirations and the sale of
equipment. Lease revenue for the year ended December 31, 1996 includes the
receipt of $872,305 of lease termination rents received in connection with the
sale of the Partnership's interest in two Boeing 727-Advanced aircraft in July
1996 (see below). The Partnership also earns interest income from temporary
investments of rental receipts and equipment sales proceeds in short-term
instruments.
The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest. In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by EFG. Proportionate equipment ownership enabled the Partnership to
further diversify its equipment portfolio at inception by participating in the
ownership of selected assets, thereby reducing the general levels of risk which
could have resulted from a concentration in any single equipment type, industry
or lessee. The Partnership and each affiliate individually report, in proportion
to their respective ownership interests, their respective shares of assets,
liabilities, revenues, and expenses associated with the equipment.
In 1998, the Partnership sold equipment having a net book value of $180,901
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $536,195 compared to a net gain of $60,576 in
1997 on equipment having a net book value of $78,990 and a net gain of $710,612
in 1996 on equipment having a net book value of $2,532,852. The 1996 equipment
sales included the sale of the Partnership's interest in two Boeing 727-Advanced
jet aircraft with an original cost and net book value of $7,779,992 and
$1,238,414, respectively, which the Partnership sold to the existing lessee in
July 1996. In connection with these sales, the Partnership realized sale
proceeds of $2,019,055, which resulted in a net gain, for financial statement
purposes, of $780,641. These aircraft were sold prior to the expiration of the
related lease term. The Partnership also realized lease termination rents equal
to $872,305 relating to these aircraft. In addition, equipment sales in 1996
included the Partnership's interest in a vessel with an original cost and net
book value of $2,782,137 and $1,230,287, respectively, which the Partnership
sold to a third party in September 1996. In connection with this sale, the
Partnership realized net sale proceeds of $944,213, which resulted in a net
loss, for financial statement purposes, of $286,074. This equipment was sold
prior to the expiration of the related lease term. This sale was effected in
connection with a joint remarketing effort involving 15 individual leasing
programs sponsored by EFG, consisting of the Partnership and 14 affiliates.
4
<PAGE>
It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.
The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. Consequently, the amount of gain
or loss reported in the financial statements is not necessarily indicative of
the total residual value the Partnership achieved from leasing the equipment.
Depreciation expense was $106,304, $524,664 and $1,097,986 for the years
ended December 31, 1998, 1997 and 1996, respectively. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the
Partnership depreciates the difference between (i) the cost of the asset and
(ii) the estimated residual value of the asset on a straight-line basis over
such term. For purposes of this policy, estimated residual values represent
estimates of equipment values at the date of primary lease expiration. To the
extent that an asset is held beyond its primary lease term, the Partnership
continues to depreciate the remaining net book value of the asset on a
straight-line basis over the asset's remaining economic life.
Interest expense was $4,589 or less than 1% of lease revenue in 1997 and
$51,188 or 1.7% of lease revenue in 1996. The Partnership's notes payable were
fully amortized during the year ending December 31, 1997.
Management fees were approximately 4.9%, 4% and 4.8% of lease revenue during
the years ended December 31, 1998, 1997 and 1996, respectively. Management fees
for the year ended December 31, 1996 included $7,731, resulting from an
underaccrual in 1995. Management fees are based on 5% of gross lease revenue
generated by operating leases and 2% of gross lease revenue generated by full
payout leases.
Operating expenses were $474,591, $194,847 and $174,966 for the years ended
December 31, 1998, 1997 and 1996, respectively. During the year ended December
31, 1998, the Partnership incurred or accrued approximately $286,600 for certain
legal and administrative expenses related to Class Action Lawsuit described in
Note 6 to the financial statements. In addition, the Partnership's expensed
$22,440 in 1998 related to the refurbishment of an aircraft engine and engine
leasing costs (see Notes 3 and 6 to the financial statements). Other operating
expenses consist principally of administrative charges, professional service
costs, such as audit and other legal fees, as well as printing, distribution and
remarketing expenses. In certain cases, equipment storage or repairs and
maintenance costs may be incurred in connection with equipment being remarketed.
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS
The Partnership by its nature is a limited life entity. As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Accordingly, the Partnership's principal source of
cash from operations is generally provided by the collection of periodic rents.
These cash inflows are used to pay management fees and operating costs and prior
to 1998, were used to satisfy debt service obligations associated with leveraged
leases. Operating activities generated net cash inflows of $647,263, $947,760
and $2,940,262 for the years ended December 31, 1998, 1997, and 1996,
respectively.
5
<PAGE>
Future renewal, re-lease and equipment sale activities will cause a decline in
the Partnership's lease revenue and corresponding sources of operating cash.
Overall, expenses associated with rental activities, such as management fees,
and net cash flow from operating activities will also decline as the Partnership
experiences a higher frequency of remarketing events.
Cash expended for equipment acquisitions and cash realized from asset
disposal transactions are reported under investing activities on the
accompanying Statement of Cash Flows. During 1998, the Partnership realized
$717,096 in equipment sale proceeds compared to $118,000 and $3,243,464 in 1997
and 1996, respectively. Future inflows of cash from asset disposals will vary in
timing and amount and will be influenced by many factors including, but not
limited to, the frequency and timing of lease expirations, the type of equipment
being sold, its condition and age, and future market conditions. During the year
ended December 31, 1996, the Partnership expended $65,700 to replace certain
aircraft engines to facilitate the re-lease of an aircraft, in which the
Partnership has an ownership interest, to Transmeridian Airlines. There were no
equipment acquisitions during the corresponding periods in 1997 or 1998.
In November 1998, the Partnership and certain affiliated investment programs
(collectively, the "Programs") entered into an agreement to sell their ownership
interests in a Boeing 727-251 ADV aircraft and three engines (collectively the
"Aircraft") to a third party (the "Purchaser"). The Programs will receive gross
sale proceeds of $4,350,000. Previously, the Aircraft had been leased to
Transmeridian Airlines ("Transmeridian"). In December 1998, the Purchaser
remitted $3,350,000 for the Aircraft, excluding one of three engines which had
been damaged while the Aircraft was leased to Transmeridian. (See Note 6
regarding legal action undertaken by the Programs related to Transmeridian and
the damaged engine). The Purchaser also deposited $1,000,000 into a third-party
escrow account (the "Escrow") pending repair of the damaged engine and
re-installation of the refurbished engine on the Aircraft. Upon installation,
the escrow agent will transfer the Escrow amount plus interest thereon to the
Programs. Currently, the engine is being refurbished at the expense of the
Programs. The associated cost is estimated to be approximately $260,000, of
which the Partnership's share is approximately $15,600. All of the Partnership's
costs were accrued at December 31, 1998 in connection with the Partnership's
legal action against Transmeridian discussed in Note 6.
The Programs also are required to reimburse the Purchaser for its cost to
lease a substitute engine during the period that the damaged engine is being
repaired. This cost is expected to be approximately $114,000, of which the
Partnership's share is $6,840, all of which has been accrued in 1998 in
connection with the litigation referenced above. If the engine repair and
re-installation do not occur on or before May 11, 1999, the Escrow plus all
interest thereon will be returned to the Purchaser and the Programs' obligation
to pay for the cost of a substitute engine will be terminated.
In addition, the purchase and sale agreement permits the Purchaser to return
the Aircraft to the Programs, subject to a number of conditions, for $4,350,000,
reduced by an amount equivalent to $450 multiplied by the number of flight hours
since the Aircraft's most recent C Check. Among the conditions precedent to the
Purchaser's returning the Aircraft, the Purchaser must have completed its
intended installation of hush-kitting on the Aircraft to conform to Stage 3
noise regulations. This work was completed in January 1999. In addition, the
Escrow funds must have been released to the Programs, assuming the repaired
engine is reinstalled on the Aircraft by May 11, 1999. The Purchaser's return
option expires on May 15, 1999.
Due to the contingent nature of the sale, the Partnership has deferred
recognition of the sale and a resulting gain at December 31, 1998 until
expiration of the Purchaser's return option on May 15, 1999. The Partnership's
share of the December proceeds was $201,000, which amount was deposited into
EFG's customary escrow account and transferred to the Partnership, together with
the Partnership's other December rental receipts, in January 1999. At December
31, 1998, the entire amount was classified as accounts receivable--affiliate,
with an equal amount reflected in other liabilities on the accompanying
Statement of Financial Position. The remainder of the sale consideration, or
$1,000,000, will be paid to the
6
<PAGE>
programs upon release of the Escrow discussed above. The Partnership's share of
this payment will be $60,000. Based upon current information, the Partnership
expects to recognize a gain for financial reporting purposes of approximately
$261,000 in connection with this transaction. The Partnership's interest in the
Aircraft had a cost of $648,738 and was fully depreciated at December 31, 1998.
Pursuant to a purchase option contained in the lease agreement, the lessee,
Sunworld International Airlines, Inc., purchased the Partnership's interest in a
Boeing 727-251 ADV aircraft for approximately $147,000 in January 1999, at the
expiration of the existing lease term (see Note 7 Subsequent Event for
additional discussion).
At December 31, 1998, the Partnership was due aggregate future minimum lease
payments of $383,963 from contractual lease agreements (see Note 2 to the
financial statements). At the expiration of the individual renewal lease terms
underlying the Partnership's future minimum lease payments, the Partnership will
sell the equipment or enter re-lease or renewal agreements when considered
advantageous by the General Partner and EFG. Such future remarketing activities
will result in the realization of additional cash inflows in the form of
equipment sale proceeds or rents from renewals and re-leases, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of remarketing events often is dependent upon the needs and interests
of the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third-party.
Accordingly, as the terms of the currently existing contractual lease agreements
expire, the cash flows of the Partnership will become less predictable. In
addition, the Partnership will need cash outflows to pay management fees and
operating expenses.
The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. The Partnership's notes payable
were fully amortized during the year ending December 31, 1997.
There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket equipment upon lease expiration. Liquidity is
especially important as the Partnership matures and sells equipment, because the
remaining equipment base consists of fewer revenue-producing assets that are
available to cover prospective cash disbursements. Insufficient liquidity could
inhibit the Partnership's ability to sustain its operations or maximize the
realization of proceeds from remarketing its remaining assets. In particular,
the Partnership's ownership interests in commercial aircraft involve unique
risks resulting from the specialized nature of these assets and the potential
for the Partnership to incur significant remarketing costs at lease expiration.
Accordingly, the General Partner has maintained significant cash reserves within
the Partnership in order to minimize the risk of a liquidity shortage primarily
in connection with the Partnership's aircraft. At December 31, 1998, the
Partnership owned interests in two Boeing 727 aircraft, one of which was under
contract to be sold to a third party buyer subject to the buyer's right to
return the aircraft on or before May 15, 1999. See Notes 3 and 7 of the
accompanying financial statements concerning this aircraft. See also Note 6 of
the accompanying financial statements concerning the sale of the second aircraft
in January 1999.
In addition, the Partnership is a Nominal Defendant in a Class Action
Lawsuit described in Note 6 to the accompanying financial statements. A
preliminary settlement agreement will allow the Partnership to invest in new
equipment or other activities, subject to certain limitations, effective March
22, 1999. To the extent that the Partnership has exposure to aircraft
investments that could require capital reserves, the General Partner does not
anticipate that the Partnership will invest in new assets, regardless of its
authority to do so. Until the Class Action Lawsuit is adjudicated, the General
Partner does not expect that the level of future quarterly cash distributions
paid by the Partnership will be increased above amounts paid in the
7
<PAGE>
fourth quarter of 1998. In addition, the proposed settlement, if effected, will
materially change the future organizational structure and business interests of
the Partnership, as well as its cash distribution policies. See Note 6 to the
accompanying financial statements.
Cash distributions to the General Partner and Recognized Owners are declared
and generally paid within fifteen days following the end of each calendar
quarter. The payment of such distributions is presented as a component of
financing activities. For the year ended December 31, 1998, the Partnership
declared total cash distributions of $330,573. In accordance with the Restated
Agreement, as amended, the Recognized Owners were allocated 95% of these
distributions, or $314,044, and the General Partner was allocated 5%, or
$16,529. The forth quarter 1998 cash distribution was paid on January 15, 1999.
Cash distributions paid to the Recognized Owners consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date.
The Partnership's capital account balances for federal income tax and for
financial reporting purposes are different primarily due to differing treatments
of income and expense items for income tax purposes in comparison to financial
reporting purposes (generally referred to as permanent or timing differences;
see Note 5 to the financial statements). For instance, selling commissions,
organization and offering costs pertaining to syndication of the Partnership's
limited partnership units are not deductible for federal income tax purposes,
but are recorded as a reduction of partners' capital for financial reporting
purposes. Therefore, such differences are permanent differences between capital
accounts for financial reporting and federal income tax purposes. Other
differences between the bases of capital accounts for federal income tax and
financial reporting purposes occur due to timing differences. Such items consist
of the cumulative difference between income or loss for tax purposes and
financial statement income or loss, the difference between distributions
(declared vs. paid) for income tax and financial reporting purposes, and the
treatment of unrealized gains or losses on investment securities, if any, for
book and tax purposes. The principal component of the cumulative difference
between financial statement income or loss and tax income or loss results from
different depreciation policies for book and tax purposes.
For financial reporting purposes, the General Partner has accumulated a
capital deficit at December 31, 1998. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital contribution
of $1,000 and its allocation of financial statement net income or loss.
Ultimately, the existence of a capital deficit for the General Partner for
financial reporting purposes is not indicative of any further capital
obligations to the Partnership by the General Partner. The Amended and Restated
Agreement and Certificate of Limited Partnership requires that, upon the
dissolution of the Partnership, the General Partner will be required to
contribute to the Partnership an amount equal to any negative balance which may
exist in the General Partner's tax capital account. At December 31, 1998, the
General Partner had a positive tax capital account balance.
The future liquidity of the Partnership will be influenced by, among other
factors, prospective market conditions, technological changes, the ability of
EFG to manage and remarket the assets, and many other events and circumstances,
that could enhance or detract from individual asset yields and the collective
performance of the Partnership's equipment portfolio. However, the outcome of
the Class Action Lawsuit described in Note 6 to the accompanying financial
statements will be the principal factor in determining the future of the
Partnership's operations.
8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of American Income Partners V-C Limited Partnership:
We have audited the accompanying statements of financial position of
American Income Partners V-C Limited Partnership, as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Income Partners V-C
Limited Partnership at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Additional Financial Information
identified in the Index to Annual Report to the Partners is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ERNST & YOUNG LLP
Boston, Massachusetts
March 10, 1999
9
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................................................. $ 2,913,800 $ 1,880,014
Rents receivable...................................................................... 17,052 21,479
Accounts receivable--affiliate........................................................ 260,794 146,113
Equipment at cost, net of accumulated depreciation of $6,710,529 and $7,522,412 at
December 31, 1998 and 1997, respectively............................................ 52,472 339,677
------------ ------------
Total assets.................................................................... $ 3,244,118 $ 2,387,283
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities................................................................... $ 270,940 $ 9,200
Accrued liabilities--affiliate........................................................ 8,236 16,056
Deferred rental income................................................................ 2,470 5,020
Other liabilities..................................................................... 201,000 --
Cash distributions payable to partners................................................ 82,643 82,643
------------ ------------
Total liabilities............................................................... 565,289 112,919
------------ ------------
Partners' capital (deficit):
General Partner..................................................................... (897,569) (917,792)
Limited Partnership Interests (930,443 Units; initial purchase price of $25 each)... 3,576,398 3,192,156
------------ ------------
Total partners' capital......................................................... 2,678,829 2,274,364
------------ ------------
Total liabilities and partners' capital......................................... $ 3,244,118 $ 2,387,283
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of
these financial statements
10
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ------------ ------------
<S> <C> <C> <C>
Income:
Lease revenue.......................................................... $ 695,210 $ 1,192,858 $ 2,994,157
Interest income........................................................ 118,339 81,917 113,568
Gain on sale of equipment.............................................. 536,195 60,576 710,612
---------- ------------ ------------
Total income....................................................... 1,349,744 1,335,351 3,818,337
---------- ------------ ------------
Expenses:
Depreciation........................................................... 106,304 524,664 1,097,986
Interest expense....................................................... -- 4,589 51,188
Equipment management fees--affiliate................................... 33,811 48,207 144,187
Operating expenses--affiliate.......................................... 474,591 194,847 174,966
---------- ------------ ------------
Total expenses..................................................... 614,706 772,307 1,468,327
---------- ------------ ------------
Net income............................................................... $ 735,038 $ 563,044 $ 2,350,010
---------- ------------ ------------
---------- ------------ ------------
Net income per limited partnership unit.................................. $ 0.75 $ 0.57 $ 2.40
---------- ------------ ------------
---------- ------------ ------------
Cash distributions declared per limited partnership unit................. $ 0.34 $ 0.42 $ 4.97
---------- ------------ ------------
---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of
these financial statements
11
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
GENERAL RECOGNIZED OWNERS
PARTNER ------------------------
AMOUNT UNITS AMOUNT TOTAL
----------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995................................ $ (799,277) 930,443 $ 5,443,916 $ 4,644,639
Net income--1996.......................................... 117,500 -- 2,232,510 2,350,010
Cash distributions declared............................... (243,507) -- (4,626,627) (4,870,134)
----------- --------- ------------- -------------
Balance at December 31, 1996................................ (925,284) 930,443 3,049,799 2,124,515
Net income--1997.......................................... 28,152 -- 534,892 563,044
Cash distributions declared............................... (20,660) -- (392,535) (413,195)
----------- --------- ------------- -------------
Balance at December 31, 1997................................ (917,792) 930,443 3,192,156 2,274,364
Net income--1998.......................................... 36,752 -- 698,286 735,038
Cash distributions declared............................... (16,529) -- (314,044) (330,573)
----------- --------- ------------- -------------
Balance at December 31, 1998................................ $ (897,569) 930,443 $ 3,576,398 $ 2,678,829
----------- --------- ------------- -------------
----------- --------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of
these financial statements
12
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from (used in) operating activities:
Net income............................................................ $ 735,038 $ 563,044 $ 2,350,010
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation...................................................... 106,304 524,664 1,097,986
Gain on sale of equipment......................................... (536,195) (60,576) (710,612)
Decrease in allowance for doubtful accounts....................... -- (15,000) --
Changes in assets and liabilities:
Decrease (increase) in:
Rents receivable.................................................. 4,427 31,132 141,020
Accounts receivable--affiliate.................................... (114,681) (69,339) 41,557
Increase (decrease) in:
Accrued interest.................................................. -- (2,609) (3,335)
Accrued liabilities............................................... 261,740 (17,750) 6,950
Accrued liabilities--affiliate.................................... (7,820) 1,242 8,049
Deferred rental income............................................ (2,550) (7,048) 8,637
Other liabilities................................................. 201,000 -- --
------------ ------------- -------------
Net cash from operating activities.............................. 647,263 947,760 2,940,262
------------ ------------- -------------
Cash flows from (used in) investing activities:
Purchase of equipment............................................... -- -- (65,700)
Proceeds from equipment sales....................................... 717,096 118,000 3,243,464
------------ ------------- -------------
Net cash from investing activities.............................. 717,096 118,000 3,177,764
------------ ------------- -------------
Cash flows used in financing activities:
Principal payments--notes payable................................... -- (329,370) (457,385)
Distributions paid.................................................. (330,573) (440,736) (5,249,657)
------------ ------------- -------------
Net cash used in financing activities........................... (330,573) (770,106) (5,707,042)
------------ ------------- -------------
Net increase in cash and cash equivalents............................. 1,033,786 295,654 410,984
Cash and cash equivalents at beginning of year........................ 1,880,014 1,584,360 1,173,376
------------ ------------- -------------
Cash and cash equivalents at end of year.............................. $ 2,913,800 $ 1,880,014 $ 1,584,360
------------ ------------- -------------
------------ ------------- -------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.............................. $ -- $ 7,198 $ 54,523
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
Supplemental schedule of non-cash activity:
At December 31, 1996, $21,566 representing an equipment purchase option was
classified as deferred rental income on the Statement of Financial Position.
During the year ended December 31, 1997, the Partnership sold the equipment and
such funds were recognized as sales proceeds.
The accompanying notes are an integral part of
these financial statements
13
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
NOTE 1--ORGANIZATION AND PARTNERSHIP MATTERS
American Income Partners V-C Limited Partnership (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on December 27, 1989 for the purpose of
acquiring and leasing to third parties a diversified portfolio of capital
equipment. Partners' capital initially consisted of contributions of $1,000 from
the General Partner (AFG Leasing IV Incorporated) and $100 from the Initial
Limited Partner (AFG Assignor Corporation). On May 21, 1990, the Partnership
issued 930,443 units, representing assignments of limited partnership interests
(the "Units"), to 1,550 investors. Unitholders and Limited Partners (other than
the Initial Limited Partner) are collectively referred to as Recognized Owners.
The Partnership has one General Partner, AFG Leasing IV Incorporated, a
Massachusetts corporation and an affiliate of Equis Financial Group Limited
Partnership (formerly known as American Finance Group), a Massachusetts limited
partnership ("EFG"). The common stock of the General Partner is owned by AF/AIP
Programs Limited Partnership, of which EFG and a wholly-owned subsidiary are the
99% limited partners, and AFG Programs, Inc., which is wholly-owned by Geoffrey
A. MacDonald, is the 1% general partner. The General Partner is not required to
make any other capital contributions except as may be required under the Uniform
Act and Section 6.1(b) of the Amended and Restated Agreement and Certificate of
Limited Partnership (the "Restated Agreement, as amended").
Significant operations commenced May 22, 1990 when the Partnership made its
initial equipment purchase. Pursuant to the Restated Agreement, as amended,
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Recognized Owners and 5% to the
General Partner.
Under the terms of a management agreement between the Partnership and AF/AIP
Programs Limited Partnership and the terms of an identical management agreement
between AF/AIP Programs Limited Partnership and EFG (collectively, the
"Management Agreement"), management services are provided by EFG to the
Partnership at fees which the General Partner believes to be competitive for
similar services (see Note 4).
EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the "Other Investment Programs"). The Company arranges to broker or originate
equipment leases, acts as remarketing agent and asset manager, and provides
leasing support services, such as billing, collecting, and asset tracking.
The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Mr. Engle
established Equis Corporation and GDE LP in December 1994 for the sole purpose
of acquiring the business of AFG.
In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group", and its acronym, to a third-party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
14
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Partnership and the Other Investment Programs and to continue managing all
assets owned by the Partnership and the Other Investment Programs.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
STATEMENT OF CASH FLOWS
The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and reverse repurchase agreements with overnight maturities.
Under the terms of the agreements, title to the underlying securities passes to
the Partnership. The securities underlying the agreements are book entry
securities. At December 31, 1998, the Partnership had $2,802,850 invested in
federal agency discount notes and in reverse repurchase agreements secured by
U.S. Treasury Bills or interests in U.S. Government securities.
REVENUE RECOGNITION
Rents are payable to the Partnership monthly or quarterly and no significant
amounts are calculated on factors other than the passage of time. The leases are
accounted for as operating leases and are noncancellable. Rents received prior
to their due dates are deferred. Future minimum rents of $383,963 are due as
follows:
<TABLE>
<C> <S> <C>
For the year ending December 31,
1999 ............................................. $ 326,403
2000 ............................................. 49,648
2001 ............................................. 7,912
---------
Total ............................................. $ 383,963
---------
---------
</TABLE>
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1998, 1997, and 1996 are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ------------
<S> <C> <C> <C>
Zeigler Cole Holding Company............................................... $ 198,000 $ -- $ --
Westinghouse Electric Company.............................................. $ 163,640 $ 194,081 $ --
Rose's Stores, Inc......................................................... $ 89,785 $ -- $ --
Shell Oil Company.......................................................... $ -- $ 346,564 $ 346,564
Ford Motor Company......................................................... $ -- $ 146,643 $ --
Transnet Limited........................................................... $ -- $ 120,836 $ --
Northwest Airlines, Inc.................................................... $ -- $ -- $ 1,581,666
Gearbulk Shipowning Ltd.................................................... $ -- $ -- $ 336,440
</TABLE>
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
15
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
EQUIPMENT ON LEASE
All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment Cost means the actual cost paid by the
Partnership to acquire the equipment, including acquisition fees. Where
equipment was acquired from EFG or an Affiliate, Equipment Cost reflects the
actual price paid for the equipment by EFG or the Affiliate plus all actual
costs incurred by EFG or the Affiliate while carrying the equipment, including
all liens and encumbrances, less the amount of all primary term rents earned by
EFG or the Affiliate prior to selling the equipment. Where the seller of the
equipment was a third party, Equipment Cost reflects the seller's invoice price.
DEPRECIATION
The Partnership's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset is
held on primary lease term, the Partnership depreciates the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term. For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of primary
lease expiration. To the extent that an asset is held beyond its primary lease
term, the Partnership continues to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. Adjustments to
reduce the net carrying value of equipment are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.
ACCRUED LIABILITIES--AFFILIATE
Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities--Affiliate (see Note 4).
ALLOCATION OF PROFITS AND LOSSES
For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the
Recognized Owners and 5% to the General Partner). See Note 5 concerning
allocation of income or loss for income tax purposes.
NET INCOME AND CASH DISTRIBUTIONS PER UNIT
Net income and cash distributions per Unit are based on 930,443 units
outstanding during the years ended December 31, 1998, 1997 and 1996 and computed
after allocation of the General Partner's 5% share of net income and cash
distributions.
16
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
PROVISION FOR INCOME TAXES
No provision or benefit from income taxes is included in the accompanying
financial statements. The Partners are responsible for reporting their
proportionate shares of the Partnership's taxable income or loss and other tax
attributes on their tax returns.
NOTE 3--EQUIPMENT
The following is a summary of equipment owned by the Partnership at December
31, 1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1998 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.
<TABLE>
<CAPTION>
REMAINING
LEASE TERM EQUIPMENT
EQUIPMENT TYPE (MONTHS) AT COST LOCATION
- --------------------------------------------- ------------- ------------ ---------------------------------------
<S> <C> <C> <C>
Construction and mining...................... 7-24 $ 2,345,427 DE/IN/WY
Communications............................... 6 1,278,350 FL
Aircraft..................................... 0-1 1,231,776 KY/TX
Retail store fixtures........................ 0 1,144,958 AL/DE/GA/KY/MD/MS/NC/SC/ TN/ VA/WV
Materials handling........................... 0-3 550,472 GA/MI/NC/NY/SC/OH
Motor vehicles............................... 2 212,018 NJ
------------
Total equipment cost 6,763,001
Accumulated depreciation (6,710,529)
------------
Equipment, net of accumulated depreciation $ 52,472
------------
------------
</TABLE>
In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or an
affiliated equipment leasing program sponsored by EFG. The Partnership and each
affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment. Proportionate equipment ownership
enabled the Partnership to further diversify its equipment portfolio at
inception by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could have resulted from a concentration in any
single equipment type, industry or lessee. At December 31, 1998, the
Partnership's equipment portfolio included equipment having a proportionate
original cost of $1,231,776, representing approximately 18% of total equipment
cost.
Generally, the costs associated with maintaining, insuring and operating the
Partnership's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Partnership.
As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms.
17
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
At December 31, 1998, the Partnership had fully depreciated equipment held
for sale with a cost of approximately $1,232,000. This equipment represents the
Partnership's proportionate interests in two Boeing 727-251 ADV aircraft. In
January 1999, at the expiration of the existing lease term, the Partnership sold
its interest in one of these aircraft having a cost of $583,038 (see Note 7
Subsequent Event). See below for discussion related to the Partnership's
interest in the second aircraft. The summary above also includes equipment being
leased on a month to month basis.
DEFERRED SALE
In November 1998, the Partnership and certain affiliated investment programs
(collectively, the "Programs") entered into an agreement to sell their ownership
interests in a Boeing 727-251 ADV aircraft and three engines (collectively the
"Aircraft") to a third party (the "Purchaser"). The Programs will receive gross
sale proceeds of $4,350,000. Previously, the Aircraft had been leased to
Transmeridian Airlines ("Transmeridian"). In December 1998, the Purchaser
remitted $3,350,000 for the Aircraft, excluding one of three engines which had
been damaged while the Aircraft was leased to Transmeridian. (See Note 6
regarding legal action undertaken by the Programs related to Transmeridian and
the damaged engine). The Purchaser also deposited $1,000,000 into a third-party
escrow account (the "Escrow") pending repair of the damaged engine and
re-installation of the refurbished engine on the Aircraft. Upon installation,
the escrow agent will transfer the Escrow amount plus interest thereon to the
Programs. Currently, the engine is being refurbished at the expense of the
Programs. The associated cost is estimated to be approximately $260,000, of
which the Partnership's share is approximately $15,600. All of the Partnership's
costs were accrued at December 31, 1998 in connection with the Partnership's
legal action against Transmeridian discussed in Note 6.
The Programs also are required to reimburse the Purchaser for its cost to
lease a substitute engine during the period that the damaged engine is being
repaired. This cost is expected to be approximately $114,000, of which the
Partnership's share is $6,840, all of which has been accrued in 1998 in
connection with the litigation referenced above. If the engine repair and
re-installation do not occur on or before May 11, 1999, the Escrow plus all
interest thereon will be returned to the Purchaser and the Programs' obligation
to pay for the cost of a substitute engine will be terminated.
In addition, the purchase and sale agreement permits the Purchaser to return
the Aircraft to the Programs, subject to a number of conditions, for $4,350,000,
reduced by an amount equivalent to $450 multiplied by the number of flight hours
since the Aircraft's most recent C Check. Among the conditions precedent to the
Purchaser's returning the Aircraft, the Purchaser must have completed its
intended installation of hush-kitting on the Aircraft to conform to Stage 3
noise regulations. This work was completed in January 1999. In addition, the
Escrow funds must have been released to the Programs, assuming the repaired
engine is reinstalled on the Aircraft by May 11, 1999. The Purchaser's return
option expires on May 15, 1999.
Due to the contingent nature of the sale, the Partnership has deferred
recognition of the sale and a resulting gain at December 31, 1998 until
expiration of the Purchaser's return option on May 15, 1999. The Partnership's
share of the December proceeds was $201,000, which amount was deposited into
EFG's customary escrow account and transferred to the Partnership, together with
the Partnership's other December rental receipts, in January 1999. At December
31, 1998, the entire amount was classified as accounts receivable--affiliate,
with an equal amount reflected in other liabilities on the accompanying
Statement of Financial Position. The remainder of the sale consideration, or
$1,000,000, will be paid to the Programs upon release of the Escrow discussed
above. The Partnership's share of this payment will be
18
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
$60,000. The Partnership's interest in the Aircraft had a cost of $648,738 and
was fully depreciated at December 31, 1998.
NOTE 4--RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during the years ended December 31,
1998, 1997 and 1996 which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Equipment management fees.................................................... $ 33,811 $ 48,207 $ 144,187
Administrative charges....................................................... 55,692 52,926 32,746
Reimbursable operating
Expenses due to third parties.............................................. 418,899 141,921 142,220
---------- ---------- ----------
Total.................................................................... $ 508,402 $ 243,054 $ 319,153
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership. Such services include acquisition and
management of equipment. For acquisition services, EFG is compensated by an
amount equal to 2.23% of Equipment Base Price paid by the Partnership. For
management services, EFG is compensated by an amount equal to 5% of gross
operating lease rental revenue and 2% of gross full payout lease rental revenue
received by the Partnership. Both acquisition and management fees are subject to
certain limitations defined in the Management Agreement.
Administrative charges represent amounts owed to EFG, pursuant to Section
10.4 of the Restated Agreement, as amended, for persons employed by EFG who are
engaged in providing administrative services to the Partnership. Reimbursable
operating expenses due to third parties represent costs paid by EFG on behalf of
the Partnership which are reimbursed to EFG at actual cost.
All equipment was acquired from EFG, one of its affiliates, including other
equipment leasing programs sponsored by EFG, or from third-party sellers. The
Partnership's Purchase Price was determined by the method described in Note 2,
Equipment on Lease.
All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At December 31, 1998, the Partnership was owed $260,794 by EFG for such funds
and the interest thereon, including the proceeds form the sale of the
Partnership's interest in a Boeing 727-251 (see Note 3). These funds were
remitted to the Partnership in January 1999.
Certain affiliates of the General Partner own Units in the Partnership as
follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
AFFILIATE UNITS OWNED OUTSTANDING UNITS
- --------------------------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Atlantic Acquisition Limited Partnership......................................... 59,877 6.44%
Old North Capital Limited Partnership............................................ 7,850 0.84%
</TABLE>
Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC") are both Massachusetts limited partnerships formed
in 1995 and affiliates of EFG. The general
19
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
partners of AALP and ONC are controlled by Gary D. Engle. In addition, the
limited partnership interests of ONC are owned by Semele Group, Inc. ("Semele").
Gary D. Engle is Chairman and CEO of Semele.
NOTE 5--INCOME TAXES
The Partnership is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Partnership.
For financial statement purposes, the Partnership allocates net income or
loss to each class of partner according to their respective ownership
percentages (95% to the Recognized Owners and 5% to the General Partner). This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended. For income tax purposes, the Partnership allocates net income or net
loss, in accordance with the provisions of such agreement. The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account. At December 31, 1998, the General Partner had a positive tax
capital balance.
The following is a reconciliation between net income reported for financial
statement and federal income tax reporting purposes for the years ended December
31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- -------------
<S> <C> <C> <C>
Net income................................................................. $ 735,038 $ 563,044 $ 2,350,010
Financial statement depreciation in excess of (less than) tax
depreciation........................................................... (21,717) 309,119 365,958
Deferred rental income................................................... (2,550) (28,614) 8,637
Other.................................................................... 148,783 48,044 (1,791,731)
---------- ---------- -------------
Net income for federal income tax reporting purposes....................... $ 859,554 $ 891,593 $ 932,874
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
The principal component of "Other" consists of the difference between the
tax gain and loss on equipment disposals and the financial statement gain or
loss on disposals.
The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Partners' capital..................................................................... $ 2,678,829 $ 2,274,364
Add back selling commissions and organization and offering costs.................... 2,611,871 2,611,871
Financial statement distributions in excess of tax distributions.................... 4,132 4,132
Cumulative difference between federal income tax and financial statement income
(loss)............................................................................ 158,985 34,469
------------ ------------
Partners' capital for federal income tax reporting purposes........................... $ 5,453,817 $ 4,924,836
------------ ------------
------------ ------------
</TABLE>
Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.
20
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6--LEGAL PROCEEDINGS
In January 1998, certain plaintiffs (the "Plaintiffs") filed a class and
derivative action, captioned LEONARD ROSENBLUM, ET AL. V. EQUIS FINANCIAL GROUP
LIMITED PARTNERSHIP, ET AL., in the United States District Court for the
Southern District of Florida (the "Court") on behalf of a proposed class of
investors in 28 equipment leasing programs sponsored by EFG, including the
Partnership (collectively, the "Nominal Defendants"), against EFG and a number
of its affiliates, including the General Partner, as defendants (collectively,
the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned LEONARD ROSENBLUM, ET AL. V. EQUIS
FINANCIAL GROUP LIMITED PARTNERSHIP, ET AL., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit".
The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.
On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth terms pursuant to which a settlement of
the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The Stipulation of Settlement was based upon and superseded a
Memorandum of Understanding between the parties dated March 9, 1998 which
outlined the terms of a possible settlement. The Stipulation of Settlement was
filed with the Court on July 23, 1998 and was preliminarily approved by the
Court on August 20, 1998 when the Court issued its "Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
for Notice of, and Hearing on, the Proposed Settlement" (the "August 20 Order").
Prior to issuing a final order, the Court will hold a fairness hearing that will
be open to all interested parties and permit any party to object to the
settlement. The investors of the Partnership and all other plaintiff class
members in the Class Action Lawsuit will receive a Notice of Settlement and
other information pertinent to the settlement of their claims that will be
mailed to them in advance of the fairness hearing. Since first executing the
Stipulation of Settlement, the Court has scheduled two fairness hearings, the
first on December 11, 1998 and the second on March 19, 1999, each of which was
postponed because of delays in finalizing certain information materials that are
subject to regulatory review prior to being distributed to investors.
On March 15, 1999, counsel for the Plaintiffs and the Defendants entered
into an amended stipulation of settlement (the "Amended Stipulation") which was
filed with the Court on March 15, 1999. The Amended Stipulation was
preliminarily approved by the Court by its "Modified Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
For Notice of, and Hearing On, the Proposed Settlement" dated March 22, 1999
(the "March 22 Order"). The Amended Stipulation, among other things, divides the
Class Action Lawsuit into two separate sub-classes that can be settled
individually. This revision is expected to expedite the settlement of one
sub-class by the middle of 1999. However, the second sub-class, involving the
Partnership and 10 affiliated partnerships (collectively referred to as the
"Exchange Partnerships"), is expected to remain pending for a longer period due,
in part, to the complexity of the proposed settlement pertaining to this class.
Specifically, the settlement of the second sub-class is premised on the
consolidation of the Exchange Partnerships' net assets (the "Consolidation"),
subject to certain conditions, into a single successor
21
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
company ("Newco"). Under the proposed Consolidation, the partners of the
Exchange Partnerships would receive both common stock in Newco and a cash
distribution; and thereupon the Exchange Partnerships would be dissolved. In
addition, EFG would contribute certain management contracts, operations
personnel, and business opportunities to Newco and cancel its current management
contracts with all of the Exchange Partnerships. Newco would operate as a
finance company specializing in the acquisition, financing and servicing of
equipment leases for its own account and for the account of others on a contract
basis. Newco also would use its best efforts to list its shares on the Nasdaq
National Market or another national exchange or market as soon after the
Consolidation as Newco deems that market conditions and its business operations
are suitable for listing its shares and Newco has satisfied all necessary
regulatory and listing requirements. The potential benefits and risks of the
Consolidation will be presented in a Solicitation Statement that will be mailed
to all of the partners of the Exchange Partnerships as soon as the associated
regulatory review process is completed and at least 60 days prior to the
fairness hearing. A preliminary Solicitation Statement was filed with the
Securities and Exchange Commission on August 24, 1998 and remains pending. Class
members will be notified of the actual fairness hearing date when it is
confirmed.
One of the principal objectives of the Consolidation is to create a company
that would have the potential to generate more value for the benefit of existing
limited partners than other alternatives, including continuing the Partnership's
customary business operations until all of its assets are disposed in the
ordinary course of business. To facilitate the realization of this objective,
the Amended Stipulation provides, among other things, that commencing March 22,
1999, the Exchange Partnerships may collectively invest up to 40% of the total
aggregate net asset values of all of the Exchange Partnerships in any
investment, including additional equipment and other business activities that
the general partners of the Exchange Partnerships and EFG reasonably believe to
be consistent with the anticipated business interests and objectives of Newco,
subject to certain limitations, including that the Exchange Partnerships retain
sufficient cash balances to pay their respective shares of the cash distribution
referenced above in connection with the proposed Consolidation.
In the absence of the Court's authorization to enter into such activities,
the Partnership's Restated Agreement, as amended, would not permit new
investment activities without the approval of limited partners owning a majority
of the Partnership's outstanding Units. Accordingly, to the extent that the
Partnership invests in new equipment, the Manager (being EFG) will (i) defer,
until the earlier of the effective date of the Consolidation or December 31,
1999, any acquisition fees resulting therefrom and (ii) limit its management
fees on all such assets to 2% of rental income. In the event that the
Consolidation is consummated, all such acquisition and management fees will be
paid to Newco. To the extent that the Partnership invests in other business
activities not consisting of equipment acquisitions, the Manager will forego any
acquisition fees and management fees related to such investments. In the event
that the Partnership has acquired new investments, but the Partnership does not
participate in the Consolidation, Newco will acquire such new investments for an
amount equal to the Partnership's net equity investment plus an annualized
return thereon of 7.5%. Finally, in the event that the Partnership has acquired
new investments and the Consolidation is not effected, the General Partner will
use its best efforts to divest all such new investments in an orderly and timely
fashion and the Manager will cancel or return to the Partnership any acquisition
or management fees resulting from such new investments.
The Amended Stipulation and previous Stipulation of Settlement prescribe
certain conditions necessary to effecting final settlements, including providing
the partners of the Exchange Partnerships with the opportunity to object to the
participation of their partnership in the Consolidation. Assuming the proposed
settlement is effected according to present terms, the Partnership's share of
legal fees and expenses related
22
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
to the Class Action Lawsuit is estimated to be approximately $62,700, all of
which was accrued and expensed by the Partnership in 1998. In addition, the
Partnership's share of fees and expenses related to the proposed Consolidation
is estimated to be approximately $223,900, all of which was accrued and expensed
by the Partnership in 1998.
While the Court's August 20 Order enjoined certain class members, including
all of the partners of the Partnership, from transferring, selling, assigning,
giving, pledging, hypothecating, or otherwise disposing of any Units pending the
Court's final determination of whether the settlement should be approved, the
March 22 Order permits the partners to transfer Units to family members or as a
result of the divorce, disability or death of the partner. No other transfers
are permitted pending the Court's final determination of whether the settlement
should be approved. The provision of the August 20 Order which enjoined the
General Partners of the Exchange Partnerships from, among other things,
recording any transfers not in accordance with the Court's order remains
effective.
There can be no assurance that settlement of either sub-class of the Class
Action Lawsuit will receive final Court approval and be effected. There also can
be no assurance that all or any of the Exchange Partnerships will participate in
the Consolidation because if limited partners owning more than one-third of the
outstanding Units of a partnership object to the Consolidation, then that
partnership will be excluded from the Consolidation. The General Partner and its
affiliates, in consultation with counsel, concur that there is a reasonable
basis to believe that final settlements of each sub-class will be achieved.
However, in the absence of final settlements approved by the Court, the
Defendants intend to defend vigorously against the claims asserted in the Class
Action Lawsuit. Neither the General Partner nor its affiliates can predict with
any degree of certainty the cost of continuing litigation to the Partnership or
the ultimate outcome
In addition to the foregoing, the Partnership is a party to other lawsuits
that have arisen out of the conduct of its business, principally involving
disputes or disagreements with lessees over lease terms and conditions. The
following actions had not been finally adjudicated at December 31, 1998:
ACTION INVOLVING NORTHWEST AIRLINES, INC.
On September 22, 1995, Investors Asset Holding Corp. and First Security
Bank, N.A., trustees of the Partnership and certain affiliated investment
programs (collectively, the "Plaintiffs"), filed an action in United States
District Court for the District of Massachusetts against a lessee of the
Partnership, Northwest Airlines, Inc. ("Northwest"). The Complaint alleges that
Northwest did not fulfill its maintenance obligations under its Lease Agreements
with the Plaintiffs and seeks declaratory judgment concerning Northwest's
obligations and monetary damages. Northwest filed an Answer to the Plaintiffs'
Complaint and a motion to transfer the venue of this proceeding to Minnesota.
The Court denied Northwest's motion. On June 29, 1998, a United States
Magistrate Judge recommended entry of partial summary judgment in favor of the
Plaintiffs. Northwest appealed this decision and a hearing was scheduled for
January 1999 by the District Judge to consider arguments and review the
Magistrate's recommendation. A ruling by the District Judge remains pending. The
General Partner believes that the Plaintiff's claims ultimately will prevail and
that the Partnership's financial position will not be adversely affected by the
outcome of this action.
ACTION INVOLVING TRANSMERIDIAN AIRLINES
On November 9, 1998, First Security Bank, N.A., as trustee of the
Partnership and certain affiliated investment programs (collectively, the
"Plaintiffs), filed an action in Superior Court of the Commonwealth
23
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
of Massachusetts in Suffolk County against Prime Air, Inc. d/b/a Transmeridian
Airlines ("Transmeridian"), Atkinson & Mullen Travel, Inc., and Apple Vacations,
West, Inc., both d/b/a Apple Vacations, asserting various causes of action for
declaratory judgment and breach of contract. The action subsequently was removed
to United States District Court for the District of Massachusetts. Transmeridian
filed counterclaims for breach of contract, quantum meruit, conversion, breach
of the implied covenant of good faith and fair dealing, and violation of M.G.L.
c. 93A. The Plaintiffs subsequently filed an Amended Complaint asserting claims
for breaches of contract and covenant of faith and fair dealing against
Transmeridian and breach of guaranty against Apple Vacations.
The Plaintiffs are seeking damages for, among other things, breach of
contract arising out of Transmeridian's refusal to repair or replace burned
engine blades found in one engine during a pre-return inspection of an aircraft
leased by Transmeridian from the Plaintiffs, a Boeing 727-251 ADV aircraft (the
"Aircraft"). The estimated cost to repair the engine and lease a substitute
engine during the repair period is approximately $374,000. The Plaintiffs intend
to enforce written guarantees issued by Apple Vacations that absolutely and
unconditionally guarantee Transmeridian's performance under the lease agreement
and are seeking recovery of all costs, lost revenue and monetary damages in
connection with this matter. Notwithstanding the foregoing, the Plaintiffs will
be required to advance the cost of repairing the engine and leasing a substitute
engine and cannot be certain whether the guarantees will be enforced. Therefore,
the Partnership has accrued and expensed its share of these costs, or $22,440,
in 1998. Discovery has not yet commenced, and although the General Partner plans
to vigorously pursue this action, it is too early to predict the Plaintiffs'
likelihood of success. This Aircraft was fully depreciated at December 31, 1998
for financial reporting purposes. (See Note 3 concerning the remarketing of this
Aircraft.)
NOTE 7--SUBSEQUENT EVENT
On January 19, 1999, at the expiration of the aircraft's lease term, the
Partnership sold its proportional interest in a Boeing 727-251 aircraft to the
lessee, Sunworld International Airlines, Inc. The Partnership received net sale
proceeds of approximately $147,000 for its interest in this aircraft which had a
cost of $583,038 and was fully depreciated at December 31, 1998.
24
<PAGE>
ADDITIONAL FINANCIAL INFORMATION
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
OF EQUIPMENT DISPOSED
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
The Partnership classifies all rents from leasing equipment as lease
revenue. Upon expiration of the primary lease terms, equipment may be sold,
rented on a month-to-month basis or re-leased for a defined period under a new
or extended lease agreement. The proceeds generated from selling or re-leasing
the equipment, in addition to any month-to-month revenues, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition, may not reflect the aggregate residual proceeds
realized by the Partnership for such equipment.
The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ -------------
<S> <C> <C> <C>
Rents earned prior to disposal of equipment, net of interest
charges............................................................. $ 1,285,390 $ 1,191,798 $ 12,065,562
Sale proceeds realized upon disposition of equipment.................. 717,096 139,566 3,243,464
------------ ------------ -------------
Total cash generated from rents and equipment sale proceeds........... 2,002,486 1,331,364 15,309,026
Original acquisition cost of equipment disposed....................... 1,099,088 974,537 13,446,782
------------ ------------ -------------
Excess of total cash generated to cost of equipment disposed.......... $ 903,398 $ 356,827 $ 1,862,244
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
25
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
SALES AND REFINANCINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SALES AND
OPERATIONS REFINANCINGS TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Net income.............................................................. $ 198,843 $ 536,195 $ 735,038
Add:
Depreciation.......................................................... 106,304 -- 106,304
Management fees....................................................... 33,811 -- 33,811
Book value of disposed equipment...................................... -- 180,901 180,901
------------ ------------ ------------
Cash from operations, sales and refinancings.......................... 338,958 717,096 1,056,054
Less:
Management fees....................................................... (33,811) -- (33,811)
------------ ------------ ------------
Distributable cash from operations, sales and refinancings............ 305,147 717,096 1,022,243
Other sources and uses of cash:
Cash at beginning of year............................................. 1,880,014 -- 1,880,014
Net change in receivables and accruals................................ 342,116 -- 342,116
Less:
Cash distributions paid............................................... -- (330,573) (330,573)
------------ ------------ ------------
Cash at end of year..................................................... $ 2,527,277 $ 386,523 $ 2,913,800
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
26
<PAGE>
AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
SCHEDULE OF COSTS REIMBURSED TO THE
GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
BY SECTION 10.4 OF THE AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
DECEMBER 31, 1998
For the year ended December 31, 1998, the Partnership reimbursed the General
Partner and its Affiliates for the following costs:
<TABLE>
<S> <C>
Operating expenses................................................ $ 220,466
</TABLE>
27
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of American Income Partners V-C Limited Partnership, of our report dated
March 10, 1999, included in the 1998 Annual Report to the Partners of American
Income Partners V-C Limited Partnership.
ERNST & YOUNG LLP
Boston, Massachusetts
March 10, 1999
<PAGE>
RENEWAL RENTAL SCHEDULE NO. A-l6RN1 (the "Renewal Rental Schedule")
DATED AS OF February 1, 1998
TO MASTER LEASE AGREEMENT NO. 8607TXG245 (the "Master Lease")
DATED AS OF July 15, 1986
LESSOR LESSEE
American Income Partners V-C LP Zeigler Coal Holding Company
c/o EQUIS FINANCIAL GROUP 50 Jerome Lane
88 BROAD STREET Fairview Heights, IL
BOSTON, MA 02110 62208
1. LEASE TERM. PAYMENT DATES.
This Renewal Rental Schedule, between American Income Partners V-C LP, as
lessor, lessor's interest therein having been previously sold and assigned by
American Finance Group and Lessee incorporates by reference the terms and
conditions of the Master Lease. Lessor hereby leases to Lessee and Lessee hereby
leases from Lessor those items of Equipment described on the attached Schedule
B, for the Renewal Lease Term and at the Renewal Term Basic Rent payable on the
Payment Dates hereinafter set forth on the attached Schedule A, on the terms and
conditions set forth in the Master Lease.
2. BASIC RENT.
Renewal Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Renewal Lease Rate set forth on the attached Schedule A.
3. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Rental Schedule and the Master Lease constitute the entire
agreement between Lessee and Lessor with respect to the leasing of the
Equipment. Capitalized terms not defined herein shall have the meanings assigned
to them in the Master Lease. To the extent any of the terms and conditions set
forth in this Renewal Rental Schedule conflict with or are inconsistent with the
Master Lease, this Renewal Rental Schedule shall govern and control. No
amendment, modification or waiver of this Renewal Rental Schedule or the Master
Lease will be effective unless evidenced in writing signed by the party to be
charged. This Renewal Rental Schedule may be executed in counterparts, all of
which together shall constitute one and the same instrument.
<PAGE>
RENEWAL RENTAL SCHEDULE NO. A-l6RN1
PAGE TWO
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Master Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
American Income Partners V-C LP Zeigler Coal Holding Company
By: AFG Leasing IV Incorporated Lessee
Lessor
By: /s/ Gail O. Ofgant By: /s/ [ILLEGIBLE]
------------------------------- -----------------------------
Title: Vice President Title: Treasurer
---------------------------- -------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
EQUIS FINANCIAL GROUP Page 1
Schedule A - Rental Schedule Economics
LESSEE: SHELL OIL COMPANY
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: A-l6RN1
LEASE TERM (months): 24
PRIMARY START DATE: 2/01/1998
LEASE EXPIRATION DATE: 1/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .008520750
PER DIEM LEASE RATE: .000284025
PERIODIC RENT: $8,999.99
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $ .00
PAYMENT COMMENCEMENT DATE: 2/01/1998
TOTAL EQUIPMENT COST: $1,056,244.48
DOCUMENTATION FEE: ___________________
LESSEE INITIALS
- ---------------------------
/s/ GDO LESSOR INITIALS
- ---------------------------
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
ASSET ACTIVITY CHECKLIST REPORT
PREPARED BY: STEVEN LASPINA
APPROVALS: /s/ SL /
------------------------
TYPE OF TRANSACTION
(/) RENEWAL LEASE ( ) CASUALTY AT STIPULATED LOSS VALUE
( ) SALE TO ORIGINAL USER ( ) EARLY TERMINATION
( ) SALE TO THIRD PARTY USER ( ) WAREHOUSE OF ASSETS
( ) OTHER ___________________________
PRIMARY TERM DATA
ORIGINAL LESSEE SHELL OIL COMPANY
STREET ADDRESS 1 ZEIGLER COAL HOLDING CO
STREET ADDRESS 2 50 JEROME LANE
CITY, STATE, ZIP FAIRVIEW HEIGHTS IL 62208
CONTACT NAME ROBERT MCPEAK
PHONE NUMBER 618-394-2480 FAX NUMBER 618-394-2488
MASTER LEASE NUMBER 8607TXG245
LEASE DATE 7/15/1986
RENTAL SCHEDULE A-16
START DATE 1/01/1991
EXPIRATION DATE 12/31/1997
PAYMENT FREQUENCY M/ADV
LEASE RATE FACTOR .013672000
ASSUMED DEBT RATE 8.8900
TREASURY RATE 7.97
LENDER/LOAN NUMBER KFNL KFNL012
EQUITY OWNER(S) 1053
100.000000000
1 ( ) ORIGINAL TITLES 3 ( ) STOP BILL FORM
2 ( ) PRODUCE IRR REPORT 4 ( ) COLLATERAL DOCS REQUESTED
I. WAREHOUSE DATA (SEE ATTACHED EQUIPMENT LIST)
WAREHOUSE COST $_____________________
DATE WAREHOUSED _____________________ STOP BILL DATE _____________________
<PAGE>
EQUIS FINANCIAL GROUP PAGE 2
ASSET ACTIVITY CHECKLIST REPORT
II. EQUIPMENT SALE DATA (SEE ATTACHED EQUIPMENT AND PRICE LIST)
NEW LESSEE OR BUYER
STREET ADDRESS 1
STREET ADDRESS 2
CITY, STATE, ZIP
CONTACT NAME
PHONE NUMBER FAX NUMBER
SALE TYPE BS LS OS RS
TAX EXEMPTION STATUS YES NO EXEMPTION NUMBER
TOTAL SALE PRICE $_________________ BROKERAGE FEE $___________________
SALE DATE/STOP BILL DATE __________________
1 ( ) CREATE MEMO CODE 6 ( ) CHANGE MEMO CODE
2 ( ) AS/400 INPUT 7 ( ) DELIVERY INSTRUCTIONS
3 ( ) MISCELLANEOUS INVOICE 8 ( ) REMOVE RS COUNTERPART IF ALL
4 ( ) PRODUCE DOCUMENTS/SEND TO BUYER ASSETS SOLD
5 ( ) RECEIPT OF PAYMENT 9 ( ) PREP FOR SCANNING
10 ( ) FINAL DOCUMENTS TO BUYER
III. RENEWAL DATA (ATF MAY NEED TO BE CREATED)
NEW RENTAL SCHEDULE A-16RN1 TERM 24 MONTHS
START DATE 1/1/98 EXPIRATION DATE 12/31/99
PAYMENT FREQUENCY [M/ADV] Q/ADV S/ADV A/ADV N/ARR Q/ARR S/ARR A/ARR
STIPULATED LOSS VALUE $_________________ LRF/RENT $.00852075
SEND DOCUMENTS TO LESSEE __________________ END OF LEASE OPTIONS FMV
1 (/) AS/400 INPUT 5 ( ) ACTIVATION REPORT
2 (/) UPDATE EQUITY OWNER 6 ( ) PREP FOR SCANNING
3 (/) PRODUCE DOCUMENTS/SEND TO LESSEE 7 ( ) FINAL DOCUMENTS TO LESSEE
4 ( ) REQUEST UPDATED INSURANCE
IV. NOTES, COMMENTS AND OTHER INFORMATION
_________________________________________
_________________________________________
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
ASSET ACTIVITY REPORT - EQUIPMENT DESCRIPTION
LESSEE: SHELL OIL COMPANY
RENTAL SCHEDULE: A-16
<TABLE>
<CAPTION>
Asset Equipment Cost Serial Number Manufacturer Model Type Status Bill Code
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0013615 973,744.48 74290 EUCLID R-190 TRUCK LEASE WY002
0013616 82,500.00 3700 R57 HAUL TRUCK WHEELS LEASE WY002
-------------
1,056,244.48 Total for Location BUCKSKIN MINE GILLETTE WY 82716 CODE WY001
=============
1,056,244.48 Total Equipment Cost
</TABLE>
** END OF REPORT **
<PAGE>
[LOGO] Triton Coal Company 113 S. Gillette Avenue, Suite 203
Division Office Gillette, Wyoming 82716
(307) 687-2062
================================================================================
November 20, 1997
Mr. Steve Laspina
Equis Financial Group
88 Broad Street
Boston, MA 02110
Dear Steve:
To follow up our discussions concerning the Euclid R-190 truck leases,
Schedule(s) A-15 and A-16, Triton has elected to extend the current lease
agreement for another 24 months per the terms set forth in your letter of July
24, 1997. These terms were also set forth in the October 1, 1997 letter,
however, we would rather not consider stating a Purchase Price at this time.
Simply, a 24 month extension at $9,000.00 per month will most closely fit with
our mine planning at this time. As I interpret this proposal, the same language
regarding options at termination will hold as set forth in the original lease
agreement.
Please forward the proper documentation required to initiate this 24 month
extension so that I can prepare the paperwork necessary for management approval
signatures at my location.
If there is anything more that I need to do, or if you have any questions
regarding this matter, please call.
Sincerely,
/s/ Bill Seay
Bill Seay
Materials Manager
cc: John Willson
Dick Grady
Scott Deppe
Randy Roos
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
Schedule B Equipment Description
LESSEE: SHELL OIL COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-16RN1
LESSOR: EQUIS FINANCIAL GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
973,744.48 74290 EUCLID R-190 TRUCK 1/01/1998
82,500.00 3700 R57 HAUL TRUCK WHEELS 1/01/1998
- ------------------
1,056,244.48 Total for Location BUCKSKIN MINE GILLETTE WY 82716
==================
1,056,244.48 Total Equipment Cost
</TABLE>
<PAGE>
RENEWAL RENTAL SCHEDULE NO. A-15RN1 (the "Renewal Rental Schedule")
DATED AS OF February 1, 1998
TO MASTER LEASE AGREEMENT NO. 8607TXG245 (the "Master Lease")
DATED AS OF July 15, 1986
LESSOR LESSEE
American Income Partners V-C LP Zeigler Coal Holding Company
c/o EQUIS FINANCIAL GROUP 50 Jerome Lane
88 BROAD STREET Fairview Heights, IL
BOSTON, MA 02110 62208
1. LEASE TERM. PAYMENT DATES.
This Renewal Rental Schedule, between American Income Partners V-C LP, as
lessor, lessor's interest therein having been previously sold and assigned by
American Finance Group and Lessee incorporates by reference the terms and
conditions of the Master Lease. Lessor hereby leases to Lessee and Lessee hereby
leases from Lessor those items of Equipment described on the attached Schedule
B, for the Renewal Lease Term and at the Renewal Term Basic Rent payable on the
Payment Dates hereinafter set forth on the attached Schedule A, on the terms and
conditions set forth in the Master Lease.
2. BASIC RENT.
Renewal Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Renewal Lease Rate set forth on the attached Schedule A.
3. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Rental Schedule and the Master Lease constitute the entire
agreement between Lessee and Lessor with respect to the leasing of the
Equipment. Capitalized terms not defined herein shall have the meanings assigned
to them in the Master Lease. To the extent any of the terms and conditions set
forth in this Renewal Rental Schedule conflict with or are inconsistent with the
Master Lease, this Renewal Rental Schedule shall govern and control. No
amendment, modification or waiver of this Renewal Rental Schedule or the Master
Lease will be effective unless evidenced in writing signed by the party to be
charged. This Renewal Rental Schedule may be executed in counterparts, all of
which together shall constitute one and the same instrument.
<PAGE>
RENEWAL RENTAL SCHEDULE NO. A-15RN1
PAGE TWO
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Master Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
American Income Partners V-C LP Zeigler Coal Holding Company
By: AFG Leasing IV Incorporated Lessee
Lessor
By: /s/ Gail O. Ofgant By: /s/ [ILLEGIBLE]
------------------------------- -----------------------------
Title: Vice President Title: Treasurer
---------------------------- -------------------------
COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: SHELL OIL COMPANY
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: A-15RN1
LEASE TERM (months): 24
PRIMARY START DATE: 2/01/1998
LEASE EXPIRATION DATE: 1/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .008521700
PER DIEM LEASE RATE: .000284057
PERIODIC RENT: $8,999.99
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $ .00
PAYMENT COMMENCEMENT DATE: 2/01/1998
TOTAL EQUIPMENT COST: $1,056,126.73
DOCUMENTATION FEE: ___________________
LESSEE INITIALS
- ---------------------------
/s/ GDO LESSOR INITIALS
- ---------------------------
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
ASSET ACTIVITY CHECKLIST REPORT
PREPARED BY: STEVEN LASPINA
APPROVALS: /s/ SL /
------------------------
TYPE OF TRANSACTION
(/) RENEWAL LEASE ( ) CASUALTY AT STIPULATED LOSS VALUE
( ) SALE TO ORIGINAL USER ( ) EARLY TERMINATION
( ) SALE TO THIRD PARTY USER ( ) WAREHOUSE OF ASSETS
( ) OTHER _____________________________
PRIMARY TERM DATA
ORIGINAL LESSEE SHELL OIL COMPANY
STREET ADDRESS 1 ZEIGLER COAL HOLDING CO
STREET ADDRESS 2 50 JEROME LANE
CITY, STATE, ZIP FAIRVIEW HEIGHTS IL 62208
CONTACT NAME ROBERT MCPEAK
PHONE NUMBER 618-394-2480 FAX NUMBER 618-394-2488
MASTER LEASE NUMBER 8607TXG245
LEASE DATE 7/15/1986
RENTAL SCHEDULE A-15
START DATE 1/01/1991
EXPIRATION DATE 12/31/1997
PAYMENT FREQUENCY M/ADV
LEASE RATE FACTOR .013672000
ASSUMED DEBT RATE 9.4700
TREASURY RATE 7.97
LENDER/LOAN NUMBER KFNL KFNL012
EQUITY OWNER(S) 1053
100.000000000
1 ( ) ORIGINAL TITLES 3 ( ) STOP BILL FORM
2 ( ) PRODUCE IRR REPORT 4 ( ) COLLATERAL DOCS REQUESTED
I. WAREHOUSE DATA (SEE ATTACHED EQUIPMENT LIST)
WAREHOUSE COST $_____________________
DATE WAREHOUSED _____________________ STOP BILL DATE _____________________
<PAGE>
EQUIS FINANCIAL GROUP PAGE 2
ASSET ACTIVITY CHECKLIST REPORT
II. EQUIPMENT SALE DATA (SEE ATTACHED EQUIPMENT AND PRICE LIST)
NEW LESSEE OR BUYER
STREET ADDRESS 1
STREET ADDRESS 2
CITY, STATE, ZIP
CONTACT NAME
PHONE NUMBER FAX NUMBER
SALE TYPE BS LS OS RS
TAX EXEMPTION STATUS YES NO EXEMPTION NUMBER
TOTAL SALE PRICE $_________________ BROKERAGE FEE $___________________
SALE DATE/STOP BILL DATE __________________
1 ( ) CREATE MEMO CODE 6 ( ) CHANGE MEMO CODE
2 ( ) AS/400 INPUT 7 ( ) DELIVERY INSTRUCTIONS
3 ( ) MISCELLANEOUS INVOICE 8 ( ) REMOVE RS COUNTERPART IF ALL
4 ( ) PRODUCE DOCUMENTS/SEND TO BUYER ASSETS SOLD
5 ( ) RECEIPT OF PAYMENT 9 ( ) PREP FOR SCANNING
10 ( ) FINAL DOCUMENTS TO BUYER
III. RENEWAL DATA (ATF MAY NEED TO BE CREATED)
NEW RENTAL SCHEDULE A-15RN1 TERM 24 MONTHS
START DATE 1/1/98 EXPIRATION DATE 12/31/99
PAYMENT FREQUENCY [M/ADV] Q/ADV S/ADV A/ADV N/ARR Q/ARR S/ARR A/ARR
STIPULATED LOSS VALUE $_________________ LRF/RENT $.00852070/9,000
SEND DOCUMENTS TO LESSEE __________________ END OF LEASE OPTIONS FMV
1 (/) AS/400 INPUT 5 ( ) ACTIVATION REPORT
2 (/) UPDATE EQUITY OWNER 6 ( ) PREP FOR SCANNING
3 (/) PRODUCE DOCUMENTS/SEND TO LESSEE 7 ( ) FINAL DOCUMENTS TO LESSEE
4 ( ) REQUEST UPDATED INSURANCE
IV. NOTES, COMMENTS AND OTHER INFORMATION
_________________________________________
_________________________________________
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
ASSET ACTIVITY REPORT - EQUIPMENT DESCRIPTION
LESSEE: SHELL OIL COMPANY
RENTAL SCHEDULE: A-15
<TABLE>
<CAPTION>
Asset Equipment Cost Serial Number Manufacturer Model Type Status Bill Code
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0013613 973,626.73 74289 EUCLID R-190 TRUCK LEASE WY002
0013614 82,500.00 3700 R57 HAUL TRUCK WHEELS LEASE WY002
-------------
1,056,126.73 Total for Location BUCKSKIN MINE GILLETTE WY 82716 CODE WY001
=============
1,056,126.73 Total Equipment Cost
</TABLE>
** END OF REPORT **
<PAGE>
[LOGO] Triton Coal Company 113 S. Gillette Avenue, Suite 203
Division Office Gillette, Wyoming 82716
(307) 687-2062
================================================================================
November 20, 1997
Mr. Steve Laspina
Equis Financial Group
88 Broad Street
Boston, MA 02110
Dear Steve:
To follow up our discussions concerning the Euclid R-190 truck leases,
Schedule(s) A-15 and A-16, Triton has elected to extend the current lease
agreement for another 24 months per the terms set forth in your letter of July
24, 1997. These terms were also set forth in the October 1, 1997 letter,
however, we would rather not consider stating a Purchase Price at this time.
Simply, a 24 month extension at $9,000.00 per month will most closely fit with
our mine planning at this time. As I interpret this proposal, the same language
regarding options at termination will hold as set forth in the original lease
agreement.
Please forward the proper documentation required to initiate this 24 month
extension so that I can prepare the paperwork necessary for management approval
signatures at my location.
If there is anything more that I need to do, or if you have any questions
regarding this matter, please call.
Sincerely,
/s/ Bill Seay
Bill Seay
Materials Manager
cc: John Willson
Dick Grady
Scott Deppe
Randy Roos
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
Schedule B Equipment Description
LESSEE: SHELL OIL COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-15RN1
LESSOR: EQUIS FINANCIAL GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
973,626.73 74289 EUCLID R-190 TRUCK 1/01/1998
82,500.00 3700 R57 HAUL TRUCK WHEELS 1/01/1998
- ------------------
1,056,126.73 Total for Location BUCKSKIN MINE GILLETTE WY 82716
==================
1,056,126.73 Total Equipment Cost
</TABLE>
<PAGE>
RENEWAL SUPPLEMENT NO. TEL1RN2 (the "SUPPLEMENT")
DATED AS OF JANUARY 1, 1996
TO EQUIPMENT LEASE AGREEMENT (the "LEASE AGREEMENT")
DATED AS OF FEBRUARY 1, 1989
LESSOR LESSEE
AMERICAN INCOME PARTNERS V-C ROSE'S STORES, INC.
LIMITED PARTNERSHIP PO DRAWER 947
c/o AMERICAN FINANCE GROUP HENDERSON, NC 27536
EXCHANGE PLACE
BOSTON, MA 02109
1. LEASE TERM. PAYMENT DATES.
This Renewal Supplement, between American Finance Group, as lessor,
lessor's interest therein having been previously sold and assigned to the
above-referenced Lessor and Lessee incorporates by reference the terms and
conditions of the Lease Agreement. Lessor hereby leases to Lessee and Lessee
hereby leases from Lessor those items of Equipment described on the attached
Schedule B, for the Renewal Lease Term and at the Renewal Term Basic Rent
payable on the Payment Dates hereinafter set forth on the attached Schedule A,
on the terms and conditions set forth in the Lease Agreement.
2. BASIC RENT.
Renewal Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Renewal Lease Rate set forth on the attached Schedule A.
3. LESSEE'S OPTION AT RENEWAL SUPPLEMENT EXPIRATION.
Notwithstanding the provisions of Section 29, and 30 of the Lease Agreement, at
the expiration of the Renewal Lease Term, upon (60) days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, items of
Equipment leased pursuant to this Renewal Supplement for $2,750.00. If Lessee
fails to give Lessor (60) days written notice, the Renewal Lease Term may, at
Lessor's option, be extended and continue until (60) days from the date Lessor
receives written notice of Lessee's decision to purchase the Equipment.
4. STIPULATED LOSS VALUE.
Notwithstanding the provision of Section 9 and 10 of the Lease Agreement,
the Stipulated Loss Value for the Equipment during the Renewal Lease Term shall
be equal to $75,000.00.
4. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Supplement and the Lease Agreement constitute the entire
agreement between Lessee and Lessor with respect to the leasing of the
Equipment. Lessee hereby represents, warrants and certifies that the
representations and warranties of Lessee set forth in the Lease Agreement are
true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Lease Agreement. To the extent
<PAGE>
RENEWAL SUPPLEMENT NO. TEL1RN2
PAGE TWO
any of the terms and conditions set forth in this Renewal Supplement conflict
with or are inconsistent with the Lease Agreement, this Renewal Supplement shall
govern and control. No amendment, modification or waiver of this Renewal
Supplement or the Lease Agreement will be effective unless evidenced in writing
signed by the party to be charged. This Renewal Supplement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Lease Agreement, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
LESSOR LESSEE
American Income Partners V-C Rose's Stores, Inc.
Limited Partnership
By: AFG Leasing IV Incorporated By: /s/ [ILLEGIBLE]/[ILLEGIBLE]
----------------------------
Title: General Partner Title: SVP Distribution & IS
-------------------------
By: /s/ Gail Ofgant
-------------------------------
Title: Manager
----------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS.
TO THE EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER
THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1
<PAGE>
PAGE 1
AMERICAN FINANCE GROUP
Schedule A - Rental Schedule Economics
LESSEE: ROSE'S STORES, INC.
LESSOR: AMERICAN FINANCE GROUP
RENTAL SCHEDULE: TEL1RN2
LEASE TERM (months): 24
PRIMARY START DATE: 1/01/1996
LEASE EXPIRATION DATE: 12/31/1997
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .009198042
PER DIEM LEASE RATE: .000306601
PERIODIC RENT: $2,985.00
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 1/01/1996
TOTAL EQUIPMENT COST: $324,525.60
DOCUMENTATION FEE: ___________________
/s/ [ILLEGIBLE]/[ILLEGIBLE] LESSEE INITIALS
- ---------------------------
/s/ GDO LESSOR INITIALS
- ---------------------------
<PAGE>
AMERICAN FINANCE GROUP PAGE 1
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815209 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815628 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MID-SUSSEX S/C MILLSBORO DE 19966
1,352.19 815260 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815506 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 4993 HIGHWAY ONE REHOBOTH BEACH DE 19971
1,352.19 815258 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815594 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 602 N DUAL HWY SEAFORD DE 19973
1,352.19 815234 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815418 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MOULTRIE MALL S/C MOULTRIE GA 31768
1,352.19 815227 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815614 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3856 PIO NONO AVE MACON GA 31206
1,352.19 815100 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815152 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location 652 SHURLING DR MACON GA 31201
1,352.19 815315 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815534 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.30 Total for Location 1620 OLGETHORPE BLVD ALBANY GA 31705
1,352.19 815296 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815572 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1108 ZEBULON RD GRIFFIN GA 30223
1,352.19 815125 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815456 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location COLUMBIA SQUARE MARTINEZ GA 30907
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 2
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815162 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815511 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 207 S DAWSON ST THOMASVILLE GA 31792
1,352.19 830363 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815408 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 110 BLUE RIDGE MTN CTR BLUE RIDGE GA 30513
1,352.19 815093 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815219 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location TRADEWINDS S/C SOMERSET KY 42501
1,352.19 815230 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815508 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 10 HELMWOOD PLAZA SHOPPING CENTER ELIZABETHTOWN KY 42701
1,352.19 815365 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815493 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1901 RUSSELLVILLE RD BOWLING GREEN KY 42101
1,352.19 815305 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815634 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location LINDEN AVE POCOMOKE CITY MD 21851
1,352.19 815275 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815584 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total tor Location 200 94TH ST OCEAN CITY MD 21842
1,352.19 815340 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815637 TELKON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location WHITE MARLIN MALL OCEAN CITY MD 21842
1,352.19 815361 TELEON 750 POS TERMINAL 1/01/1996
1,352.19 815402 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location KENT PLAZA SHOPPING CENTER CHESTERTOWH MD 21620
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 3
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815121 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815188 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815641 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
4,056.57 Total for Location SOUTHGATE S/C JACKSON MS 39212
1,352.19 815172 TELEON 750 POS TERMINAL 1/01/1996
1,352.19 815464 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3720 HARDY ST HATTIESBURG MS 39401
1,352.19 815105 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815455 TELKON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 946 N 16TH AVE LAUREL MS 39440
1,352.19 815142 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815510 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location EASTGATE S/C JACKSON MS 39208
1,352.19 815078 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815086 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location S SCALES ST & TURNER DR REIDSVILLE NC 27320
1,352.19 815269 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815615 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location DUNN PLAZA S/C DUNN NC 29334
1,352.19 815083 TELEON 750 POS TERMINAL 1/01/1996
1,352.19 815575 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MORGANTON PLAZA S/C MORGANTON NC 28655
1,352.19 815237 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815459 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1600 WELDON RD ROANOKE RAPIDS NC 27870
1,352.19 815143 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815437 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location TRI-CITIES MALL S/C FOREST CITY NC 28043
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 4
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815097 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815384 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 125 WESTWOOD S/C FAYETTEVILLE NC 28304
1,352.19 830376 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815480 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location VERNON PARK MALL S/C KINSTON NC 28501
1,352.19 815076 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815419 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location CUM-PARK PLAZA S/C BURLINGTON NC 27215
1,352.19 815267 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815593 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1738 OWEN DR FAYETTEVILLE NC 28304
1,352.19 815201 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815624 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location HENDERSON MALL S/C HENDERSON NC 27536
1,352.19 815304 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815371 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location HWY 321 S BOONE NC 20607
1,352.19 815349 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815631 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3011 MOREHEAD PLAZA S/C MOREHEAD CITY NC 28557
1,352.19 815263 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815620 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 106 WESTERN BLVD JACKSONVILLE NC 28540
1,352.19 815271 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815309 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location ABBEY PLAZA S/C BELMONT NC 29012
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 5
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815150 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815245 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location 2835 REYNOLDA RD WINSTON-SALEM NC 27106
1,352.19 815192 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815527 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location UNIVERSITY HALL S/C CHAPEL HILL NC 27514
1,352.19 818048 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815517 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 520 BERNE SQ NEW BERN NC 28560
1,352.19 815173 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815376 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3600 N DUKE ST DURHAM NC 27704
1,352.19 815199 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815465 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 120-1 GRINDSTAFF RD SYLVA NC 28779
1,352.19 815158 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815432 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1505 HOWE ST SOUTHPORT NC 28461
1,352.19 815343 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815636 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location OLEANDER DR WILMINGTON NC 28403
1,352.19 815157 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815512 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 203 E 24Th ST LUMBERTON NC 28358
1,352.19 815146 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815386 TELXOM 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 401 N BERKELEY BLVD GOLDSBORO NC 27530
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 6
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815336 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815483 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1471 NORLINA RD HENDERSON NC 27536
1,352.19 815124 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815410 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 2001 E DIXON BLVD SHELBY NC 28150
1,352.19 815367 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815609 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 300 RANDOLPH MALL ASHEBORO NC 27203
1,352.19 815130 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815422 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 2638 CAROLINA BEACH BLVD WILMINGTON NC 28403
1,352.19 815098 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815540 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1029 N MADISON BLVD ROXBORO NC 27573
1,352.19 815134 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815325 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location 342 EASTERN BLVD FAYETTEVILLE NC 28301
1,352.19 815184 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815546 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1149 HWY 64-70 SW HICKORY MC 26602
1,352.19 815347 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815526 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MOUNTAIN VILLAGE S/C JEFFERSON NC 28640
1,352.19 815221 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815565 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 198 WAKELON DR ZEBULON NC 27597
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 7
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 830378 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815492 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 6832 MARKET ST WILMINGTON NC 28405
1,352.19 815292 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815576 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MARION CITY SQ S/C MARION NC 28752
1,352.19 815337 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815556 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 601 THE COMMONS S/C SPRUCE PINE NC 28777
1,352.19 815182 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815393 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815469 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
4,056.57 Total for Location 165 WEAVER BLVD WEAVERVILLE NC 28787
1,352.19 815222 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815522 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3020 N MAIN ST/STE 300 HOPE HILLS NC 28348
1,352.19 815191 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815496 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1490 E KING ST BOONE NC 28607
1,352.19 815126 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815440 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 3030 OLD HOLLOW RD WALKERTOWN NC 27051
1,352.19 815352 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815528 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location SOUTH LAKE S/C/ CORNELLUS NC 28031
1,352.19 815241 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815287 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location 1300 N MAIN ST FUQUAY VARINA NC 27526
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 8
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815179 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815477 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MT OLIVE CENTRE MT OLIVE NC 28365
1,352.19 815220 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815627 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 101 SILER CROSSING S/C SILER CITY NC 27344
1,352.19 815262 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815602 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location CHOWAN CROSSING S/C EDENTON NC 27932
1,352.19 815189 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815399 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location HOMESTEAD MARKET S/C DURHAM NC 27113
1,352.19 815110 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815251 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location NEW MARKET CROSSING MOUNT AIRY NC 27030
1,352.19 815232 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815621 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.39 Total for Location YANCEY COMMONS SHOPPING CENTER BURNSVILLE MC 28714
1,352.19 815089 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815091 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815106 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815112 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815113 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815115 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815119 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815120 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815122 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815123 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815133 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815139 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815141 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815161 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815163 TELXON 750 POS TERMINAL 1/01/1996
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 9
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815171 TELXON 750 POS TERNINAL 1/01/1996
1,352.19 815176 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815183 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815391 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815392 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815394 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815395 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815398 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815401 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815404 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815416 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815424 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815426 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815429 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815453 TELEON 0274 CONTROLLER 1/01/1996
1,352.19 815461 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815467 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815470 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815491 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815495 TELXON 0274 CONTROLLER 1/01/1996
1,352.19 815507 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
48,678.84 Total for Location US HWY 1 S HENDERSON NC 27536
1,352.19 815147 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815643 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location HARTSVILLE MALL S/C HARTSVILLE SC 29550
1,352.19 815159 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815446 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location KALMIA PLAZA S/C AIKEN SC 29801
1,352.19 815354 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815472 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1175 ORANGEBURG MALL ORANGEBURG SC 29115
1,352.19 815350 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815489 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1508 S IRBY ST FLORENCE SC 29501
1,352.19 815524 TELXON 0274 CONTROLLER 1/01/1996
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 10
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------
1,352.19 Total for Location 2701 N DAVID MCLEOD BLVD FLORENCE SC 29501
1,352.19 815256 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815582 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location N VILLAGE S/C N MYRTLE BEACH SC 29582
1,352.19 815295 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815611 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1018 MERCURY BLVD MURFREESBORO TN 37130
1,352.19 815137 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815598 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location GALAZ PLAZA S/C GALAX VA 24333
1,352.19 815114 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815474 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 538 N MAIN ST EMPORIA VA 23847
1,352.19 815212 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815568 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 450 N MASON ST HARRISONBURG VA 22801
1,352.19 815322 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815536 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 901-1 W BROAD ST WAYNESBORO VA 22990
1,352.19 815356 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815380 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 105 CAVALIER SQ HOPEWELL VA 23860
1,352.19 815246 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815553 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1069 INDEPENDENCE BLVD VIRGINIA BEACH VA 23455
1,352.19 815213 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815632 TELXON 0274 CONTROLLER 1/01/1996
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 11
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,704.38 Total for Location 748 HILLTOP N S/C VIRGINIA BEACH VA 23451
- -----------------
1,352.19 815096 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815454 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location FOUR CORNER PLAZA ONLEY VA 23418
1,352.19 815103 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815486 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location S MAIN & ELY STS FARMVILLE VA 23901
1,352.19 815328 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815417 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 751 E MAIN ST ABINGDON VA 24210
1,352.19 815135 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815409 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 2940 CLINCH ST RICKLANDS VA 24641
1,352.19 815102 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815646 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.30 Total for Location 1143 JEFFERSON DAVIS HWY FREDERICKSBURG VA 22401
1,352.19 815316 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815482 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 4251 E LITTLE CREEK RD NORFOLK VA 23518
1,352.19 815274 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815595 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 163 MONTICELLO AVE WILLAMSBURG VA 23185
1,352.19 815362 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815644 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location MARTINSVILLE PLAZA MARTINSVILLE VA 24112
1,352.19 815272 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815525 TELXON 0274 CONTROLLER 1/01/1996
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 12
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------
2,704.38 Total for Location TOWN & COUNTRY S/C ALTAVISTA VA 24517
1,352.19 815288 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815504 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location WASHINGTON SQ S/C GRAFTON VA 23692
1,352.19 815286 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815450 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 605 NEWMARKET DR NEWPORT NEWS VA 23605
1,352.19 815206 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815557 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1390 ARMORY DR FRANKLIN VA 23851
1,352.19 815242 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815502 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 801 LAKESIDE DR LYNCHBURG VA 24501
1,352.19 815151 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815468 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 610 PELL AVE NE ROCKY MOUNT VA 24151
1,352.19 815196 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815229 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
2,704.38 Total for Location WOODFORD SQ CHESAPEAKE VA 23320
1,352.19 815231 TELXON 750 POS TERMINAL 1/01/1996
- -----------------
1,352.19 Total for Location 830 E ATLANTIC ST SOUTH HILL VA 23970
1,352.19 815144 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815372 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location ASHLAND JUNCTION ASHLAND VA 23005
1,352.19 815215 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815561 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 400 PANTOPS CENTER CHARLOTTESVILLE VA 22901
</TABLE>
<PAGE>
AMERICAN FINANCE GROUP PAGE 13
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC.
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: TEL1RN2
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815190 TELXON 750 POS TERMINAL 1/01/1996
1,352.19 815471 TELXON 0274 CONTROLLER 1/01/1996
- -----------------
2,704.38 Total for Location 1322 STAFFORD DR PRINCETON WV 24740
=================
324,525.60 Total Equipment Cost
</TABLE>
<PAGE>
RENEWAL SUPPLEMENT NO. TEL1RN2A (THE "SUPPLEMENT")
DATED AS OF JULY 9, 1996
TO EQUIPMENT LEASE AGREEMENT (the "LEASE AGREEMENT")
DATED AS OF FEBRUARY 1, 1989
LESSOR LESSEE
AMERICAN INCOME PARTNERS V-C ROSE'S STORES, INC.
LIMITED PARTNERSHIP P0 DRAWER 947
c/o EQUIS FINANCIAL GROUP HENDERSON, NC 27536
98 NORTH WASHINGTON STREET
BOSTON, MA 02114
1. LEASE TERM. PAYMENT DATES.
This Renewal Supplement, between American Income Partners V-C, as Lessor,
Lessor's interest therein having been previously sold and assigned by American
Finance Group and Lessee incorporates by reference the terms and conditions of
the Lease Agreement. Lessor hereby leases to Lessee and Lessee hereby leases
from Lessor those items of Equipment described on the attached Schedule B, for
the Renewal Lease Term and at the Renewal Term Basic Rent payable on the Payment
Dates hereinafter set forth on the attached Schedule A, on the terms and
conditions set forth in the Lease Agreement.
2. BASIC RENT
Renewal Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Renewal Lease Rate set forth on the attached Schedule A.
3. LESSEE'S OPTION AT RENEWAL SUPPLEMENT EXPIRATION.
Notwithstanding the provisions of Section 29, and 30 of the Lease Agreement, at
the expiration of the Renewal Lease Term, upon (60) days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, items of
Equipment leased pursuant to this Renewal Supplement for $2,750.00. If Lessee
fails to give Lessor (60) days written notice, the Renewal Lease Term may, at
Lessor's option, be extended and continue until (60) days from the date Lessor
receives written notice of Lessee's decision to purchase the Equipment.
4. STIPULATED LOSS VALUE.
Notwithstanding the provision of Section 9 and 10 of the Lease Agreement,
the Stipulated Loss Value for the Equipment during the Renewal Lease Term shall
be equal to $50,000.00.
4. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Supplement and the Lease Agreement constitute the entire
agreement between Lessee and Lessor with respect to the leasing of the
Equipment. Lessee hereby represents, warrants and certifies that the
representations and warranties of Lessee set forth in the Lease Agreement are
true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Lease Agreement. To the extent
<PAGE>
RENEWAL SUPPLEMENT NO. TEL1RN2A
PAGE TWO
any of the terms and conditions set forth in this Renewal Supplement conflict
with or are inconsistent with the Lease Agreement, this Renewal Supplement shall
govern and control. No amendment, modification or waiver of this Renewal
Supplement or the Lease Agreement will be effective unless evidenced in writing
signed by the party to be charged. This Renewal Supplement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Lease Agreement, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
LESSOR LESSEE
American Income Partners V-C Rose's Stores, Inc.
Limited Partnership
By: AFG Leasing IV Incorporated By: /s/ [Illegible]
-------------------------
Title: General Partner Title: Sr. VP Distribution
----------------------
& Information Systems
By: /s/ Gail Ofgant
------------------------
Title: VP & Auth. Signer
---------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS.
TO THE EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER
THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: ROSE'S STORES, INC.
LESSOR: AMERICAN FINANCE GROUP, INC.
RENTAL SCHEDULE: TEL1RN2A
LEASE TERM (months): 17
PRIMARY START DATE: 8/01/1996
LEASE EXPIRATION DATE: 12/31/1997
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .006914708
PER DIEM LEASE RATE: .000230490
PERIODIC RENT: $1,870.00
NUMBER OF PAYMENTS: 17
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 8/01/1996
TOTAL EQUIPMENT COST: $270,438.00
DOCUMENTATION FEE:
----------------
/s/ [ILLEGIBLE] LESSEE INITIALS
- ---------------
/s/ GDO LESSOR INITIALS
- ---------------
<PAGE>
EQUIS FINANCIAL GROUP PAGE 1
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815363 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1144 DADEVILLE RD ALEXANDER CITY AL 35010
1,352.19 815207 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 108 CHERRY VALLEY S/C LANETT AL 36863
1,352.19 815253 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location BLUE HEN MALL DOVER DE 19901
1,352.19 815324 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815638 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 633 N DUPONT HWY MILFORD DE 19963
1,352.19 815092 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 236 VIRGINIA AVE TIFTON GA 31794
1,352.19 815341 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location COLLEGE PLAZA S/C STATESBORO GA 30458
1,352.19 815127 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815128 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 4058 LEXINGTON RD ATHENS GA 30604
1,352.19 815285 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 3206-A PEACH ORCHARD RD AUGUSTA GA 30906
1,352.19 815167 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 3242 WRIGHTSBORO RD AUGUSTA GA 30909
1,352.19 815359 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1285 W WASHINGTON ST GAINESVILLE GA 30501
1,352.19 815293 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location TRADEMART S/C CORBIN KY 40701
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 2
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 830362 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location TRADEMORE CTR MOREHEAD KY 40351
1,352.19 815099 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location PARKWAY PLAZA MALL MADISONVILLE KY 42431
1,352.19 815223 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location UNIVERSITY S/C RICHMOND KY 40475
1,352.19 815094 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 915249 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 22 WINCHESTER PLAZA WINCHESTER KY 40391
1,352.19 815301 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 400 VILLAGE LANE HAZARD KY 41701
1,352.19 815355 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1089 18TH ST CORBIN KY 40701
1,352.19 815117 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WILDEWOOD CTR CALIFORNIA MD 20619
1,352.19 815095 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location FESTIVAL AT WALDORF SHOPPING CENTER WALDORF MD 20601
1,352.19 815261 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815327 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 1461 N FAYETTEVILLE ST ASHEBORO NC 27203
1,352.19 815239 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 107 EAST BLVD WILLIAMSTON NC 27892
1,352.19 815236 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1628 S MAIN ST HIGH POINT NC 27260
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 3
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815307 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 911 SUNSET AVE CLINTON NC 28328
1,352.19 815313 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location NEW RIVER SHOP DISTRICT JACKSONVILLE NC 28540
1,352.19 815077 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location S STRATFORD RD WINSTON-SALEM NC 27103
1,352.19 815259 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location ROWAN MALL S/C SALISBURY NC 28144
1,352.19 815090 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 223 GREENVILLE HWY HENDERSONVILLE NC 28739
1,352.19 830367 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1500 SKYWAY DR MONROE NC 28110
1,352.19 815214 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location LEXINGTON S/C LEXINGTON NC 27292
1,352.19 815138 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 801 WASHINGTON SQUARE S/C WASHINGTON NC 27889
1,352.19 815109 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 220 W KINGS HWY EDEN NC 27288
1,352.19 815364 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location GRACE PLAZA S/C ASHEVILLE NC 28804
1,352.19 815116 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815635 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 1804 CENTER PARK S/C ABERDEEN NC 28315
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 4
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815306 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WHITEVILLE PLAZA S/C WHITEVILLE NC 28472
1,352.19 815178 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 211 EASTCHESTER DR HIGH POINT NC 27260
1,352.19 815155 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location W ERINGHAUS ST ELIZABETH CITY NC 27909
1,352.19 815186 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 516 PLAZA DR MOORESVILLE NC 28115
1,352.19 815282 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1603-D E MAIN ST LINCOLNTON NC 28092
1,352.19 815131 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815642 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location BEAUFORT SQUARE BEAUFORT NC 28516
1,352.19 815248 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location ASHEVILLE W S/C ASHEVILLE NC 28806
1,352.19 815108 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location BLACK MOUNTAIN S/C BLACK MOUNTAIN NC 28711
1,352.19 815218 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location DOGWOOD PLAZA S/C BREVARD NC 28712
1,352.19 815284 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 113 HILLTOP VILLAGE OXFORD NC 27565
1,352.19 815165 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2449 N CENTER ST HICKORY NC 28601
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 5
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815334 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location OUTER BANKS MALL/PO 1179 NAGS HEAD NC 27959
1,352.19 815118 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 300 W DIXON BLVD SHELBY NC 28150
1,352.19 815193 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location FOUR SEASONS BLVD HENDERSONVILLE NC 28739
1,352.19 815345 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1100 MIAMI BLVD DURHAM NC 27703
1,352.19 815170 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1015 SPRING LANE SANFORD NC 27330
1,352.19 815132 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location GUM BRANCH & HENDERSON JACKSONVILLE NC 28540
1,352.19 815344 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 100 BARBER BLVD WAYNESVILLE NC 28786
1,352.19 815153 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815630 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 1315 KILDAIRE FARM RD CARRY NC 27511
1,352.19 815326 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location PLANTATION PLAZA CARRBORO NC 27510
1,352.19 815104 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2727 S CHURCH ST BURLINGTON NC 27215
1,352.19 815166 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815640 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location ATLANTIC STATION S/C ATLANTIC BEACH NC 28512
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 6
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815216 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1935 SALISBURY BLVD W SALISBURY NC 28144
1,352.19 815204 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815645 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 1100 WESLEYAN BLVD N ROCKY MOUNT NC 27804
1,352.19 815211 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location STANTON SQ GREENVILLE NC 27834
1,352.19 815303 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 3308 BRAGG BLVD FAYETTEVILLE NC 28303
1,352.19 815148 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location HWY 301 S/PO 307 SELMA NC 27576
1,352.19 815174 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 980 S MAIN ST/PO 1488 KERNERSVILLE NC 27284
1,352.19 815101 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 3191 PETERS CREEK PKWY WINSTON-SALEM NC 27107
1,352.19 815197 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815317 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location BEACON PLAZA RALEIGH NC 27610
1,352.19 815273 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1320 W GRANTHAM ST GOLDSBORO NC 27530
1,352.19 815225 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location THE MARKET PLACE NEWTON NC 28658
1,352.19 815360 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location NEW TOWNE CTR CLEMENS NC 27012
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 7
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815291 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 714 E GREENVILLE BLVD GREENVILLE NC 27858
1,352.19 815368 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 12295 NORTH BLVD WAKE FOREST NC 27587
1,352.19 815289 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location DARE CENTER KILL DEVIL HILLS NC 27948
1,352.19 815270 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815633 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location EDGECOMBE SQUARE SHOPPING CTR TARBORO NC 27886
1,352.19 815185 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815187 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815208 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815210 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815217 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815224 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815226 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815228 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815238 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815240 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815243 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815247 TELXON 750 POS TERMINAL 6/01/1996
1,352.19 815250 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815252 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815254 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815255 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815266 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815277 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815278 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815280 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815283 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815290 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815294 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815297 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815299 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815302 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815308 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815314 TELXON 750 POS TERMINAL 8/01/1996
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 8
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815320 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815321 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815323 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815329 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815330 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815335 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815339 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815346 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830369 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830370 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830371 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830372 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830373 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830375 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 818049 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 818050 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 818051 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 818052 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 818053 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
63,552.93 Total for Location US HWY 1 S HENDERSON NC 27536
1,352.19 815081 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815084 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815087 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815111 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815140 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815164 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815181 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815202 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815279 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815281 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815300 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815312 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815318 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815319 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815342 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815357 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815358 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815366 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830361 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830364 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830365 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830366 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830368 TELXON 750 POS TERMINAL 8/01/1996
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 9
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 830377 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 830380 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815629 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
35,156.94 Total for Location US HWY 1 S HENDERSON NC 27536
1,352.19 815088 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815107 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815149 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815195 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815310 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815353 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
8,113.14 Total for Location US HWY 1S HENDERSON NC 27536
1,352.19 815268 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location PINEWOOD S/C SPARTANBURG SC 29301
1,352.19 815160 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location MONTAGUE ST GREENWOOD SC 29649
1,352.19 815205 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location MARION MALL S/C MARION SC 29571
1,352.19 815180 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1137 KNOX AVE/HWY 25 NORTH AUGUSTA SC 29841
1,352.19 815332 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2955 KEITH ST NW CLEVELAND TN 37311
1,352.19 815079 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2533 BROAD ST CAMDEN SC 29020
1,352.19 815369 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location BEAUFORT PLAZA BEAUFORT SC 29902
1,352.19 815169 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1121 BROAD ST SUMTER SC 29150
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 10
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815311 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location KEOWEE VILLAGE S/C SENECA SC 29678
1,352.19 815145 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 3820 S KINGS HWY MYRTLE BEACH SC 29577
1,352.19 815200 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1412-19 TROTWOOD AVE COLUMBIA TN 38401
1,352.19 830374 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 120 S WILLOW AVE COOKEVILLE TN 38501
1,352.19 815194 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location NORTHGATE S/C MCMINNVILLE TN 37110
1,352.19 815298 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location MORRISTOWN PLAZA S/C MORRISTOWN TN 37813
1,352.19 815080 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location COLONIAL SQ S/C COLONIAL HEIGHTS VA 23834
1,352.19 815264 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location POPLAR HILL PLAZA S/C CHESAPEAKE VA 23321
1,352.19 815338 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 14347 WARWICK-DENBIGH SC NEWPORT NEWS VA 23602
1,352.19 815348 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location ESSEX SQ/PO 219 TAPPAHANNOCK VA 22560
1,352.19 815233 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 6529 COLLEGE PARK SQ VIRGINIA BEACH VA 23462
1,352.19 815203 TELXON 750 POS TERMINAL 8/01/1996
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 11
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------
1,352.19 Total for Location 1165 N FOURTH ST WYTHEVILLE VA 24382
1,352.19 815276 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WISE COUNTY PLAZA S/C WISE VA 24293
1,352.19 815085 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815168 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location HAYES STORES S/C HAYES VA 23072
1,352.19 830379 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 801 UNIVERSITY CITY BLVD BLACKSBURG VA 24060
1,352.19 815265 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 975 EMMET ST CHARLOTTESVILLE VA 22901
1,352.19 815136 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 920 S CRAIG AVE COVINGTON VA 24426
1,352.19 815235 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 1403 N MAIN ST SUFFOLK VA 23434
1,352.19 815198 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WILBORN AVE SOUTH BOSTON VA 24592
1,352.19 815175 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2720 N MALL DR/STE 104 VIRGINIA BEACH VA 23452
1,352.19 815154 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815156 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,704.38 Total for Location 260 REMOUNT RD FRONT ROYAL VA 22630
1,352.19 815331 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 749 DOMINION SQ S/C CULPEPPER VA 22701
</TABLE>
<PAGE>
EQUIS FINANCIAL GROUP PAGE 12
Schedule B Equipment Description
LESSEE: ROSE'S STORES, INC. RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE
NUMBER: TEL1RN2A
LESSORS: AMERICAN FINANCE GROUP, INC.
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,352.19 815177 TELXON 750 POS TERMINAL 8/01/1996
1,352.19 815639 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
2,104.38 Total for Location 3333-5 S CRATER RD PETERSBURG VA 23803
1,352.19 815129 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location 2265 S MAIN ST HARRISONBURG VA 22801
1,352.19 815244 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WOODS CORNER S/C VIRGINIA BEACH VA 23464
1,352.19 815351 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location WILLIAMS COURT S/C PORTSMOUTH VA 23702
1,352.19 815333 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location NO 1 WESTGATE S/C BEDFORD VA 24526
1,352.19 815082 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location AMHERST HWY & AMELON RD MADISON HEIGHTS VA 24572
1,352.19 815257 TELXON 750 POS TERMINAL 8/01/1996
- -----------------
1,352.19 Total for Location AIRPORT SQ S/C BLUEFIELD WV 24701
- -----------------
- -----------------
270,438.00 Total Equipment Cost
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,913,800
<SECURITIES> 0
<RECEIVABLES> 277,846
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,191,646
<PP&E> 6,763,001
<DEPRECIATION> 6,710,529
<TOTAL-ASSETS> 3,244,118
<CURRENT-LIABILITIES> 565,289
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,678,829
<TOTAL-LIABILITY-AND-EQUITY> 3,244,118
<SALES> 0
<TOTAL-REVENUES> 1,349,744
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 614,706
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 735,038
<INCOME-TAX> 0
<INCOME-CONTINUING> 735,038
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 735,038
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
