EXHIBIT 2.13
------------
Conformed
---------
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
LEONARD ROSENBLUM, J/B INVESTMENT PARTNERS, SMALL and REBECCA BARMACK, PARTNERS,
BARBARA HALL, HENRY R. GRAHAM, ANNE R. GRAHAM, MARGO CORTELL, PATRICK M. RHODES,
BERNICE M. HUELS, GARRETT N. VOIGHT, CLAIRE E. FULCHER, MARCELLA LEVY, RICHARD
HODGSON, CITY PARTNERSHIPS, HELMAN PARSONS AND CLEVA PARSONS, on behalf of
themselves and all others similarly situated and derivatively on behalf of the
Nominal Defendants,
Plaintiffs,
v.
Case No. 98-8030
EQUIS FINANCIAL GROUP LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
EQUIS CORPORATION, a Massachusetts Corporation, GDE ACQUISITION LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AFG LEASING INCORPORATED, a
Massachusetts Corporation, AFG LEASING IV INCORPORATED, a Massachusetts
Corporation, AFG LEASING VI INCORPORATED, a Massachusetts Corporation, AFG
AIRCRAFT MANAGEMENT CORPORATION, a Massachusetts Corporation, AFG ASIT
CORPORATION, a Massachusetts Corporation, AF/AIP PROGRAMS LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, GARY D. ENGLE and GEOFFREY A. MACDONALD,
Defendants,
AIRFUND I INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 4 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 5 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 6 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 7 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 8 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-B LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-C
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS III-D LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME PARTNERS IV-B LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS IV-C LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS IV-D LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS V-A
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS V-B LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN
INCOME PARTNERS V-C LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership,
AMERICAN INCOME FUND I-C, a Massachusetts Limited Partnership, AMERICAN INCOME
FUND I-D, a Massachusetts Limited Partnership, AMERICAN INCOME FUND I-E, a
Massachusetts Limited Partnership, AFG INVESTMENT TRUST A, a Delaware business
trust, AFG INVESTMENT TRUST B, a Delaware business trust, AFG INVESTMENT TRUST
C, a Delaware business trust, and AFG INVESTMENT TRUST D, a Delaware business
trust,
Nominal Defendants.
AMENDMENT TO SUBSECTION 2.2(F) OF THE REVISED STIPULATION OF SETTLEMENT DATED
-----------------------------------------------------------------------------
JANUARY 29, 2002
----------------
Pursuant to the Court's instruction at the June 7, 2002 fairness hearing in
the above-captioned action, the Parties hereby agree to, and submit, the
following amendment to be substituted in Subsection 2.2.(f) of the Revised
Stipulation of Settlement dated January 29, 2002:
(f) Sale of the Echelon Notes. In accordance with the Court's
-----------------------------
Preliminary Approval Order dated March 22, 1999 requiring that the Defendants
use their best efforts to sell any New Investments in an orderly and timely
fashion if the Exchange has not occurred, Equis and the General Partners shall
purchase the Echelon Notes not later than the last day of the first fiscal
quarter after the Effective Date - the Operating Partnership Sub-Class (the
"Note Payment Date"). Equis and the General Partners shall purchase the Echelon
Notes for a price equal to their aggregate outstanding principal amount plus an
annualized return of 7.5% simple interest (calculated on the basis of the $32
million original aggregate principal amount of the Echelon Notes less any
payments during the original aggregate principal amount of the Echelon Notes
less any payments during the term of such notes) from the origination date of
March 8, 2000 until the date on which the Echelon Notes are purchased (the
"Echelon Note Purchase Price"). The Defendants shall cause Echelon Residential
Holdings LLC not to make any distributions in respect of its common equity
interests while any outstanding principal and accrued interest of the Echelon
Notes is payable to the Operating Partnerships or the Liquidating Trust, as the
case may be. For the purpose of calculating the Echelon Note Purchase Price,
any payments made in respect to the Echelon Notes prior to the purchase of the
notes by Equis and the General Partners shall be applied as a reduction in
principal amount pro rata of the Echelon Notes and the 7.5% rate of return will
cease to accrue on such payments after receipt of such payments. IT IS THE
CLEAR INTENT AND AGREEMENT OF THE PARTIES THAT IN NO EVENT SHALL EQUIS AND THE
GENERAL PARTNERS PAY LESS FOR THE ECHELON NOTES THAN THE ECHELON NOTE PURCHASE
PRICE (I.E., $32 MILLION PLUS 7.5% SIMPLE INTEREST ACCRUED ON THAT AMOUNT FROM
----
THE ORIGINATION DATE OF MARCH 8, 2000 UNTIL THE DATE ON WHICH THE ECHELON NOTES
ARE PURCHASED). HOWEVER, IN ORDER TO ENSURE THAT THE DEFENDANTS ARE NOT
RECEIVING A WINDFALL IN CONNECTION WITH THE PURCHASE OF THE ECHELON NOTES, THE
DEFENDANTS SHALL HAVE AN APPRAISAL OF THE PROPERTIES UNDERLYING THE ECHELON
NOTES CONDUCTED PRIOR TO THE NOTE PAYMENT DATE BY AN INDEPENDENT, NATIONALLY
RECOGNIZED, ACCREDITED APPRAISER. IN THE EVENT THAT THE FAIR MARKET VALUE OF
THE PROPERTIES UNDERLYING THE ECHELON NOTES BASED ON THE APPRAISAL EXCEEDS THE
-------
ECHELON NOTE PURCHASE PRICE (I.E., IS MORE THAN $32 MILLION PLUS 7.5% SIMPLE
----
INTEREST CALCULATED AS DESCRIBED ABOVE), THE LIQUIDATING TRUSTEE WILL HAVE THE
OPTION TO FORECLOSE AND COLLECT ON THE ECHELON NOTES RATHER THAN ALLOW EQUIS AND
THE GENERAL PARTNERS TO PURCHASE THE ECHELON NOTES FOR THE ECHELON NOTE PURCHASE
PRICE. Upon receipt of the Echelon Note Purchase Price, the Operating
Partnerships will assign and deliver their respective Echelon Notes to Equis and
the General Partners along with a full release of the Payor's obligations to the
Operating Partnerships under the Echelon Notes. Equis and the General Partners
agree that upon
receipt of the Echelon Notes and said release they shall forebear from
foreclosing on the Echelon Notes.
In the event the Echelon Note Purchase Price has not been paid for the
Echelon Notes by Equis and the General Partners by the Maturity Date of
September 8, 2002, the Operating Partnerships shall forebear from foreclosing on
the Echelon Notes until the earlier of the purchase of the Echelon Notes by
Equis and the General Partners on the Note Payment Date or the rejection,
termination or cancellation of this Revised Stipulation.
Respectfully submitted,
this 11th day of June 2002,
ATTORNEYS FOR PLAINTIFFS:
s/Allan Lerner by ADF
- ---------------------------------
LERNER & PEARCE, P.A.
Allan M. Lerner
2888 East Oakland Park Boulevard
Fort Lauderdale, FL 33306
(305) 563-8111
and
s/Andrew D. Friedman
- ------------------------------
WECHSLER HARWOOD HALEBIAN & FEFFER LLP
Andrew D. Friedman
488 Madison Avenue, 8th Floor
New York, NY 10022
(212) 935-7400
LAW OFFICES OF VINCENT T. GRESHAM
Vincent T. Gresham
6065 Roswell Road, Ste. 1445
Atlanta, GA 30328
(770) 552-5270
GILMAN AND PASTOR
Peter A. Lagorio
One Boston Place
Boston, MA 02108-4400
(617) 589-3750
BENJAMIN S. SCHWARTZ, CHARTERED
Benjamin S. Schwartz
4600 Olympic Way
Evergreen, CO 80439
(303) 670-5941
GLANCY & BINKOW
Lionel Z. Glancy
1801 Avenue of the Stars, Suite 306
Los Angeles, CA 90067
(310) 201-9150
LAW OFFICES OF JAMES V. BASHIAN
500 Fifth Avenue, Ste. 2700
New York, NY 10110
(212) 921-4100
THOMAS A. HOADLEY, PA
310 Australian Avenue
Palm Beach, FL 33480
(561) 792-9006
GOODKIND, LABATAN, RUDOFF & SUCHAROW, LLP
Lynda J. Grant
Robert N. Cappucci
100 Park Avenue
New York, NY 10017
(212) 907-0700
LASKY & RIFKIND, LTD.
Leigh Lasky
30 North LaSalle Street, Ste. 2140
Chicago, IL 60602
(312) 759-7670
HAROLD B. OBSTFELD, P.C.
Harold B. Obstfeld
260 Madison Avenue
New York, NY 10116
(212) 696-1212
ATTORNEYS FOR DEFENDANTS:
s/Gerald F. Richman
- ----------------------------
RICHMAN GREER WEIL BRUMBAUGH
MIRABITO & CHRISTENSEN, P.A.
Gerald F. Richman, Esq.
250 Australian Ave. South - Suite 1504
West Palm Beach, Florida 33401
Tel. (561) 803-3500
and
s/Gregory P. Deschenes
- -------------------------------
NIXON PEABODY LLP
Deborah L. Thaxter, P.C.
Gregory P. Deschenes
101 Federal Street
Boston, MA 02110-1832
Te. (617) 345-1000
EXHIBIT A
---------
EXHIBIT 2.13 EXHIBIT A
----------------------
Conformed
---------
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
LEONARD ROSENBLUM, J/B INVESTMENT PARTNERS, SMALL and REBECCA BARMACK, PARTNERS,
BARBARA HALL, HENRY R. GRAHAM, ANNE R. GRAHAM, MARGO CORTELL, PATRICK M. RHODES,
BERNICE M. HUELS, GARRETT N. VOIGHT, CLAIRE E. FULCHER, MARCELLA LEVY, RICHARD
HODGSON, CITY PARTNERSHIPS, HELMAN PARSONS AND CLEVA PARSONS, on behalf of
themselves and all others similarly situated and derivatively on behalf of the
Nominal Defendants,
Plaintiffs,
v.
Case No. 98-8030
EQUIS FINANCIAL GROUP LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
EQUIS CORPORATION, a Massachusetts Corporation, GDE ACQUISITION LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AFG LEASING INCORPORATED, a
Massachusetts Corporation, AFG LEASING IV INCORPORATED, a Massachusetts
Corporation, AFG LEASING VI INCORPORATED, a Massachusetts Corporation, AFG
AIRCRAFT MANAGEMENT CORPORATION, a Massachusetts Corporation, AFG ASIT
CORPORATION, a Massachusetts Corporation, AF/AIP PROGRAMS LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, GARY D. ENGLE and GEOFFREY A. MACDONALD,
Defendants,
AIRFUND I INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 4 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 5 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 6 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 7 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 8 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-B LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-C
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS III-D LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME PARTNERS IV-B LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS IV-C LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS IV-D LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS V-A
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS V-B LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN
INCOME PARTNERS V-C LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership,
AMERICAN INCOME FUND I-C, a Massachusetts Limited Partnership, AMERICAN INCOME
FUND I-D, a Massachusetts Limited Partnership, AMERICAN INCOME FUND I-E, a
Massachusetts Limited Partnership, AFG INVESTMENT TRUST A, a Delaware business
trust, AFG INVESTMENT TRUST B, a Delaware business trust, AFG INVESTMENT TRUST
C, a Delaware business trust, and AFG INVESTMENT TRUST D, a Delaware business
trust,
Nominal Defendants.
REVISED STIPULATION OF SETTLEMENT
---------------------------------
This Revised Stipulation of Settlement (the "Revised Stipulation" or
"Settlement") dated as of January 29, 2002 is made and entered into by and among
the Plaintiffs, individually and on behalf of all others similarly situated, as
further described below, and derivatively on behalf of the Nominal Defendants
(defined below), on the one hand, and the Defendants (defined below), on the
other hand, by and through their undersigned attorneys in the Action (defined
below), and is subject to the approval of the Court (defined below).
RECITALS
--------
Capitalized terms not otherwise defined shall have the meanings set forth
in Article I of this Revised Stipulation.
WHEREAS
A. This Action was brought by the Plaintiffs, owners of limited partner
units ("Units") or beneficial interests ("Interests") in investment programs
sponsored by defendant Equis Financial Group Limited Partnership, as
successor-in-interest to American Finance Group ("Equis"), as a class and
derivative action on behalf of the twenty-eight investment programs named as
Nominal Defendants in the Action -- twenty-four (24) limited partnerships (the
"Partnerships") and four (4) Trusts organized under Delaware law (the "Trusts")
(the Partnerships and the Trusts are referred to collectively as the "Nominal
Defendants") -- and a putative class of current and certain former owners of
Units or Interests of the Nominal Defendants (the "putative Class" or "Class" or
"Class Members").
B. Named as defendants are Equis, certain of its affiliates, including five
wholly-owned subsidiaries of Equis which are the general partners or managing
trustees of one or more of the Nominal Defendants (the "Managing Defendants"),
and certain other entities and individuals alleged to own and/or control one or
more of the Managing Defendants and Nominal Defendants (the "Controlling
Defendants").
C. Plaintiffs have asserted claims arising out of the acts, 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 and/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.
D. Plaintiffs allege that the Defendants have engaged in a common plan and
scheme in which they have, among other things, (1) violated Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations promulgated by the SEC thereunder, by intentionally or recklessly
issuing, disseminating to certain Class Members, and/or filing with the SEC,
documents which contained false and misleading statements and/or omissions of
material facts; and (2) breached their fiduciary duties of loyalty, good faith
and due diligence by, among other things, (a) misappropriating 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 Governing Agreements of the
Nominal Defendants, (b) failing to explore and/or pursue transactions designed
to maximize the value of the Units and Interests, and (c) usurping business
opportunities that belonged to the Nominal Defendants and the profits derived
therefrom.
E. Defendants categorically deny the allegations in the Class and Derivative
Action Complaint, deny any fault, wrongdoing, or liability relating in any way
to, inter alia, the offering and sale of Units or Interests; any statements or
demands concerning the Partnerships; and the operation and management of any of
the Partnerships and Trusts. The Defendants further deny that they acted
improperly in any way, and deny any liability of any kind to the Named
Plaintiffs, the Nominal Defendants, or any member of the Settlement Class. The
Defendants are entering into this Revised Stipulation solely because the
proposed settlement would eliminate the burden, inconvenience and expense of
further litigation and to achieve total and final release, repose and
protection.
F. In the absence of this Revised Stipulation, Defendants would vigorously
assert and pursue several defenses as a complete bar to recovery in this Action.
G. The parties agree that the Court should grant a joint motion for
conditional certification of the Settlement Class and that the Court should
designate the Named Plaintiffs as class representatives and designate Class
Counsel as class counsel, solely for the purposes of this Revised Stipulation
and the Settlement of the Action as set forth herein.
H. The parties consider it desirable that the Action be settled on the terms
and conditions set forth in this Revised Stipulation.
I. Based on their investigation of the facts and of the applicable law, the
Named Plaintiffs and Class Counsel have concluded that the proposed settlement
of the Action on the terms and conditions of this Revised Stipulation is fair,
reasonable, and adequate and is in the best interests of the Settlement Class
and the Nominal Defendants, having taken into account the risks and difficulties
involved in attempting to establish a right of recovery on behalf of the
Settlement Class and/or the Nominal Defendants against the Defendants, the
expense and length of time necessary to continue the litigation through trial
and the appeals that might follow, and the uncertainty inherent in any complex
litigation and the substantial benefits of the Settlement for the Class and
Nominal Defendants.
J. The proposed settlement of the Action contemplated by this Revised
Stipulation is the product of extensive, good faith, and arm's-length
negotiation between Class Counsel and counsel for the Defendants.
NOW, THEREFORE, in consideration of the foregoing Recitals and the agreements,
covenants, representations and warranties set forth herein, IT IS HEREBY
STIPULATED AND AGREED by and among the Parties, by and through their attorneys
or counsel of record, that, subject to the approval of the Court, the Action and
all claims that have been or could have been asserted therein shall be finally
and fully compromised and settled as to all Defendants and the Released Parties,
and this Action shall be dismissed on the merits and with prejudice as to all
Defendants and the Released Parties upon the following terms and conditions:
ARTICLE I
DEFINITIONS
-----------
As used in this Revised Stipulation, the following capitalized terms shall
have the meanings respectively assigned to them below.
Section 1.1. "Action" shall mean the case entitled Leonard Rosenblum, et al. v.
------ ----------------------------
Equis Financial Group, Inc. et al., Case No. 98-8030, filed in the United States
- ----------------------------------
District Court for the Southern District of Florida by the Plaintiffs,
individually and on behalf of all persons similarly situated and derivatively on
behalf of the Nominal Defendants, against the Defendants.
Section 1.2. "Class" or "Settlement Class" or "Class Members" shall mean the
----- ---------------- -------------
class comprised of all Members of the three sub-classes defined herein -- the
RSL Sub-Class, Operating Partnership Sub-Class and Trust Sub-Class -- excluding
only those RSL Sub-Class and Trust Sub-Class Members who submit a valid and
timely request for exclusion from the Settlement Class pursuant to the
provisions of the Class Certification and Notice Order.
Section 1.3. "Class Counsel" shall mean Law Offices of Lionel Z. Glancy,
--------------
Wechsler Harwood Halebian & Feffer LLP, Gilman and Pastor, LLP, The Law Office
of Vincent T. Gresham, Benjamin S. Schwartz, Chartered, Law Offices of Allen M.
Lerner, Law Offices of James V. Bashian, Thomas A. Hoadley, P.A., Goodkind,
Labatan, Rudoff & Sucharow, LLP, Lasky & Rifkind, Ltd., and Harold B. Obstfeld,
P.C.
Section 1.4. "Complaint" or "Class and Derivative Action Complaint" shall
--------- -------------------------------------
mean the class and derivative action complaint filed on or about January 15,
1998.
Section 1.5. "Counsel for the Defendants" shall mean Nixon Peabody LLP.
-----------------------------
Section 1.6. "Court" shall mean the United States District Court for the
-----
Southern District of Florida.
Section 1.7. "Defendant/Defendants" shall mean Equis Financial Group Limited
--------------------
Partnership, Equis Corporation, GDE Acquisition Limited Partnership, AFG Leasing
Incorporated, AFG Leasing IV Incorporated, AFG Leasing VI Incorporated, AFG
Aircraft Management Corporation, AFG ASIT Corporation, AF/AIP Programs Limited
Partnership, Gary D. Engle and Geoffrey A. MacDonald, either singularly or
collectively.
Section 1.8. "Echelon Notes" shall mean the $32 million aggregate
--------------
principal amount of promissory notes issued by Echelon Residential Holdings LLC
to the Operating Partnerships to finance the acquisition of the Properties
pursuant to the Court's March 22, 1999 Order permitting the Operating
Partnerships to make New Investments.
Section 1.9. "Echelon Note Purchase Price" shall mean the price
------------------------------
required to be paid to the Operating Partnerships for the Echelon Notes which
shall be an amount equal to the aggregate outstanding principal amount of $32
million plus a return of 7.5% simple interest per annum on the outstanding
principal amounts of the Echelon Notes calculated from the origination date of
March 8, 2000 through the Note Payment Date.
Section 1.10. "Effective Date - RSL and Trust Sub-Classes" shall mean the
--------------------------------------------
first date on which the Final Judgment and Order with respect to the RSL and
Trust Sub-Classes entered by the Court, as described in Section 4.4 hereof,
becomes final, binding and non-appealable which shall be deemed to occur upon
the last of the following: (a) if no appeal or review of the Final Judgment -
RSL and Trust Sub-Classes is sought, the thirtieth (30th) day after entry of the
Final Judgment - RSL and Trust Sub-Classes (or, if the date for taking an appeal
shall be extended, the date of expiration of the extension); or (b) if an appeal
or review of the Final Judgment and Order - RSL and Trust Sub-Classes is sought,
the day after such Final Judgment and Order - RSL and Trust Sub-Classes is
affirmed or the appeal or review is dismissed or denied and such Final Judgment
and Order - RSL and Trust Sub-Classes is no longer subject to further review.
Section 1.11. "Effective Date - Operating Partnership Sub-Class" shall mean
------------------------------------------------
the first date on which the Final Judgment and Order with respect to the
Operating Partnership Sub-Class entered by the Court, as described in Section
4.4 hereof, becomes final, binding and non-appealable which shall be deemed to
occur upon the last of the following: (a) if no appeal or review of the Final
Judgment - Operating Partnership Sub-Class is sought, the thirtieth (30th) day
after the entry of the Final Judgment - Operating Partnership Sub-Class (or , if
the date for taking an appeal shall be extended, the date of expiration of the
extension); or (b) if an appeal or review of the Final Judgment and Order -
Operating Partnership Sub-Class is sought, the date after such Final Judgment
and Order - Operating Partnership Sub-Class is no longer subject to further
review.
Section 1.12. "Equipment" shall mean the existing equipment assets directly
---------
and indirectly owned by the Partnerships and Trusts.
Section 1.13. "Expense Fund" shall mean an amount not to exceed $2.5 million
------------
to be used for the payment of attorneys' fees and reimbursable expenses of Class
Counsel that are approved by the Court.
Section 1.14. "Final Judgment and Order - RSL and Trust Sub-Classes" shall
-----------------------------------------------------
mean the final judgment entered by the Court as provided in Section 4.4 hereof.
Section 1.15. "Final Judgment and Order - Operating Partnership Sub-Class"
-----------------------------------------------------------
shall mean the final judgment entered by the Court as provided in Section 4.4
hereof, substantially in the form of Exhibit C hereto, finally approving the
Settlement contemplated by this Revised Stipulation with respect to the
Operating Partnership Sub-Class.
Section 1.16. "General Partner" or "General Partners" shall mean any of the
--------------- ----------------
General Partners of the Partnerships, including AFG Leasing Associates, a
Massachusetts general partnership, AFG Leasing Incorporated, a Massachusetts
corporation, AFG Leasing Associates II, a Massachusetts general partnership, AFG
Leasing IV Incorporated, a Massachusetts corporation, AFG Leasing VI
Incorporated, a Massachusetts corporation, AFG Aircraft Management Corporation,
a Massachusetts corporation, and AFG ASIT Corporation, a Massachusetts
corporation.
Section 1.17. "General Partner Interest" shall mean the percentage ownership
------------------------
of the General Partners in the Partnerships as set forth in the Partnership
Agreements.
Section 1.18. "Governing Agreements" means the Partnership and Trust
---------------------
Agreements that govern each of the Nominal Defendants.
Section 1.19. "Lead Plaintiffs' Counsel" shall mean Andrew D. Friedman, Esq.
------------------------
of Wechsler Harwood Halebian & Feffer LLP.
Section 1.20. "Limited Partner" shall mean a Person who owns Units of any
----------------
of the Partnerships.
Section 1.21. "Liquidating Trust" shall mean a liquidating trust established
-----------------
upon the dissolution of the Operating Partnerships, one of the trustees of which
shall be an independent, nationally-recognized financial institution. The
trustee(s) may engage a manager to manage and administer the Liquidating Trust
assets and liabilities.
Section 1.22. "Liquidating Trustee" shall mean the Trustee(s) of the
--------------------
Liquidating Trust.
Section 1.23. "Manager" shall mean the manager as set forth in each
-------
Partnership Agreement.
Section 1.24. "Maturity Date" means the maturity date of the Echelon Notes,
-------------
September 8, 2002.
Section 1.25. "Named Plaintiffs" shall mean Leonard Rosenblum, J/B
-----------------
Investment Partners, Small and Rebecca Barmack, Partners, Barbara Hall, Henry R.
Graham, Anne R. Graham, Margo Cortell, Patrick M. Rhodes, Bernice M. Huels,
Garrett N. Voight, Claire E. Fulcher, Marcella Levy, Richard Hodgson, City
Partnerships, Helman Parsons and Cleva Parsons.
Section 1.26. "Net Proceeds" shall mean the gross amount of each Cash Fund
-------------
established pursuant to Sections 2.1(a), 2.2(b) and 2.3(a) and (b) of the
Stipulation less the respective amount allocated to each Cash Fund for the
portion of the Expense Fund that is to be contributed by the Class and Nominal
Defendants (i.e., 60% of the Expense Fund).
----
Section 1.27. "Nominal Defendants" shall mean the twenty-four (24)
-------------------
Partnerships organized under Massachusetts law and four (4) Trusts organized
under Delaware law which collectively comprised all of the investment programs
sponsored by Equis.
Section 1.28. "Note Payment Date" shall mean the last day of the first
-------------------
fiscal quarter after the Effective Date-Operating Partnership Sub-Class.
Section 1.29. "Notice - RSL and Trust Sub-Classes" or "Class Notice - RSL
------------------------------------ ------------------
and Trust Sub-Classes" shall mean the Notice of Class Action Determination,
---------------------
Proposed Settlement and Fairness Hearing to be approved by the Court as set
--
forth in Section 4.1 hereof.
--
Section 1.30. "Notice - Operating Sub-Class" or "Class Notice - Operating
------------------------------ ------------------------
Sub-Class" shall mean the Notice of Class Action Determination, Proposed
-------
Settlement and Fairness Hearing to be approved by the Court as set forth in
-----
Section 4.1 hereof, substantially in the form attached as Exhibit B hereto.
--
Section 1.31. "Operating Partnerships" shall mean the following eleven (11)
----------------------
Partnerships named as Nominal Defendants that are still in existence and
currently operating:
(a) American Income Partners V-A Limited Partnership,
(b) American Income Partners V-B Limited Partnership,
(c) American Income Partners V-C Limited Partnership,
(d) American Income Partners V-D Limited Partnership,
(e) American Income Fund I-A, a Massachusetts Limited Partnership,
(f) American Income Fund I-B, a Massachusetts Limited Partnership,
(g) American Income Fund I-C, a Massachusetts Limited Partnership,
(h) American Income Fund I-D, a Massachusetts Limited Partnership,
(i) American Income Fund I-E, a Massachusetts Limited Partnership,
(j) AIRFUND International Limited Partnership, and
(k) AIRFUND II International Limited Partnership.
Section 1.32. "Operating Partnership Sub-Class" shall mean all Persons
-------------------------------
who own Units of any of the Operating Partnerships as of the date of the Court's
preliminary approval of the Settlement. Members of this Sub-Class shall not
have the right to request exclusion from the Settlement Class.
Section 1.33. "Parties" shall mean, collectively, the Plaintiffs, the Class,
-------
the Nominal Defendants and the Defendants.
Section 1.34. "Partnership Agreements" shall mean, collectively, the amended
----------------------
agreements of limited partnership of the Partnerships, the provisions of which
govern the rights and obligations of their respective partners.
Section 1.35. "Payor" shall mean Echelon Residential Holdings LLC, the
-----
obligor under the Echelon Notes.
Section 1.36. "Person" shall mean an individual, corporation, partnership,
------
limited partnership, limited liability company, association, joint stock
company, estate, legal representative, trust, unincorporated organization and
any other type of legal entity, and their heirs, predecessors, successors,
representatives and assigns.
Section 1.37. "Preliminary Approval Order" shall mean the order of the Court
--------------------------
as described in Section 4.1 hereof, substantially in the form attached as
Exhibit A hereto.
Section 1.38. "Properties" shall mean seven parcels of land either
----------
under construction or development as multifamily housing and interests in two
joint ventures holding parcels of land under development as multifamily housing,
originally owned by Echelon Residential LLC, a wholly-owned subsidiary of
Echelon Residential Holdings LLC, the issuer of the Echelon Notes, or the
proceeds of such parcels of land and joint ventures in the event of a sale or
refinancing.
Section 1.39. "Released Parties" means (i) the Defendants or the
-----------------
General Partners; (ii) past or present beneficiaries, subsidiaries, parents,
affiliates, associates, successors or assigns including, without limitation,
James A. Coyne, of any of the Defendants; (iii) past or present officers,
directors, shareholders, partners, members, employees, and attorneys of any of
the foregoing; (iv) agents, advisors, investment bankers, accountants, financial
advisors or other advisors, including the issuer of the fairness opinion,
appraisers, independent contractors, representatives, trustees, heirs,
executors, and administrators of the Defendants and Nominal Defendants; and (v)
Echelon Residential Holdings LLC, Echelon Residential LLC and any past or
present beneficiaries, subsidiaries, parents, successors or assigns, officers,
directors, members, employees, attorneys, agents, advisors, investment bankers,
accountants, contractors, financial advisors, representatives, trustees, heirs,
executors, administrators or other affiliates, associates and advisors of any of
the foregoing.
Section 1.40. "Releasing Parties" shall have the meaning ascribed to such
------------------
term in Section 3.1 and Section 3.2 hereof.
Section 1.41. "Revised Stipulation" shall mean this Revised Stipulation of
--------------------
Settlement, together with all exhibits hereto.
Section 1.42. "RSL Sub-Class" shall mean all persons who owned Units as of
--------------
September 30, 1996 of any of the thirteen (13) Partnerships that sold all of
their remaining assets to RSL Finance II Limited Partnership ("RSL") and were
subsequently liquidated (the "Liquidated Partnerships") and/or the two (2)
Operating Partnerships that sold certain assets to RSL in connection with the
transaction closed on or about September 30, 1996 (the "RSL Transaction"), but
shall exclude those Members who submit a valid and timely request for exclusion
from the RSL Sub-Class pursuant to the provisions of the Class Certification and
Notice Order.
Section 1.43. "SEC" shall mean the United States Securities and Exchange
---
Commission.
Section 1.44. "Semele Notes" shall mean purchase money notes in the
-------------
aggregate principal amount of $3,957,146 bearing an interest rate of 10% issued
by Semele Group, Inc. indirectly to five of the Operating Partnerships as part
of the consideration in the purchase of vessels formerly owned indirectly by the
Partnerships and certain affiliated investment programs.
Section 1.45. "Semele Group Stock" shall mean 177,730 shares of common
------------------
stock of Semele Group, Inc. indirectly issued to five of the Operating
Partnerships as part of the consideration in the purchase of vessels formerly
owned indirectly by those Partnerships and certain affiliated investment
programs.
Section 1.46. "Settlement" shall mean the settlement of the Action
----------
pursuant to the terms of this Revised Stipulation.
Section 1.47. "Settled Claims" shall have the meaning ascribed to the term
---------------
in Sections 3.1 and 3.2 hereof.
Section 1.48. "Settlement Hearing" or "Settlement Hearings" shall mean the
------------------- -------------------
fairness hearing or hearings held at the time and place designated by the Court
to consider final approval of the Settlement, as provided in Section 4.3 hereof.
Section 1.49. "Stipulation" or "Original Stipulation" shall mean the
----------- ---------------------
original Stipulation of Settlement, together with all exhibits hereto.
Section 1.50. "Trust Sub-Class Members" shall mean all Persons who owned
-------------------------
Interests of the Trusts (now characterized as Class A Interests) as of September
1, 1997, and/or their successors and assigns, but shall exclude the Trusts and
those Members who submit a valid and timely request for exclusion from the Trust
Sub-Class pursuant to the provisions of the Class Certification and Notice
Order.
Section 1.51. "Trusts" shall mean AFG Investment Trust A, a Delaware
------
Business Trust; AFG Investment Trust B, a Delaware Business Trust; AFG
Investment Trust C, a Delaware Business Trust; and AFG Investment Trust D, a
Delaware Business Trust.
Section 1.52. "Unit" shall mean a unit of limited partnership interest in
----
any of the Partnerships.
Section 1.53. "Unknown Claims" shall have the meaning ascribed to such term
--------------
in Sections 3.1 and 3.2 hereof.
ARTICLE II
CONSIDERATION TO THE SETTLEMENT CLASS FOR SETTLEMENT
----------------------------------------------------
Subject to Court approval and the conditions specified herein, in full and
final disposition, settlement, discharge, release and satisfaction of any and
all Settled Claims, the Defendants agree to provide the following consideration
to the Settlement Class Members and Nominal Defendants:
Section 2.1. Cash Distribution to RSL Sub-Class Members.
-----------------------------------------------
(a) $600,000 Cash Fund. Within fifteen (15) days of the Effective Date
------------------
- - RSL and Trust Sub-Classes, the Defendants shall establish a Cash Fund by
paying the sum of $600,000 for the benefit of the RSL Sub-Class Members, the Net
Proceeds of which will be distributed on a pro rata per Unit-owned basis to the
RSL Sub-Class Members who are not Defendants and/or affiliates of the
Defendants.
(b) Cash Distributions From Release of $2 Million From Reserve Accounts.
-----------------------------------------------------------------------
Within fifteen (15) days of the Effective Date - RSL and Trust Sub-Classes, the
Defendants shall cause an aggregate sum of $2 million to be distributed, from
the remaining funds contained in certain reserve escrow accounts previously
established by the Liquidated Partnerships, to the General and Limited Partners
of the Liquidated Partnerships on that date, on a pro rata basis and as
determined by the amounts contributed by each Liquidated Partnership to the
reserve escrow accounts, after considering the amounts of any contingent or
existing liabilities that are reasonably estimated for each such Liquidated
Partnership.
Section 2.2. Cash Distributions and Orderly Liquidation of Assets of
---------------------------------------------------------
the Operating Partnerships.
--------------------------
The Defendants agree to conduct the orderly liquidation of the Operating
Partnerships as more fully set forth below:
(a) Liquidation of Assets and Dissolution of the Operating
-------------------------------------------------------------
Partnerships. Defendants have agreed to dissolve each of the Operating
Partnerships and liquidate their remaining assets on or before thirty (30) days
following the Effective Date - Operating Partnership Sub-Class and, upon
dissolution, the General Partners (or their successors) shall (i) cause the
cancellation of each Operating Partnership's Certificate of Limited Partnership,
(ii) apply and distribute all cash and proceeds in accordance with the
provisions set forth in their respective Limited Partnership Agreements and as
described in subsection 2.2(b) below after reserving cash amounts for any
contingent or existing sales, use and property tax or other types of liabilities
that are reasonably estimated for each such Operating Partnership, which cash
reserves shall be maintained in a separate account managed and administered on
behalf of the Operating Partnerships (and the successor Liquidating Trust) by
their respective General Partners or their successors or assigns, and (iii)
liquidate the Partnership's assets. All cash other than the cash reserves
referred to in (ii) above and any assets that could not be sold for cash prior
to dissolution shall be placed in a Liquidating Trust for the benefit of the
Members of the Operating Partnership Sub-Class to be established upon the
dissolution of the Operating Partnerships with an independent,
nationally-recognized financial institution as its trustee. All of the net cash
proceeds from the sale of assets of the Liquidating Trust and cash, less
reserves for any contingent liabilities, shall be distributed to the
beneficiaries of the Liquidating Trust no later than December 31, 2003.
(b) Cash Distribution to Partners of the Operating Partnerships. On or
----------------------------------------------------------------
before thirty (30) days following the Effective Date - Operating Partnership
Sub-Class, the Operating Partnerships or Liquidating Trustee, as the case may
be, shall collectively distribute on a pro rata basis a minimum aggregate amount
of $15 million (less any cash distributions made prior to that date and an
amount up to $700,000 for the Operating Partnerships' shares of the amount
approved for payment of attorneys' fees and reimbursement of expenses)
representing all of the cash that is then held by each of the Operating
Partnerships or the Liquidating Trust to the Operating Partnership Sub-Class
Members and the General Partners of the Operating Partnerships, after reserving
amounts for any contingent or existing liabilities that are reasonably estimated
for each such Operating Partnership, as is set forth in Chart #1 below:
CHART #1
SCHEDULE OF MINIMUM $15 MILLION CASH DISTRIBUTION
Operating Partnership MinimumDistribution $15,000,000
--------------------- ------------
American Income Partners V-A Limited Partnership $ 158,000
American Income Partners V-B Limited Partnership 2,216,000
American Income Partners V-C Limited Partnership 821,000
American Income Partners V-D Limited Partnership 692,000
American Income Fund 1-A, a Massachusetts Limited Partnership 304,000
American Income Fund 1-B, a Massachusetts Limited Partnership 282,000
American Income Fund 1-C, a Massachusetts Limited Partnership 1,601,000
American Income Fund 1-D, a Massachusetts Limited Partnership 1,661,000
American Income Fund 1-E, a Massachusetts Limited Partnership 1,819,000
AIRFUND International Limited Partnership 1,996,000
AIRFUND II International Limited Partnership 3,450,000
Total $15,000,000(1)
(1) Reduced by any cash distributions made on or before thirty (30)
days following the Effective
Date - Operating Partnership Sub-Class and an amount up to $700,000 for the
Operating
Partnerships' shares of the amount approved for payment of attorneys' fees and
expenses.
(c) Sale of Equipment Assets. The Defendants agree to market
---------------------------
immediately the Equipment of the Operating Partnerships, and will endeavor to
sell all such Equipment on or before the Effective Date-Operating Partnership
Sub-Class. The Equipment held by American Income Partners V-A through V-D and
American Income Funds I-A through I-E consists of portfolios of capital
equipment including, but not limited to, aircraft, communications equipment,
construction equipment, containers and chassis, energy equipment, materials
handling equipment, office equipment, over-the-road tractors, trailers and
trucks, production machinery and machine tools, research and experimentation
equipment and railroad rolling stock. Not all of the Operating Partnerships
hold Equipment in all of these categories. AIRFUND and AIRFUND II hold only
aircraft equipment. A schedule of the Equipment and its value as carried on the
books of the Operating Partnerships is set forth in the Class Notice. Any
Equipment not sold by the Effective Date-Operating Partnership Sub-Class shall
be placed in the Liquidating Trust, and the proceeds from the sale of such
Equipment will be distributed to the former General Partners and Limited
Partners of the Operating Partnerships by the Liquidating Trustee.
(d) Sale of the Semele Notes and Guaranteed Payment of 30% of Aggregate
------------------------------------------------------------------------
Principal Plus Accrued Interest. The Semele Notes in the aggregate principal
------------------------------
amount of $3,957,146 held indirectly by the Operating Partnerships will be
liquidated in the ordinary course and (a) will be repaid or sold at face value
plus accrued interest on or before the Effective Date-Operating Partnership
Sub-Class, or (b) if not repaid or sold by such date, the Semele Notes shall be
placed in the Liquidating Trust and the proceeds from the sale of the Semele
Notes will be distributed to the former General Partners and Limited Partners of
the Operating Partnerships by the Liquidating Trustee. If by the last day of
the first fiscal quarter after the Effective Date - Operating Partnership
Sub-Class at least 30% of the aggregate principal amount of the Semele Notes and
the related accrued interest has not yet been paid on the Semele Notes, the
Defendants shall cause Semele Group, Inc. or a related party to purchase such
aggregate principal amount of the Semele Notes at face value plus related
accrued interest as is necessary to reduce the aggregate initial principal
amount of the Semele Notes by 30%. The Operating Partnership Sub-Class, the
General Partners, Equis, Semele Group, Inc. or a related party may purchase any
outstanding Semele Notes at face value plus accrued interest.
(e) Sale of the Semele Group Stock and Guaranteed Receipt of at Least
-------------------------------------------------------------------
$5.00 Per Share. The Semele Group Stock held indirectly by five of the
----------------
Operating Partnerships in the aggregate amount of 177,730 shares of common stock
-------
shall be placed in the Liquidating Trust, and such stock shall be sold by the
Liquidating Trustee on or after June 30, 2003 in an orderly fashion over the
next sixty (60) days with the objective of maximizing the sale price of such
shares. If the average sale price for the Semele Group Stock is less than $5.00
per share, Equis shall pay to the Liquidating Trust the difference between $5.00
per share and the average sale price realized from the sale of the Semele Group
Stock. The proceeds will thereafter be distributed on a pro rata basis to the
former General Partners and Limited Partners of the Operating Partnerships.
(f) Sale of the Echelon Notes. In accordance with the Court's
-----------------------------
Preliminary Approval Order dated March 22, 1999 requiring that the Defendants
use their best efforts to sell any New Investments in an orderly and timely
fashion if the Exchange has not occurred, Equis and the General Partners shall
purchase the Echelon Notes not later than the last day of the first fiscal
quarter after the Effective Date - the Operating Partnership Sub-Class (the
"Note Payment Date"). Equis and the General Partners shall purchase the Echelon
Notes for a price equal to their aggregate outstanding principal amount plus an
annualized return of 7.5% simple interest (calculated on the basis of the $32
million original aggregate principal amount of the Echelon Notes less any
payments during the term of such notes) from the origination date of March 8,
2000 until the date on which the Echelon Notes are purchased (the "Echelon Note
Purchase Price"). The Defendants shall cause Echelon Residential Holdings LLC
not to make any distributions in respect of its common equity interests while
any outstanding principal and accrued interest of the Echelon Notes is payable
to the Operating Partnerships or the Liquidating Trust, as the case may be. For
the purpose of calculating the Echelon Note Purchase Price, any payments made in
respect to the Echelon Notes prior to the purchase of the notes by Equis and the
General Partners shall be applied as a reduction in principal amount pro rata of
the Echelon Notes and the 7.5% rate of return will cease to accrue on such
payments after receipt of such payments. The Echelon Note Purchase Price will
not be less than the fair value of the Properties based upon an appraisal
conducted prior to the Note Payment Date by an independent, nationally
recognized, accredited appraiser, nor more than $32 million plus interest
calculated at a 7.5% annual rate of return on the outstanding principal amounts
during the term of the Echelon Notes. Upon receipt of the Echelon Note Purchase
Price, the Operating Partnerships will assign and deliver their respective
Echelon Notes to Equis and the General Partners along with a full release of the
Payor's obligations to the Operating Partnerships under the Echelon Notes.
Equis and the General Partners agree that upon receipt of the Echelon Notes and
said release they shall forebear from foreclosing on the Echelon Notes.
In the event the Echelon Note Purchase Price has not been paid for the
Echelon Notes by Equis and the General Partners by the Maturity Date of
September 8, 2002, the Operating Partnerships shall forebear from foreclosing on
the Echelon Notes until the earlier of the purchase of the Echelon Notes by
Equis and the General Partners on the Note Payment Date or the rejection,
termination or cancellation of this Revised Stipulation.
(g) Establishment of Minimum of $8 Million Cash Account as Collateral
-------------------------------------------------------------------
for the Echelon Note Purchase Price. In order to assure timely payment of the
------------------------------------
Echelon Note Purchase Price on or before the Note Payment Date, (i) the
Defendants, prior to the date that Notice - Operating Partnership Sub-Class is
mailed to the Members of the Operating Partnership Sub-Class, will deposit an
aggregate amount of $8 million cash in a Cash Collateral Account with an
independent, nationally-recognized financial institution as Account Agent (who
may also serve as the Liquidating Trustee of the Liquidating Trust); and (ii)
Equis, upon receipt from the General Partners of cash distributions from the
Operating Partnerships, shall promptly deposit 50% of such distributions in the
Cash Collateral Account with the Account Agent. (In accordance with the
governing provisions of the respective Partnership Agreements, the General
Partners generally receive 5% of distributions, except in the case of AIRFUND II
where the General Partner receives 1% of distributions, which are then
dividended to Equis. The aggregate distributions to the General Partners are
expected to exceed $3 million cash.) The Account Agent shall invest the funds
deposited in the Cash Collateral Account in securities issued or guaranteed by
the United States government or any agency or instrumentality thereof,
certificates of deposit of United States banks having a net worth of at least
$50,000,000, bankers' acceptances, bank repurchase agreements covering
securities issued or guaranteed by the United States government or any agency or
instrumentality thereof, money market funds having a net worth of at least
$100,000,000 or similar highly liquid investments (other than tax-exempt
securities or obligations). On the Note Payment Date, to the extent that any
Echelon Notes remain outstanding, the Account Agent shall pay the Echelon Notes
out of the funds on deposit in the Cash Collateral Account plus any interest
earned on them net of the Account Agent's reasonable fees and expenses pro rata
to the Operating Partnerships as payments reducing, first, the principal amount
due on the Echelon Notes and, second, any interest accrued at 7.5%. Upon the
payment of all of the outstanding aggregate principal amount and interest
accrued at 7.5% on the Echelon Notes, the Account Agent shall promptly release
any remaining funds in the Cash Collateral Account to the Defendants and
terminate the Cash Collateral Account.
(h) Equis and General Partners' Obligations to Maintain Minimum Net
-------------------------------------------------------------------
Worth to Assure Ability to Timely Purchase the Echelon Notes. Equis covenants
-----------------------------------------------------------
to maintain a net worth of not less than $12 million (exclusive of the $8
million cash deposited by the Defendants in the Cash Collateral Account) from
the date of the Class Notice - Operating Sub-Classes (the "Notice Date") until
the Note Payment Date as evidenced by the delivery to Lead Plaintiffs' Counsel
of a certificate of the chief financial officer of Equis dated as of the close
of the last fiscal quarter prior to the date of said Class Notice. From the
Notice Date until the Note Payment Date, Equis shall not make any distributions
or pay any dividends, in cash or in kind, to its partners (other than an
aggregate not to exceed $59,000 per month to officers in lieu of salaries).
If, at the close of business on the Note Payment Date, Equis and the General
Partners have not purchased the Echelon Notes and the total payments on the
Echelon Notes from Equis, the General Partners and Echelon Residential Holdings
LLC combined with the funds deposited in the Cash Collateral Account to that
date are less than the outstanding aggregate principal amount and interest
accrued at 7.5% due on the Echelon Notes, the Liquidating Trustee shall take
such action as it in its discretion deems appropriate to protect the interests
of the beneficiaries of the Liquidating Trust, including, but not limited to,
foreclosing on the Echelon Notes and bringing suit against Echelon Residential
Holdings LLC to recover all unpaid and overdue principal and accrued interest on
the Echelon Notes. In the event that the Liquidating Trustee's suit against
Echelon Residential Holdings LLC yields a recovery of less than the remainder of
the Echelon Note Purchase Price, Equis and the General Partners shall be liable
to suit by the Liquidating Trustee for the difference between the actual damages
recovered by the Liquidating Trustee from Echelon Residential Holdings LLC in
its suit on the Echelon Notes and the remainder of the Echelon Note Purchase
Price. All reasonable expenses and fees incurred by the Operating Partnerships,
the Liquidating Trust and its Liquidating Trustee, or their successors or
assigns, incurred in taking such actions, including reasonable counsel fees and
expenses, shall be borne by Echelon Residential Holdings LLC, Equis and the
General Partners.
(i) Payment of up to $466,667 for Attorneys' Fees and Reimbursement of
-------------------------------------------------------------------
Expenses Incurred in the Pursuit of the Action on Behalf of the Operating
- --------------------------------------------------------------------------------
Partnerships and Operating Partnership Sub-Class. Defendants shall pay an
- ----------------------------------------------------
amount up to $466,667 for the payment of 40% of the aggregate amount awarded by
- -----
the Court to Class Counsel for payment of attorneys' fees and reimbursement of
expenses in connection with the settlement of the claims asserted on behalf of
the Operating Partnerships and Operating Partnership Sub-Class.
Section 2.3. Cash Distributions, Right To Rescind Sales of Interests
---------------------------------------------------------
And Therapeutic Benefits To Trust Sub-Class Members, and Cash Distributions and
------------------------------------------------------------------------------
Reduction in Fees Charged to the Trusts.
- ---------------------------------------------
(a) $4 Million Distribution to Trust Sub-Class Members from Remaining
-------------------------------------------------------------------
Proceeds Raised from Sale of Class B Interests to the Defendants. Within
----------------------------------------------------------------------
fifteen (15) days of the Effective Date - RSL and Trust Sub-Classes, the
-----
Defendants shall establish a Cash Fund by causing the sum of $4 million to be
-----
paid for the benefit of all Trust Sub-Class Members, the Net Proceeds of which
-
will be distributed to all Trust Sub-Class Members on a pro rata per Class A
Interest-owned basis. The sum of $4 million shall be paid from the aggregate
remaining proceeds that were raised from the sale of Class B Subordinated
Interests of each of the Trusts (the "Class B Interests") and only from that
----
portion of such remaining proceeds which would otherwise be distributed, or be
available to be distributed, to the Defendants and/or affiliates of the
Defendants and/or Managing Trustee as a Class B Capital Distribution, as that
term is defined in the Trust Agreements, as set forth below in Chart #2. The
rights and interests of all Trust Sub-Class Members who purchased Class B
Interests other than the Defendants, Managing Trustee and/or their affiliates
(the "Class B Beneficiaries") will not be affected by this distribution of $4
million from the remaining proceeds raised from the sale of the Class B
Interests, and the portion of such proceeds which would otherwise be
distributed, or be available to be distributed, to Class B Beneficiaries as a
Class B Capital Distribution will be distributed, or will remain available to be
distributed, and will not be affected by this Settlement.
CHART #2
ALLOCATION OF PROCEEDS PAID TO $4 MILLION CASH FUND
Trust Portion of Remaining Proceeds To Be Contributed to $4 Million Cash
- ----- ------------------------------
Fund
- ----
AFG Investment Trust A $ 413,247
AFG Investment Trust B 500,709
AFG Investment Trust C 1,513,639
AFG Investment Trust D 1,572,405
----------
TOTAL $4,000,000
----------
(b) Right to Rescind Prior Sales of Class A Interests and Receipt of
-------------------------------------------------------------------
Pro Rata Share of Net Proceeds of $4 Million Cash Fund. The Defendants shall
-------------------------------------------------------
permit all Trust Sub-Class Members who sold Class A Interests to any of the
Trusts in connection with the self-tender offers completed in September 1997, to
rescind their tenders and sales of Class A Interests upon repayment of the
purchase price that was tendered to them by the Trusts in exchange for their
Class A Interests. In any event, all Trust Sub-Class Members, including those
who sold Class A Interests in September 1997, will be entitled to receive a pro
---
rata portion of the distribution to Trust Sub-Class Members described in Section
- ----
2.3(a). Those Trust Sub-Class Members who sold Class A Interests in September
1997 will receive the pro rata portion of the cash distribution that is
--- ----
attributable to the Class A Interests that were sold to the Trusts.
(c) $9 Million Distribution To The Trusts to be Used for Investment or
------------------------------------------------------------------------
General Trust Purposes. Within fifteen (15) days of the Effective Date - RSL
-------------------
and Trust Sub-Classes, the Defendants shall establish a Cash Fund for the
benefit of the Trusts and Trust Sub-Class Members by causing the sum of $9
million to be paid from the portions of the aggregate remaining proceeds raised
from the sale of Class B Interests which would otherwise be distributed, or be
available to be distributed, to the Defendants and/or affiliates of the
Defendants and/or Managing Trustee as a Class B Capital Distribution, as set
forth in Chart #3 below, the Net Proceeds of which will be transferred to the
Trusts to be used for investment or general trust purposes. The rights and
interests of Class B Beneficiaries will not be affected by this transfer of such
$9 million from the remaining proceeds raised from the sale of Class B
Interests, and that portion of such remaining proceeds that would otherwise be
distributed or be available to be distributed to Class B Beneficiaries will be
distributed, or will remain available to be distributed, to such Class B
Beneficiaries as a Class B Capital Distribution.
CHART #3
CONTRIBUTION TO $9 MILLION CASH FUND
Trust Portion of Remaining Proceeds To Be Contributed to $9 Million Cash
- ----- ------------------------------
Fund
- ----
AFG Investment Trust A $ 929,806
AFG Investment Trust B 1,126,596
AFG Investment Trust C 3,405,688
AFG Investment Trust D 3,537,910
----------
TOTAL $9,000,000
----------
(d) Agreement To Reduce Fees Charged To Trusts and Permitted under
-------------------------------------------------------------------
Trust Agreements in the Event of the Approval of Certain Amendments to Trust
----------------------------------------------------------------------------
Agreements. The Defendants agree to cause and have caused the Managing Trustee
-------
to amend the Trust Agreements to ensure that the fees permitted to be paid to
the Managing Trustee or its affiliates under the Trust Agreements would be
reduced as follows: for all Equipment acquired after the expiration of the
original reinvestment date set forth in the Trust Agreements, the Acquisition
Fee (as defined in the Trust Agreements) payable by the Trust to the Managing
Trustee and/or its affiliates on such Equipment shall be reduced from a maximum
of 3% to 1%, and the Management Fee (as defined in the Trust Agreements) payable
by the Trust to the Managing Trustee and/or its affiliates on such Equipment
shall be reduced from a maximum of 5% to 2%.
(e) Restrictions Upon Defendants' Exercise of Voting Rights. Upon the
-------------------------------------------------------------
Effective Date - RSL and Trust Sub-Classes, the Defendants will cause the
Managing Trustee to amend the Trust Agreements so as to require the Managing
Trustee and/or its Affiliates to vote any Class B Interests owned by such
Persons in accordance with the vote of the majority of Class A Interests voted
on such matters, where beneficiary consent is necessary, with respect to all
Interested Transactions, i.e., transactions concerning the compensation of the
----
Managing Trustee, the extension of the lives of the Trusts, or regarding any
transaction between the Trust and the Managing Trustee or any of its affiliates
with the express exception of any votes concerning either the withdrawal or
removal of the Managing Trustee or the entrance into such transactions that are
expressly permitted by the current Trust Agreements.
(f) Preparation of Schedules of All Expenses Incurred by Trusts. Following
-------------------------------------------------------------
the Effective Date - RSL and Trust Sub-Classes, the Defendants shall prepare a
schedule of all expenses incurred by the Trusts showing expenses paid to third
parties ("external expenses") separately from reimbursable expenses paid to the
Managing Trustee and its affiliates ("internal expenses"), with both external
and internal expenses broken down by specific categories to be agreed upon by
the Parties to the Action (the "Expense Schedule"). The Expense Schedule will
thereafter be included with the Trusts' annual financial statements and sent to
all owners of Interests in the Trusts. The Expense Schedule will be audited by
the Trusts' independent accountants. Such independent accountants shall include
in their public annual report on the financial statements of each Trust which
are sent to investors a specific statement (in words or substance) that all
expenses have been classified as such on the books and records of the Trust in
accordance with generally accepted accounting principles, and in a manner
consistent with the prior year.
(g) Preparation of Annual Reports Concerning Material Investments and
------------------------------------------------------------------------
Material Changes. Following the Effective Date - RSL and Trust Sub-Classes, the
----------
Defendants shall provide to all owners of Interests in the Trusts with the
following reports on an annual basis within ninety (90) days after the end of
each year of operations of the applicable Trust or fifteen (15) days after
annual filings with the SEC, whichever is later:
(i) a description of all material investments owned by the applicable
Trust during the previous year; and
(ii) a description of all material changes known to the Trust affecting such
assets which occurred during such previous year, including, without limiting the
generality of the foregoing, any material delinquencies with respect to any
payments due under any leases, notes or other obligations held by such Trust,
any material default under any contracts to which such Trust is a party, any
material damage to or destruction of assets owned by such Trust, any material
decline in the value of collateral securing any indebtedness held by such Trust
and any other materially significant events, whether similar to or dissimilar
from those enumerated above.
Section 2.4. Full and Complete Consideration to the Settlement Class. The
-------------------------------------------------------
consideration provided to the Members of the Settlement Sub-Classes pursuant to
Sections 2.1, 2.2, 2.3 and Section 7.1 hereof is in full and complete settlement
of the Action and all Settled Claims as between the Members of the Settlement
Class, on the one hand, and each of the Released Parties, on the other hand.
However, in the event any portion of the Settlement is terminated pursuant to
Section 5.2, or for any other reason, the Defendants may elect, but will not be
obligated, to proceed with Settlement of both the RSL and Trust Sub-Classes
pursuant to Sections 2.1 and 2.3.
ARTICLE III
DISCHARGE OF CLAIMS
-------------------
Section 3.1. Release of Claims by the RSL and Trust Settlement
---------------------------------------------------------
Sub-Classes.
Upon the Effective Date - RSL and Trust Sub-Classes, the Plaintiffs and all
other Class Members who are members of the RSL and Trust Sub-Classes, on behalf
of themselves and each of their predecessors, successors, parents, subsidiaries,
affiliates, custodians, agents, assigns, representatives, heirs, executors,
trustees, administrators and any other person or entity having any legal or
beneficial interest in the Units or Interests held by any member of the Class
(the "Releasing Parties") will be deemed by this Settlement to have, and by
operation of the Final Judgment and Order - RSL and Trust Sub-Classes shall
have, released and forever discharged the Defendants and all other Released
Parties from any and all of the RSL and Trust Sub-Classes Settled Claims, which
are defined as all claims, rights, causes of action, suits, matters and issues,
whether known or unknown, matured or unmatured, that have been, could have been,
or in the future might be asserted in the Action, in the related Massachusetts
action entitled, Leonard Rosenblum, et al. v. Equis Financial Group Limited
-------------------------------------------------------------
Partnership, et al., C.A. No. 97-3358B, or in any court or any other proceeding
----------------
(including but not limited to any claims arising under federal or state law,
including the federal securities laws, relating to alleged fraud, breach of any
duty, negligence or otherwise) by or on behalf of the Plaintiffs or any Members
of the Class who are also members of the RSL Sub-Class or the Trust Sub-Class,
whether individual, class, derivative, representative, legal, equitable or any
other type or in any other capacity against the Defendants and all other
Released Parties (in each case, in each and every capacity) which have arisen,
arise now or could have arisen out of, or relate in any way to any of the facts,
occurrences or transactions or events described in the Complaint in the Action
or any disclosures related thereto (collectively, the "RSL and Trust Sub-Classes
Settled Claims"). The RSL and Trust Sub-Classes Settled Claims shall
specifically include any Unknown Claims, as defined by the following. "Unknown
Claims" means any RSL and Trust Sub-Classes Settled Claim which the Releasing
Parties do not know or suspect to exist in their favor at the time of the
release of the Defendants and all other Released Parties which, if known by
them, might have affected their Settlement with, and release of, the Defendants
and all other Released Parties. With respect to any and all RSL and Trust
Sub-Classes Settled Claims, the Parties stipulate and agree that, the Releasing
Parties shall be deemed to have, and by operation of the Final Judgment and
Order- RSL and Trust Sub-Classes shall have, expressly waived and relinquished,
to the fullest extent permitted by law, the provisions, rights and benefits of
1542 of the California Civil Code which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Further, the Releasing Parties shall be deemed to have, and by operation of
the Final Judgment and Order - RSL and Trust Sub-Classes shall have, waived any
and all provisions, rights and benefits conferred by any law of any state or
territory of the United States, or principle of common law, which is similar,
comparable or equivalent to the provision of 1542 of the California Civil Code
set forth above. The Releasing Parties may, after entrance into the Stipulation
and entry of Final Judgment and Order - RSL and Trust Sub-Classes, discover
facts in addition to or different from those which they then knew or believed to
be true with respect to the subject matter of the RSL and Trust Sub-Classes
Settled Claims, but the Releasing Parties shall nevertheless, then be deemed to
have, and by operation of the Final Judgment and Order - RSL and Trust
Sub-Classes shall have fully, finally and forever settled and released any and
all RSL and Trust Sub-Classes Settled Claims, known or unknown, suspected or
unsuspected, contingent or non-contingent, whether or not concealed or hidden,
which now exist, or heretofore have existed upon any theory of law or equity now
existing, including, but not limited to, conduct which is negligent,
intentional, with or without malice, or a breach of any duty, law or rule,
without regard to the subsequent discovery or existence or such different or
additional facts.
Section 3.2. Release of Claims by the Operating Partnership Sub-Class.
-----------------------------------------------------------
Upon the Effective Date - Operating Partnership Sub-Class, the remaining
Plaintiffs and all Operating Partnership Sub-Class Members, on behalf of
themselves and each of their predecessors, successors, parents, subsidiaries,
affiliates, custodians, agents, assigns, representatives, heirs, executors,
trustees, administrators and any other person or entity having any legal or
beneficial interest in the Units or Interests of the Operating Partnerships held
by any member of the Operating Partnership Sub-Class (the "Releasing Parties")
will be deemed by this Settlement to have, and by operation of the Final
Judgment and Order - Operating Partnership Sub-Class shall have, released and
forever discharged the Defendants and all other Released Parties from any and
all of the Operating Partnership Sub-Class Settled Claims, which are defined as
all claims, rights, causes of action, suits, matters and issues, whether known
or unknown, matured or unmatured, from the beginning of time to the present,
that have been, could have been, or in the future might be asserted in the
Action, in the related Massachusetts action entitled, Leonard Rosenblum, et al.
-------------------------
v. Equis Financial Group Limited Partnership, et al., C.A. No. 97-3358B, or in
- ------------------------------------------------------
any claim brought in any court or any other proceeding (including but not
limited to any claims arising under federal or state law, including the federal
securities laws, relating to alleged fraud, breach of any duty, negligence or
otherwise) by or on behalf of the Plaintiffs or any Members of the Class who are
also members of the Operating Partnership Sub-Class, whether individual, class,
derivative, representative, legal, equitable or any other type or in any other
capacity against the Defendants and all other Released Parties (in each case, in
each and every capacity) which have arisen, arise now or could have arisen out
of, or relate in any way to any of the facts, occurrences or transactions or
events described in the Complaint in the Action or any disclosures related
thereto or related in any way to the management, control, operation of or
investments made by the Operating Partnerships, excepting however, any claim
arising from, relating to or under this Revised Stipulation of Settlement by and
between the Releasing Parties, the Defendants and all other Released Parties
(collectively, the "Operating Partnership Sub-Class Settled Claims"). The
Operating Partnership Sub-Class Settled Claims shall specifically include any
Unknown Claims, as defined by the following. "Unknown Claims" means any
Operating Partnership Sub-Class Settled Claim which the Releasing Parties do not
know or suspect to exist in their favor at the time of the release of the
Defendants and all other Released Parties which, if known by them, might have
affected their Settlement with, and release of, the Defendants and all other
Released Parties. With respect to any and all Operating Partnership Sub-Class
Settled Claims, the Parties stipulate and agree that, the Releasing Parties
shall be deemed to have, and by operation of the Final Judgment and Order -
Operating Partnership Sub-Class shall have, expressly waived and relinquished,
to the fullest extent permitted by law, the provisions, rights and benefits of
1542 of the California Civil Code which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Further, the Releasing Parties shall be deemed to have, and by operation of
the Final Judgment and Order - Operating Partnership Sub-Class shall have,
waived any and all provisions, rights and benefits conferred by any law of any
state or territory of the United States, or principle of common law, which is
similar, comparable or equivalent to the provision of 1542 of the California
Civil Code set forth above. The Releasing Parties may, after entrance into the
Stipulation and entry of Final Judgment and Order - Operating Partnership
Sub-Class, discover facts in addition to or different from those which they then
knew or believed to be true with respect to the subject matter of the Operating
Partnership Sub-Class Settled Claims, but the Releasing Parties shall
nevertheless, then be deemed to have, and by operation of the Final Judgment and
Order - Operating Partnership Sub-Class shall have fully, finally and forever
settled and released any and all Operating Partnership Sub-Class Settled Claims,
known or unknown, suspected or unsuspected, contingent or non-contingent,
whether or not concealed or hidden, which now exist, or heretofore have existed
upon any theory of law or equity now existing, including, but not limited to,
conduct which is negligent, intentional, with or without malice, or a breach of
any duty, law or rule, without regard to the subsequent discovery or existence
or such different or additional facts.
Section 3.3. Reliance on Section 47(b)(1) of the Investment Company Act of
-------------------------------------------------------------
1940 (the "1940 Act"). In entering into the Revised Stipulation, the Defendants
- ---------------------
relied on Section 47(b)(1) of the 1940 Act, and in seeking the Court's approval
of the Settlement, the Defendants will request that it find under the
circumstances that enforcement of any contract that may have been made in, or
whose performance may involve a, violation of the 1940 Act, would produce a more
equitable result than the non-enforcement and would not be inconsistent with the
purposes of the 1940 Act.
ARTICLE IV
IMPLEMENTATION
--------------
Section 4.1. Preliminary Approval of Revised Stipulation; Certification of
-------------------------------------------------------------
Settlement Class. On August 20, 1998, the Court issued an order preliminarily
- -----------------
approving the Original Stipulation, conditionally certifying the settlement
class, and providing for notice of, and hearing on, the proposed Settlement.
Thereafter, on March 15, 1999, the Parties entered into an Amended Stipulation.
On March 22, 1999, the Court entered an order modifying the August 20, 1998
preliminary approval order and bifurcating the settlement process into two
phases. On May 26, 1999, after a hearing, the Court entered an order finally
approving the settlement with respect to the RSL and Trust Sub-Classes.
Forthwith after the execution of this Revised Stipulation, counsel for the
Parties hereto shall jointly submit this Revised Stipulation to the Court and
shall jointly request entry of a Preliminary Approval Order substantially in the
form of Exhibit A hereto. In the event that this Revised Stipulation shall
terminate, be canceled, or not become effective for any reason, the Preliminary
Approval Order described in this Section 4.1 shall be vacated without prejudice
to the right of the Named Plaintiffs to move the Court for any order they deem
appropriate with respect to the certification of a plaintiff class in the
Action, and without prejudice to the rights of the other Parties hereto to
oppose any such motion. The Preliminary Approval Order shall specifically
include provisions which, among other things:
a. Preliminarily approve the Settlement as fair, reasonable and
adequate and within the range of reasonableness;
b. Conditionally re-certify the Operating Partnership Sub-Class and
preliminarily approve the Plaintiffs as representatives of the Class and
Operating Partnership Sub-Class;
c. Approve form of Notice for mailing to the Members of the Operating
Partnership Sub-Class to notify them of the Hearing (i) on final approval of the
Settlement, (ii) on final certification of the Operating Partnership Sub-Class
and approval of the Plaintiffs as representatives of the Sub-Class, and (ii) on
Class Counsel's application for an award of attorneys' fees and reimbursement of
costs and litigation expenses, as set forth in Section 7.1 below.
d. Direct Counsel for the Defendants to mail or cause to be mailed the
Notices to all Members of the Operating Partnership Sub-Class;
e. Direct Counsel for the Defendants to serve on Plaintiffs' Lead Counsel
and file with the Court proof, by affidavits or declarations, of the mailing of
the Notice;
f. Find that the mailing pursuant to Subsection (d) above constitutes
the best and most practicable notice to the Members of the Operating Partnership
Sub-Class, and is due and sufficient notice of the Hearing, Proposed Settlement,
application for an award of attorneys' fees and expenses, and other matters set
forth in the Notice to all Members of the Operating Partnership Sub-Class and
that the Notice fully satisfies the requirements of due process, the Federal
Rules of Civil Procedure and any other applicable law;
g. Provide that, pending final determination of whether the Settlement
should be approved, neither the Plaintiffs nor any Operating Partnership
Sub-Class Member either directly, in a representative capacity, a derivative
capacity or in any other capacity, shall commence, maintain or prosecute any
other action or proceeding in any court or tribunal against any of the
Defendants, asserting any of the Settled Claims, as that term is defined herein,
except in this Action;
h. Provide that, pending final determination of whether the Settlement
should be approved, the Plaintiffs and all other Operating Partnership Sub-Class
Members are barred and enjoined from (i) transferring, selling, assigning,
giving, pledging, hypothecating or otherwise disposing of any Units of the
Operating Partnerships to any person other than a family member or in cases of
divorce, incapacity or death of the Unitholder; or (iii) commencing a tender
offer for the Units. In addition, provide that, pending final determination of
whether the Settlement should be approved, the General Partners of the Operating
Partnerships are enjoined from (i) recording any transfers made in violation of
the Order and (ii) providing the list of investors in any Operating Partnership
to any person for the purpose of conducting a tender offer;
i. Schedule a Hearing to be held by the Court to consider and determine (i)
whether the proposed Settlement, including the dissolution of the Operating
Partnerships should be approved as fair, reasonable and adequate with respect to
the Operating Partnership Sub-Class; (ii) whether, in view of the allegation
that certain of the Operating Partnerships may be unregistered investment
companies under the 1940 Act, and that, as such, contracts entered into by such
Partnerships may be unenforceable, the Court should find that under the
circumstances, including the terms and conditions of the Settlement, enforcement
of said contracts would produce a more equitable result than non-enforcement and
would not be inconsistent with the purpose of said Act; (iii) whether the
Operating Partnership Sub-Class should be certified and the Plaintiffs approved
as representatives of the Sub-Class; (iv) whether an order approving the
Settlement and a Final Judgment - Operating Partnership Sub-Class should be
entered thereon dismissing this Action on the merits and with prejudice with
respect to the claims brought on behalf of the Operating Partnerships and the
Operating Partnership Sub-Class; and (v) whether the application of Class
Counsel for an award of attorney's fees and reimbursement of expenses should be
approved with respect to the Operating Partnerships and the Operating
Partnership Sub-Class;
j. Provide that any objections by Members of the Operating Partnership
Sub-Class to (i) the proposed Settlement and the entry of the Final Judgment
approving the Settlement, or (ii) the application of Class Counsel for an award
of attorneys' fees and expenses, shall be heard and any papers submitted in
support of said objections shall be received and considered by the Court at the
Hearing (unless, in its discretion, the Court shall direct otherwise) only if,
on or before a date to be specified in the Approval Order, persons making
objections shall file notice of their intention to appear and copies of any
papers in support of their position with the Clerk of the Court and serve such
notice and papers on:
Wechsler Harwood Halebian & Nixon Peabody LLP
Feffer LLP 101 Federal Street
488 Madison Avenue, 8th Floor Boston, MA 02110
New York, NY 10022 Attn: Deborah L. Thaxter, P.C.
Attn: Andrew Friedman, Esq. Counsel for Defendants
Plaintiffs' Lead Counsel
k. Provide that the Hearing may, from time to time, and without further
notice to the Class Members, be continued or adjourned by Order of the Court.
Section 4.2. Notice to Settlement Class. Upon entry of the Preliminary
--------------------------
Approval Order, and as provided for therein, Defendants' Counsel shall direct
the General Partners to send copies of the Notice - Operating Partnership
Sub-Class, by U.S. Mail, postage prepaid, to the Operating Partnership Sub-Class
Members at their last known address as appearing in the records maintained by
the Partnerships. The Notice - Operating Partnership Sub-Class shall be
substantially in the form of Exhibit B hereto. The terms of the Notice -
Operating Partnership Sub-Class are hereby incorporated as a material part of
this Revised Stipulation.
Section 4.3. Settlement Hearings. Pursuant to Fed. R. Civ. P. 23, the
--------------------
Settlement Hearing on the Operating Partnership Sub-Class shall be held 45 days,
or such other period as the Court directs, after the sending of Notice -
Operating Partnership Sub-Class to Members of the Operating Partnership
Sub-Class as provided in Sections 4.1 and 4.2 hereof. In connection with the
Settlement Hearing, the Parties hereto shall file with the Court all such papers
as their counsel believe to be necessary. At the Settlement Hearing, the Court
will be asked to consider the fairness of the terms and conditions of the
Settlement and all of the transactions contemplated by this Revised Stipulation.
The Court will also be asked to consider the application of Class Counsel for
attorneys' fees and expenses.
Section 4.4. Entry of Final Judgments and Orders. At or prior to the
----------------------------------------
Settlement Hearing, counsel for the Parties to this Stipulation shall jointly
submit to the Court an appropriate proposed Final Judgment and Order, in
substantially the form annexed hereto as Exhibit C which shall:
(a) Find the Revised Stipulation and Settlement and the transactions
contemplated thereby (i) to be fair, reasonable and adequate to the Operating
Partnerships and the Class, and (ii) to be in the best interests of the
Operating Partnerships and the Operating Partnership Sub-Class, and directing
consummation of the Settlement in accordance with the terms and conditions of
the Revised Stipulation;
(b) In accordance with Section 47(b) of the 1940 Act, find that, under the
circumstances surrounding this Revised Stipulation of Settlement and the
transactions contemplated thereby, enforcement of this Settlement and any
contracts entered into, or to be entered into, by the Operating Partnerships and
their affiliates (i) would produce a more equitable result than would
non-enforcement, and (ii) would not be inconsistent with the purposes of the
1940 Act, as described in Section 1 of that Act. Accordingly, even if any of
the Operating Partnerships is or has been an "investment company," as that term
is defined in Section 3 of the 1940 Act, this order shall be enforceable and
binding upon the Parties hereto, notwithstanding Section 7 of the 1940 Act.
Nothing herein shall be deemed to constitute either (a) a finding by the Court,
or (b) an admission or acknowledgment by any Party hereto that any Operating
Partnership is or has been an "investment company" within the meaning of Section
3 of the 1940 Act.
(c) Dismiss the Class and Derivative Action Complaint and each and every
cause of action and claim set forth therein brought by the Sub-Class(es) seeking
Final Judgment and Order on the merits as to all Defendants and with prejudice
to the Operating Partnership Sub-Class; extinguishing all claims, rights,
demands and causes of action (including Unknown Claims) that might have been
asserted therein by the Named Plaintiffs on behalf of themselves or the Nominal
Defendants and Operating Partnership Sub-Class; and discharging Defendants and
all Released Parties therefrom;
(d) Permanently bar the Operating Partnership Sub-Class Members from
asserting against the Released Parties, and releasing the Released Parties from,
the Settled Claims;
(e) Bar and permanently enjoin each Operating Partnership Sub-Class Member
from transferring, selling, assigning, giving, pledging, hypothecating or
otherwise disposing of any Units of the Operating Partnerships to any person
until the dissolution of the Operating Partnerships or termination of this
Settlement, whichever occurs sooner; and
(f) Reserve jurisdiction in the Court over all matters relating to the
administration and consummation of this Revised Stipulation and the Settlement
provided for herein.
If, at the Settlement Hearing, the Court finally approves this Revised
Stipulation and the Settlement contemplated hereby, and the Settlement has not
been terminated for failure to satisfy any of the conditions set forth in
Article V hereof, then counsel for the parties hereto shall request entry by the
Court of such proposed Final Judgment and Order.
ARTICLE V
CONDITIONS
Section 5.1. Conditions to the Settlement. The consummation of the
-------------------------------
Settlement shall be contingent on and subject to the fulfillment of each of the
following conditions:
(a) The Class Certification and Notice Order shall have been entered by the
Court in substantially the form of Exhibit B to this Revised Stipulation.
(b) The Settlement Class shall not have been materially modified by the
Court.
(c) The Final Judgment and Order shall have been entered by the Court in
substantially the form of Exhibit C hereto, and shall have become a final order
within the meaning of Section 4.4 hereof.
Section 5.2. Termination.
-----------
(a) If: (i) the Court does not enter the Final Judgment and Order, or
(ii) the Court enters the Final Judgment and Order and appellate review is
sought and on such review the Final Judgment and Order is materially modified or
reversed, or (iii) any of the conditions of Section 5.1 is not satisfied, then
this Revised Stipulation shall be canceled and terminated unless counsel for
each of the Parties within ten (10) days from the receipt of such ruling or
written notice of such circumstances, agrees in writing with counsel for all
other Parties hereto to proceed with this Revised Stipulation. For purposes of
this provision, an intent to proceed shall not be valid unless it is expressed
by: (a) Plaintiffs' Lead Counsel and (b) Counsel for the Defendants. Such
notice shall be provided on behalf of the Parties to this Revised Stipulation
only by their counsel. Neither a modification nor reversal on appeal of any
amount of fees, costs, expenses and interest awarded by the Court to any of
Class Counsel shall be deemed a material modification or reversal of a part of
the material terms of the Final Judgment or of this Revised Stipulation.
(b) If either Effective Date does not occur, or if the Revised Stipulation
is disapproved, terminated or canceled pursuant to its terms, neither Plaintiffs
nor Class Counsel shall have any obligation to pay any amounts for the costs of
printing or mailing of the Notices. In addition, any costs or expenses already
incurred for the costs of printing or mailing of the Notices at the time of such
termination or cancellation, but which have not been paid, shall be paid by the
Defendants and/or the Nominal Defendants and not by Plaintiffs or Class Counsel.
---
(c) If neither Effective Date occurs, or if this Revised Stipulation is
disapproved, terminated or canceled with respect to the Operating Partnership
Sub-Class pursuant to its terms, all of the Parties to this Revised Stipulation
shall be deemed to have reverted to their respective status as prior to the
execution of this Revised Stipulation, and they shall proceed in all respects as
if this Revised Stipulation had not been executed and the related orders and
judgments had not been entered, preserving in that event all of their respective
claims and defenses in the Action. If only the Effective Date - Operating
Partnership Sub-Class does not occur, or if this Revised Stipulation is not
approved with respect to the Operating Partnership Sub-Class provisions, all
terms and conditions of this Revised Stipulation pertaining to the RSL and Trust
Sub-Classes shall remain in full force and effect.
(d) In the event that this Revised Stipulation is terminated and the Final
Judgments and Orders are vacated, this Revised Stipulation shall be of no
further force and effect, except for the provisions of this Section 5.2 and
Section 7.1(c) hereof.
ARTICLE VI
COVENANTS
Section 6.1. Entry of Order and Reasonable Efforts. Counsel for all of
---------------------------------------
the Parties hereto shall use their best good faith efforts to obtain the entry
of the Final Judgments and Orders. The Parties hereto, and their respective
counsel, agree to use their best good faith efforts to effectuate the
transactions contemplated hereby and to fulfill the conditions set forth in
Article V hereof.
Section 6.2. No Representations. The Named Plaintiffs acknowledge, for
-------------------
themselves and for the Settlement Class, that they have not relied upon any
representations, warranties, guarantees, promises, statements or estimates,
whether written or oral, express or implied, by any of the Defendants, any
affiliate, broker, agent, employee, accountant, attorney-in-fact or at-law or
other person representing or purporting to represent any such Defendant,
including, without limitation, any representations, warranties, guarantees,
promises, statements or estimates regarding the value of the Partnerships, their
properties, interests therein or the Units. The Named Plaintiffs acknowledge
that they or their counsel have undertaken such investigation of the
Partnerships and Trusts as they have deemed necessary in connection with
entering into this Revised Stipulation.
ARTICLE VII
EXPENSES
Section 7.1. Attorneys' Fees.
----------------
(a) The procedure for and the allowance or disallowance by the Court of
any applications by Class Counsel for an award or reimbursement of reasonable
attorneys' fees and expenses shall not constitute a part of this Revised
Stipulation and are to be considered by the Court separately from the Court's
consideration of the fairness, reasonableness and adequacy of the Settlement,
and any order or proceeding relating to any such fee application or procedure
shall not operate to terminate or cancel this Revised Stipulation or affect the
finality of the Final Judgments and Orders approving this Revised Stipulation
and the Settlement.
(b) Defendants agree to pay an amount equal to forty percent (40%) of the
aggregate amount of attorneys' fees and the reimbursement of expenses that are
approved by the Court. Plaintiffs will agree to limit the amount sought by
their application(s) for attorneys' fees and reimbursement of expenses so as to
request an amount up to, but not in excess of $2.5 million in the aggregate,
thus requiring the Defendants to separately pay an amount up to, but not in
excess of, $1 million in the aggregate, as payment for their 40% portion of the
aggregate award of attorneys' fees and reimbursement of expenses approved by the
Court. The Defendants will agree not to oppose any such application(s) that are
so limited pursuant to this provision. The remaining sixty percent (60%) of the
aggregate amount of attorneys' fees and reimbursement of expenses approved by
the Court -- an amount up to, but not in excess of $1.5 million -- will be paid
by the Class Members and Nominal Defendants receiving benefits from the
Settlement out of, inter alia, the Cash Funds that are to be established for the
benefit of the Class Members and Nominal Defendants pursuant to Sections 2.1(a),
2.2(b) and 2.3(a) and (b) of this Revised Stipulation above. Plaintiffs will
agree to limit the amounts sought from each Cash Fund for the payment of the 60%
portion of the aggregate amount of attorneys' fees and reimbursement of expenses
approved by the Court as follows:
(i) up to $100,000, or 16.6%, of the $600,000 Cash Fund established for the
benefit of the RSL Sub-Class; (ii) up to $700,000, or 4.67%, of the minimum
$15,000,000 Cash Distribution to the Operating Partnership Sub-Class; (iii) up
to $215,000, or 5.37%, of the $4,000,000 Cash Fund established for the benefit
of the Trust Sub-Class; and (iv) up to $485,000, or 5.39%, of the $9,000,000
Cash Fund established for the benefit of the Trust Sub-Class and the Trusts.
Other than as set forth above, the Defendants and the Class shall not have any
obligations with respect to Plaintiffs' Counsel's attorneys' fees and expenses.
Subject to the terms and conditions of this Revised Stipulation, the Defendants
will cause the aggregate amount of the attorneys' fees and reimbursement of
expenses as may be approved by the Court to be contributed to the Expense Fund
and transferred to Plaintiffs' Lead Counsel within fifteen (15) days of the
Effective Dates for the subsequent distribution to all Class Counsel. In no
event shall the Plaintiffs or Class Counsel pay, or be liable for, the costs of
mailing and printing the Notices.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Stipulation Not Admission. Neither this Revised Stipulation,
-------------------------
any exhibit or document referenced herein, nor any action taken to effectuate or
further this Revised Stipulation or the Settlement set forth herein is, may be
construed as, or may be used as an admission by or against any other parties of
any fault, wrongdoing or liability whatsoever, or as a waiver or limitation of
any defenses otherwise available to any of the Parties. Entering into or
carrying out this Revised Stipulation, the exhibits hereto, and any negotiations
or proceedings related thereto shall not in any event be construed as, or deemed
to be evidence of, an admission or concession by any of the Parties, or to be a
waiver of any applicable defense, and shall not be offered or received in
evidence in any action or proceeding against any Party hereto in any court,
administrative agency or other tribunal for any purpose whatsoever other than to
enforce or effectuate the provisions of this Revised Stipulation or the
provisions of any of the exhibits to this Revised Stipulation. The Parties
hereto each specifically reserve all rights, claims, demands, defenses, actions
or causes of action which each Party presently has, or claims to have, against
any of the others and nothing contained herein will be deemed to affect the
same, until the Effective Dates as set forth herein, at which time the releases
described in Article III hereof shall become effective.
Section 8.2. Captions. The definitions and recitals set forth above are
--------
essential elements of this Revised Stipulation. The captions contained in this
Revised Stipulation are inserted only as a matter of convenience and in no way
define, limit, extend, or describe the scope of this Revised Stipulation or the
intent of its provisions.
Section 8.3. Entire Agreement. This Revised Stipulation sets forth the entire
----------------
agreement of the Parties in respect to the Settlement and supersedes all prior
oral or written agreements, arrangements, understandings, inducements, promises,
and warranties, not embodied or incorporated herein, relating to the subject
matter of this Revised Stipulation. Prior discussions and negotiations are
superseded by, and merged into, this Revised Stipulation.
Section 8.4. Counterparts. This Revised Stipulation may be executed in one or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
Section 8.5. Modifications. The provisions of this Revised Stipulation
-------------
(including any time periods specified herein) may be modified by written
agreement of counsel for all the Parties with the consent of the Court and
without further notice to the Settlement Class unless the Court requires such
notice. The terms and provisions of this Revised Stipulation may not be
changed, waived, modified, or varied in any manner unless in writing duly signed
by counsel for Defendants and Plaintiffs' Lead Counsel.
Section 8.6. Waiver. The failure of any Party hereto to enforce at any time
------
any provision of this Revised Stipulation shall not be construed as a waiver of
such provision, nor be construed in any way to effect the validity of this
Revised Stipulation or any part hereof or the right of any Party thereafter to
enforce each and every such provision. No waiver of any breach of this Revised
Stipulation shall be held to constitute a waiver of any other breach.
Section 8.7. Successors. This Revised Stipulation shall be binding upon and
----------
inure to the benefit of the Parties hereto and their successors and assigns. No
Party hereto may assign its rights or obligations hereunder without the prior
written consent of all of the other Parties hereto.
Section 8.8. Third Parties. Nothing in this Revised Stipulation, whether
--------------
express or implied, is intended to confer any rights or remedies under or by
reason of this Revised Stipulation on any persons other than the Parties hereto
and their respective successors and assigns, nor is anything in this Revised
Stipulation intended to relieve or discharge the obligations or liabilities of
any third parties to any party to this Revised Stipulation, nor shall any
provision give any third parties any right of subrogation or action over or
against any Party to this Revised Stipulation.
Section 8.9. Notices. Any and all notices, requests, consents, directives or
-------
communications by any party intended for any other party shall be in writing,
shall be given personally or by postage prepaid certified or registered mail,
return receipt requested, and shall be deemed delivered on the earlier of (a)
the date received and (b) the date four business days after the date of deposit
in a United States Postal Depository, and shall be addressed as follows:
(a) If to the Defendants:
Nixon Peabody LLP
101 Federal Street
Boston, MA 02110-1832
(617) 345-1000
Attn: Deborah L. Thaxter, P.C.
Gregory P. Deschenes, Esq.
(b) If to the Named Plaintiffs:
Wechsler Harwood Halebian & Feffer LLP
488 Madison Avenue, 8th Floor
New York, New York 10022
Attn: Andrew D. Friedman, Esq.
Any Party may, from time to time, change the address to which such written
notice, requests, consents, directives or communications are to be mailed, by
giving the other parties ten (10) days prior written notice of the changed
address in the manner hereinabove provided.
Section 8.10. Governing Law. This Revised Stipulation and the attached
--------------
exhibits shall be governed by and construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts, without reference to principles of
choice or conflicts of laws. This Revised Stipulation (including, without
limitation, its execution and consummation) shall be enforced solely in this
Court. The Defendants, the Named Plaintiffs and the Settlement Class hereby
waive any objection they may now or hereafter have to the venue or forum of any
such enforcement proceedings, and irrevocably consent to and acknowledge
jurisdiction and service of any and all process of the Court in any such
proceedings.
Section 8.11. Collaborative Effort. The undersigned agree that no single party
--------------------
shall be deemed to have drafted this Stipulation or any portion thereof. This
Revised Stipulation is the product of the collaborative effort of the
undersigned counsel.
Section 8.12. Exhibits. All of the exhibits hereto are hereby incorporated by
--------
reference as though fully set forth herein.
Section 8.13. Plaintiffs' Lead Counsel Authorization. Plaintiffs' Lead Counsel
--------------------------------------
on behalf of the Class has been expressly authorized by the Plaintiffs to take
all appropriate action required or permitted to be taken by the Class to
effectuate its terms and is also authorized by the Plaintiffs to enter into any
modifications or amendments to the Revised Stipulation on behalf of the Class.
Section 8.14. Defendants' Counsel Authorization. Counsel for the Defendants is
---------------------------------
authorized to sign this Revised Stipulation on behalf of each of its clients.
Section 8.15. Defendants' Acknowledgment. The Defendants hereby acknowledge
---------------------------
that various revisions to the terms and conditions of the sale of Class B
Interests that were made by the Defendants prior to the consummation of the sale
of the Class B Interests, and all of the consideration to be paid to, or on
behalf of, the Class and Nominal Defendants pursuant to the terms of the
Settlement set forth herein, are attributable to the Action and the efforts of
the Plaintiffs and Plaintiffs' Counsel in connection therewith.
Section 8.16. No Assignment. The Plaintiffs and their counsel represent and
--------------
warrant that none of the Plaintiffs' alleged claims or causes of action against
the Defendants have been assigned, encumbered or in any manner transferred in
whole or in part.
ATTORNEYS FOR PLAINTIFFS:
s/Andrew D. Friedman
- ----------------------------
WECHSLER HARWOOD HALEBIAN & FEFFER LLP
Andrew D. Friedman
488 Madison Avenue, 8th Floor
New York, NY 10022
(212) 935-7400
LAW OFFICES OF VINCENT T. GRESHAM
Vincent T. Gresham
6065 Roswell Road, Ste. 1445
Atlanta, GA 30328
(770) 552-5270
GILMAN AND PASTOR
Peter A. Lagorio
One Boston Place
Boston, MA 02108-4400
(617) 589-3750
BENJAMIN S. SCHWARTZ, CHARTERED
Benjamin S. Schwartz
4600 Olympic Way
Evergreen, CO 80439
(303) 670-5941
GLANCY & BINKOW
Lionel Z. Glancy
1801 Avenue of the Stars, Suite 306
Los Angeles, CA 90067
(310) 201-9150
LAW OFFICES OF ALLEN M. LERNER
Allan Lerner
2888 East Oakland Park Boulevard
Fort Lauderdale, FL 33306
(305) 563-8111
LAW OFFICES OF JAMES V. BASHIAN
500 Fifth Avenue, Ste. 2700
New York, NY 10110
(212) 921-4100
THOMAS A. HOADLEY, PA
310 Australian Avenue
Palm Beach, FL 33480
(561) 792-9006
GOODKIND, LABATAN, RUDOFF & SUCHAROW, LLP
Lynda J. Grant
Robert N. Cappucci
100 Park Avenue
New York, NY 10017
(212) 907-0700
LASKY & RIFKIND, LTD.
Leigh Lasky
30 North LaSalle Street, Ste. 2140
Chicago, IL 60602
(312) 759-7670
HAROLD B. OBSTFELD, P.C.
Harold B. Obstfeld
260 Madison Avenue
New York, NY 10116
(212) 696-1212
ATTORNEYS FOR DEFENDANTS:
s/Deborah L. Thaxter
- --------------------------
NIXON PEABODY LLP
Deborah L. Thaxter, P.C.
Gregory P. Deschenes
101 Federal Street
Boston, MA 02110-1832
(617) 345-1000
Exhibit A - Preliminary Approval Order
Exhibit B - Notice of Class Action Determination, Proposed Settlement
and Fairness Hearing
Exhibit C - Final Judgment and Order
Those thirteen (13) Partnerships are as follows: American Income 4 Limited
Partnership, American Income 5 Limited Partnership, American Income 6 Limited
Partnership, American Income 7 Limited Partnership, American Income 8 Limited
Partnership, American Income Partners III-A Limited Partnership, American Income
Partners III-B Limited Partnership, American Income Partners III-C Limited
Partnership, American Income Partners III-D Limited Partnership, American Income
Partners IV-A Limited Partnership, American Income Partners IV-B Limited
Partnership, American Income Partners IV-C Limited Partnership, American Income
Partners IV-D Limited Partnership.
Those two (2) Partnerships are American Income Partners V-A Limited Partnership
and American Income Partners V-C Limited Partnership.
EXHIBIT 2.13 EX B
-----------------
EXHIBIT B
---------
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
LEONARD ROSENBLUM, J/B INVESTMENT PARTNERS, SMALL and REBECCA BARMACK, PARTNERS,
BARBARA HALL, HENRY R. GRAHAM, ANNE R. GRAHAM, MARGO CORTELL, PATRICK M. RHODES,
BERNICE M. HUELS, GARRETT N. VOIGHT, CLAIRE E. FULCHER, MARCELLA LEVY, RICHARD
HODGSON, CITY PARTNERSHIPS, HELMAN PARSONS AND CLEVA PARSONS, on behalf of
themselves and all others similarly situated and derivatively on behalf of the
Nominal Defendants,
Plaintiffs,
v.
Case No. 98-8030-CIV-Hurley
EQUIS FINANCIAL GROUP LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
EQUIS CORPORATION, a Massachusetts Corporation, GDE ACQUISITION LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AFG LEASING INCORPORATED, a
Massachusetts Corporation, AFG LEASING IV INCORPORATED, a Massachusetts
Corporation, AFG LEASING VI INCORPORATED, a Massachusetts Corporation, AFG
AIRCRAFT MANAGEMENT CORPORATION, a Massachusetts Corporation, AFG ASIT
CORPORATION, a Massachusetts Corporation, AF/AIP PROGRAMS LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, GARY D. ENGLE and GEOFFREY A. MACDONALD,
Defendants,
AIRFUND I INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 4 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 5 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 6 LIMITED PARTNERSHIP, a Massachusetts
Limited partnership, AMERICAN INCOME 7 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME 8 LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-B LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS III-C
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS III-D LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME PARTNERS IV-B LIMITED PARTNERSHIP, a Massachusetts
Limited Partnership, AMERICAN INCOME PARTNERS IV-C LIMITED PARTNERSHIP, a
Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS IV-D LIMITED
PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME PARTNERS V-A
LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN INCOME
PARTNERS V-B LIMITED PARTNERSHIP, a Massachusetts Limited Partnership, AMERICAN
INCOME PARTNERS V-C LIMITED PARTNERSHIP, a Massachusetts Limited Partnership,
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP, a Massachusetts Limited
Partnership, AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership,
AMERICAN INCOME FUND I-C, a Massachusetts Limited Partnership, AMERICAN INCOME
FUND I-D, a Massachusetts Limited Partnership, AMERICAN INCOME FUND I-E, a
Massachusetts Limited Partnership, AFG INVESTMENT TRUST A, a Delaware business
trust, AFG INVESTMENT TRUST B, a Delaware business trust, AFG INVESTMENT TRUST
C, a Delaware business trust, and AFG INVESTMENT TRUST D, a Delaware business
trust,
Nominal Defendants.
5
ORDER AND FINAL JUDGMENT
------------------------
This matter having come before the Court on the application of the parties
for approval of the settlement set forth in the Revised Stipulation of
Settlement dated January 29, 2002 and the exhibits annexed thereto, as amended
by the agreement of the parties dated June 11, 2002 (the "Revised Stipulation")
relating to the claims of the Class that was conditionally certified for
settlement purposes by this Court's Preliminary Approval Order dated March 1,
2002 in the above-captioned Action (the "Settlement"), and the Court having
considered all papers filed and proceedings had herein and otherwise being fully
informed in the premises and good cause appearing therefor,
ORDERED, ADJUDGED AND DECREED THAT:
1. For purposes of this Final Judgment, the Court adopts and
incorporates by reference the definitions contained in the Revised Stipulation.
2. This Court has jurisdiction over the subject matter of this
litigation, over all actions within this litigation and over all parties to this
litigation, including all members of the Settlement Class.
3. This Court hereby approves the Settlement and the transactions
contemplated thereby with respect to the Settlement Class and the Operating
Partnerships, and finds, in accordance with Rule 23 and 23.1 of the Federal
Rules of Civil Procedure, that the Settlement is in all respects, fair,
reasonable and adequate, and directs implementation of all of its terms and
provisions with respect to the Operating Partnerships and the Class. The Class,
as defined in the Settlement and Preliminary Approval Order, consists of all
persons and entities who owned Units of any of the Operating Partnerships as of
this Court's Order dated March 1, 2002.
4. The Court hereby finds that, (a) the benefits provided under the
Settlement compare favorably to the likely recovery at trial; (b) the claims
asserted in the Action are complex and the alternative to the Settlement now
would be lengthy, burdensome and expensive litigation; (c) the Settlement was
reached at a stage in the litigation sufficient to assure that counsel for the
parties had sufficient information regarding the strength and weaknesses of the
claims and defenses so as to make reasoned judgments concerning the Settlement
of the Action; (d) Plaintiffs' Lead Counsel and the ten other law firms
representing the plaintiffs ("Class Counsel") are well qualified and have
substantial experience in class action and other complex litigation on behalf of
investors, and it is the collective judgment of Class Counsel that the benefits
of the Settlement outweigh the delay and risk of proceeding to trial; (e) the
substance and amount of opposition to this Settlement, from three out of over
fourteen thousand members of the Class, was small and the objections were
resolved, in large part, by the parties' agreement to amend the Revised
Stipulation to clarify the intent of the parties as to a clause previously set
forth in subsection 2.2(f) of the Revised Stipulation; and (f) the Settlement
resulted from arms' length bargaining between the parties and there is no
evidence that the Settlement is the product of collusion.
5. It is appropriate to finally certify the Class defined in the
Revised Stipulation and in Paragraph 3 hereof, for settlement purposes only, and
without prejudice to further litigation in the event the Revised Stipulation
does not become effective (as described in the Revised Stipulation). With
respect to the certification of the Class solely for, and contingent upon, the
Settlement of the Action, this Court finds: (A) the members of the Class are so
numerous that joinder of all Class members in this Action is impracticable; (B)
there are common questions of law and fact which predominate over any individual
questions; (C) the claims of the Plaintiffs are typical of the respective claims
of the Class; (D) the Class is adequately represented by the Plaintiffs who have
fairly and adequately represented and protected the interests of all of the
Class members, have no interests which conflict with the interests of the Class,
and have retained counsel who are well qualified and highly experienced in the
representation of limited partners in class and derivative actions similar to
the Action; and (E) a class action is superior to other available methods for
the fair and efficient adjudication and settlement of the controversy,
considering, among other matters, (i) the interest of the members of the
Operating Partnership Sub-Class in individually controlling the prosecution and
settlement of separate actions, (ii) the extent and nature of any litigation
concerning the controversy already commenced by or against members of the Class,
(iii) the desirability or undesirability of concentrating the litigation of
these claims in this particular forum, and (iv) the difficulties likely to be
encountered in the management of this Action.
6. This Court hereby dismisses the Class and Derivative Action
Complaint, and each and every claim stated therein brought by or on behalf of
the members of the Class and the Operating Partnerships, on the merits and with
prejudice as against the Defendants and without costs to any of the parties, as
against any other party, except as set forth in the Revised Stipulation.
7. Defendants and the Released Parties are hereby and forever
acquitted, released and discharged by each Plaintiff and Class Member and
Releasing Parties with respect to any and all Settled Claims as set forth in
Section 3.2 of the Revised Stipulation.
8. Each Plaintiff and Class Member and Releasing Parties is hereby
deemed conclusively to have compromised, settled, discharged, dismissed and
released any and all rights, claims or causes of action against the Defendants
and Released Parties arising out of or based upon the Settled Claims and is
hereby forever barred and enjoined from asserting, either directly or
indirectly, any Settled Claims against any of the Defendants and Released
Parties.
9. On March 1, 2002, the Court entered an Order Preliminarily Approving
the Settlement by which it approved the form of Notice of Class Action
Determination, Proposed Settlement and Fairness Hearing (the "Notice") and
ordered that copies of the Notice be sent by mail to all Members of the Class at
the addresses set forth in the books and records maintained by the Operating
Partnerships. Pursuant to and in accordance with such order, the Notice was
provided to the Class members. The Notice given to the Class pursuant to the
Revised Stipulation was the best notice practicable under the circumstances.
Said Notice provided due and adequate notice to all Class Members of all
material elements of the Action, the terms and conditions of the Settlement, the
request for attorneys' fees and expenses and all relevant proceedings in the
Action. Said Notice fully satisfied the requirements of Rules 23(c)(2) and
23(e) of the Federal Rules of Civil Procedure and the United States
Constitution.
10. Without affecting the finality of this Final Judgment in any way,
this Court hereby retains continuing jurisdiction: (a) over implementation of
the Settlement and all distributions to the Plaintiffs and Class Members
pursuant to further orders of this Court; (b) over the Action until the final
judgment contemplated hereby has become effective and each and every act agreed
to be performed by the parties shall have been performed pursuant to the
Settlement; and (c) over all parties to the Action for the purpose of enforcing
and administering the Revised Stipulation.
11. If the Settlement does not become final and effective, then this
Final Judgment shall be rendered null and void ab initio and be vacated and the
-- ------
Settlement and all orders entered in connection therewith shall be rendered null
and void, except for the provisions of the Revised Stipulation concerning the
payment of the costs of Notice, and the Action shall be reinstated with the
parties having all rights as existed prior to the execution of the Revised
Stipulation.
12. Class Counsel in the Action are awarded attorneys' fees and
reimbursement of costs and expenses incurred from May 7, 1999 through May 30,
2002, in the aggregate amount of $1,166,667.00, which is to be paid, pursuant to
the terms of the Revised Stipulation, to Plaintiffs' Lead Counsel who will
allocate $100,000.00 of such amount among the Plaintiffs for incentive awards
approved by the Court and the remainder among Class Counsel.
13. In accordance with Section 47(b) of the Investment Company Act of
1940, as amended (the "1940 Act"), the Court finds, under the circumstances
surrounding the Revised Stipulation and the transactions contemplated thereby,
enforcement of this Settlement and any contracts entered into, or to be entered
into, by the Operating Partnerships and their affiliates (a) would produce a
more equitable result than would non-enforcement, and (b) would not be
inconsistent with the purposes of the 1940 Act, as described in Section 1 of
that Act. Accordingly, even if any of the Operating Partnerships is now, or has
been, an "investment company," as that term is defined in Section 3 of the 1940
Act, this Order shall be enforceable and binding on the parties hereto,
notwithstanding Section 7 of the 1940 Act. Nothing herein shall be deemed to
constitute either (a) a finding by the Court, or (b) an admission or
acknowledgment by any party hereto that any Operating Partnership is now, or has
been, an "investment company" within the meaning of Section 3 of the 1940 Act.
14. This Court hereby decrees that neither the Settlement, this Final
Judgment, nor the fact of settlement are an admission or concession by the
Defendants of any liability or wrongdoing whatsoever. This Final Judgment is
not a finding of the validity or invalidity of any claims in the Action or of
any wrongdoing by the Defendants. Neither the Settlement, nor this Final
Judgment, nor the fact of settlement, nor the settlement proceedings, nor the
settlement negotiations, nor any related documents shall be used or construed as
an admission of any fault, liability or wrongdoing by any person or entity or
shall be offered or received in evidence as an admission, concession,
presumption or inference against any party in any proceeding other than such
proceedings as may be necessary to consummate or enforce the Settlement.
DONE AND SIGNED in Chambers at West Palm Beach, Florida, this 12th day of
June, 2002.
/s/ Daniel T.K. Hurley
-------------------------
Daniel T.K. Hurley
United States District Judge
Copies To All Counsel Of Record