<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AFG Investment Trust B
--------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
<PAGE>
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------
-2-
<PAGE>
AFG INVESTMENT TRUST B
88 Broad Street
Boston, Massachusetts 02110
This Solicitation Statement is being furnished to each holder
(individually, a "Beneficiary," and, collectively, the "Beneficiaries") of
Class A Beneficiary Interests ("Class A Interests") and Class B Subordinated
Beneficiary Interests ("Class B Interests"; the Class A Interests and the
Class B Interests, collectively, the "Interests") in AFG Investment Trust B,
a Delaware business trust (the "Trust"), in connection with the solicitation
by the Trust of the consent of the Beneficiaries to a proposed amendment (the
"Amendment") to the Second Amended and Restated Declaration of Trust of the
Trust (the "Trust Agreement"). AFG ASIT Corporation, a Massachusetts
corporation, is the Managing Trustee of the Trust (the "Managing Trustee").
The Managing Trustee is proposing the Amendment for consideration by the
Beneficiaries for two primary reasons. First, the Managing Trustee believes
that investing Trust funds in additional assets other than equipment may
provide returns in excess of those currently available to the Trust. Second,
the Amendment will implement certain provisions of a memorandum of
understanding to settle a pending class and derivative action brought on
behalf of various entities and investors, including the Beneficiaries, in the
event that the parties to the action are able to agree upon a final
settlement of the action. The Amendment would modify the Trust Agreement so
that:
- in the event of final settlement of the action, the Trust would
be required to grant certain rights (including a special cash
distribution) to the Class A Beneficiaries;
- the Trust would be permitted to invest in instruments that
the Managing Trustee believes would provide higher rates of
return to the Trust; and
- expenses of the Trust could be reduced through the acquisition of
indebtedness at a lower cost.
Specifically, the Amendment would:
(i) subject to attaining a settlement in the class and derivative
action, (a) provide for a special distribution of $500,709 (the "1998 Special
Distribution") to the Class A Beneficiaries of record as of September 1,
1997, or their successors and assigns, from the proceeds of the offering of
the Class B Interests (the "Class B Proceeds"); (b) provide for the retention
of $1,126,596 by the Trust which would otherwise be distributed to Equis II
Corporation, an Affiliate of the sponsor of the Trust, Equis Financial Group
Limited Partnership ("EFG"), and provide that such amount will be retained
and invested by the Trust in additional Assets (as defined below); and (c)
require Equis II Corporation to vote its Class B Interests in proportion to
the votes of the Class A Beneficiaries on matters concerning certain related
party transactions, management fees and acquisition fees and other
compensation;
-3-
<PAGE>
(ii) permit the Trust, directly or indirectly, to (a) invest in,
acquire, own, lease, hold, manage, operate, sell, exchange or otherwise
dispose of any personal property, including equipment and other personal
property and securities of any type and description, whether or not related
to such personal property (such personal property, including securities,
collectively, "Assets"), and (b) enter into any lawful transaction and engage
in any business lawful activities related or incidental thereto or in
furtherance of the foregoing;
(iii) permit the Trust to lease assets to any lessee selected by the
Managing Trustee as an appropriate lessee, without the need to meet any
minimum credit rating; permit the Trust to incur recourse and
cross-collateralized debt and remove the current limitation as to the amount
of debt which may be incurred by the Trust; modify the requirements with
respect to joint ventures with Affiliates of the Managing Trustee and EFG;
and otherwise modify the investment objectives and policies of the Trust, as
hereinafter described in this Solicitation Statement;
(iv) permit the Managing Trustee to reinvest the Trust's cash from
sales or refinancings of Assets commencing on the date of adoption of the
Amendment (the "Amendment Date") and continuing through December 31, 2001;
(v) provide that the acquisition fee payable by the Trust on Assets
purchased from reinvestment proceeds after the Amendment Date be reduced from
3% to 1% and the annual management fee with respect to all equipment acquired
after the Amendment Date be reduced from 5% to 2%, and the Managing Trustee
will receive an annual management fee on securities, debt and other
non-equipment Assets (other than cash and cash equivalents) equal to 1% of
the fair market value (or, if unobtainable, the cost) of such Assets; and
(vi) make various other changes to the Trust Agreement necessary or
appropriate to effectuate the foregoing.
This Solicitation Statement and the accompanying consent form are being
mailed to Beneficiaries of record as of the close of business on _________,
1998. Pursuant to Section 11.2 of the Trust Agreement, the adoption of the
Amendment requires the consent of Beneficiaries holding more than 50% in the
aggregate of the Interests held by all Beneficiaries. As of the date of this
Solicitation Statement, there were 582,657 Class A Interests and 1,000,961
Class B Interests outstanding. Accordingly, under the Trust Agreement the
consent of Beneficiaries holding more than 791,809 Interests will be required
for the adoption of the Amendment.
Affiliates of the Managing Trustee own 839 Class A Interests, all of
which will be voted in favor of the Amendment.
While under no requirement to do so, Equis II Corporation has advised
the Managing Trustee that it will vote all of its 997,373 Class B Interests
with respect to the Amendment in the same manner in which the majority of the
Class A Interests are actually voted (i.e., for this purpose the Class A
Interests for which no
-4-
<PAGE>
consent form is actually received or which abstain will not be taken into
account). Accordingly, the Amendment will be adopted or rejected based upon
the majority of the Class A Interests actually voted (including the votes of
Affiliates of the Managing Trustee), no matter how few Class A Interests are
actually voted. This undertaking by Equis II Corporation relates solely to
the Amendment and is made in connection with the memorandum of understanding
relating to the class and derivative action hereinafter described. In the
event that a settlement in the class and derivative action is not attained in
accordance with the memorandum of understanding, Equis II Corporation will no
longer be bound by this undertaking with respect to any future votes by
Beneficiaries.
Under applicable law, no dissenters' rights (i.e., rights of
nonconsenting Beneficiaries to exchange their Interests in the Trust for
payment of their fair value) are available to any Beneficiary of the Trust
regardless of whether such Beneficiary has or has not consented to the
Amendment.
The consent form enclosed with this Solicitation Statement, to be valid,
must be signed by the record owner(s) of the Interests and returned to the
Managing Trustee by _______________ (subject to extension at the discretion
of the Managing Trustee). Pursuant to Section 12.1 of the Trust Agreement, a
written consent may not be withdrawn or voided once the consent form is
received by the Managing Trustee. A properly executed consent form received
by the Managing Trustee will be voted in accordance with the direction
indicated on the form. If no direction is indicated, a properly executed
consent form received by the Managing Trustee will be voted in favor of the
Amendment. Voting on the Amendment will be conducted only by written consent
and no formal meeting of the Beneficiaries will be held. THE MANAGING
TRUSTEE RECOMMENDS THAT YOU CONSENT TO THE AMENDMENT.
BENEFICIARIES ARE ASKED TO VOTE BY MARKING AND SIGNING THE ACCOMPANYING
CONSENT FORM AND RETURNING IT PROMPTLY IN THE ENCLOSED ENVELOPE SO THAT IT IS
RECEIVED BY _________, 1998. THE CONSENT FORM MAY ALSO BE RETURNED BY FACSIMILE
AT (201) 804-8693.
-5-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF AMENDMENT...........................................................7
BACKGROUND AND PURPOSES OF AMENDMENT...........................................9
RISK FACTORS..................................................................16
CONFLICTS OF INTEREST.........................................................18
CONSENT OF BENEFICIARIES......................................................19
ADDITIONAL INFORMATION CONCERNING THE TRUST...................................20
</TABLE>
-6-
<PAGE>
SUMMARY OF AMENDMENT
Consenting to the Amendment would, among other things, permit the Trust to
do the following:
1. PROVIDE FOR A SPECIAL DISTRIBUTION TO CLASS A BENEFICIARIES.
Subject to attaining a settlement in the Class Action Lawsuit (as
hereafter defined), the Amendment would require that the Trust make a special
distribution to the Class A Beneficiaries of record as of September 1, 1997, or
their successors and assigns, of $500,709 for all Class A Interests (or
approximately $0.75 per Class A Interest) (the "1998 Special Distribution").
See "BACKGROUND AND PURPOSES OF AMENDMENT - Pending Litigation." In July 1997,
the Trust issued $1,000,961 Class B Interests for $5,004,805 (the "Class B
Proceeds") and made a special distribution from such proceeds to the Class
A Beneficiaries. The 1998 Special Distribution also will be made from the Class
B Proceeds and will correspondingly reduce the amounts which may be returned to
Equis II Corporation as a Class B Capital Distribution. After making
the special distribution in 1997, paying offering costs for the Class B
Interests and purchasing 82,837 Class A Interests, the Trust has $3,127,843
remaining from the Class B Proceeds. If the Amendment is not adopted, up to
a maximum of $3,116,631 may be distributed under the Trust Agreement to Equis II
Corporation as a Class B Capital Distribution. If the Amendment is adopted,
the amount that may be distributed to Equis II Corporation would be reduced to
a maximum of $1,489,327.
2. PROVIDE FOR AN ADDITIONAL COMMITMENT OF FUNDS TO THE TRUST.
Subject to reaching final settlement of the Class Action Lawsuit,
the Amendment would require Equis II Corporation unconditionally to commit
$1,126,596 of the Class B Proceeds to the Trust to be used exclusively for Trust
purposes and waive all rights to receive a return of such funds as a Class B
Capital Distribution.
3. PERMIT THE TRUST TO ACQUIRE PROPERTY IN ADDITION TO EQUIPMENT.
Previously, the Trust was permitted to acquire only equipment to be
leased to lessees meeting a minimum standard of creditworthiness. The Amendment
would permit the Trust to acquire equipment for lease to lessees without
satisfying any minimum credit standard, and to acquire securities and other
personal property. See"Background and Purposes of Amendment" for a discussion
of the reasons for these proposed changes in the acquisition policies of
the Trust and the investment intentions of the Managing Trustee if the Amendment
is adopted. See also "RISK FACTORS".
-7-
<PAGE>
4. REINSTATE THE TRUST'S REINVESTMENT PERIOD.
The Trust was permitted to reinvest proceeds from sales or
refinancings in additional equipment through September 8, 1996. The
Amendment would reinstate the reinvestment period through December 31, 2001
(the "Additional Reinvestment Period"). The extension of the reinvestment
period will not, however, extend the term of the Trust or otherwise modify
the terms of the Trust Agreement. Accordingly, the Trust is expected to be
liquidated by December 31, 2003.
Since the expiration of the initial reinvestment period, the Trust has
disposed of equipment in the ordinary course of business. The proceeds from
such dispositions have been used to make distributions to Beneficiaries, retire
Trust indebtedness and establish reserves for Trust operations, equipment
repairs and maintenance. No additional equipment has been acquired from such
proceeds.
The Managing Trustee estimates that the liquidation value per Class A
Interest at December 31, 1997 was $____. This amount was determined by
calculating the net present value of the estimated distributions that a Class
A Interest might realize, assuming a discount rate of 10% per annum (the
"NPV"). The Managing Trustee believes that the NPV is in excess of the amount
of cash consideration that could flow to the Class A Beneficiaries in
liquidation if an independent third party buyer were to purchase the Trust's
Assets in an arm's length transaction. While there can be no assurance as to
this result, the Managing Trustee believes that the NPV may be increased as a
result of the revised investment policies that would be affected by the
Amendment and which will permit capital to be committed to higher yielding
investments and reduce Trust expenses as a result of lower financing costs.
5. MODIFY CERTAIN FEES PAYABLE TO THE MANAGING TRUSTEE AND EFG.
The Amendment would reduce acquisition fees payable by the Trust on
assets purchased from reinvestment proceeds during the Additional
Reinvestment Period from 3% to 1% and reduce the annual management fee with
respect to equipment acquired after the Amendment Date from 5% to 2% on all
leases and also provide that the Managing Trustee will receive an annual
management fee on securities, debt and other non-equipment Assets (other than
cash or cash equivalents) equal to 1% of the fair market value (or, if
unobtainable, the cost) of such assets.
-8-
<PAGE>
6. IMPOSE VOTING RESTRICTIONS ON CLASS B INTERESTS.
Subject to obtaining a settlement in the Class Action Lawsuit as
described herein, the Amendment would require Equis II Corporation to vote
its Class B Interests in proportion to the votes of the Class A Beneficiaries
on matters concerning certain related party transactions, management fees and
acquisition fees and other compensation.
7. MAKE OTHER CHANGES TO THE TRUST AGREEMENT.
The Amendment would also permit the Trust to incur recourse and
cross-collateralized debt, remove the current limitations on the amount of debt
which may be incurred by the Trust, and modify the requirements with respect to
joint ventures with affiliates.
BACKGROUND AND PURPOSES OF AMENDMENT
The Trust is soliciting the consent of the Beneficiaries to permit the
Trust to do various things, including to acquire assets in addition to
equipment. The following is a discussion of the background of the Trust,
certain pending litigation and purposes of the Amendment. The exact language
of the Amendment is set forth in Exhibit A to this Solicitation Statement.
ORGANIZATION OF TRUST
AFG Investment Trust B is a Delaware business trust which was created on
May 28, 1992, for the purpose of acquiring and leasing to third parties a
diversified portfolio of capital equipment. The Managing Trustee of the
Trust and three other Delaware business trusts (collectively, the "AFG
Investment Trusts" or the "Trusts") is AFG ASIT Corporation, a Massachusetts
corporation which was organized on August 13, 1991, and is a wholly-owned
subsidiary of Equis II Corporation and an affiliate of Equis Financial Group
Limited Partnership (formerly American Finance Group), a Massachusetts
limited partnership ("EFG" or the "Advisor"). The principal executive office
of the Trust, the Managing Trustee and EFG is at 88 Broad Street, Boston,
Massachusetts 02110.
EFG is the Advisor to, and Special Beneficiary of, the Trust. As Advisor,
EFG provides various services to the Trust, including selection of Assets for
acquisition by the Trust and management of Assets, for which it receives
compensation as provided in the Trust Agreement. As Special Beneficiary, EFG
also participates in Trust distributions.
The Trust issued 665,494 beneficiary interests on September 8, 1992 (the
"Class A Interests"), which are currently held by 674 investors (the "Class
A Beneficiaries"). On July 18, 1997, the Trust issued 1,000,961 Class B
Subordinated Interests (the "Class B Interests") of which (i) 997,373 are
currently held by Equis II Corporation, and (ii) 3,588 are held by five other
investors (collectively, the "Class B Beneficiaries"). Class A Interests and
Class B Interests basically have identical voting rights and, therefore,
Equis II Corporation has control over the Trust on all matters on which
Beneficiaries may vote.
-9-
<PAGE>
The net proceeds of the offering of the Class B Interests (the "Class
B Proceeds") were intended to be applied to make a one-time special cash
distribution to the Class A Beneficiaries of $1.47 per Class A Interest (the
"Special Class A Distribution") and thereafter were intended by the Managing
Trustee to be applied for a period of 24 months (i.e., through July 17, 1999)
to redeem a portion of the Class A Interests. Any Class B Proceeds not so
applied during the 24-month period were intended to be distributed in
accordance with the Trust Agreement to the Class B Beneficiaries as the Class
B Capital Distribution. The Trust has paid $979,449 ($1.47 per Class A
Interest) as the Special Class A Distribution and has applied $785,295 to
redeem 82,837 Class A Interests through March 6, 1998. The Trust currently
retains $3,127,843 in Class B Proceeds. There are currently 582,657 Class A
Interests outstanding held by 674 Class A Beneficiaries.
A summary of the use of Class B Proceeds through the date hereof and
the projected balance of the Class B Proceeds, assuming a settlement of
the Class Action Lawsuit as described herein, is presented below:
<TABLE>
<S> <C>
Issue Price ($5.00 per Class B, Interest) $5,004,805
Offering costs and related expenses 112,218
Cash used to redeem Class A Interests 785,295
1997 Special Distribution 979,449
1998 Special Distribution (i) 500,709
Class B Long-Term Investment (i) 1,126,596
---------
Projected Amount of Class B Capital $1,500,538
Contributions ----------
----------
</TABLE>
(i) Contingent upon settlement of the Class Action Lawsuit.
The 1998 Special Distribution and reduction in the Class B Capital
Distributions to be effected by the Amendment will not affect the 24-month
redemption period. However, the proposed expansion of the investment
policies of the Trust would permit purchases by the Trust of Class A
Interests after the 24-month redemption period.
PENDING LITIGATION
On or about January 15, 1998, plaintiffs (the "Plaintiffs") brought a
class and derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., C.A. No. 98-8030 (the "Class
Action Lawsuit"), on behalf of current and certain former owners of units
(the "Units") or interests (the "Interests") in twenty-eight investment
programs sponsored by EFG, including the Trust(collectively, the "Nominal
Defendants"), pending in the United States District Court for the Southern
District of Florida (the "Court"), against EFG and its Affiliates, including
the Managing Trustee (the "Defendants"). Plaintiffs allege claims arising
out of the acts,
-10-
<PAGE>
errors, omissions, practices, and course of conduct allegedly engaged in by
the Defendants in connection with the operation and management of the Nominal
Defendants, including, but not limited to, common law fraud, breach of
contract, breach of fiduciary duties, and violations of the Partnership or
Trust Agreements that govern each of the Nominal Defendants, and seek various
legal and equitable remedies, including compensatory and punitive damages and
various forms of injunctive relief.
Certain of the Plaintiffs had filed an earlier derivative action on
behalf of current and former owners of Units or Interests in the Nominal
Defendants in the Superior Court for the Commonwealth of Massachusetts in
Suffolk County, captioned Leonard Rosenblum, et al. v. Equis Financial Group
Limited Partnership, et al., C.A. No. 97-3358B (together with the Class
Action Lawsuit, the "Litigation").
The Plaintiffs further allege that the Defendants have engaged in a
scheme in which they have, inter alia, (1) intentionally and recklessly
issued and disseminated documents which were materially false and misleading
to those class members who owned Interests in the Trusts, (2) violated
Section 14(a) of the Securities Exchange Act of 1934 by causing the Nominal
Defendants to file documents with the Commission (and/or sent to class
members) containing misrepresentations and omissions of material facts, (3)
misappropriated assets of the Nominal Defendants by causing them to, inter
alia, sell or exchange assets for inadequate consideration, enter into
unnecessary and wasteful transactions, and to pay fees and reimbursements of
expenses to the Defendants and their affiliates in amounts that greatly
exceeded the value of the services provided and/or the amounts permitted by
the respective Partnership and Trust Agreements of the Nominal Defendants,
(4) failed to explore and/or pursue transactions designed to maximize the
value of the Units and Interests which might have been detrimental to the
Defendants' personal or financial interests; and (5) usurped business
opportunities belonging to the Nominal Defendants. The Plaintiffs also
allege that the Defendants have violated their fiduciary duty to the
Plaintiffs, and violated the restrictions and guidelines set forth in the
prospectuses as well as the Partnership and 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 breaches of duty
to the Plaintiffs or any of the Nominal Defendants, including the Trusts.
On March 9, 1998, the Defendants and Plaintiffs entered into a memorandum of
understanding (the "Memorandum of Understanding") setting forth terms
pursuant to which a Stipulation of the Action may be agreed upon (the
"Settlement"). The Defendants
-11-
<PAGE>
entered into the Memorandum of Understanding and will be seeking to
effectuate the Settlement because, among other things, the Settlement would
eliminate the burden and expense of further litigation.
The principal terms of the Memorandum of Understanding relating to the
Trust are reflected in the proposed Amendment. Subject to attaining the
Settlement, the Managing Trustee will agree to:
(a) cause the Trust to make the 1998 Special Distribution in the
amount of $500,709 from the Class B Proceeds to the Class A Beneficiaries
of record as of September 1, 1997 or their successors and assigns;
(b) cause the Trust to retain $1,126,596 from the portion of the Class
B Proceeds which would otherwise be distributed to Equis II Corporation as
a Class B Capital Distribution; and
(c) restrict the exercise of voting rights by Equis II Corporation by
requiring it to vote its Class B Interests in accordance with the majority
of Class A Interests on matters concerning certain related party
transactions, management fees and acquisition fees and other compensation.
The Defendants will permit those Class Members who sold Class A
Interests of the Trust in connection with the self-tender offers completed in
September 1997 to (a) rescind their tenders and sales of Class A Interests
upon repayment of the purchase price tendered to them for their Interests,
and (b) receive in any event, a pro rata portion of the 1998 Special
Distribution of proceeds to Class Members.
The terms of the proposed Settlement providing for the 1998 Special
Distribution and limiting the Class B Capital Distribution are expected to
provide additional cash to Class A Beneficiaries and to the Trust, to align
more closely the economic interests of the Class A and Class B Beneficiaries,
and to increase substantially the continued investment by Equis II
Corporation in and its dependence on the long term economic results of the
Trust. The Managing Trustee desires and recommends that the Amendment be
adopted because it believes the Trust, and in turn the Class A Beneficiaries
and Class B Beneficiaries, would earn higher rates of return if the
investment objectives and policies of the Trust are modified as described
herein.
There is no assurance that the Settlement will be attained. However,
Equis II Corporation will vote its Class B Interests with respect to the
Amendment in the same manner in which the majority of the Class A Interests
are actually voted.
PURPOSES OF AMENDMENT
The Trust was formed to acquire and thereafter lease a diversified
portfolio of equipment to third parties. The primary investment objectives
of the Trust currently are to: (1) preserve and protect Trust capital by
leasing equipment to creditworthy lessees to obtain a creditworthy lease
portfolio; (2) generate cash distributions to the Beneficiaries;
12
<PAGE>
and (3) acquire leases of a diversified portfolio of equipment and to
maximize proceeds to the Trust from the ultimate sale of such equipment.
The proposed Amendment would significantly modify these investment
objectives, primarily by permitting the Trust to acquire personal property in
addition to equipment, including securities and debt. If the Amendment is
adopted, the primary investment objectives of the Trust will be to: (1)
preserve and protect Trust capital; (2) generate cash distributions to the
Beneficiaries from Assets;(3) acquire, own, lease and manage Assets,
including securities and debt; and (4) maximize proceeds to the Trust from
the ultimate sale of such Assets. The achievement of the Trust of any of
these objectives, including the generation of any specific level of
distributions, cannot be assured or guaranteed. To attain its original
investment objectives, the Trust had established certain investment policies
with respect to, among other things, the selection of lessees, the types of
assets which may be acquired and other matters. If the proposed Amendment is
adopted, these policies will be revised in a manner which the Managing
Trustee believes will enable the Trust better to attain its revised
investment objectives. This Solicitation Statement should be read carefully
as it describes certain consequences of, and risks and conflicts of interest
related to, these changes. See "RISK FACTORS" and "CONFLICTS OF INTEREST."
The Managing Trustee believes that investing Trust funds in assets in
addition to equipment could provide returns in excess of those currently
available to the Trust, as hereinafter described, thereby resulting in
increased cash distributions to the Beneficiaries. The current investment
policies of the Trust, in the judgment of the Managing Trustee, are narrow
and limit the ability of the Managing Trustee to take advantage of
opportunities to acquire assets for the Trust which may provide attractive
returns to the Beneficiaries, including to Equis II Corporation.
The Managing Trustee believes that recent declines in interest rates
enhance the desirability of the Trust's equipment already subject to fixed
rate leases with creditworthy lessees. This may present opportunities for
the Trust to generate cash by selling a portion of such equipment at prices
favorable to the Trust or by refinancing certain leases at favorable interest
rates. This in turn would allow the Trust to seek to attain its investment
objective of providing higher distributions to the Beneficiaries, but only if
the Trust could reinvest the proceeds of such sales or refinancings in assets
that generate higher rates of return. (It should be noted that the Trust
will continue its present policy of not reinvesting unless sufficient
distributions are made by the Trust during the relevant period of operations
to enable the Beneficiaries to pay any state and federal income taxes arising
from sale or refinancing transactions.)
The Trust's equipment currently is on lease to corporations generally
with high credit ratings. Lease rates generally follow the yield on the
lessee's senior debt securities, plus a small premium. The current expected
return on assets for a typical lease to an investment grade lessee is
approximately 8% and, through leverage, the return on equity could
approximate 11%.
It is possible to acquire direct finance leases that provide similar
returns as operating leases, except that the tax benefits run to the lessee
rather than the lessor. Because of reduced residual risk, the lessor under a
direct finance
13
<PAGE>
lease may benefit from higher leverage and lower borrowing costs which in
turn would increase its return on equity (14% or greater, in the judgment of
the Managing Trustee).
The Managing Trustee also believes that the Trust could purchase
interests in limited partnerships (or similar securities) that own equipment
subject to lease, at significant discounts from the underlying asset values.
The Managing Trustee would seek to purchase such securities at prices that
would generate expected returns in excess of those from a direct investment
in the underlying asset (15% to 20%, in the judgment of the Managing
Trustee).
The Managing Trustee also believes that issuance of cross-collateralized
debt could reduce its average debt cost by 100 to 200 basis points. Because
the Trust currently may not issue cross-collateralized debt, each rental
schedule is individually leveraged, with separate transaction costs for each
borrowing. If the Trust were to issue cross-collateralized debt, it would
most likely do so by establishing a securitization facility which also would
generate savings by avoiding multiple transaction costs.
The Managing Trustee believes that in order to improve total returns to
the Beneficiaries it needs maximum flexibility to pursue attractive
investment opportunities, the timing and extent of which vary in relation to
changes in the economy and financial markets. If the Amendment is adopted,
the types of assets which the Trust may acquire will be substantially
expanded and the Trust will no longer be limited by asset or lessee
concentration requirements. Further, the Trust will not be required to lease
Assets to only those lessees whose senior debt obligations have been assigned
a credit rating of at least "B" by Moody's Investor Service, Inc. (or its
equivalent as assigned by another nationally recognized credit agency or
determined by the Managing Trustee) as currently required. The Managing
Trustee will be permitted to lease assets to lessees without any minimum
credit requirements but will do so only if it believes the lessee will be
able to meet its lease obligations.
Notwithstanding the foregoing, the Managing Trustee currently
anticipates continuing investment by the Trust primarily in the equipment
leasing or finance business. Such investment may take place through the
acquisition of debt and equity securities , direct finance leases, loans
secured by equipment and variable rate leases. The Managing Trustee also may
consider leasing equipment to companies in exchange for lease payments made
through a combination of both cash and securities of the lessee (e.g.,
options and warrants).
The equity securities in which the Trust may invest may include limited
partnership interests, common stocks, preferred stocks and securities
convertible into common stocks, as well as warrants to purchase such
securities. The debt securities in which the Trust may invest may include
equipment trust certificates, bonds, debentures, notes, and mortgage and
other real estate-related securities. Certain of such securities may include
lower-rated securities which may provide the potential for higher yields and
therefore may entail higher risk.
14
<PAGE>
The Trust's investments in securities may be subject to significant
business, financial, market and other risks. There can be no assurance that
the Trust will correctly evaluate such investments and their attendant risks
or that such investments will be profitable to the Trust. In addition, the
securities may fluctuate in value and such fluctuations could be material.
See "RISK FACTORS."
The Managing Trustee was permitted to reinvest Trust cash from sales or
refinancings in additional equipment only for a period of four years
following the initial closing of the offering of the Trust's Class A
Interests (i.e., through September 8, 1996). The Amendment would reinstate
the reinvestment period through December 31, 2001 (the "Additional
Reinvestment Period"). The reinstatement of the reinvestment period will not,
however, extend the term of the Trust or otherwise modify the terms of the
Trust Agreement.
Under the Trust Agreement, the Trust may enter into joint ventures with
Affiliates of the Managing Trustee or EFG or any other investment programs
sponsored by EFG; provided that, among other things, the affiliated joint
venturers have substantially identical investment objectives and the
investment by each participant in the joint venture is on substantially the
same terms and conditions. If the Amendment is adopted, the Trust will be
permitted to enter into joint ventures with affiliated joint venturers that
have different investment objectives. Investment by the joint venturers may
be on varying terms and conditions reflecting their respective
participations; provided that the Managing Trustee will enter into such joint
ventures only if it believes that it is in the best interests of the
Beneficiaries to do so, and the Trust's participation is on terms and
conditions which are fair to the Trust and the Beneficiaries, taking into
account the participation of the other affiliated venturers, and will allow
the Trust to better attain its revised investment objectives. See "CONFLICTS
OF INTEREST."
The Managing Trustee believes that the requirements that all affiliated
venturers have substantially identical objectives and invest on substantially
the same terms and conditions unnecessarily limit the opportunity of the
Trust to co-invest with Affiliates of the Managing Trustee. It may be
beneficial to each venturer, including the Trust, that the venture be
structured so that each venturer participates in a manner taking into account
its particular investment objectives. For example, if an Affiliate of the
Trust does not have as one of its primary objectives current cash
distributions, it may be beneficial to provide the Trust a priority return on
current cash flow while the other venturer has a priority return on sale or
residual proceeds. Further, the Trust has a finite life and is not a taxable
entity whereas another venturer may have an infinite life and may be a
taxable entity.
The Trust requires liquid assets to fund the repair, maintenance or
upgrading of equipment. Most of the Trust's leases are triple net, requiring
the lessee to maintain and repair equipment during the lease term. However,
as equipment ages and is returned to the Trust, upgrades or other
improvements thereto may be required to improve the marketability of the
equipment. In instances where a lease has a number of years to run prior to
expiration, the Trust may hold significant liquid assets to satisfy potential
upgrades and improvements, while not needing to use such assets in the near
term. Currently, the Trust is permitted only to invest its cash in certain
limited investments, generally bank deposits and government securities. The
Managing Trustee believes that
-15-
<PAGE>
permitting the Trust to invest in other types of securities with varying
terms, including longer-term securities that are marketable or traded on an
exchange, will provide a greater overall return to the Trust.
Currently, the amount of outstanding debt which may be incurred by the
Trust may not exceed 60% of the purchase price of assets owned by the Trust.
The Amendment would remove this limitation. The Managing Trustee believes
that it may be advisable in the future for the Trust to increase its debt
obligations. Further, long-term debt financing for the Trust currently is
required to be nonrecourse to the Trust and may not be secured by assets of
the Trust other than the assets purchased with the proceeds of the loan. The
Amendment would permit the Trust to issue cross-collateralized and recourse
debt. Although the Trust does not anticipate obtaining recourse debt, it may
be advisable from time to time to borrow against an asset with a limited
lease payment stream. In such event, the interest rate a lender would charge
would be substantially higher than a recourse loan to the Trust. Further,
the use of cross-collateralized debt might permit the Trust to obtain a lower
cost of financing. Securitized debt, which includes debt secured by a group
of leases (and as such is cross-collateralized) is among the lowest cost debt
available to leasing and finance companies.
The proportion of the Trust's assets invested in any one type of
security or any single issuer will not be limited. The Managing Trustee will
have full authority relating to the bases and methods for selection of
securities, and the Trust will not be subject to any policy limitations on
the amounts and nature of any non-equipment related securities purchased,
sold or held, provided that the Trust will conduct its activities in such a
manner so as not to be deemed an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act").
Conducting activities in such a manner so as not to be deemed an
investment company under the 1940 Act generally means that the Trust does not
intend to enter the business of investing in securities and that no more than
40% of the Trust's total assets will be invested in securities. While the
Trust intends to operate so as to not be treated as an investment company
under the 1940 Act, if it did not meet the exclusions under the 1940 Act in
the future, the Trust would be required to register as an investment company
under the 1940 Act.
RISK FACTORS
TRUST OPERATIONS INVOLVE BUSINESS, INVESTMENT AND TAX RISKS. The Trust
was created for the purpose of acquiring and leasing to third parties a
diversified portfolio of capital equipment and will continue to be subject to
the business, investment and tax risks associated with such activities. In
addition, adoption of the Amendment will subject the Trust and its
Beneficiaries to additional risks, including those hereinafter discussed.
MANAGING TRUSTEE HAS FULL POWER OVER TRUST AFFAIRS, INCLUDING FUTURE
INVESTMENTS. Under terms of the Trust Agreement, the Managing Trustee has
full power over the business and affairs of the Trust. Therefore,
Beneficiaries are not given an opportunity to approve or disapprove
-16-
<PAGE>
of decisions, including potential investments, made by the Trust and the
Trust will be able to invest in assets in addition to equipment without
further consent of the Beneficiaries.
The Managing Trustee will have full authority relating to the bases and
methods for selection of securities, and the Trust will not be subject to any
policy limitations on the amounts and nature of any securities purchased,
sold or held, provided that the Trust will conduct its activities in such a
manner so as not to be deemed an investment company under the 1940 Act.
LESSEES WITH LOWER CREDIT RATINGS INCREASE RISK OF DEFAULT. The
Managing Trustee may cause the Trust to lease assets to lessees whose credit
rating is significantly lower than the credit standards currently in effect.
There can be no assurance as to the ability of any lessee to perform its
financial and other obligations under its lease. New lessees may have a
lower credit rating than that of the original lessees, thereby increasing the
possibility of default.
INVESTMENTS IN SECURITIES INVOLVE DIFFERENT RISKS THAN EQUIPMENT
INVESTMENTS. Investments in securities will pose risks different from those
associated with investments in equipment. For example, equity securities
fluctuate in value, often based on factors unrelated to the value of the
issuer of the securities, and such fluctuations can be pronounced. In
addition, even though interest-bearing debt securities are investments which
may promise a stable stream of income, the prices of such securities
generally are inversely affected by changes in interest rates and, therefore,
are subject to the risk of market price fluctuations. Also, some securities
which may provide the potential for higher yields may also entail a
commensurately greater risk of loss.
REINSTATED REINVESTMENT PERIOD MAY ADVERSELY AFFECT DISTRIBUTIONS. The
Amendment will reinstate the reinvestment period from the Amendment Date
through December 31, 2001 and the Managing Trustee will seek to invest in
additional assets which will increase the level of distributions to the
Beneficiaries. However, reinvestment will have the effect of significantly
deferring distributions which would otherwise have been made from proceeds of
sales or refinancings, and there is no assurance that the future
distributions will be significantly increased as a result.
CROSS-COLLATERALIZED, RECOURSE AND INCREASED DEBT MAY INCREASE RISK OF
DEFAULT. Permitting the Trust to issue cross-collateralized debt or recourse
debt may result in a significantly greater loss to the Trust than from
non-recourse or non-cross-collateralized debt in the event that the Trust
defaults on such debt. Further, permitting the Trust to increase its debt
level above current limitations may subject the Trust to increased risk of
default and loss of its assets.
1940 ACT CONSTRAINTS MAY ADVERSELY AFFECT THE TRUST. The Trust intends
to conduct its activities so as not to be deemed an investment company under
the 1940 Act. However, if it does not in the future meet the requirements
for exclusion from the 1940 Act, the Trust would be subjected to substantial
reporting and regulatory constraints which could adversely affect its
operations and the level of distributions made to the Beneficiaries.
-17-
<PAGE>
1998 SPECIAL DISTRIBUTION AND OTHER BENEFITS OF SETTLEMENT ARE NOT
ASSURED. The 1998 Special Distribution, the reduction in the Class B Capital
Distribution and restrictions on the voting of Equis II Corporation as Class
B Beneficiary will be made or effected only if the Settlement is attained in
the Class Action Lawsuit, as to which there can be no assurance.
CONFLICTS OF INTEREST
The Managing Trustee's selection of non-equipment investments may be
influenced by factors other than the best interests of the Trust and
maximization of Beneficiary distributions. Such factors may include, but are
not limited to, whether EFG or its Affiliates have independent investments in
such assets which may benefit from investments by the Trust. The Amendment
would permit the Trust to engage in joint ventures with affiliates which have
differing investment objectives and policies and on terms which differ
significantly from those of the Trust. While the Managing Trustee is
required to structure such transactions so that they are fair to the Trust,
the Managing Trustee and its Affiliates will have a conflict of interest
because of participation by EFG and its Affiliates. Further, it should be
noted that the Trust Agreement provides that the Managing Trustee and its
Affiliates are permitted to have other business interests and may engage in
other business ventures of any nature whatsoever, and may compete directly or
indirectly with the business of the Trust.
The Managing Trustee is accountable to the Trust as a fiduciary and
consequently is under a fiduciary duty to exercise good faith and act with
integrity in handling Trust affairs. The Managing Trustee and its affiliates
will continue to be bound by restrictions in the Trust Agreement, including
provisions which are intended to resolve possible conflicts of interest
arising from the fact that affiliates of the Managing Trustee are currently
managing, and will continue to manage during the life of the Trust, a number
of other investment programs. In attempting to prevent or minimize conflicts
of interests among investment entities advised by EFG and its affiliates,
good business practice and bona fide preferences or expectations of other
parties to transactions will be considered.
In the event that the Managing Trustee is presented with an opportunity
to acquire and lease assets which might be a suitable investment for one or
more investment entities advised, managed, controlled or to be formed by the
Managing Trustee, EFG and/or its Affiliates, the Managing Trustee will
analyze the assets already purchased and investment objectives of each
investment entity involved and will (by agreement with EFG) make the decision
as to which investment entity will purchase the assets based upon such
factors, among others, as (i) the amount of cash available in each investment
entity for such acquisition and the length of time such funds have been
available, (ii) the current and long-term liabilities of each investment
entity, (iii) the effect of such acquisition on the diversification of each
investment entity's asset portfolio by type of asset, (iv) the credit
diversification (geographically and/or by industry) of each investment
entity's asset portfolio, (v) the estimated income tax consequences from such
acquisition to the investors in each investment entity,
-18-
<PAGE>
(vi) the cash distribution objectives of each investment entity, (vii) the
policy of each investment entity relating to leverage, and (viii) any
specialized investment purposes for which the entities were created. If,
after analyzing the foregoing and any other factors deemed appropriate by the
Managing Trustee, the Managing Trustee determines that an acquisition would
be equally suitable for more than one investment entity, then the Managing
Trustee will purchase assets for the investment entities based upon the
length of time the investment entities have had cash available for
acquisition of Assets.
The Managing Trustee does not believe that the potential for conflicts
of interest will impair the Trust's investment opportunities or the
maximization of Beneficiary distributions.
CONSENT OF BENEFICIARIES
This Solicitation Statement is being furnished to Beneficiaries in
connection with the solicitation by the Trust of the consent of the
Beneficiaries to the Amendment. NO FORMAL MEETING OF BENEFICIARIES WILL BE
HELD.
A properly executed consent form received by the Managing Trustee will
be voted in accordance with the direction indicated by the Beneficiary on the
form. If no direction is indicated, a properly executed consent form received
by the Managing Trustee will be voted in favor of the Amendment. To be
counted, a consent form must be received by the Managing Trustee no later
than _____________, 1998, subject to extension at the discretion of the
Managing Trustee. The Managing Trustee will notify the Beneficiaries of any
extensions, which in no event may exceed 90 days. The consent form may be
returned to the Managing Trustee by mail or hand-delivery c/o Corporate
Investor Communications, Inc., 111 Commerce Road, Carlstadt, NJ 07072. A
stamped envelope addressed to the Managing Trustee is enclosed. The consent
form may also be returned to the Managing Trustee by facsimile at (201)
804-8693. To be valid, a consent form must be signed by the record owner(s)
of the Interests represented thereby as listed in the records of the Trust as
of ___________, 1998. Pursuant to Section 12.1 of the Trust Agreement, a
written consent may not be withdrawn or voided once it is received by the
Managing Trustee. All questions as to the validity (including time of
receipt) of all consent forms will be determined by the Managing Trustee,
which determinations will be final and binding. As of _________, 1998, there
were 582,657 Class A Interests and 1,000,961 Class B Interests outstanding.
Accordingly, under the Trust Agreement, the Consent of Beneficiaries holding
more than 791,809 Interests will be required for the adoption of the
Amendment.
Affiliates of the Managing Trustee own 839 Class A Interests, all of which
will be voted in favor of the Amendment.
While under no obligation to do so, Equis II Corporation has advised the
Managing Trustee that it will vote all of its Class B Interests with respect
to the Amendment in the same manner in which the majority of the Class A
Interests are actually voted (i.e., for this purpose, the Class A Interests
for which no consent form is actually received or which abstain will not be
taken into account.) The Amendment will be adopted or rejected based upon
the vote of the majority of the Class A Interests actually voted (including
the votes of Affiliates of the Managing Trustee). Accordingly, the Amendment
will be adopted no matter how few Class A Interests are voted, provided a
majority of those Interests are voted in favor of the Amendment.
-19-
<PAGE>
This Solicitation Statement has been prepared under the direction of the
Managing Trustee. The costs of preparing and mailing this Solicitation
Statement and the enclosed consent form and soliciting consent will be paid
by the Trust. In addition to soliciting the consent of Beneficiaries by
mail, representatives of the Managing Trustee may, at the Trust's expense,
solicit the consent of Beneficiaries by telephone, telegraph, in person or by
other means. In addition, the Managing Trustee has retained Corporate
Investor Communications, Inc. to solicit the consent. The fees of Corporate
Investor Communications, Inc. will be paid by the Trust and are estimated to
be $2,000.
Pursuant to Section 11.2 of the Trust Agreement, the consent of
Beneficiaries holding more than 50% in the aggregate of the Interests held by
all Beneficiaries is required for approval of the Amendment. Upon receipt of
the requisite approval, it will be binding on all Beneficiaries, whether or
not they consented.
THE MANAGING TRUSTEE RECOMMENDS THAT THE AMENDMENT BE APPROVED AND URGES
EACH BENEFICIARY TO COMPLETE AND RETURN THE ENCLOSED CONSENT FORM
IMMEDIATELY. ANY BENEFICIARY WITH QUESTIONS RELATING TO THE AMENDMENT SHOULD
TELEPHONE THE TRUST AT (888) 204-8031.
ADDITIONAL INFORMATION CONCERNING THE TRUST
The Class A Interests are registered under the Securities Act of 1933
and as a result the Trust files annual and quarterly reports and other
information with the Securities and Exchange Commission (the "Commission").
Such reports and other information may be inspected at the Commission's
public reference facilities, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as the following regional offices: 7 World Trade Center,
13th floor, New York, New York 10048, and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such
materials may be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of such Web site is
http://www.sec.gov. In addition, the Trust's Annual Report on Form 10-K for
the years ended December 31, 1997, and 1996 may be obtained by Beneficiaries
from the Trust by writing to the Trust c/o Equis Financial Group at 88 Broad
Street, Boston, Massachusetts 02110.
-20-
<PAGE>
EXHIBIT A
The full text of the proposed Amendment to the Trust Agreement is as
follows:
AMENDMENT NO. 1
to
SECOND AMENDED AND RESTATED DECLARATION OF TRUST
THE SECOND AMENDED AND RESTATED DECLARATION OF TRUST OF AFG INVESTMENT
TRUST B made and agreed to by the Trustees and the Beneficiaries as of July 15,
1997 (the "Trust Agreement"), is hereby amended as of _________, 1998, as
follows:
1. "Section 1.2 Location" is hereby deleted and the following substituted
in lieu thereof: The Trust shall maintain an office at 88 Broad Street, Boston,
Massachusetts 02110, and may have such other offices or places of business as
the Managing Trustee may from time to time determine as necessary or expedient.
2. The purposes of the Trust are as set forth in Section 1.4, as
supplemented and modified by the Solicitation Statement.
3. The following terms are hereby added to "ARTICLE II -- Definitions" in
replacement of the corresponding terms in such Article:
"Assets" means, collectively, any personal property, including equipment,
other personal property and Securities of any type and description, whether or
not related to such personal property, and any interest of the Trust therein,
whether directly or indirectly through a nominee, Joint Venture or otherwise.
"Asset Management" means personnel and services necessary to the activities
of the Trust relating to its Assets including but not limited to leasing and
re-leasing of Assets, collecting revenues, paying operating expenses,
determining that the Assets are used in accordance with all operative
contractual arrangements, providing clerical and bookkeeping services necessary
to the operation of Assets and management of any Securities.
4. The following terms are hereby added to "ARTICLE -- II Definitions" in
their proper alphabetical position:
"Class Action Lawsuit" means the class and derivative action brought on
June 24, 1997, by Leonard Rosenblum, J/B Investment Partners, Small and Barbara
Barmack, Partners, and Barbara Hall against EFG and a number of its Affiliates,
together with any related class and derivative actions.
"Securities" means securities of any type or description which are acquired
by the Trust.
-21-
<PAGE>
"Solicitation Statement" means the Solicitation Statement of the Trust
dated _________, 1998, as amended or supplemented from time to time, pursuant to
which the Consent of the Beneficiaries was obtained, among other things, to
modify the investment objectives and policies of the Trust.
5. Section 4.2(b)(iv) is hereby deleted and the following substituted in
lieu thereof:
(iv) for a period continuing through September 8, 1996, and for an
additional period commencing as of [insert effective date of Amendment No. 1]
and continuing through December 31, 2001, to reinvest Cash from Sales and
Refinancings in additional Assets; provided, however, that the Lease of any
Asset so acquired shall have a term which shall expire not later than eleven
years after Final Closing, or, if such term is scheduled to expire more than
eleven years after Final Closing, that such asset will be sold within such
period; and provided, further, that sufficient Distributions are made during
the relevant period of Trust operations to enable the Beneficiaries to pay any
state and federal income taxes arising from the Sale or Refinancing transaction
(assuming the Beneficiaries are in a combined federal and state marginal tax
bracket of 33% or the rate effective at the time of the Sale or Refinancing
transaction);
6. Clause (vii) of Section 4.5 is hereby deleted.
7. The first sentence of Section 5.1(c) of the Trust Agreement is hereby
deleted and the following inserted in lieu thereof:
(c) For Asset Management, the Trust shall pay an Asset Management Fee,
payable monthly, equal to the lesser of (A) the fees which the Managing
Trustee reasonably believes to be competitive for similar services for
similar assets or (B) either (i) 5% of gross lease rental revenues of
the Trust from Operating Leases and 2% of gross lease rental revenues of
the Trust from Full Payout Leases for the month for which such payment is
being made with respect to any Assets acquired by the Trust on or prior to
March 31, 1998, or (ii) 2% of gross lease rentals with respect to leases of
Assets acquired on or after April 1, 1998, or (iii) 1/12th of 1% of
the fair market value (or, if unattainable, the cost) of any Securities or
other Assets (other than equipment).
8. Section 7.1 of the Trust Agreement is hereby deleted and the following
inserted in lieu thereof:
The Managing Trustee shall use its best efforts to cause the Trust to
follow the investment objectives and policies set forth in the Class
A Prospectus, as modified by the Solicitation Statement. The Managing Trustee
may not make substantial or material modifications in such investment objectives
without Majority Consent. All funds held by the Trust which are not invested in
Assets (including subscription payments upon their release to the Trust) may be
invested by the Trust in Permitted Investments. The Trust shall not redeem or
repurchase Interests except to the extent that such Interests are forfeited in
order to (a) prevent the assets of the Trust from being deemed plan assets or
(b) prevent Foreign Beneficiaries from remaining Trust Beneficiaries under
certain
-22-
<PAGE>
circumstances provided herein or (c) as permitted by Section 9.6. The Managing
Trustee shall use its best efforts and in particular shall only acquire
Securities in such a manner to ensure that the Trust shall not be deemed
an investment company, as such term is defined in the Investment Company Act of
1940.
9. Section 8.1(d) is hereby deleted and the following is hereby
substituted in lieu thereof:
(d) Promptly after the Class B Closing the Trust will make the
Special Class A Distribution to the Class A Beneficiaries. Promptly after
settlement of the Class Action Lawsuit, the Trust will make the Second
Special Class A Distribution to the Class A Beneficiaries of record as of
September 1, 1997, or their successors and assigns.
10. The following sentence is hereby added at the end of Section
8.1(e): In the event that a final settlement of the Class Action Lawsuit has
been attained on or prior to July 17, 1999, then $1,126,596 of any remaining
Class B Proceeds will be retained by the Trust and invested in additional
Assets.
Except as specifically amended hereby, the Trust Agreement as in effect
prior to this Amendment thereof remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 1 as of __________________, 1998.
MANAGING TRUSTEE: CLASS A AND B BENEFICIARIES:
AFG ASIT Corporation By: AFG ASIT Corporation, as
Attorney-in-Fact for each such
Person pursuant to Article XIII
By: of the Trust Agreement
---------------------------------
Authorized Officer
By:
---------------------------------
DELAWARE TRUSTEE: Authorized Officer
Wilmington Trust Company
By:
---------------------------------
Authorized Officer
SPECIAL BENEFICIARY:
Equis Financial Group (formerly
named American Finance Group)
By:
---------------------------------
Authorized Officer
-23-
<PAGE>
AFG INVESTMENT TRUST B
88 Broad Street
Boston, Massachusetts 02110
Consent of Beneficiary
(SOLICITED ON BEHALF OF THE MANAGING TRUSTEE)
I have received and reviewed the Solicitation Statement dated
_______________, 1998 (the "Solicitation Statement"), from AFG Investment
Trust B (the "Trust") concerning the proposed amendment to the Trust
Agreement of the Trust. I hereby vote
______ FOR ______ AGAINST ______ Abstain
for purposes of Article XII, Section 12.1, of the Trust Agreement to the
amendment of the Trust Agreement as set forth in the Solicitation Statement.
A properly executed Consent of Beneficiary received by the Managing
Trustee will be voted in accordance with the direction indicated hereby. If
no direction is indicated, a properly executed Consent of Beneficiary
received by the Managing Trustee will be voted in favor of the Amendment.
Aggregate Number of Class A and Class B Beneficiary Interests: __________
IF THE BENEFICIARY IS AN INDIVIDUAL (IF JOINT TENANTS OR TENANTS-IN-COMMON, BOTH
OWNERS MUST SIGN):
- ------------------------------------ ------------------------------------
Signature Date Signature Date
- ------------------------------------ ------------------------------------
Print Name Print Name
IF THE BENEFICIARY IS A CORPORATION, PARTNERSHIP OR TRUST:
- ------------------------------------
Print Name of Entity
By: --------------------------------
Signature Date
- ------------------------------------
Print Name and, if applicable, Title
<PAGE>
PLEASE RETURN THIS CONSENT FORM NO LATER THAN _______________________ (SUBJECT
TO EXTENSION AT THE DISCRETION OF THE MANAGING TRUSTEE), TO:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 COMMERCE ROAD
CARLSTADT, NEW JERSEY 07072-2586
UNIT HOLDER QUESTIONS: CALL (888) 204-8031 FAX VOTES TO: (201) 804-8693
-2-
