SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
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Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, or Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
...............................................................................
PLM Equipment Growth Fund V
(Name of Registrant as Specified in its Charter)
...............................................................................
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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SOLICITATION STATEMENT
PLM FINANCIAL SERVICES, INC.
This Solicitation Statement is being provided to the limited partners
(the "Limited Partners") of PLM Equipment Growth Fund V, a California limited
partnership ("Fund V" or "Partnership") pursuant to a preliminary order, dated
June 29, 1999 (the "Order"), of the United States District Court for the
Southern District of Alabama (the "Court") issued in connection with the
proposed equitable settlement (the "Equitable Settlement") of the class action
litigation (the "Litigation") captioned Koch, et al. v. PLM International, Inc.,
et al. brought on behalf of the Limited Partners and other Unitholders who are
not Limited Partners. The Litigation named as defendants PLM International,
Inc., a Delaware corporation; PLM Financial Services, Inc., a Delaware
corporation and the general partner of the Partnership (the "General Partner");
PLM Investment Management, Inc., a Delaware corporation ("IMI") and a subsidiary
of the General Partner; and two other subsidiaries of the General Partner
(collectively, the "Defendants"). Plaintiffs filed the Litigation on behalf of
investors in this and other equipment partnerships managed by the General
Partner and described in the documents that you are receiving along with this
Solicitation Statement. Limited partners in two of such other partnerships are
also receiving a Solicitation Statement virtually identical to this one. The
proposed Equitable Settlement of the Litigation is part of a larger settlement,
including a monetary settlement (the "Monetary Settlement"), that would resolve
and settle all claims brought against the Defendants (the "Settlement").
As part of the Equitable Settlement described in the accompanying
documents, among other matters, the Amended and Restated Limited Partnership
Agreement of the Partnership will be amended (the "Amendments") to: (a) extend
the operating life of the Partnership for 6 years (the "Extension"); (b) allow
the Partnership to repurchase (the "Repurchase") up to ten percent 10% of the
outstanding limited partnership interests (the "Units") from Unitholders; (c)
require IMI to defer a portion of its equipment management fee (the "Equipment
Management Fee") pending the attainment of certain financial performance goals
by the Partnership; and (d) increase by 20% the limitations on equipment
acquisition and lease negotiation fees ("Front-End Fees") the General Partner
can receive from the Partnership (the "Front-End Fee Increase"). Pursuant to the
terms of the Equitable Settlement, the Amendments are also proposed for the
limited partnership agreements of two other partnerships for which the General
Partner acts as general partner, PLM Equipment Growth Fund VI ("Fund VI") and
PLM Equipment Growth and Income Fund VII ("Fund VII"), each a California limited
partnership. The Partnership, Fund VI and Fund VII are collectively referred to
as the "Partnerships", and the limited partnership agreements of the
Partnerships are collectively referred to as the "Partnership Agreements".
Identical amendments to the Partnership Agreements of Funds VI and VII are also
referred to as the "Amendments."
CERTAIN FACETS OF THE AMENDMENTS INVOLVE RISKS THAT SHOULD BE
CONSIDERED BY THE LIMITED PARTNERS. SEE "RISKS FACTORS" BEGINNING ON PAGE 9 OF
THIS SOLICITATION STATEMENT.
The Court's Order, among other matters: (a) certified for purposes of
settlement two classes: (i) an Equitable Settlement Class consisting of all
persons who were Unitholders in the Partnerships, as of the time of the
Equitable Class Preliminary Approval Order, and their assigns and successors in
interest (the "Equitable Class"), and (ii) a Monetary Settlement Class
consisting generally of all persons that during the period May 23, 1989 and June
29, 1999 purchased, or received by way of transfer or assignment, units in any
of the Partnerships, regardless of whether such persons currently hold units
(the "Monetary Class"); and (b) preliminarily approved the Settlement pursuant
to the Stipulation of Settlement (the "Settlement Stipulation") entered into by
the General Partner and the other Defendants. The Settlement Stipulation
generally provides for the settlement, discharge and release of all claims
against Defendants in exchange for certain benefits to the two classes. The
Settlement, consisting of the Monetary Settlement and the Equitable Settlement,
is described in greater detail in the accompanying Notice of Proposed Monetary
Settlement of Class Action, Settlement Hearing and Right to Appear ("Monetary
Notice") and the Notice of Proposed Equitable Settlement of Class Action,
Settlement Hearing and Right to Appear ("Equitable Notice").
This Solicitation Statement provides information with respect to the
Amendments, the predominant component of the Equitable Settlement.
Pursuant to the Court's Order preliminarily approving the Settlement
Stipulation and subject to final Court approval, unless Limited Partners holding
50% or more of the Units vote against one or more of the Amendments, the
Partnership Agreement will be amended in accordance with the Amendments and the
Partnership will participate in the Equitable Settlement. However, even if
Limited Partners holding 50% or more of the Units do not vote against
Amendments, the Court may still not approve the Amendments for this Partnership,
in which case the Amendments will not be given effect and the Partnership will
not participate in the Equitable Settlement.
LIMITED PARTNERS THAT DO NOT WISH TO VOTE AGAINST THE AMENDMENTS SHOULD
DO NOTHING; LIMITED PARTNERS WHO WISH TO VOTE AGAINST THE AMENDMENTS MAY DO SO
BY FOLLOWING THE PROCEDURES DESCRIBED HEREIN. LIMITED PARTNERS WHO FAIL TO
RETURN THE FORM FOR VOTING AGAINST THE AMENDMENTS WILL BE TREATED AS IF THEY HAD
VOTED IN FAVOR OF THE AMENDMENTS.
Approval of the Amendments for the Partnership is conditioned upon: (a)
Limited Partners holding less than one-half of the Units voting against any or
all of the Amendments; and (b) final Court approval of the Settlement after a
fairness hearing (the "Fairness Hearing") that is scheduled for 10:30 a.m. on
November 16, 1999 [TENTATIVE] at the United States Courthouse in Mobile,
Alabama. This Solicitation Statement is dated _______ and is being mailed to
Limited Partners on or about ________________, 1999.
THE GENERAL PARTNER RECOMMENDS THAT THE LIMITED PARTNERS NOT VOTE
AGAINST THE AMENDMENTS. CLASS COUNSEL SUPPORTS THE PROPOSED EQUITABLE SETTLEMENT
OF WHICH THE AMENDMENTS FORM AN INTEGRAL PART.
ALL QUESTIONS AND INQUIRIES SHOULD BE DIRECTED TO:
Investor Services
PLM Investment Management, Inc.
One Market Street, Steuart Tower, Suite 800
San Francisco, California 94105-1301
Telephone: (800) 626-7549 or (415) 974-1399
CAUTIONARY STATEMENT
CERTAIN STATEMENTS IN THIS SOLICITATION STATEMENT RELATE TO FUTURE
EVENTS AND EXPECTATIONS, AND AS SUCH, CONSTITUTE WHAT ARE CALLED
"FORWARD-LOOKING STATEMENTS." FOR PURPOSES OF THIS SOLICITATION STATEMENT AND
LIMITED PARTNERS' RIGHT TO BE HEARD IN COURT REGARDING THE SETTLEMENT, ANY
STATEMENTS CONTAINED IN THIS SOLICITATION STATEMENT THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT
LIMITATION BY THE FOREGOING DESCRIPTION, THE WORDS "BELIEVES," "ANTICIPATES,"
"EXPECTS," "PROJECTS," "DETERMINED" AND SIMILAR EXPRESSIONS USED IN THIS
SOLICITATION STATEMENT ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
OF THE PARTNERSHIP TO BE MATERIALLY DIFFERENT FROM HISTORICAL ACHIEVEMENTS OF
THE PARTNERSHIP.
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS SOLICITATION STATEMENT.
The Amendments are being proposed by the General Partner and supported
by counsel for plaintiffs in the Litigation (the "Class Counsel") as an integral
part of the proposed Equitable Settlement. Pursuant to the Court's Order
preliminarily approving the Settlement Stipulation and subject to final Court
approval, unless Limited Partners holding 50% or more of the Units vote against
one or more of the Amendments by timely delivery of a vote against the
Amendments in the form attached as Appendix A (a "Notice of Vote Against the
Amendments," or "No Vote"), the Partnership Agreement will be so amended.
In addition, the Court has scheduled the Fairness Hearing at which
time: (a) members of the Equitable Class ("Equitable Class Members") who follow
the procedures described in the Equitable Notice may appear before the Court and
object to any aspect of the Settlement, including the Amendments,
notwithstanding their failure to deliver a No Vote by ___________________, 1999
(the "No Vote Deadline"); (b) the General Partner will provide the Court with a
tabulation of the number of Units held by Limited Partners in each Partnership
that have voted against one or more of the Amendments; and (c) the Court may (i)
not approve the Equitable Settlement in the event that Limited Partners of any
of the Partnerships holding 50% or more of the Units vote against the Amendments
(ii) approve the Equitable Settlement as to one, two or all of the Partnerships
so long as Limited Partners holding less than 50% of the Units of any such
Partnership vote against the Amendments, or (iii) notwithstanding votes against
the Amendments by Limited Partners holding less than 50% of the Units in each
Partnership, still not approve the Settlement.
If less than 50% of Units held by the Limited Partners vote against the
Amendments and the Court approves the Equitable Settlement, the Amendments, in
part will extend the operating life of the Partnership by 6 years (the
"Extension Period"). During the Extension Period, the General Partner will be
permitted to reinvest cash flow, surplus Partnership funds and retained proceeds
in additional equipment, which the General Partner will endeavor to lease, and
ultimately sell, consistent with the objectives of the Partnerships.
For a portion of the Extension Period (2-1/2 years), IMI will defer
receipt of 25% of the Equipment Management Fee it would otherwise be entitled to
receive. IMI will be paid such fee by the Partnership only if the internal rate
of return ("IRR") for the Partnership, as computed in accordance with the IRR
protocol (agreed to by the parties to the Litigation and attached as an exhibit
to the Settlement Stipulation (the "IRR Protocol")), from the beginning of the
Extension Period through the measurement date, equals or exceeds the stipulated
performance target described in the IRR Protocol for this purpose. See "IRR
PROTOCOL, discussed below."
For equipment acquisition and lease negotiation services to be provided
to the Partnership during the Extension Period, including reinvestments of
assets, the previous limitation on the Front-End Fees (including fees and
expenses for such activities as the selection and acquisition of Equipment, and
negotiation of equipment leases) that can be paid by the Partnership to the
General Partner will be increased so that the General Partner can earn up to 20%
more than previously permitted; finally, the Partnership will repurchase up to
10% of its Units at the price of 80% of the net asset value per Unit determined
as of the end of the fiscal quarter immediately preceding the deadline for
submission of a repurchase request ("Repurchase Request").
RISK FACTORS
Limited Partners should carefully consider the matters disclosed under
"RISK FACTORS", beginning on page 9, before deciding whether or not to vote
against the Amendments. The following is a summary of the material risks and
other effects of the Amendments.
CHANGE IN LENGTH OF INVESTMENT. Each Limited Partner's investment will
change from an equity interest in an entity (the Partnership) that originally
was designed to sell its assets and distribute the proceeds prior to January 1,
2001 to an equity interest in an entity that will, consistent with its fiduciary
duties, liquidate its equipment assets prior to January 1, 2007. As a result of
the Amendments, it is anticipated that Unitholders will not receive
distributions from sales of assets with respect to their Units until
approximately 6 years later than would be the case otherwise.
EFFECT OF THE REPURCHASE. In order to fund the Repurchase, the
Partnerships may have to use cash which would otherwise be available for
distributions to the Limited Partners or for reinvestment in equipment.
IMPACT OF FRONT-END FEE INCREASE. Part of the Equitable Settlement
includes increasing by 20% the previous limitation on Front-End Fees which can
be paid by the Partnership to the General Partner. Any amounts paid to the
General Partner as a result of the Front-End Fee increase will be unavailable
for distributions to Unitholders or for reinvestment in equipment.
CONFLICT OF INTEREST OF GENERAL PARTNER. The General Partner initiated
and participated in the structuring of the Amendments and has certain conflicts
of interest with respect to their effect, including the fact that the General
Partner and its subsidiary, IMI, will earn fees for up to an additional 6 years:
the limitation on certain of the fees (the Front-End Fees) will be increased by
20% over current limits. See "CONFLICTS OF INTEREST - Conflict of Interest of
the General Partner."
AFFIRMATIVE VOTE OF MAJORITY IN INTEREST NOT REQUIRED TO BIND ALL
LIMITED PARTNERS. Pursuant to the Court's Order preliminarily approving the
Settlement Stipulation and subject to final Court approval, the Amendments will
be effective unless Limited Partners holding 50% or more of the Units vote
against one or more of the Amendments. Under the Partnership Agreement, if the
Amendments were not subject to a judicial determination and Court Order
following the Fairness Hearing, the Amendments could be effected only by
obtaining the affirmative approval of Limited Partners holding not less than a
majority of the Units. See "VOTING PROCEDURES."
CHANGE OF CONTROL. The IRR Protocol provides that, to the extent the
applicable conditions have been met, the Deferred Management Fee and the
Equitable Class Fee and Expense Award will be payable in a lump sum in the event
the Limited Partners approve a roll-up transaction or more than 50% of the Units
in any Partnership are tendered in response to a registered tender offer. Absent
a roll-up or tender, such fees would be paid over time subject to the applicable
conditions being met with funds available for distribution to the unit holders.
These provisions could have the effect of deterring such transactions. See "IRR
PROTOCOL."
CONTINUING RISK FACTORS. See "RISK FACTORS - Ongoing Risks Relating to
the Partnership" for a discussion of risks which are similar to those that were
present at the time Limited Partners made their investments.
GENERAL PARTNER'S REASONS FOR RECOMMENDING THE AMENDMENTS
The Amendments are being proposed by the General Partner in connection
with the Settlement and pursuant to the Settlement Stipulation.
The General Partner believes that the Extension Period will give it
more flexibility to take advantage of market conditions. Liquidating the Funds
as scheduled may cause the General Partner to sell certain assets prior to
realizing the full economic benefit that may be available to the Funds.
Extending the operating lives of the Funds is likely to provide the General
Partner with greater flexibility both to generate additional revenue from
continuing to lease an asset and to determine when to sell an asset based on
market conditions. In other words, the Extension Period will provide the General
Partner with discretion to ride out cyclical markets, to hold or sell certain
assets, to reinvest the proceeds of those assets and to make other investment
decisions in an effort to improve the performance of the Funds. There can be no
assurance, however, that the performance of the Funds during the Extension
Period will achieve the anticipated benefits described in the Equitable Notice
or that the equipment markets, looking forward, will support such results when
the General Partner determines to sell assets. See "RISK FACTORS - Ongoing Risks
Relating to the Partnership."
The General Partner believes its recommendation in favor of the
Amendments is also supported by: (a) the process of arm's length negotiation of
the structure, terms and conditions of the Amendments with Class Counsel acting
on behalf of the Equitable Class; (ii) the General Partner's knowledge that any
amendments to the Partnership Agreement would necessarily entail obtaining
preliminary and final approval by the Court of the Equitable Settlement,
including the Amendments; and (iii) the opportunity for each Limited Partner
both to vote against the Amendments and/or to object to the Settlement in Court
as part of the Fairness Hearing. In addition, those holders of Units who are not
Limited Partners will also have the opportunity to object to the Settlement as
part of the Fairness Hearing. The General Partner's judgment, however, may be
affected by the fact that it will derive financial benefits from the Amendments,
and is thus subject to conflicts of interest. See "CONFLICTS OF INTEREST -
Conflict of Interest of the General Partner."
VOTING PROCEDURES
Pursuant to the Court's Order preliminarily approving the Settlement
Stipulation and subject to final Court approval, the Partnership Agreement will
be amended in accordance with the Amendments unless Limited Partners holding 50%
or more of the Units vote against any or all of the Amendments. Limited Partners
may vote against the Amendments by delivering a No Vote to the General Partner.
Limited Partners may also object to any aspect of the Equitable Settlement,
including the Amendments, at the Fairness Hearing by following the procedures
set forth in the Equitable Notice which accompanies this Solicitation Statement.
However, even if Limited Partners holding 50% or more of the Units do not vote
against the Amendments, the Court may not approve the Settlement as to a
particular Partnership, and then the Amendments will not be given effect and
that Partnership will not participate in the Equitable Settlement.
LIMITED PARTNERS WHO WISH TO VOTE AGAINST THE AMENDMENTS SHOULD RETURN
A SIGNED NOTICE OF VOTE AGAINST THE AMENDMENTS (THE FORM OF WHICH IS ATTACHED AS
APPENDIX A) TO GILARDI & CO., 1115 MAGNOLIA AVENUE, LARKSPUR, CALIFORNIA 94977,
AS SOON AS POSSIBLE, BUT IN ANY EVENT, NO LATER THAN _____________, 1999, FOR
THIS AND ANY OTHER PARTNERSHIP IN WHICH THEY HOLD UNITS. THE NOTICE OF VOTE
AGAINST THE AMENDMENTS MUST CONTAIN THE NAME AND ADDRESS OF THE LIMITED PARTNER,
AND THE NUMBER OF UNITS HELD BY THE LIMITED PARTNER.
Limited Partners holding Units as of June 29 1999 (the "Record Date"),
have until 5:00 p.m. Pacific Time, on ____________, 1999, unless extended, to
submit their Notice of Vote Against the Amendments (the "Voting Deadline").
Limited Partners may withdraw or revoke their No Vote at any time prior
to the Voting Deadline. See "VOTING PROCEDURES - Revocability of Notice of Vote
Against the Amendments ."
THE GENERAL PARTNER RECOMMENDS THAT LIMITED PARTNERS NOT VOTE AGAINST
THE AMENDMENTS. CLASS COUNSEL SUPPORTS THE PROPOSED EQUITABLE SETTLEMENT OF
WHICH THE AMENDMENTS FORM AN INTEGRAL PART. The General Partner and Class
Counsel are subject to conflicts of interest with respect to the Amendments. See
"CONFLICTS OF INTEREST."
CONFLICTS OF INTEREST
GENERAL PARTNER. The General Partner initiated and participated in the
structuring of the Amendments and has conflicts of interest with respect to
their effect. For a more complete discussion of the conflicts of interest of the
General Partner with respect to the Amendments, see "CONFLICTS OF INTEREST -
Conflict of Interest of the General Partner."
CLASS COUNSEL. Limited Partners should consider that Class Counsel may
be deemed to have a conflict of interest with respect to their support of the
Equitable Settlement, of which the proposed Amendments form an integral part. In
particular, the fees and expenses of Class Counsel, if approved by the Court,
will be paid in part from the cash settlement pool provided by the Defendants
pursuant to the Monetary Settlement. In addition, as part of the Equitable
Settlement, Class Counsel will apply for an additional fee and expenses award
from any Partnership participating in the Settlement. Any such fee and expense
award will be an obligation of the Equitable Settlement Class Members.
Defendants shall have no separate liability for the payment of any such fees and
expense award. Such additional fees and expenses will be paid to Class Counsel,
however, only if a Partnership's IRR during the Extension Period exceeds the
stipulated performance target described in the IRR Protocol for this purpose.
See "CONFLICTS OF INTEREST - Conflict of Interest of Class Counsel" and "IRR
PROTOCOL."
RISK FACTORS
The Amendments involve certain risks and other adverse factors. Limited
Partners are urged to read this Solicitation Statement carefully in its
entirety, including all appendices and supplements hereto, and should consider
carefully the following factors in determining whether to vote against one or
more of the Amendments, as well as whether to object to the Settlement in Court
as part of the Fairness Hearing scheduled for November 16, 1999 [tentative].
RISKS RELATING TO THE AMENDMENTS
CHANGE IN LENGTH OF INVESTMENT. Each Limited Partner's investment will
change from an equity interest in an entity (the Partnership) that originally
was designed to sell its assets and distribute the proceeds prior to January 1,
2001 to an equity interest in an entity in which the General Partner will
liquidate the Partnership's equipment assets prior to January 1, 2007,
consistent with the General Partner's fiduciary duties to the Limited Partners.
As a result of the Amendments, it is anticipated that Limited Partners will not
receive distributions from the sales of assets with respect to their Units until
approximately 6 years later than would be the case otherwise.
EFFECT OF THE REPURCHASE. In order to fund the Repurchase, the
Partnership may have to use cash which would otherwise be available for
distributions to the Limited Partners or for reinvestment in equipment.
IMPACT OF FRONT-END FEE INCREASE. Part of the Equitable Settlement
includes increasing by 20% the limitation on equipment acquisition and lease
negotiation fees which can be paid by the Partnership to the General Partner.
Any amounts paid to the General Partner as a result of the Front-End Fee
Increase will be unavailable for distributions to Limited Partners or for
reinvestment in equipment. Furthermore, the aggregate amount of the Front-End
Fee Increase could offset any benefits to the Partnership resulting from IMI
deferring a portion of the Equipment Management Fee. During that part of the
Extension Period when IMI defers receipt of a portion of the Equipment
Management Fee, the Partnership will retain the deferred fees which it may
reinvest in equipment or deposit in interest bearing accounts. The Partnership's
return on those investments, or even the Partnership's savings if it does not
pay IMI any of the deferred portion of the Equipment Management Fee (if IMI does
not achieve the stipulated performance target) may be less than the amount of
Front End Fees the Partnership may pay to the General Partner as a result of the
increase in the limitation on those Fees.
AFFIRMATIVE VOTE OF MAJORITY IN INTEREST NOT REQUIRED TO BIND ALL
LIMITED PARTNERS. Pursuant to the Court's Order preliminarily approving the
Settlement Stipulation and subject to the final Court approval, the Amendments
will be effective unless Limited Partners holding 50% or more of the Units vote
against one or more of the Amendments. If the Amendments were not subject to a
judicial determination and Court Order following the Fairness Hearing, the
Amendment could be effected only by obtaining the affirmative approval of
Limited Partners holding of not less than a majority of the Units. See " VOTING
PROCEDURES."
CHANGE OF CONTROL. The IRR Protocol provides that, to the extent the
applicable conditions have been met, the Deferred Management Fee and the
Equitable Class Fee and Expense Award will be payable in a lump sum in the event
the Limited Partners approve a roll-up transaction or more than 50% of the Units
in any Partnership are tendered in response to a registered tender offer. Absent
a roll-up or tender, such fees would be paid over time after the applicable
conditions had been met with funds available for distribution to the unit
holders. These provisions could have the effect of deterring such transactions.
See "IRR PROTOCOL."
ONGOING RISKS RELATING TO THE PARTNERSHIPS
The operation of the Partnership will continue to be subject to risks
similar to those that were present at the time Limited Partners made their
original investment, the most important ones of which are discussed below.
Others are set forth in the Prospectus for the Partnership, copies of which are
available from the General Partner.
EQUIPMENT LEASING BUSINESS. The success of the Partnership during the
Extension Period will depend, in part, upon the availability of equipment that
fits within the investment objectives of the Partnership, the quality of the
equipment, the timing of equipment purchases, the terms of any leases to which
the equipment will be subject and the credit quality of the lessees. Equipment
leasing is subject to the risk of technological and economic obsolescence and
the risks associated with the inability to lease the equipment and the defaults
of lessees. A Partnership may acquire items of equipment for which it does not
have a lease commitment. There can be no assurance that there will be a demand
for each item of equipment from a commercially acceptable lessee. Therefore, it
is possible that items of equipment may be acquired which do not generate any
rental revenues for a Partnership. Moreover, while the General Partner will
investigate prospective lessees to ascertain whether they will be able to meet
their obligations under proposed leases, there is no assurance that a lessee
will actually meet its obligations under a lease.
EQUIPMENT OPERATIONS. Equipment ownership and operation is a business
and, like any business, is dependent upon maintaining acceptable levels of
income and operating expense. The principal business risk associated with
equipment ownership and operation is the possible inability to keep all the
equipment under leases yielding revenues which, after payment of operating
expenses, provide, together with any anticipated sale proceeds, a return
acceptable to the equipment owner. The ability to achieve this result may be
adversely affected by the economic and business factors to which the
transportation industry in general, and the equipment leasing industry in
particular, are subject. Most of these factors are beyond the control of the
General Partner, IMI and the lessees of the equipment, and include: (a) general
economic conditions such as inflation, fluctuations in general business
conditions and availability of financing; (b) fluctuations in supply and demand
for various types of equipment resulting from, among other things, obsolescence,
changes in the methods or economics of a particular mode of transportation or
changes in governmental regulations or safety standards; (c) increases in
maintenance expenses, taxes, insurance costs and management fees attributable to
the equipment, which cannot be offset by increased revenues from the equipment;
(d) the risk of an uninsured loss with respect to the equipment or an insured
loss for which insurance proceeds are inadequate, resulting in a possible loss
of invested capital in and any profits anticipated from such equipment; (e) the
effects of strikes and other labor disputes on a Partnership's acquisition of
equipment, the lessees of equipment and the transportation industry generally;
(f) bankruptcies, contract disputes or defaults in payment by lessees of the
equipment resulting in uncollectible accounts; (g) the risk of foreign
expropriation of, or damage to, equipment used on the high seas and in foreign
countries, such as certain marine vessels, cargo containers, and aircraft; and
(h) loss of revenues during periods when the equipment is not being utilized.
EQUIPMENT LEASES. Equipment leases may be categorized generally into
two types: (a) short- and mid-term leases under which the lessor normally will
receive aggregate rental payments in an amount that is less than the lessor's
purchase price of the equipment ("Operating Leases") and (b) long-term leases
under which the noncancellable rental payments due during the initial term of
the lease are sufficient to recover the investment in such equipment and to
provide a return on such investment ("Full Payout Net Leases"). It is presently
contemplated that each Partnership will continue to invest primarily in
equipment which will be subject to Operating Leases. Because Operating Leases
are for terms insufficient to recover the purchase price of the subject
equipment, in order to recover a Partnership's investment in such equipment, the
Partnership will, on termination of an Operating Lease, either have to obtain a
renewal from the original lessee, find a new lessee or sell the equipment. There
can be no assurance that there will be demand for the equipment from
commercially acceptable lessees on commercially acceptable terms or purchasers
for the equipment at the termination of an Operating Lease. Failure to renew
leases, to enter into subsequent leases or to sell the equipment after the
expiration of the initial term of an Operating Lease may result in the loss of
anticipated revenues and the inability to recover the Partnership's investment
in the equipment. The risks associated with Operating Leases are magnified with
respect to short-term Operating Leases. In connection with Operating Leases, the
Partnership may encounter considerable competition from other lessors offering
Full Payout Net Leases. While some lessees prefer the flexibility offered by a
shorter term Operating Lease, other lessees prefer the longer term and lower
rate possible with a Full Payout Net Lease. Competitors of the Partnership may
write Full Payout Net Leases at lower rates, or larger competitors with a lower
cost of capital may offer Operating Leases at lower rates, and as a result,
assuming the same acquisition costs of equipment, a Partnership may be at a
competitive disadvantage.
CONSEQUENCES OF GOVERNMENT REGULATION. The use, maintenance and
ownership of certain types of equipment are regulated by federal, state and/or
local authorities which may impose restrictions and financial burdens on the
Partnership's ownership and operation of equipment and, accordingly, affect the
profitability of the Partnership. Changes in government regulations or industry
standards, or deregulation, may also affect the ownership, operation and resale
of equipment. In addition, certain types of equipment (such as railcars,
aircraft and vessels) are subject to extensive safety and operating regulations
by governmental agencies and/or industry organizations. Such agencies or
organizations may require modifications or capital improvements to items of
equipment which may result in the removal of such equipment from service for a
period of time. If the Partnership, due to insufficient funds, was unable to
make a required improvement or modification, it might be required to sell the
affected item of equipment or to sell other items of equipment owned by it in
order to obtain the necessary funds; in either event, the Partnership might
sustain a loss on its investment in the items sold and might lose future
revenues, and the Limited Partners might experience adverse tax consequences.
RISK OF LOSS OF EQUIPMENT REGISTRATION. Aircraft and marine vessels
which may be acquired by the Partnership are subject to certain registration
requirements. Registration with the Federal Aviation Administration ("FAA") may
be required for the operation of aircraft within the United States. Similarly,
certain types of marine vessels must be registered with the United States Coast
Guard prior to operation in the waterways of the United States and rolling stock
and over-the-road vehicles may be subject to registration requirements. Failure
to register or loss of such registration for these types of equipment could
result in substantial penalties, the premature sale of such equipment and the
inability to operate and lease such equipment.
RESIDUAL VALUE OF EQUIPMENT. The ultimate cash return from an
investment in Units (without giving effect to any tax savings) will depend in
part upon the continuing value (either for sale or continued operation) of the
equipment, which in turn depends on, among other factors, the condition of the
equipment, the cost of comparable new equipment, the technological obsolescence
of the equipment and supply and demand regarding the equipment. Some of these
factors are not within the control of the General Partner.
INVESTMENT RISKS
LIABILITY OF LIMITED PARTNERS. The principles of law governing the
limitation of liability of limited partners in a limited partnership have not
been authoritatively established as to partnerships organized under the laws of
one jurisdiction but operating or owning property, incurring obligations, or
having partners resident in other jurisdictions. The Partnership is governed by
the California Revised Limited Partnership Act (the "Revised Act"), which
provides that the exercise by limited partners of certain rights relating to the
internal affairs or organization of a partnership (such as, for example, a right
to vote on the removal of a general partner or on the dissolution of the
partnership) does not have the effect of subjecting the limited partners to
liability as general partners.
A substantial number of states have adopted legislation which includes
a section comparable to that provision of the Revised Act which provides that
the laws of the state under which a foreign limited partnership is organized
govern its organization and internal affairs and the liability of its partners.
Accordingly, in such states, the limitation of liability of limited partners
provided by the Revised Act should be respected. In those jurisdictions which
have not adopted similar legislative provisions, the General Partner believes
that strong arguments may be made in support of the conclusion that California
law should govern as to the liability of limited partners and that neither the
possession nor the exercise of such rights should affect the limited liability
of limited partners; however, since there is no authoritative precedent on this
issue, a question exists as to whether the exercise (or perhaps even the
existence) of such rights might provide a basis for a court in such a
jurisdiction to hold that the Limited Partners are not entitled to the
limitation of liability provided by the Partnership Agreement and California
law.
RETURN OF DISTRIBUTIONS. In accordance with the Revised Act, Limited
Partners will be obligated to return any distribution from the Partnership to
the extent that, after giving effect to the distribution, all liabilities of the
Partnership (other than nonrecourse liabilities and liabilities to Limited
Partners on account of their interest in the Partnership) exceed the fair value
of their assets (including, as to assets serving as security for nonrecourse
liabilities, that portion of the fair value of such assets which exceeds the
amount of such nonrecourse liabilities).
LIMITED TRANSFERABILITY OF UNITS. The Units cannot be transferred
without the consent of the General Partner which may be withheld in its absolute
discretion. The General Partner intends to limit transfers so that they do not
exceed the number of transfers permitted by one of the safe harbors available
under IRS Notice 88-75 for the period prior to January 1, 2006, and the Treasury
Regulations under Section 7704, thereafter, which were issued to furnish
guidance regarding the publicly traded partnership rules of Section 7704 of the
Internal Revenue Code. Generally, this safe harbor requires all nonexempt
transfers and redemptions of Units in any calendar year not to exceed 5% (2%
after December 31, 2005) of the outstanding interest in the capital or profits
of a Partnership. Therefore, Unitholders may not be able to liquidate their
investments in the event of an emergency. Moreover, the Units may not be readily
acceptable as a collateral for a loan.
RISKS OF JOINT INVESTMENTs. The Partnership may participate on a
co-tenancy or partnership basis in investments in certain types of equipment,
the purchase prices of which are substantial. The investment by a Partnership in
a venture which owns equipment may, under certain circumstances, involve risks
not otherwise present if the Partnership were the sole owner of the equipment,
including, for example, risks associated with the possibility that the
Partnership's co-investors might become bankrupt, that such co-investors may at
any time have economic or business interests or goals which are inconsistent
with those of the Partnership, or that such co-investor may be in a position to
take action contrary to the instructions or the requests of the Partnership or
contrary to the Partnership's policies or objectives. Among other things,
actions by such a co-investor might have the result of subjecting equipment
owned by the venture to liabilities in excess of those contemplated by the
Partnership or might have other adverse consequences for the Partnership.
Inasmuch as no one of the co-investors may control the venture, there will be a
potential risk of impasse on decisions, including a proposed sale of the
equipment, and, although it is anticipated that each co-investor (including the
Partnership) will have a right of first refusal should one or more of the other
co-investors desire to sell equipment owned by the venture, the Partnership may
not have the resources to purchase such equipment.
RELIANCE ON GENERAL PARTNER AND CONFLICTS OF INTEREST. All decisions
with respect to management of the Partnership, including the determination as to
which equipment to acquire, will continue to be made exclusively by the General
Partner and its affiliates. The future success of the Partnership, to a large
extent, will depend on the quality of its management, particularly as it relates
to equipment acquisition, releasing and disposition. Limited Partners are not
permitted to take part in the management of the Partnership. The interests of
Limited Partners may be inconsistent in some respects with the interest of the
General Partner and its affiliates.
TAX RISKS
FEDERAL TAX CONSIDERATIONS IN GENERAL. A ruling from the Internal
Revenue Service has not been obtained, and the General Partner does not
presently intend to apply for a ruling, with respect to any of the tax
considerations associated with an investment in Units. It should be noted that
the determination of items of Partnership income, gain, loss, deduction and
credit will be made at the Partnership level rather than in separate proceedings
with Unitholders, and Unitholders generally will be required to report
Partnership items consistent with the Partnership's tax returns. Any adjustment
to a tax return of the Partnership as a result of an audit by the Service would
also result in adjustment to the tax returns of the Unitholders, and may result
in an examination of other items in such returns unrelated to the Partnership,
or an examination of prior years' tax returns. Unitholders could incur
substantial legal and accounting costs in contesting any challenge by the
Internal Revenue Service, regardless of the outcome. For any year in which the
Partnership has income in excess of deductions, each Unitholder will be required
to report his, her or its share of such income on his federal and state tax
returns and will be responsible for the payment of taxes thereon. Such taxes
might in some cases be greater than cash distributions received by the
Unitholder from a Partnership for the year.
PARTNERSHIP STATUS. The General Partner has not requested, and does no
intend to request, a ruling from the Service that the Partnership will be
treated as a partnership and not as an "association" taxable as a corporation.
In the absence of a ruling, there can be no assurance that a Partnership will
not constitute an association taxable as a corporation. In this regard, the
Service may successfully contend that the Partnership should be treated as a
"publicly traded partnership" ("PTP") that is treated as a corporation for
federal income tax purposes rather than as a partnership. In such event,
substantially all of the possible tax benefits (primarily non-taxation of the
Partnership and a passthrough to investors of all income and losses) of an
investment in the Partnership could be eliminated. If the Partnership were
treated as a PTP, the following results would occur: (a) the Partnership would
be taxed at income tax rates applicable to corporations; (b) distributions to
the Unitholders would be taxable to them as dividend income to the extent of
current and accumulated earnings and profits. In order to minimize the
possibility of PTP treatment for the Partnership, the Partnership Agreement
provides for restrictions on transfers of Units by incorporating certain "safe
harbor" tests specified in the applicable tax authorities.
PARTNERSHIP ALLOCATIONS. If the allocations of Partnership profit and
loss to the Unitholders made pursuant to the Partnership Agreement are
successfully challenged by the Internal Revenue Service, Unitholders may be
required to recognize additional taxable income without any corresponding
increase in distributions of cash from the Partnership.
PASSIVE ACTIVITY LOSS LIMITATIONS. Unitholders may not be able
currently to deduct Partnership tax losses as a result of limitations on the
current utilization of passive activity losses.
SALE OR OTHER DISPOSITION OF EQUIPMENT OR UNITS -- TAX LIABILITY. A
sale or other disposition of equipment or the disposition of a Unitholder's
interest in the Partnership may result in a tax liability to the Unitholder in
excess of any cash proceeds received by such Unitholder. To the extent a
Unitholder's federal tax liabilities exceed cash proceeds, such excess would be
a nondeductible cost to such Unitholder.
RELIANCE ON EXISTING LAW. Tax benefits associated with an investment in
Units could be lost and/or substantial tax liabilities incurred by reason of
changes in the tax laws. There is no assurance that changes in the
interpretation of applicable tax laws will not be made by administrative or
judicial action which will adversely affect the tax consequences of an
investment in Units. Administrative or judicial changes may or may not be
retroactive with respect to transactions entered into prior to the date on which
they occur. Periodic consultations with an investor's professional advisor may
be necessary given the possibility of such changes.
CONFLICTS OF INTEREST
CONFLICT OF INTEREST OF GENERAL PARTNER. The General Partner initiated
and participated in the structuring of the Amendments and has conflicts of
interest with respect to their effect. As part of the Amendments, the limitation
on Front-End Fees that can be paid to the General Partner by the Partnership
will be increased by 20% so that the General Partner can earn such fees up to
20% in excess of the Statement of Policy of the North American Securities
Administrators Association, Inc. during the Extension Period. As a result of the
Extension, the General Partner will earn Front-End Fees for up to 6 additional
years; during the period 1996 through 1998 the Partnership paid the General
Partner on average Front-End Fees of $963,702 per year. Furthermore, IMI, a
Defendant and subsidiary of the General Partner, will earn Equipment Management
Fees for an additional 6 years. During the period 1996 through 1998 the
Partnership paid IMI on average equipment management fees of $2,073,578 per
year. See "CONFLICTS OF INTEREST - Conflict of Interest of Class Counsel" and
"IRR PROTOCOL," full fuller discussion.
CLASS COUNSEL. In assessing Class Counsel's support of the Equitable
Settlement of which the proposed Amendments form an integral part, Limited
Partners should consider that Class Counsel may be deemed to have a conflict of
interest with respect to such support. In particular, the fees and expenses of
Class Counsel, if approved by the Court, will be paid in part from the cash
settlement fund provided by the Defendants pursuant to the Monetary Settlement.
In addition, as part of the Equitable Settlement, Class Counsel will apply for
an additional fee and expense award from the Partnership participating in the
Settlement. Any such fee and expense award will be an obligation of the
Equitable Settlement Class Members. Defendants shall have no separate liability
for the payment of any such fees and expense award. See "CONFLICTS OF INTEREST -
Conflict of Interest of Class Counsel" and "IRR PROTOCOL."
THE SETTLEMENT AND THE AMENDMENTS
DESCRIPTION OF THE LITIGATION
PLM International, Inc., IMI, the General Partner and two subsidiaries
of the General Partner are named as defendants in the Litigation, a lawsuit
filed as a purported class action on January 22, 1997 in the Circuit Court of
Mobile County, Mobile, Alabama, Case No. CV-97-251). Plaintiffs, who filed the
complaint on their own and on behalf of all class members similarly situated,
are six individuals who invested in the Partnerships, for which the General
Partner acts as the general partner. The complaint asserts eight causes of
action against all Defendants, as follows: fraud and deceit, suppression,
negligent misrepresentation and suppression, intentional breach of fiduciary
duty, negligent breach of fiduciary duty, unjust enrichment, conversion, and
conspiracy. Additionally, plaintiffs allege a cause of action against PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the National Association of Securities Dealers rules of fair practice.
Plaintiffs allege that each Defendant owed plaintiffs and the class certain
duties due to their status as fiduciaries, financial advisors, agents, and
control persons. Based on these duties, plaintiffs assert liability against
Defendants for improper sales and marketing practices, mismanagement of the
Partnerships, and concealing such mismanagement from investors in the
Partnerships. Plaintiffs seek unspecified compensatory and rescissory damages,
as well as punitive damages, and have offered to tender their limited
partnership units back to the defendants.
In March 1997, the Defendants removed the Litigation from the state
court to the United States District Court for the Southern District of Alabama,
Southern Division (Civil Action No. 97-0177-BH-C) based on the Court's diversity
jurisdiction, following which plaintiffs filed a motion to remand the action
back to the Alabama state court. Removal of the action to federal court
automatically nullified the Alabama state court's EX PARTE certification of the
class. In September 1997, the Court denied plaintiffs' motion to remand the
action to Alabama state court and dismissed without prejudice the individuals
claims of the California plaintiff, reasoning that he had been fraudulently
joined as a plaintiff. In October 1997, Defendants filed a motion to compel
arbitration of plaintiffs' claims, based on an agreement to arbitrate contained
in the Partnership Agreement of each Partnership, and to stay further
proceedings pending the outcome of such arbitration. Notwithstanding plaintiffs'
opposition, the Court granted Defendants' motion in December 1997.
On June 5, 1997, the Defendants were named as defendants in another
purported class action filed in the San Francisco Superior Court, San Francisco,
California, Case No. 987062 (the "Romei Action"). The plaintiff in the Romei
Action (the "Romei Plaintiff") is an investor in Fund V, and filed the complaint
on her own behalf and on behalf of all class members similarly situated who
invested in certain California limited partnerships for which the General
Partner acts as the general partner, including the Partnerships. The complaint
alleges the same facts and the same nine causes of action as in the Litigation,
plus five additional causes of action against all of the Defendants, as follows:
violations of California Business and Professions Code Section 17200, et seq.
for alleged unfair and deceptive practices, constructive fraud, unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.
On July 31, 1997, Defendants filed with the United States District
Court for the Northern District of California (the "California Federal Court")
(Case No. C-97-2847 WHO) a petition (the "Petition") under the Federal
Arbitration Act seeking to compel arbitration of the Romei Plaintiff's claims
and for an order staying the California state court proceedings pending the
outcome of the arbitration. In connection with this motion, plaintiff agreed to
a stay of the California state court action pending the California Federal
Court's decision on the Petition. In October 1997, the California Federal Court
denied the Petition, but in November 1997, agreed to hear the General Partner's
motion for reconsideration of this order. The hearing on this motion has been
taken off calendar and the California District Court has dismissed the Petition
pending settlement of the Romei Action. The California state court action
continues to be stayed pending such resolution. In connection with her
opposition to the Petition, the Romei Plaintiff filed an amended complaint with
the California state court in August 1997, alleging two new causes of action for
violations of the California Securities Law of 1968 (California Corporations
Code Sections 25400 and 25500) and for violation of California Civil Code
Sections 1709 and 1710. Plaintiff also served certain discovery requests on
Defendants. Because of the stay, no response to the amended complaint or to the
discovery is currently required.
In May 1998, all parties to the Litigation and Romei Action entered
into a memorandum of understanding related to the settlement of those actions
(the "Monetary Settlement"). The Monetary Settlement provides for the
certification of a class for settlement purposes, and the settlement and release
of all claims against Defendants and third party brokers in exchange for payment
for the benefit of the Monetary Class of up to $6.0 million. The final
settlement amount will depend on the number of claims filed by authorized
claimants who are members of the Monetary Class, the amount of the
administrative costs incurred in connection with the Settlement, and the amount
of attorneys' fees awarded by the Court. The General Partner will pay up to
$300,000 of the Monetary Settlement, with the remainder being funded by an
insurance policy.
The parties to the Monetary Settlement have also agreed to an Equitable
Settlement (the "Equitable Settlement"), as described herein. Defendants
continue to deny each of the claims and contentions and admit no liability in
connection with the proposed Settlement. The General Partner continues to
believe that the allegations contained in the Litigation and Romei Action are
completely without merit, and intends to continue to defend this matter
vigorously if the Monetary Settlement is not consummated.
THE SETTLEMENT
On February 9, 1999, Class Counsel and the Defendants entered into the
Settlement Stipulation, which was preliminarily approved by Order of the Court
dated June 29, 1999.
The Order, among other matters: (a) certified two classes for
settlement purposes - one pursuant to Rule 23(b)(3) of the Federal Rules of
Civil Procedure for monetary relief (the "Monetary Class Members") and the other
pursuant to Rule 23(b)(1) and (2) for equitable relief (the "Equitable Class
Members" and, together with the Monetary Class Members, the "Class Members");
(b) approved the form of Equitable Class Notice ("Equitable Notice") and
directed that the Equitable Notice be sent, along with this Solicitation
Statement, to the applicable Equitable Class Members subsequent to the filing
and clearance of the Solicitation Statement with the Securities Exchange
Commission; and (c) scheduled a date for the Fairness Hearing at which all Class
Members will have an opportunity to be heard.
The Monetary Class Members consist of, among others, all persons who
between May 23, 1989 and June 29, 1999 purchased Units, regardless of whether
they currently hold Units.
The Equitable Class Members consist of, among others, all Unitholders
as of June 29, 1999. There is substantial overlap between the two classes and
they are not mutually exclusive. Accordingly, everyone who is a member of the
Equitable Class will also be a member of the Monetary Class. However, not all
Monetary Class Members will be Equitable Class Members because they were not
Unitholders of a Partnership as of June 29, 1999. If a person who is a member of
both the Equitable Class and Monetary Class opts out of the Monetary Class, he
or she will still be able to sue individually for money damages notwithstanding
the fact that he or she remains a member of the Equitable Class. Conversely, a
person who is a member of both the Equitable Class and the Monetary Class will
be able to object to the Equitable Settlement in Court and, if he or she is also
a Limited Partner, to vote against the Equitable Settlement by voting against
one or more of the Amendments in response to this Solicitation Statement, while
still participating in the Monetary Settlement by not opting out. However,
Equitable Class Members whose Partnership participates in the Equitable
Settlement -- i.e., where less than 50% of the Units held by limited partners of
such Partnership voted against the Amendments -- may not opt out of the
Equitable Class. They may, however, object to the Equitable Settlement in Court
at the Fairness Hearing.
SUMMARY OF SETTLEMENT. The Settlement is comprised of two parts, the
Monetary Settlement, which involves the Partnerships and PLM Equipment Growth
Fund IV, a California limited partnership ("Fund IV") and the Equitable
Settlement in which only the Partnerships (but not Fund IV) may participate, as
more fully set forth in the accompanying two separate Notices of the Equitable
and Monetary Settlements. The Monetary Settlement in part requires Defendants to
pay $6,000,000 (the "Settlement Amount") in settlement of the Monetary Class
claims. The Settlement Amount, less Court-approved fees and expenses, will be
distributed among Monetary Class Members in accordance with a plan of allocation
that was formulated by Class Counsel and is to be considered for approval by the
Court. The Equitable Settlement in part extends the operating life of the
Partnership, permitting the General Partner to reinvest cash flow, surplus
Partnership funds or retained proceeds of the Partnership in equipment into the
year 2004, and then the General Partner will liquidate the equipment assets of
the Partnership in 2006.
EFFECT ON RIGHTS OF LIMITED PARTNERS. The Settlement will result in the
full and complete settlement, discharge and release of the claims by Class
Members against the General Partner and the other Defendants and others in
connection with or which arise out of the allegations made in the Litigation.
Each Class Member who does not opt out of the Monetary Settlement will be
restrained from commencing or prosecuting any claims settled and released as
part of the Monetary Settlement.
RIGHT TO TERMINATE. The Defendants may, at their sole discretion,
terminate either the Monetary or Equitable Settlements if requests for exclusion
from the Monetary Class, or the percentage of Limited Partner votes against the
Amendments (in the Equitable Settlement), reach certain pre-determined levels.
APPROVAL PROCEDURE FOR THE EQUITABLE SETTLEMENT. Approval of the
Equitable Settlement, including the Amendments, is in the sole discretion of the
Court. The Equitable Settlement provides that, assuming certain other conditions
are met, the Partnership Agreement will be amended to give effect to the
Amendments unless Limited Partners holding 50% or more of the Units in such
Partnership vote against one or more of the Amendments. Limited Partners have
until _________________, 1999 to vote against one or more of the Amendments.
Thus, this Partnership will participate in the Equitable Settlement if: (a)
Limited Partners holding less than 50% of the Units of a given Partnership vote
against the Amendments; (b) the Court approves of the Partnership being included
in the Equitable Settlement; and (c) the other terms and conditions of the
Settlement Stipulation are satisfied or waived. Under the Partnership Agreement,
if the Amendments were not subject to a judicial determination and Court Order
following the Fairness Hearing (as provided for in the Settlement Stipulation),
the Amendments could only be effected by obtaining the approval of the Limited
Partners holding not less than a majority of the Units.
In addition to a Limited Partner's right in the Equitable Settlement to
vote against the Amendments by delivery of a Notice of Vote Against the
Amendments pursuant to this Solicitation Statement, any Class Member may object
in Court to the Monetary or Equitable Settlements by following the procedures
set forth in the Monetary or Equitable Notices which accompany this Solicitation
Statement.
CLASS COUNSEL
Class Counsel consists of law firms located throughout the United
States, each of which is unaffiliated with the General Partner. Such firms were
selected by the individual plaintiffs who commenced or intervened in the
Litigation, all of whom are Limited Partners, to represent and act on behalf of
other Limited Partners and Unitholders in the Litigation, including settlement
of the Litigation. Class Counsel are coordinated by Michael E. Criden of the law
firm of Hanzman, Criden, Chaykin, Ponce and Heise in Miami, Florida.
Each of plaintiffs' law firms is experienced in representing investors
in securities and limited partnership class action litigation, and each has
represented investors in complex settlement negotiations resulting in a variety
of settlement transactions. Class Counsel investigated the claims asserted
against the Defendants in the Litigation, conducted discovery, including the
review of numerous documents, and conducted extensive negotiations with the
General Partner resulting in the Settlement. Class Counsel may be deemed to have
a conflict of interest in their support of the Equitable Settlement, of which
the proposed Amendments form an integral part, because Class Counsel intends to
apply to the Court for an award of fees and reimbursement of expenses. See
"CONFLICTS OF INTEREST - Conflict of Interest of Class Counsel." Class Counsel's
fee application are subject to the approval of the Court.
PROVISIONS OF THE AMENDMENTS
The Amendments, if approved by the Court and the Limited Partners, will
consist of four material components, each described below:
o The extension of the operating life of the Partnership by up
to 6 years;
o The deferral of a portion of IMI's Equipment Management Fee
pending the achievement of certain performance levels by the
Partnership;
o The repurchase by the Partnership of up to ten percent of
their Units; and
o An increase by 20% in the limitation on Front-End Fees that
the General Partner can earn for providing services to the
Partnership.
THE EXTENSION
The operating life of the Partnership will be extended, permitting the
General Partner to reinvest cash flow, surplus Partnership funds or retained
proceeds of the Partnership in equipment into the year 2004, and then the
General Partner will sell the assets of the Partnership by 2006.
THE EQUIPMENT MANAGEMENT FEE DEFERRAL
Commencing January 1, 2002 and continuing for 2 1/2 years, IMI, a
subsidiary of the General Partner, will defer receipt of 25% of the Equipment
Management Fee it would otherwise be entitled to receive from the Partnership
pursuant to Section 2.05 of the Partnership Agreement. For 1998, IMI was paid an
Equipment Management Fee of $1,682,193 from the Partnership.
The time period over which IMI agrees to defer receipt of a portion of
the Equipment Management Fee will end June 30, 2004. The deferred portion of the
Equipment Management Fee will be accrued by IMI during the Deferral Period, and
will not be earned or paid to IMI unless the IRR for the Partnership during the
Extension Period reaches the stipulated performance target described in the IRR
Protocol. Such payment would occur no earlier than the year in which the
Partnership's equipment was originally scheduled to be liquidated.
IMI's entitlement to payment of the deferred portion of the Equipment
Management Fee for the Partnership shall be determined by the General Partner
pursuant to the IRR Protocol, and payment of the deferred portion of the
Equipment Management Fee shall commence immediately upon the General Partner's
determination that the Partnership has reached the stipulated performance target
described in the IRR Protocol, subject to review by Class Counsel. The deferred
portion of the Equipment Management Fee will be paid to IMI from any additional
cash flow of the Partnerships until the deferred portion of the Equipment
Management Fee is paid in full. If the stipulated performance target is not
attained, the deferred portion of the Equipment Management Fee will not be paid
to IMI. See "IRR PROTOCOL."
THE REPURCHASE
The Equitable Settlement provides that the Partnership will repurchase
from the holders of Units up to 10% of the total outstanding Units as of June
29, 1999 (the "Outstanding Units"). Any Equitable Class Member intending to
submit for repurchase some or all of his, her or its Units shall indicate this
intention on the Repurchase Request that they receive along with the Equitable
Settlement Hearing Notice and this Solicitation Statement. The repurchase price
for each Unit shall be determined as follows: the net asset value of the
Partnership (the value of all equipment owned by the Partnership as determined
by the General Partner as of the fiscal quarter immediately preceding the
repurchase date, plus any cash, uncollected receivables and any other assets,
less accounts payable, debts and other liabilities of the Partnership as of the
same date) will be divided by the number of Outstanding Units to determine the
net asset value per Unit. The net asset value per Unit will be multiplied by 80%
to determine the repurchase price per Unit. The repurchase of Units will be
completed not later than the end of the first fiscal quarter after final Court
approval of the Settlement.
If the eligible Class Members request that the Partnership repurchase
more than 10% of its Outstanding Units, the Partnership will repurchase up to
10% of the Outstanding Units pro rata within certain groups of established
priorities based on the number of Units offered for repurchase in each such
group, or as close to a pro rata basis as is reasonably possible. Any such pro
rata allocation adjustment will be determined by the Claims Administrator,
giving first priority to Units owned by estates, IRAs and qualified plans, in
that order, and which were purchased in the initial offering. In the event that
the total number of Units requested by eligible Class Members to be repurchased
exceed 10% of that Partnership's Outstanding Units, the General Partner will
have the option, but not the obligation, to purchase these excess Units with its
own monies and on its own behalf.
THE FRONT-END FEE INCREASE
The Partnership Agreement sets limitations on the Front-End Fees that
can be paid to the General Partner. As part of the Amendments, the limitations
on the Front-End Fee payments will be increased by 20% during the Extension
Period to allow the General Partner to earn fees up to 20% in excess of the
compensatory limits set forth in the Statement of Policy of the North American
Security Administrators Association, Inc. which increase is intended to
compensate the General Partner for its work on behalf of the Partnership
including the purchase and sale of Partnership assets and negotiation of
equipment leases on behalf of the Partnership during the Extension Period.
During the period 1996- 1998, the Partnership paid the General Partner Front-End
Fees of on average $963,702 per year. The General Partner will earn the
Front-End Fees pursuant to the formulas already in place in the Partnership
Agreement, except that, to the extent such fees otherwise would have been capped
due to the NASAA limitations, the General Partner will be entitled to earn fees
up to 20% in excess of such cap. The General Partner will not be entitled to any
Front-End Fees within such increased limitation which are not earned, and it is
possible that the General Partner will not earn the full 20% increase in the
limitation on the Front-End Fees.
REASONS FOR THE GENERAL PARTNER'S RECOMMENDATION OF THE AMENDMENTS
The Partnership was formed to acquire and thereafter lease a
diversified portfolio of transportation equipment (primarily used equipment) to
third parties. The primary investment objectives of the Partnership were to: (1)
acquire a diversified portfolio of long-lived, low obsolescence, high residual
value equipment at prices that the General Partner believes to be below inherent
values and to place the equipment on lease with creditworthy lessees; (2)
generate cash distributions to the Unitholders (a portion of which may represent
a return of their investment); (3) preserve and protect the value of the
portfolio through good management and by maintaining the portfolio's diversity
and constantly monitoring equipment markets; and (4) sell equipment when the
General Partner believes that, due to market conditions, prices are above
inherent equipment values, and to use the sale proceeds to purchase additional
equipment and to supplement cash distributions to investors.
The Amendments would not significantly modify these investment
objectives, but would allow the General Partner additional time and greater
flexibility to seek to meet the investment objectives. If the Amendments are
adopted, the primary investment objectives of the Partnership will be to: (1)
use Partnership assets from the sale of equipment to continue to invest in a
diversified portfolio of long-lived, low obsolescence, high residual value
equipment at prices that the General Partner believes to be attractive based on
its experience in the equipment markets and to place the equipment on lease with
creditworthy lessees; (2) re-lease equipment that is not suitable for sale and
is coming off-lease to creditworthy lessees; (3) generate cash distributions to
the Unitholders (a portion of which may represent a return of their investment);
(4) preserve and protect the value of the portfolio through good management and
by maintaining the portfolio's diversity and constantly monitoring equipment
markets; and (5) sell equipment when the General Partner believes that, due to
market conditions, prices are above inherent equipment values, and to use the
sale proceeds to purchase additional equipment and to supplement cash
distributions to investors.
The achievement by the Partnership of any of its primary objectives,
including the generation of any specific level of distributions, cannot be
assured or guaranteed. To attain its original investment objectives, the
Partnership established certain investment policies with respect to, among other
things, the selection of lessees, the types of assets which may be acquired and
other matters. If the Amendments are adopted, these policies will not be
changed. This Solicitation Statement should be read carefully as it describes
certain consequences of, and risks and conflicts of interest related to, these
changes. See "RISK FACTORS" and "CONFLICTS OF INTEREST."
CONFLICTS OF INTEREST
GENERAL. The General Partner has fiduciary duties to the Partnerships,
in addition to the specific duties and obligations imposed upon it under the
Partnership Agreement. Subject to the terms of the Partnership Agreement, the
General Partner, in managing the affairs of the Partnership, is expected to
exercise good faith, to use care and prudence and to act with an undivided duty
of loyalty to the Limited Partners. Under these fiduciary duties, the General
Partner is obligated to ensure that the Partnership is treated fairly and
equitably in transactions with third parties, especially where consummation of
such transactions may result in the interests of the General Partner being
opposed to, or not aligned with, the interests of the Limited Partners.
Accordingly, the General Partner has assessed the potential benefits to be
derived by Limited Partners from the Amendments. Notwithstanding any conflict of
interest (see "Conflict of Interest of General Partner"), after consideration of
the terms and conditions of the Amendments, the General Partner recommends that
Limited Partners neither submit a No Vote to the Amendments nor object to the
Settlement.
CONFLICT OF INTEREST OF GENERAL PARTNER. The General Partner initiated
and participated in the structuring of the Amendments and has conflicts of
interest with respect to their effect. As part of the Amendments, the limitation
on Front-End Fees that can be paid to the General Partner by the Partnership
will be increased by 20% so that the General Partner can earn such fees in
excess of the Statement of Policy of the North American Securities
Administrators Association, Inc. during the Extension Period. As a result of the
Extension, the General Partner will earn fees from the Partnership for 6
additional years; during the period 1996 through 1998 the Partnership paid the
General Partner Front-End Fees of on average $963,702 per year. Furthermore,
IMI, a Defendant and subsidiary of the General Partner, will earn Equipment
Management Fees for an additional 6 years. During the period 1996 through 1998
IMI was paid Equipment Management Fees of on average $2,073,578 per year.
CONFLICT OF INTEREST OF CLASS COUNSEL. In assessing Class Counsel's
support of the Equitable Settlement of which the proposed Amendments form an
integral part, Limited Partners should consider that Class Counsel may be deemed
to have a conflict of interest with respect to such support. In particular, the
fees and expenses of Class Counsel, if approved by the Court, will be paid in
part from the settlement fund provided by the Defendant pursuant to the Monetary
Settlement. Also, as part of the Equitable Settlement, Class Counsel will apply
for an additional fee and expense award. With respect to the Equitable Class Fee
and Expense Award, during the Extension Period and the liquidation of the
Partnership, the General Partner will calculate for the Partnership the Internal
Rate of Return (the "IRR") on any distributions made to the Limited Partners. At
the time, if ever, that the IRR for the Partnership during the Extension Period
exceeds 12% (the stipulated performance target described in the IRR Protocol for
this purpose, and defined as the "over 12% class distributions"), Class Counsel
will be entitled to receive from each future distribution to the Unitholders, a
percentage of the over 12% class distributions, such percentage to be
established by the Court in connection with Class Counsel's application for an
Equitable Class Fee and Expense Award in an amount not to exceed 27.5% of the
first $10 million of the over 12% class distributions for each Fund, 22.5% of
such distributions between $10 million and $20 million, 15% of such
distributions between $20 million and $30 million, and 10% of such distributions
exceeding $30 million, plus Court costs and other expenses of Class Counsel, to
the extent not previously recovered from the Defendants. See also "RISK FACTORS
- - Change of Control" which describes the circumstances under which the payment
of such Fee and Award will be accelerated.
IRR PROTOCOL
For the General Partner to begin to receive the deferred portion of its
Equipment Management Fee, the IRR calculation in substance requires an
annualized increase of at least 10% in the actual cash flow relative to the cash
flow which is assumed would have been received by the Unitholders (beginning
with January 1, 1999) if the Partnerships were to be liquidated on their current
schedules ("Assumed Cash Flow"). Similarly, for Class Counsel to begin to
receive the Equitable Class Fee and Expense Award, the IRR calculation requires
an annualized increase of at least 12% in actual cash flows relative to Assumed
Cash Flows.
THE IRR PERCENTAGE PERTAINING TO THE GENERAL PARTNER'S DEFERRED PORTION
OF THE EQUIPMENT MANAGEMENT FEE AND CLASS COUNSEL'S EQUITABLE CLASS FEE AND
EXPENSE AWARD EARNED DURING THE EXTENSION PERIOD DO NOT REPRESENT A PERCENTAGE
RETURN ON EITHER A UNITHOLDER'S ORIGINAL OR REMAINING INVESTMENT IN A
PARTNERSHIP. Rather, these IRR percentages relate to the Extension Period
benefits which are calculated as the difference between the actual cash
distributed to the Unitholders in each Fund during the Extension Period and the
Assumed Cash Flow. The IRR calculation will determine the annualized rate of
return of the Extension Period benefit taking into account when the cash flows
are realized, and in effect, represents a return with respect to the Assumed
Cash Flow as if such Assumed Cash Flow were an investment of the Unitholders in
the Fund. As an example, an IRR of 10% could result if the Extension Period
benefit cash flow is positive every year from 1999 to 2006 or if the Extension
Period Benefit cash flow is zero for several years (as an example, from 1999 to
2002) and then positive for several years (as an example, from 2003 to 2006).
The IRR Protocol also provides that the Deferred Managed Fee and the Equitable
Class Fee and Expense Award will become payable as a result of a rollup or
tender offer transaction as described therein. Such fees will be an obligation
of the Partnership to be paid from moneys that will be distributed to the
Equitable Class Members or would have otherwise been distributed absent the
rollup or tender transaction.
TEXT OF THE AMENDMENTS
AMENDMENT I - THE EXTENSION
Section 10.01(e) of the Partnership Agreement for Fund V will be
amended to provide that an event of dissolution of the Fund shall occur when the
General Partner determines that it is necessary to commence the liquidation of
the Equipment (as defined in the Partnership Agreement) to complete the
liquidation by January 1, 2007. Section 10.01(e) will be deleted and replaced in
its entirety so that the introductory sentence (which will not change) and
amended subsection (e) will read as follows:
"10.01 EVENTS OF DISSOLUTION. The Partnership shall be
dissolved and shall commence the orderly liquidation of its
assets upon the first to occur of any of the following:
* * *
(e) The determination by the General Partner that it is
necessary to commence the liquidation of the Equipment in
order for the liquidation of all the Equipment to be completed
in an orderly and businesslike fashion prior to January 1,
2007."
AMENDMENT II - FRONT-END FEE INCREASE
Section 2.05(h) of the Partnership Agreement for Fund V will be amended
to increase the limitations on the General Partner's Fees by 20% of the
limitations presently stated in the Partnership Agreement so as to allow the
General Partner to earn fees in excess of the compensatory limitations set forth
in the Statement of Policy of the North American Securities Administrators
Association, Inc. during the Extension Period. The first clause of the first
sentence of Section 2.05(h) will be deleted and replaced in its entirety as
follows:
"LIMITATION OF FEES. The General Partner shall not receive
fees in excess of 120% of the following limitations which shall apply to the
amount of Capital Contributions which must be committed to Investment in
Equipment:"
AMENDMENT III - REINVESTMENT OF CASH FLOW OR SURPLUS FUNDS
Section 2.02(r) of the Partnership Agreement for Fund V will be amended
to allow the General Partner to reinvest such amounts until 2004. Specifically,
the Partnership Agreement Section 2.02 (r) will be amended by deleting only the
language that states "for six years after the year which includes the Closing
[Funding] Date" and by replacing such language with "until December 31, 2004".
AMENDMENT IV - THE REPURCHASE
Section 6.11 of the Partnership Agreement for Fund V is amended to
allow repurchase by the Fund of up to 10% of outstanding Units at 80% of net
asset value in accordance with the terms of the Settlement Stipulation and the
Repurchase Protocol which is Exhibit C to the Stipulation. Section 6.11 will be
amended by adding the following language at the end of the section:
"Notwithstanding any terms of the preceding paragraph, from
June 29, 1999 forward the following terms of Section 6.11 will
govern and control all Limited Partners' and the General Partner's
rights and obligations regarding repurchase of outstanding Units.
The Partnership will repurchase up to 10% of the then total
outstanding Units as of June 29, 1999, 1999 ("Outstanding Units").
Any Unitholder that intends to submit for repurchase some or all of
his, her or its Units must indicate this intention on the Request
to Repurchase Form that has been mailed to the Limited Partners
along with the Equitable Settlement Hearing Notice and Solicitation
Statement. The repurchase price for each Unit shall be determined
as follows: the Net Asset Value of the Partnership (defined below)
as of the fiscal quarter immediately preceding [add the last date
to file the Repurchase Request] will be divided by the number of
Outstanding Units to determine the Net Asset Value per Unit. The
Net Asset Value per Unit will be multiplied by 80% to determine the
repurchase price per Unit (the "Repurchase Price"). The repurchase
of Units will be completed no later than the end of the fiscal
quarter following the fiscal quarter during which the United States
District Court for the Southern District of Alabama enters an order
granting final approval of the Equitable Class Action Settlement.
If the Unitholders request the Partnership to repurchase more than
10% of its Units, the Partnership will repurchase up to 10% of the
Units, pro-rata based on the number of Units offered for
repurchase, or as close to a pro-rata basis as is reasonably
possible. Any such pro-rata allocation adjustments will be
determined by the Claims Administrator who will give priority
according to the order of preference for each category set forth
below in this paragraph. To the extent that the demand in any
category would exhaust the 10% number then all Unitholders in that
category will have their Units repurchased on a pro rata basis,
rounded up to the nearest whole unit, and the Unitholders in the
remaining categories will not have the option of having their units
repurchased. The order of preferences is: (1) Units owned by
estates, IRAs and Qualified Plans which were purchased as part of
the initial offering; (2) Units owned by Limited Partners which
were purchased as part of the initial offering; (3) Units owned by
Limited Partners which were purchased after the initial offering;
(4) Units owned by Unitholders which were purchased after the
initial offering. In the event that the total number of Units
requested to be repurchased exceeds 10% of the Partnership's Units,
the General Partner will have the option, but not the obligation,
to purchase these excess Units with its own monies and on its own
behalf."
"Net Asset Value" of the Partnership means the value of all
Equipment owned by the Partnership and as determined by the General
Partner (and subject to consultation with Class Counsel's valuation
expert) plus any cash, uncollected receivables and any other
assets, less accounts payable, debts and other liabilities of the
Fund as of the fiscal quarter immediately preceding the repurchase
date."
AMENDMENT V - ENABLING AMENDMENTS
Article XVIII of the Partnership Agreement for Fund V will be amended
to provide: (a) that the Limited Partners may amend the Partnership Agreement to
make all amendments in the Partnership Agreement necessary to this Equitable
Settlement, including amendments to Section 10.01 thereof; and (b) that any such
amendment may be made by approval of a Majority in Interest as provided for in
amended Article XV, below. Article XVIII shall remain the same except that the
first provision of the second paragraph in such Article will be deleted and
replaced in its entirety as follows:
"[P]rovided, however that the Limited Partners may not amend this
Agreement to extend the Partnership term or to change the
provisions of Section 10.03;"
Additionally, a new paragraph will be added at the end of Article XVIII as
follows:
"Approval of a Majority in Interest to all amendments of this
Agreement necessary to effectuating the Equitable Class Settlement
shall be deemed to have been given if less than half of the Units
held by Limited Partners vote against any such amendment proposed
by the _____, 1999 Solicitation Statement, as provided for in
amended Article XV of this Agreement."
AMENDMENT VI - ACTIONS BY LIMITED PARTNERS
Article XV of the Partnership Agreement for Fund V will be amended to
provide that written consent of the Limited Partners respecting any matters in
connection with the Equitable Settlement shall be deemed to have been given
unless Limited Partners holding more than one half of the Units vote against any
such matter. Article XV will be amended to add the following language to the end
of the fourth paragraph:
"Provided, however, that effective written consent by a Majority in
Interest of the Limited Partners to any proposed action set forth
in the ______, 1999 Solicitation Statement and in connection with
the Equitable Class Settlement, shall be deemed to have been given,
unless limited partners holding more than half of the outstanding
Units in such Limited Partnership vote against any such action."
AMENDMENT VII - DISPUTES AND RESOLUTIONS
Article XIV of the Partnership Agreement for Fund V will be amended to
provide that all disputes relating to, or arising out of this Settlement, shall
be subject to the Court's continuing jurisdiction over the interpretation and
administration of this Settlement and all the Settlement documents incorporated
herein. Article XIV will be amended by adding the following language to the end
of the paragraph:
Provided, however, that any and all disputes relating to or arising
out of the Equitable Class Action Settlement finally approved by
the Federal District Court for the Southern District of Alabama,
including all issues pertaining to the interpretation and
administration of the Stipulation of Settlement and all its
exhibits, shall be subject to the continuing and exclusive
jurisdiction of the Federal District Court for the Southern
District of Alabama.
VOTING PROCEDURES
TIME OF VOTING AND RECORD DATE
Limited Partners holding Units as of the Record Date (i.e., June 29,
1999) have until the Voting Deadline (i.e., , 1999) to vote against the
Amendments. If you approve of the Amendments, you need not do anything.
As of the Record Date, the following number of Units were held of
record by the number of Limited Partners indicated below:
NUMBER OF NUMBER OF UNITS NUMBER OF UNITS VOTING NO REQUIRED FOR THE PARTNERSHIP
LIMITED PARTNERS HELD OF RECORD NOT TO PARTICIPATE IN EQUITABLE SETTLEMENT
-------- --------- -----------------
LIMITED PARTNERS WHO FAIL TO RETURN THE FORM FOR VOTING AGAINST THE
AMENDMENTS WILL BE TREATED AS IF THEY HAD VOTED IN FAVOR OF THE AMENDMENTS. DO
NOT RETURN THE FORM IF YOU APPROVE OF THE AMENDMENTS.
The number of Units entitled to vote against the Amendments is equal to
the number of Units held by Limited Partners of record at the Record Date. The
Partnership Agreement gives the Limited Partners the power, by a majority vote,
to approve each individual Amendment. However, as structured in the Settlement,
unless a majority of Units held by Limited Partners vote against one or more of
the Amendments, in which event the Partnership will not participate in the
Settlement, approval of the Amendments is in the sole discretion of the Court.
NOTICE OF VOTE AGAINST THE AMENDMENTS
Limited Partners that wish to vote against the Amendments should send
the Notice of Vote Against the Amendments (attached as Exhibit A), indicating to
which Amendment(s) they object, to the General Partner at Gilardi & Co., 1115
Magnolia Avenue, Larkspur, California 94977, as soon as possible but in no event
later than the expiration of the Voting Deadline (_______________, 1999). Such
notice must contain the name and address of the Limited Partner and the number
of Units so held, and the Amendment(s) to which they object. Limited Partners
also have the right to object to the Settlement at or before the Fairness
Hearing, whether or not they have submitted a Notice of Vote Against the
Amendments in connection with this Solicitation Statement.
The General Partner recommends that Limited Partners not vote against
the Amendments.
REVOCABILITY OF NOTICE OF VOTE AGAINST THE AMENDMENTS
Limited Partners may revoke their No Vote at any time prior to
________________, 1999, by mailing a revocation of the Notice of Vote Against
the Amendments to the address above (which revocation must be received by the
General Partner on or prior to such date).
INFORMATION SERVICES
The General Partner and its officers, directors and employees may
assist in providing information to Limited Partners in connection with any
questions they may have with respect to this Solicitation Statement and the
procedures to vote against the Amendments.
APPENDIX A
FORM FOR VOTING AGAINST THE AMENDMENTS
FUND V
IF YOU APPROVE OF THE AMENDMENTS TO THE PARTNERSHIP AGREEMENT, DO NOT
COMPLETE AND SUBMIT THIS FORM. YOU NEED DO NOTHING TO INDICATE YOUR APPROVAL.
THIS FORM SHOULD BE USED ONLY BY PERSONS WHO WISH TO VOTE AGAINST ONE OR MORE OF
THE AMENDMENTS TO THE PARTNERSHIP AGREEMENT. The undersigned Limited Partner
hereby votes against the following amendment(s) of the Partnership Agreement, as
more fully described in the Solicitation Statement dated __________________,
1999.
Number of Units held by voting Limited Partner: _____________________________
Amendments Voted Against :
No. I: ___ No. III: ___ No. V: ___ No. VII: ___
No. II:___ No. IV: ___ No. VI: ___
Address of Limited Partner:
Social Security or Taxpayer Identification No.:_______________________
I/we hereby certify that the foregoing information is complete and accurate.
Print or type name of Limited Partner(s) as it appears on the most recent
account statement.
- -----------------------------------------------------------------------------
Signature of Limited Partner Date
- -----------------------------------------------------------------------------
Signature of Co-Owner Date
YOU MUST PROVIDE ALL OF THE INFORMATION REQUESTED ABOVE IN ORDER TO
SUBMIT A VALID VOTE AGAINST ANY OF THE AMENDMENTS TO THE PARTNERSHIP AGREEMENT.
THE DEADLINE FOR SUBMISSION OF THIS NOTICE OF VOTE AGAINST THE
AMENDMENTS IS ____________________, 1999.
VOTING NOTICES SHOULD BE SENT TO:
Gilardi & Co.
1115 Magnolia Avenue
Larkspur, CA 94977
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF ALABAMA
DANIEL KOCH; GLAN RAWLS; CIVIL ACTION NO.. 97-0177-BHC
LESLIE WALKER; LARRY
LEVIN; WILLIAM POLT; and
CHARLES LEO; on their own behalf
and on behalf of all
class members
similarly situated,
Plaintiffs,
v.
PLM INTERNATIONAL, INC.;
PLM FINANCIAL SERVICES, INC.;
PLM INVESTMENT MANAGEMENT, INC.;
PLM TRANSPORTATION EQUIPMENT
CORPORATION; and PLM
SECURITIES CORP.;
Defendants.
/
NOTICE OF PENDENCY OF CLASS LITIGATION, CLASS ACTION
DETERMINATION FOR THE MONETARY SETTLEMENT CLASS,
PROPOSED SETTLEMENT AND SETTLEMENT FAIRNESS HEARING
TO: ALL INVESTORS, LIMITED PARTNERS, ASSIGNEES, OR UNIT HOLDERS
WHO PURCHASED OR RECEIVED BY WAY OF TRANSFER OR ASSIGNMENT ANY
UNITS IN PLM EQUIPMENT GROWTH FUND IV, PLM EQUIPMENT GROWTH FUND
V, PLM EQUIPMENT GROWTH FUND VI, OR PLM EQUIPMENT GROWTH AND
INCOME FUND VII BETWEEN MAY 23, 1989 AND _________, 1999.
PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO A PROPOSED
SETTLEMENT OF THE MONETARY CLAIMS OF THIS LITIGATION AND CONTAINS IMPORTANT
INFORMATION REGARDING YOUR RIGHTS.
YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil
Procedure, and an Order of the United States District Court for the
Southern District of Alabama (the "Court"), that a settlement in the amount
of Six Million Dollars ($6,000,000) (the "Monetary Settlement") of the
captioned litigation ("the Action") has been reached by the parties to this
litigation. The Monetary Settlement is subject to approval by the Court,
and if approved, will result in: (a) the creation of the Settlement Fund
(as defined below), which shall be disbursed as set forth below; (b) the
dismissal of the Action (as defined below) and the release of the Released
Claims (as defined below) as against Defendants and other Released Parties
(as defined below); and (c) that a hearing will be held before the
Honorable William Brevard Hand, United States District Court for the
Southern District of Alabama, located at 113 St. Joseph Street, in Room
___, Mobile Alabama 36602 on _______, 1999 (the "Settlement Hearing"), to
determine whether the proposed Equitable and Monetary Settlements (the
"Settlement") of the Action is fair, reasonable and adequate, and for
purposes of determining the amount and method of payment of attorneys' fees
and reimbursement of expenses to be awarded to Plaintiffs' Class Counsel.
In its Order of _____________, the Court granted preliminary approval of
the Stipulation of Settlement dated February 12, 1999 and the exhibits
incorporated therein, subject to further confirmation at the Settlement
Hearing.
IN ORDER TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF SETTLEMENT
PROCEEDS, YOU MUST TIMELY FILE A PROOF OF CLAIM AND RELEASE AS DESCRIBED IN
SECTION III BELOW.
IF THE COURT GRANTS FINAL APPROVAL TO THE PROPOSED MONETARY SETTLEMENT YOU
WILL BE BOUND BY THIS SETTLEMENT, WHICH WILL CONFER CERTAIN BENEFITS UPON
YOU AND WILL AFFECT YOUR RIGHTS AS AN INVESTOR IN ONE OR MORE OF THE FUNDS,
AND ANY CLAIM YOU HAVE OR MAY HAVE AGAINST THE DEFENDANTS AND THE RELEASED
PARTIES FOR RELIEF OR CONCERNING THE TRANSACTIONS CONTEMPLATED BY THE
MONETARY SETTLEMENT WILL BE RELEASED.
MONETARY SETTLEMENT CLASS MEMBERS MAY REQUEST EXCLUSION ("OPT OUT") FROM
THE MONETARY SETTLEMENT CLASS AS DESCRIBED IN SECTION V BELOW. YOU ALSO
HAVE THE RIGHT TO OBJECT TO OR COMMENT UPON THE MONETARY SETTLEMENT AND TO
HAVE ANY SUCH OBJECTIONS CONSIDERED BY THE COURT IN CONNECTION WITH THE
COURT'S DETERMINATION OF WHETHER OR NOT TO APPROVE THE MONETARY SETTLEMENT,
PROVIDED THAT YOU MAKE SUCH OBJECTION OR COMMENT IN ACCORDANCE WITH THE
TIME LIMITS AND PROCEDURES DESCRIBED IN SECTION VIII BELOW.
IN ADDITION TO THE PROPOSED SETTLEMENT WITH RESPECT TO THE MONETARY
SETTLEMENT CLASS, THE COURT HAS ALSO SEPARATELY CERTIFIED FOR SETTLEMENT
PURPOSES A DIFFERENT CLASS (THE "EQUITABLE SETTLEMENT CLASS") GENERALLY
CONSISTING OF ALL PERSONS OR ENTITIES WHO ON MARCH 25, 1999 HELD ANY UNITS
IN PLM EQUIPMENT GROWTH FUND V, PLM EQUIPMENT GROWTH FUND VI, OR PLM
EQUIPMENT GROWTH & INCOME FUND VII, AND THEIR ASSIGNS AND SUCCESSORS IN
INTEREST, SUBJECT TO CERTAIN EXCLUSIONS. SEE SECTION III (9) BELOW. THE
EQUITABLE SETTLEMENT PROVIDES FOR MEMBERS OF THE EQUITABLE SETTLEMENT CLASS
TO EXTEND THE OPERATING LIFE OF THEIR FUNDS AND OTHER EQUITABLE RELIEF
DESCRIBED IN SECTION III BELOW. THIS RELIEF IS SEPARATE AND APART FROM THE
MONETARY RELIEF BEING AFFORDED TO THE MONETARY SETTLEMENT CLASS. PEOPLE WHO
ARE MEMBERS OF BOTH CLASSES SHOULD BE RECEIVING THIS NOTICE AND A SEPARATE
NOTICE BEING SENT TO EQUITABLE SETTLEMENT CLASS MEMBERS WHICH DESCRIBES IN
DETAIL THE NATURE OF THE PROPOSED EQUITABLE SETTLEMENT WITH THE EQUITABLE
SETTLEMENT CLASS. IF YOU ARE ALSO A MEMBER OF THE EQUITABLE SETTLEMENT
CLASS AND HAVE NOT RECEIVED THE EQUITABLE CLASS NOTICE, CONTACT THE CLAIMS
ADMINISTRATOR AT GILARDI & CO., POST OFFICE BOX 8040, SAN RAFAEL,
CALIFORNIA 94912-8040, (800) _____ TO REQUEST A COPY OF THAT NOTICE.
IF, AFTER HAVING READ THIS NOTICE, YOU HAVE QUESTIONS OR COMMUNICATIONS
CONCERNING THE SETTLEMENT RESPECTING THE MONETARY SETTLEMENT CLASS, THE
SETTLEMENT FAIRNESS HEARING OR ANY OF THE INFORMATION CONTAINED IN THIS
NOTICE YOU MAY CALL OR WRITE TO THE CLAIMS ADMINISTRATOR AT GILARDI & CO.,
POST OFFICE BOX 8040, SAN RAFAEL, CALIFORNIA 94912-8040, (800)____. DO NOT
WRITE OR TELEPHONE THE COURT.
This Notice of Pendency and Settlement of Class Action (the "Notice") is
not intended to be, and should not be construed as, an expression of any
opinion by the Court with respect to the truth of the allegations in the
Action or the merits of the claims or defenses asserted. This Notice is to
advise you of the pendency of the Action and the proposed settlement
thereof and of your rights in connection therewith.
I. ACTION
On January 22, 1997, six named plaintiffs originally filed the captioned
action against Defendants PLM International, Inc., PLM Financial Services,
Inc., PLM Investment Management, Inc., PLM Transportation Equipment
Corporation, and PLM Securities Corp. ("the Defendants") in Alabama state
court. On March 6, 1997, Defendants removed that state court action to the
United States District Court for the Southern District of Alabama, Southern
Division, before The Honorable William Brevard Hand (the " Alabama
Action"). On May 28, 1997, another representative plaintiff filed an action
in California state court, styled Romei vs. PLM International, Inc., et al.
in the Superior Court for the State of California (No. 987062) (the
"California Action") which is currently pending in that court. (The
California and Alabama Actions are referred to collectively as "the
Actions," or "the Litigation," and the plaintiffs in both Actions are
referred to collectively as "Plaintiffs"). The parties in the California
Action have agreed to stay that Action pending settlement of the
Litigation. Upon final approval by the Court of this Monetary Class
Settlement, the plaintiff in the California Action will dismiss that Action
with prejudice.
Plaintiffs, on behalf of themselves and all others similarly situated,
allege that Defendants (1) participated in and pursued a common scheme and
a continuous course of conduct of obtaining money from Plaintiffs and the
other class members by organizing, marketing and operating the Partnerships
through fraud and in breach of their respective fiduciary duties for their
own benefit; (2) fraudulently induced the purchase of the Partnerships; (3)
breached their fiduciary duties to Plaintiffs and the Class by selecting
and/or liquidating investments for the Partnerships; (4) breached their
fiduciary duties by failing to exercise due care in selecting investments
for the Partnerships; and (5) created and disseminated through PLM
Securities and its network of selling agents standardized offering
materials that omitted material facts or misstated material facts. Based on
the foregoing conduct, Plaintiffs alleged eight causes of action against
Defendants for: (1) Fraud and Deceit; (2) Suppression; (3) Negligent
Misrepresentation and Suppression; (4) Intentional Breach of Fiduciary
Duty; (5) Negligent Breach of Fiduciary Duty; (6) Unjust Enrichment; (7)
Conversion; and (8) Conspiracy.
In connection with the proposed settlement, on February 9, 1999 the parties
signed a Stipulation of Settlement (sometimes referred to as the
"Stipulation"), providing that the Court could enter an order certifying
two classes in this Action for settlement purposes. The first class, which
is the subject of this notice, is called the Monetary Settlement Class and
is a class under Federal Rule of Civil Procedure 23(b)(3) consisting of all
investors, limited partners, assignees, or unit holders who purchased or
received by way of transfer or assignment any Units in PLM Equipment Growth
Fund IV ("Fund IV"), PLM Equipment Growth Fund V ("Fund V"), PLM Equipment
Growth Fund VI ("Fund VI"), or PLM Equipment Growth and Income Fund VII
("Fund VII"), (collectively referred to as "the Funds") between May 23,
1989 and [THE DATE OF PRELIMINARY APPROVAL], (the "Monetary Settlement
Class") but excluding: (a) all persons or entities whose claims against the
Defendants with respect to all the Funds invested in by that person have
been finally adjudicated in litigation or arbitration, before any court or
arbitration tribunal; (b) all persons or entities who have entered into
valid releases with the Defendants with respect to any or all of the wrongs
alleged in the Actions; (c) Defendants, members of their immediate families
and their legal representatives, heirs, successors or assigns; and (d)
persons who timely and validly request exclusion from the Monetary
Settlement Class pursuant to this Notice. The second class in this
Settlement is the subject of another notice which investors in Funds V, VI,
and VII will be receiving at about the same time as this Notice. This
second class is called the Equitable Settlement Class and is receiving very
different relief than the relief being offered to the Monetary Settlement
Class. This Notice summarizes the relief being offered to the Monetary
Settlement Class. Those of you who own Units in Funds V, VI and VII are
also urged to review the Notice for the Equitable Settlement Class since
you are also in that class.
II. DEFINITIONS
In addition to the foregoing defined terms, and such other terms as may be
defined later in this Notice, the following terms have the meanings specified
below:
1. "Authorized Claim" means the claim of any Authorized Claimant
pursuant to the Monetary Class Settlement.
2. "Authorized Claimant" means any Monetary Settlement Class
Member whose Claim has been allowed pursuant to the terms of the
Stipulation and the Claims Administration Protocol.
3. "Defendants" means PLM International, Inc., PLM Financial
Services, Inc., PLM Investment Management, Inc., PLM Transportation Equipment
Corporation, and PLM Securities Corp.
4. "Claims Administrator" means Gilardi & Co. or any other
replacement Person selected by agreement of Plaintiffs' Class Counsel and
Defendants' counsel to administer the Settlement Fund and process
Claimants' Proofs of Claim and Release, or in the event they fail to agree
within ten (10) business days following any notice of the then Claims
Administrator of its intention to resign or any vacancy in this position,
then as appointed by the Court upon motion by Plaintiffs or Defendants or
any of them.
5. "Equitable Settlement" means that portion of the Stipulation
that relates to the Settlement of the claims of the Equitable Settlement
Class, including the extension of the operating lives of Funds V, VI and
VII, as more detailed in Section V below.
6. "Equitable Settlement Class" means all investors, limited
partners, assignees or Unit holders who, as of the time of the Equitable
Class Preliminary Approval Order, hold Units in PLM Equipment Growth Fund
V, PLM Equipment Growth Fund VI, or PLM Equipment Growth and Income Fund
VII, and their assigns and successors in interest, as certified in the
Court's Preliminary Approval Order Certifying the Equitable Settlement
Class to be mutually sought by the parties.
7. "Final" means: (i) the date of final affirmance on an appeal of
either or both of the Final Orders and Judgments, (if Judgments are
appealed and affirmed on appeal) the expiration of the time for a petition
for a writ of certiorari to review either or both of the Final Orders and
Judgments and, if certiorari be granted, the date of final affirmance
following review pursuant to that grant; or (ii) the date of final
dismissal of any appeal from, or proceeding seeking certiorari review of,
either or both of the Final Orders and Judgments; or (iii) if no appeal is
filed, the expiration date of the time for the filing or noticing of any
appeal from the Court's Final Orders and Judgments approving the
Stipulation, all as determined under the Federal Rules of Civil Procedure.
Any proceeding, order, appeal or petition for a writ of certiorari
pertaining solely to an application for or award of attorneys' fees, costs
or expenses, shall not in any way delay or preclude the Final Orders and
Judgments from becoming final.
8. "Final Orders and Judgments" means the judgments to be entered
by the Court with respect to the Monetary and Equitable Settlement.
9. "Monetary Settlement Class Member" means a Person (as defined
herein) who falls within the definition of the Monetary Settlement Class
and who has not validly and timely requested exclusion from the Class, as
provided in Section IV below.
10. "Monetary Settlement" means that portion of this Stipulation
that relates to the Settlement of the claims of the Monetary Settlement
Class and provides for payments to the Monetary Settlement Class out of the
Net Settlement Fund.
11. "Monetary Settlement Class" means all investors, limited
partners, assignees or Unit holders who purchased or received by way of
transfer or assignment any Units in PLM Equipment Growth Fund IV, PLM
Equipment Growth Fund V, PLM Equipment Growth Fund VI, and PLM Equipment
Growth and Income Fund VII (collectively the "Funds") during the period
from May 23, 1989 through the date the Court's Preliminary Approval Order
Certifying the Monetary Settlement Class ("Monetary Settlement Class
Period"), together with their assigns and successors in interest (also
referred to herein as the "Class"). Excluded from the Monetary Settlement
Class are:
(a) each and every person or entity whose claims against the
Defendants with respect to all the Funds invested in by that person or
entity have been finally adjudicated in litigation or arbitration, before
any court or arbitration tribunal;
(b) all persons or entities that have entered into valid releases
with the Defendants with respect to any or all of the wrongs alleged in the
Litigation:
(c) Defendants, their control persons, subsidiaries and
affiliates, employees, members of their immediate families and their legal
representatives, heirs, successors or assigns; and
(d) those persons who timely and validly request exclusion from
the Monetary Settlement Class pursuant to the Hearing Notice to be sent to
the Monetary Settlement Class.
12. "Monetary Settlement Distribution Date" means the tenth
business day following the date on which the Claims Administrator serves
its Initial Distribution Report on the signatories to the Stipulation
13. "Net Settlement Fund" means the remainder of the Settlement
Fund for the Monetary Settlement Class after deduction of all fees, costs,
expenses, taxes and other charges in accordance with the Stipulation.
14. "Person" means individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal
representative, trust, unincorporated association, government or any
political subdivision or agency thereof, and any business or legal entity
and their spouses, heirs, predecessors, successors, representatives, or
assigns.
15. "Plaintiffs' Class Counsel" means all counsel representing the
Representative Plaintiffs and Settlement Class Members who are a
signatories to the Stipulation.
16. "Plan of Allocation" means the plan of allocation of the
Settlement Fund whereby the Net Settlement Fund shall be distributed to
Authorized Claimants.
17. "Proof of Claim and Release" means the proofs of claim and
release that Monetary Settlement Class Members are required to complete
pursuant to the Stipulation.
18. "Related Parties" means each of a Defendant's past or present
directors, officers, employees, partners, principals, agents, insurers,
co-insurers, reinsurers, controlling shareholders, attorneys, accountants,
personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, related or affiliated
entities, any entity in which any Defendant has a direct or indirect
controlling interest, and all such related parties' heirs, members of their
immediate families or any trust of which any Defendant is the settler or
which is for the benefit of any Defendant and/or member(s) of his family.
19. "Released Claims" means any and all claims or causes of
action, including "Unknown Claims" as defined herein, demands, rights,
liabilities and causes of action of every nature and description
whatsoever, known or unknown, asserted or that might have been asserted,
including without limitation, claims for negligence, gross negligence,
breach of duty of care and/or breach of duty of loyalty, fraud, breach of
fiduciary duty, breach of contract, or violations of any state or federal
statutes, rules or regulations, by the Representative Plaintiffs, the
Monetary Settlement Class Members, or any of them, and their successors and
assigns, whether directly, representatively, derivatively or in any other
capacity, based upon or related to any transaction between Defendants and
any Monetary Settlement Class Member involving the Funds or the Units
during the Class Period against all Defendants and all other entities and
persons, including specifically any and all broker-dealers or other third
parties involved in such sale or purchase. Released claims specifically
means all claims and potential claims arising out of: (a) the marketing,
sale, purchase or transfer of the Funds' limited partnership Units: (b) the
operation, oversight, monitoring or management of, any of the Funds until
the date of final approval of the Monetary Settlement against all
Defendants and all other entities and persons, including specifically any
and all broker-dealers or other third parties involved in such sale or
purchase: or (c) any challenge to the Stipulation. Class Members and their
successors and assigns, whether directly representatively or derivatively
or in any other capacity, however, are not by this settlement releasing (a)
potential claims arising out of alleged future mismanagement of the Funds
that (1) occur after the date of the Court's final approval of the
Settlement, and (2) are not related to, or derived from, the Actions'
presently pled mismanagement claims; or (b) potential claims to enforce the
terms of this Settlement.
20. "Released Persons" means each and all of the Defendants and
their Related Parties, and all other entities and persons, including
specifically Defendants' insurers, any and all broker-dealers or other
third parties involved in the sale or purchase of the limited partnership
interests, including their past or present officers, directors,
shareholders, partners, agents, employees, attorneys, advisors,
accountants, representatives, successors, or assigns.
21. "Representative Plaintiff(s)" means Daniel Koch, Glan Rawls,
Lois Romei, Leslie Walker, Larry Levin, William Polt, and Charles Leo
acting on behalf of themselves or on behalf of the Settlement Class and/or
the Settlement Class Members.
22. "Settlement Fund" means the sum of the cash to be delivered to
the Settlement Administrator and held in an interest-bearing escrow
account.
23. "Settlement Hearing" means the hearing held by the Court to
consider final approval of the Stipulation pursuant to Rule 23 of the
Federal Rules of Civil Procedure.
24. "Settling Party(ies)" means, individually or collectively,
each or all of the Defendants and the Settlement Class Members.
25. "Stipulation" means the Stipulation of Settlement and all
Exhibits attached hereto and the Document Letter executed by Plaintiffs'
Class Counsel and counsel for Defendants, and all Exhibits thereto.
26. "Unknown Claims" means any Released Claims which any Monetary
Settlement Class Member does not know or suspect to exist in his, her or
its favor at the time of the release of the Released Persons which, if
known by him, her or it, might have affected his, her or its settlement
with and release of the Released Persons, or might have affected his, her
or its decision not to object to this settlement.
III. THE PROPOSED SETTLEMENT
A Monetary Settlement has been reached in the Action between the Settling
Parties which is embodied in the Stipulation. The following description of
the proposed Monetary Settlement is only a summary. For the full details of
the proposed settlement, you should refer to the Stipulation, which is on
file with the Court.
1. The Stipulation requires Defendants to pay or cause to be paid the sum
of $6,000,000 (the "Settlement Fund"). Defendants shall also pay $200,000
to the Settlement Administrator to be used to pay notice and administrative
costs (the "cost fund"). Interest earned on the Settlement Fund shall
become part of the Settlement Fund. The Claims Administrator shall allocate
80% of the Net Settlement Fund to pay the Authorized Claims of Monetary
Settlement Class Members who invested in Fund IV, and 20% of the Net
Settlement Fund to pay the Authorized Claims of Monetary Settlement Class
Members who invested in Funds V, VI or VII.
2. Upon approval of the Stipulation by the Court and entry of a judgment
that becomes a final judgment and upon satisfaction of the other conditions
to the Monetary Settlement, the Settlement Fund will be distributed as
follows:
(a) To pay any costs and expenses not paid by the cost fund in connection
with providing notice to both the Monetary and Equitable Settlement Class
Members, and with administering the Settlement on behalf of the two
Classes;
(b) To pay Plaintiffs' Class Counsel their attorneys' fees, expenses and
costs, with interest thereon (the "Monetary Class Fee and Expense Award"),
if and to the extent allowed by the Court;
(c) To pay the reasonable costs incurred in the preparation of any tax
returns required to be filed on behalf of the Settlement Fund as well as
the taxes (and any interest and penalties determined to be due thereon)
owed by reason of the earnings of the Settlement Fund, including all Taxes
and Tax Expenses as defined in the Stipulation; and
(d) To pay Authorized Claimants in accordance with the Plan of Allocation
described below.
3. Subject to the approval by the Court of the Plan of Allocation described
below, the balance of the Settlement Fund (the "Net Settlement Fund") will
be distributed to Authorized Claimants as follows:
(a) For Fund IV investors, the Claims Administrator shall determine the
Distribution Amount per Monetary Settlement Class Authorized Claimant as
the sum of the Per Unit Allocation for each Unit owned by an Authorized
Claimant. The "Per Unit Allocation" is equal to the Net Settlement Fund for
Fund IV divided by the number of Units issued to Monetary Class Members
pursuant to the initial offering (8,750,000 Units). A reduction to the Per
Unit Allocation will be made for Units purchased or sold subsequent to the
initial offering. A "purchase or sale" is defined as the exchange of Units
for cash consideration for units purchased or sold outside of the terms of
original offering. The Per Unit Allocation will be multiplied by a
percentage equal to the number of days the Unit was held by the Authorized
Claimant (defined as "the holding period") divided by the total number of
days in the Class Period ("Per Unit Allocation Adjustment"). Transfers or
assignments by operation of law such as gifts, estate transfers and
transfers related to divorce and/or name changes or account designation
changes (individual to IRA or individual to joint) will be excluded from
the Per Unit Allocation Adjustment. However, only the current holders of
the Units transferred or assigned by operation of law can participate in
the distribution from the Settlement Fund. The holding period of the
transferee/assignees will include the holding period of the
transferor/assignor. If, however, a transferee/assignee sold units received
through an operation of law transfer or assignment or independently
purchased Units outside of the terms of the initial offering, such Units
will be subject to the Per Unit Allocation Adjustment. For purposes of
these allocations, the date of transfer/assignment will be the date the
ownership change was reflected on the books and records of the Funds.
(b) In the event that the total of the Authorized Claims payable to Fund IV
Authorized Claimants is less than $2.5 million, $2.5 million (net of
attorneys' fees) will nonetheless be distributed to Fund IV Authorized
Claimants on a pro-rata basis so that each Fund IV Authorized Claimant
shall be paid that percentage of the Net Settlement Fund which is the sum
of $2.5 million times that Authorized Claimant's Distribution Ratio,
calculated as the Distribution Amount per Monetary Settlement Class
Authorized Claimant divided by the sum of Distribution Amounts for all
Authorized Claimants, except that no Fund IV Authorized Claimant may
recover more than his/her Investor Capital Losses, as defined below. Except
for the situation described above, no other adjustment shall be made to the
amounts of Authorized Claims by reason of the failure of other Monetary
Settlement Class Members to comply with the procedures set forth herein.
(c) If the sum of the Per Unit Allocations for all Authorized Claimants in
Fund IV on the one hand, or Funds V, VI and VII on the other hand, is
greater than the portion of the Net Settlement Fund allocated to the
Fund(s), then the relevant portion of the Net Settlement Fund will be paid
pro rata according to the aggregate Per Unit Allocations for each
Authorized Claimant.
(d) For Growth Fund IV and for those Investors who own Fund IV Units as of
the end of the Class Period ("Holders"), the term "Investor Capital Losses"
is defined as 100% of the amount invested by a Unitholder through the
purchase of Units less: (a) all actual cash distributions to the Unitholder
"from the Unitholder's date of purchase" through the first quarter 1999
distribution payable on or about February 15, 1999 and (b) all future cash
forecasted to be distributed to the Unitholder as set forth in the Base
Case Model provided by Defendants and approved by Plaintiffs' Class
Counsel, which models assume a commercially reasonable liquidation of Fund
IV's assets. Investor Capital Losses for transfers or assignments by
operation of law will be calculated including the amount invested and
distributions received by both the transferee/assignee and the
transferor/assignor. With respect to Monetary Settlement Class Members who
sold some or all of their Units before the date of the Hearing Order,
Investor Capital Losses will be calculated for each Unit sold as the amount
invested less distributions through the date of sale, less sale proceeds.
Units which were/are sold after the date of the Hearing Order will be
treated as Holders for purposes of this calculation. (e) For Funds V
through VII, the Per Unit Allocation is equal to the amount of the Net
Settlement Fund allocated to Funds V through VII divided by the sum of the
Units issued to the limited partners in each of the Funds V through VII,
(22,908,476 Units). The Per Unit Allocation Adjustment will be applied to
Units which were purchased or sold after the final close of the initial
offering in the respective Fund. The Per Unit Allocation Adjustment is
calculated by multiplying a percentage equal to the number of days the Unit
was held by the Authorized Claimant divided by the total number of days in
the Class Period for the respective Fund, by the respective Per Unit
Allocation. Provisions relating to the purchases and sales and the
treatment of transfers and assignments by operation of law will be effected
as specified above.
(f) Upon final determination of all amounts from the Net Settlement Fund
payable to Authorized Claimants, the Claims Administrator shall, subject to
Court approval, return to Defendants all amounts remaining in the Net
Settlement Fund. However, if the Claims Administrator reasonably determines
after consultation with counsel for the Parties, that only a certain amount
need be retained in the Net Settlement Fund to pay all Authorized Claims
and the administration fees and expenses of the Settlements, the remainder
that will not be needed to pay authorized claims or administrative fees
will be immediately returned to Defendants, subject to its being timely
redeposited in the Settlement Fund account as needed, upon Plaintiffs'
Class Counsels' reasonable request.
4. Claims shall be computed as described above. Each Claimant must fill out
and timely return a Proof of Claim in the form attached hereto, following
the instructions set forth in the Proof of Claim. Each Claimant must
provide the requested information, including identifying each Fund
purchased, sold or conveyed during the Class Period and for each such Fund
listing the number of Units, the date(s) of each purchase, sale and/or
transfer. Investor Capital Losses will be computed and/or verified by the
Claims Administrator.
5. All Proof of Claim forms must be completed in the manner specified on
the form enclosed with this Notice and sent to the address set forth on
that form. All completed Proof of Claim forms must be postmarked or
received by____ . Unless otherwise ordered by the Court, any Class Member
who fails to submit a valid Proof of Claim within such period, or such
other period as may be ordered by the Court, shall be forever barred from
receiving any payments pursuant to the Settlement but will in all other
respects be subject to the provisions of the Stipulation and the Final
Judgment entered by the Court.
6. Payment pursuant to the Plan of Allocation set forth above shall be
conclusive against all Authorized Claimants. No Person shall have any
claims against Plaintiffs' Class Counsel or any Claims Administrator or
other agent designated by Plaintiffs' Class Counsel, based on distributions
made substantially in accordance with the Stipulation and the Settlement
contained therein, the Plan of Allocation, or further orders of the Court.
The Defendants, the Released Persons, and Defendants' counsel shall have no
responsibility for, control over or liability whatsoever for the investment
or distribution of the Settlement Fund, the Net Settlement Fund, the Plan
of Allocation or the determination, administration, calculation or payment
of Claims, the Administrator's performance or non-performance of its
assigned duties, or any losses incurred in connection therewith. All class
members who fail to complete and file a valid and timely Proof of Claim
shall be barred from participating in distributions from the Settlement
Fund (unless otherwise ordered by the Court), but otherwise shall be bound
by all of the terms of this Stipulation including the terms of any judgment
entered and the releases given.
7. The Settlement Fund, less any deductions for attorneys' fees and costs
and expenses allowed by the Court and taxes due, shall be maintained by the
Claims Administrator as provided in the Stipulation.
8. Upon final determination of all amounts from the Net Settlement Fund
payable to Authorized Claimants, the Claims Administrator shall, subject to
Court approval, return to Defendants all amounts remaining in the Net
Settlement Fund.
9. The Equitable Settlement provided to the Equitable Settlement Class
which forms a part of this Settlement is more fully described in the
Equitable Class Notice, but generally consists of the extension of the
operating lives of PLM Equipment Growth Fund V, PLM Equipment Growth Fund
VI and PLM Equipment Growth and Income Fund VII, such that the General
Partner of each Fund will be permitted to reinvest cash flow, surplus
partnership funds or retained proceeds in Equipment, as contemplated in
Section 2.02(r) of each of the Fund V and Fund VI Partnership Agreements
and Section 2.02 (q) of the Fund VII Partnership Agreement into the year
2004, and will liquidate the Funds' Equipment no later than 2006.
Additional equitable relief to the Equitable Settlement Class will be
distributions to be received by the Equitable Class Members during its
respective Extension Period, and other benefits agreed to by Defendants,
provided that all requisite approvals and conditions for this relief are
obtained or met. You are encouraged to review the Equitable Class Notice
for a fuller description of the terms of this Equitable Settlement.
10. The Settlement is conditioned upon the occurrence of a number of
events, which are subject to waiver. Those events include: (1) entry of the
Judgment by the Court as provided for in the Stipulation; and (2)
expiration of the time to appeal from the Judgment. If, for any reason, any
of the conditions are not met, the Stipulation may be terminated and, if
terminated, will become null and void, and the Settling Parties will be
restored to their respective positions as of prior to the execution of the
Stipulation of Settlement. In such event, the Stipulation described herein
will also be null and void.
IV. BENEFITS OF THE SETTLEMENT
The Parties conducted extensive discovery and investigation during the
prosecution of the Actions. This discovery and investigation has included
inter alia, (i) inspection and analysis of voluminous documents, including
Defendants' and broker-dealers internal marketing and sales material,
solicitations, public filings, annual reports and other public statements;
(ii) Plaintiffs' Class Counsel's interviews with numerous investors; (iii)
research of applicable law with respect to the claims asserted in the
Actions and the potential defenses thereto; and (iv) litigation of those
claims.
Plaintiffs believe that the claims asserted in the Actions have merit.
However, Plaintiffs' Class Counsel recognize and acknowledge the uncertain
outcome and the risk of any litigation, especially in complex actions such
as this Action, as well as the difficulties and delays inherent in such
litigation. Plaintiffs' Class Counsel have also taken into account the
expense and length of continued proceedings necessary to prosecute the
Action through trial and appeals. Plaintiffs' Class Counsel believe that,
in consideration of all the circumstances and after prolonged and serious
arm's-length negotiations with Defendants, the proposed Monetary Settlement
embodied in the Stipulation is fair, reasonable and adequate and confers
substantial benefits on, and is in the best interests of, the Monetary
Class and each of the Monetary Settlement Class Members.
Defendants have denied and continue to deny all liability with respect to
any and all of the facts or claims alleged in the Action. Defendants have
denied and continue to deny the allegations that Defendants misrepresented
or concealed the risks, costs or characteristics of securities investments
made through Defendants, or that the Monetary Class suffered any injury for
which it is legally entitled to relief. There has been no determination
adverse to any of the Defendants by any court as to the merits of the
claims asserted by Plaintiffs.
Defendants have nonetheless concluded that it is desirable that the Action
be settled on the terms embodied in the Stipulation. Defendants reached
that conclusion after: (1) analyzing the factual and legal issues in the
Action; (2) determining that further conduct of the Action through trial
and any appeals that might be taken would be protracted and expensive; and
(3) considering the benefits to Defendants of resolving the Action,
including limiting further expense, inconvenience and distraction,
disposing of burdensome and protracted litigation, and permitting
Defendants to conduct their business unhampered by the distractions of
continued litigation. Defendants also determined to settle the Action after
taking into account the uncertainty and risks inherent in any litigation,
especially in protracted and complex cases such as the Action.
V. THE RIGHTS OF MONETARY SETTLEMENT CLASS MEMBERS
If you are a member of the Monetary Settlement Class, you may receive the
benefit, and you will be bound by the terms, of the proposed Settlement
described in this Notice, upon the Court's approval of the Monetary
Settlement. If you wish to remain a Monetary Settlement Class Member, you
need do nothing and your rights will be represented by Plaintiffs' Class
Counsel. If you wish, you may enter a legal appearance individually or
through your own counsel at your own expense. IN ORDER TO BE ELIGIBLE TO
PARTICIPATE IN THE DISTRIBUTION OF SETTLEMENT PROCEEDS, YOU MUST TIMELY
FILE A PROOF OF CLAIM AND RELEASE AS DESCRIBED IN SECTION III (4)-(5)
ABOVE.
If you do not wish to be included in the Monetary Class and you do not wish
to participate in the proposed Monetary Settlement described in this
Notice, you must request to be excluded. If you exclude yourself, you will
not receive any share of any settlement fund distribution and you will not
be bound by the dismissals and releases provided by the proposed
Settlement. If you wish to be excluded, you must send a written request
postmarked no later than __________, ______ and addressed as follows:
Gilardi & Co.
PO Box 8040
San Rafael, CA 94912-8040
The request for exclusion must state: (1) your name, address and telephone
number; (2) the Funds you purchased during the Class Period from or through
Defendants; (3) the account number for the accounts in which the investment
was made; (4) the dates on which they were purchased, conveyed or sold by
you (if applicable); (5) the number of Units purchased and sold by you; (6)
the prices at which these investments were purchased and sold by you; and
(7) that you wish to be excluded from the Monetary Class. NO REQUEST FOR
EXCLUSION WILL BE CONSIDERED VALID UNLESS IT IS TIMELY AND ALL OF THE
INFORMATION DESCRIBED IN THE PRECEDING PARAGRAPH IS INCLUDED IN ANY SUCH
REQUEST.
If you validly request exclusion from the Monetary Class: (a) you will be
excluded from the Monetary Class; (b) you will not share in the proceeds of
the proposed Monetary Settlement; (c) you will not be bound by the
Judgment; and (d) you will not be precluded, by reason of your decision to
request exclusion from the Monetary Class, from otherwise prosecuting an
individual claim, if timely, against Defendants based on the matters
complained of in the Action. CIVIL ACTION NO. 97-0177-BHC
VI. DISMISSALS AND RELEASES
If the proposed Monetary Settlement is approved by the Court, the Court
will enter a Final Judgment and Order of Dismissal of the Action ("the
Judgment"). The Judgment will dismiss the Action, and all claims alleged
therein, with prejudice as to all Monetary Settlement Class Members who
have not submitted valid and timely requests for exclusion.
The Judgment will also provide that Representative Plaintiffs and all
Monetary Settlement Class Members who have not submitted valid and timely
requests for exclusion from the Monetary Class release and forever
discharge the Released Parties from any and all causes of action, claims,
demands, rights to reimbursement, injunctive relief, disgorgement or
restitution or any other rights or liabilities, whether based on federal,
state or local law, statute, ordinance, regulation, contract, common law or
any other source, including, without limitation, claims arising under
Section 10(b) of the Securities Exchange Act of 1934, Section 20 of the
Securities Exchange Act of 1934, fraud, negligent misrepresentation,
negligence, gross negligence, professional negligence, negligent
supervision, breach of duty of care, breach of duty of loyalty, breach of
duty of candor, breach of fiduciary duty, fiduciary abuse, mismanagement,
breach of contract, unjust enrichment, conversion, conspiracy, California
Business and Professions Code ss.ss. 17200 and 17500 or under any other
similar statute or law of any other jurisdiction invasion of privacy or
negligent supervision, including Unknown Claims (as defined above) that
have been or could or might have been alleged in any pleading or amended
pleading in the Actions based upon, related to or arising out of the
purchase, acquisition, sale, assignment, exchange, redemption, transfer or
ownership of any Units in the Funds during the Class Period, including
without limitation any claims relating to the adequacy, accuracy or
completeness of any disclosure statement, or representation made orally or
in writing, explicit or implicit, relating to the nature, characteristics,
risks, appropriateness, suitability, descriptions, fees or operation of the
Funds sold by or through Defendants. With respect to any and all Released
Claims, upon the Effective Date (as defined in the Stipulation),
Representative Plaintiffs and the Monetary Settlement Class Members who
have not submitted valid an exclusion from the Class, shall further be
deemed to and by operation of the Judgment shall waive and relinquish, to
the fullest extent permitted by law, the provisions, rights and benefits of
Section 1542 of the California Civil Code, which provides that:
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.
Also with respect to any and all Released Claims, the
Representative Plaintiffs and the Monetary Settlement Class Members shall be
deemed to, and upon the Effective Date and by operation of the Judgment shall,
waive 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 Section 1542 of the California Civil Code.
Representative Plaintiffs and all Monetary Settlement
Class Members will be permanently barred and enjoined from commencing,
prosecuting or participating in any recovery in any action (other than
participation in the Settlement as provided for in the Stipulation) in any forum
in which any of the Released Claims or any claims arising out of, relating to,
or in connection with the defense or resolution of the Actions or the Released
Claims is asserted against the Released Parties.
In connection with the Settlement, Plaintiffs' Class
Counsel will also file a Notice of Voluntary Dismissal with Prejudice of the
California Action and shall use their best efforts to obtain an order from the
California court which acknowledges that dismissal with prejudice.
All Monetary Settlement Class Members who do not exclude
themselves from the Monetary Class (even if they choose not to share in the
distribution of the Net Settlement Fund) will be deemed to have released and
forever discharged the Released Parties from all Released Claims whether or not
they execute a Proof of Claim.
The Monetary Settlement Class Members may hereafter
discover facts in addition to or different from those which they now know or
believe to be true with respect to the subject matter of the Released Claims,
but the Monetary Settlement Class Members, upon the Effective Date, shall be
deemed to have, and by operation of the Final Order and Judgment shall have,
fully, finally, and forever settled and released any and all Released Claims,
including "Unknown 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
or coming into existence in the future, 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 of
such different or additional facts.
Following receipt of preliminary approval by the Court,
pending final determination of whether the Settlement should be approved, no one
of the Representative Plaintiffs, Monetary Settlement Class Members, or
Plaintiffs' Class Counsel, either directly, representatively, or in any other
capacity, shall commence or prosecute against any of the Released Persons, any
action or proceeding in any Court or tribunal asserting any of the Released
Claims.
In the event that any Monetary Settlement Class Member
shall thereafter bring any action involving any Released Claim against any
Released Person, such Monetary Settlement Class Member shall indemnify any such
Released Person who may be made a defendant in any such litigation against any
liability or expense arising from any such litigation, whether by reason of
contribution, indemnity, attorneys' fees, defense costs or any other liability,
cost, fee or expense.
VII. FEES AND EXPENSES
Plaintiffs' Class Counsel will apply to the Court for an
award of attorneys' fees consisting of: (a) a share of the Settlement Fund's $6
million, to be set by the Court and not to exceed one-third of the Settlement
Fund, and reimbursement of litigation expenses and disbursements actually
incurred, together with interest earned on said sums, (the "Monetary Class Fee
and Expense Award") and (b) a percentage of the cash distributions received by
the Equitable Settlement Class Members in excess of a 12% rate of return for the
period of the extension of the operating lives of the Funds and received by the
Equitable Settlement Class Members (the Equitable Class Fee and Expense Award),
as more fully set forth in the Notice to Members of the Equitable Settlement
Class. The Settlement Fund will be reduced by the payment of the Monetary Class
Fee and Expense Award, but not by the Equitable Class Fee and Expense Award
(except that Plaintiffs' Class Counsel's expenses in connection with the
Equitable Settlement may be reimbursed from the Cost Fund and, if necessary,
from the Settlement Fund).
VIII. RIGHT TO BE HEARD AT THE SETTLEMENT HEARING
A hearing (the "Settlement Hearing") will be held before
The Honorable William Brevard Hand, United States District Court Southern
District of Alabama, at 113 St. Joseph Street, Mobile, Alabama 36602, on
_______________, for the purpose of determining whether a judgment and/or orders
should be entered: (1) approving the proposed Monetary and Equitable Class
Settlements as fair, reasonable and adequate; (2) dismissing the Alabama Action
with prejudice; (3) approving the Plan of Allocation; (4) awarding Plaintiffs'
Class Counsel attorneys' fees, costs and expenses; and (5) barring Plaintiffs
and Class Members from prosecuting, pursuing, or litigating any of the Released
Claims against any of the Released Parties. The Settlement Hearing may be
continued or adjourned from time to time by the Court at the Settlement Hearing
or any continued or adjourned session thereof without further notice. Moreover,
the Monetary Settlement and Equitable Settlement may be considered separately by
the Court. Although the Equitable Settlement will be terminated if the Monetary
Settlement is not approved, the Monetary Settlement may be approved even if the
Equitable Settlement is not approved.
Any Monetary Settlement Class Member who has not validly
and timely requested to be excluded from the Monetary Settlement Class may
appear at the Settlement Hearing and be heard on any of the foregoing matters;
provided, however, that no such Monetary Settlement Class Member shall be
entitled to object to the foregoing matters unless they have filed their
opposition in writing (together with any brief or other papers in support of any
such objection) with the Court, on or before __________, showing service of all
such papers, by hand or with postmark on or before __________, on Plaintiffs'
Class Counsel and on Defendants' counsel at the following addresses:
Clerk of the Court Plaintiffs' Co-Counsel Defendants' Counsel
United States District Court HANZMAN, CRIDEN, FARELLA, BRAUN
113 St. Joseph Street CHAYKIN, PONCE & MARTEL, L.L.P.
Mobile, Alabama 36602 & HEISE, P.A. Neil A. Goteiner
Michael A. Hanzman C. Brandon Wisoff
Michael E. Criden Claudia E. Lewis
Alan H. Rolnick Russ Bldg., 30th Floor
2100 First Union 235 Montgomery Street
Financial Center San Francisco, CA
200 South Biscayne Blvd. 94104
Miami, FL 33131 415-954-4400
305-579-1222
HAND ARENDALL,
L.L.P.
Douglas L. McCoy
Post Office Box 123
Mobile, Alabama
36601
334-432-5111
Any objection should demonstrate the objecting person's
membership in the appropriate class and contain a statement of the reasons for
the objection. Any Monetary Settlement Class Member who does not make their
objection or opposition in the manner provided shall be deemed to have waived
all objections and opposition to the foregoing matters, unless the Court orders
otherwise.
IX. EXAMINATION OF PAPERS
This Notice is only a summary of the terms of the proposed Monetary
Settlement and does not describe all of the details of the Stipulation. For
a more detailed statement of the matters discussed in this Notice, you may
desire to review the Stipulation filed with the Court, as well as other
matters of record in the Actions, which may be inspected at the office of
the Clerk of the Court, at the United States Courthouse, 113 St. Joseph
Street, Mobile, Alabama 36602, between 9:00 a.m. and 4:00 p.m. of each
business day. In addition, you may contact the Claims Administrator,
Gilardi & Co., P O Box 8040, San Rafael, CA, 94912-8040, or call toll free,
1-800-XXX-XXXX for further information.
PLEASE DO NOT CALL THE COURT.
DATED:
BY ORDER OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF ALABAMA
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF ALABAMA
DANIEL KOCH; GLAN RAWLS;
LESLIE WALKER; LARRY LEVIN;
WILLIAM POLT; and
CHARLES LEO; on their own
behalf and on behalf of all
class members similarly
situated,
Plaintiffs,
v.
PLM INTERNATIONAL, INC.;
PLM FINANCIAL SERVICES, INC.;
PLM INVESTMENT MANAGEMENT, INC.;
PLM TRANSPORTATION EQUIPMENT CORPORATION;
and PLM SECURITIES CORP.;
Defendants.
/
CIVIL ACTION NO. 97-0177-BHC
NOTICE OF PENDENCY OF CLASS LITIGATION, CLASS ACTION
DETERMINATION FOR THE EQUITABLE SETTLEMENT CLASS,
PROPOSED SETTLEMENT AND SETTLEMENT FAIRNESS HEARING
TO: ALL INVESTORS, LIMITED PARTNERS, ASSIGNEES, OR UNIT HOLDERS WHO ON
___________ ______, HELD ANY UNITS IN PLM EQUIPMENT GROWTH FUND V,
PLM EQUIPMENT GROWTH FUND VI, OR PLM EQUIPMENT GROWTH AND INCOME
FUND VII, AND THEIR ASSIGNS AND SUCCESSORS IN INTEREST (THE
EQUITABLE SETTLEMENT CLASS).
PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO A PROPOSED
SETTLEMENT OF THE EQUITABLE CLAIMS OF THIS LITIGATION AND CONTAINS
IMPORTANT INFORMATION REGARDING YOUR RIGHTS.
YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules
of Civil Procedure, and an Order of the United States District Court of the
Southern District of Alabama (the "Court"), that a settlement of the above
captioned class action and a parallel
class action in state court in California, (collectively the "Action") has been
reached. This Notice will inform you of: (a) the proposed settlement of
equitable claims in this Action (the "Equitable Settlement"), (b) the
relationship between the Equitable Settlement and the Monetary Settlement
(described below) in this Action, and (c) that a hearing will be held before the
Honorable William Brevard Hand, United States District Court for the Southern
District of Alabama, located at 113 St. Joseph Street, in Room ___, Mobile
Alabama on _______, 1999 (the "Settlement Hearing"), to determine whether the
proposed settlement of both the Equitable and Monetary Settlements (the
"Settlement") of the Action is fair, reasonable and adequate, and for purposes
of determining the amount and method of payment of attorneys' fees and
reimbursement of expenses to be awarded to Plaintiffs' Class Counsel. In its
Order of , 1999, the Court granted preliminary approval of the Stipulation of
Settlement dated February 12, 1999 and the exhibits incorporated therein,
subject to further confirmation at the Settlement Hearing.
The Equitable Settlement is conditioned upon final approval by the
Court at the Settlement Hearing. In addition to Court approval of the
Settlement, approval of the proposed amendments to the respective partnership
agreements is necessary to implement and effectuate the Equitable Settlement.
Considering each Fund individually, if a majority of the Units held by Limited
Partners eligible to vote are voted against the proposed amendments to the
Partnership Agreement, the Equitable Settlement will not be implemented for that
Fund. By way of summary, if approved and implemented, the Equitable Settlement
will generally result in:
I. the extension of the operating lives of PLM Equipment
Growth Fund V ("Fund V"), PLM Equipment Growth Fund VI
("Fund VI"), and PLM Equipment Growth and Income Fund VII
("Fund VII") (collectively, the "Funds") through 2006 (the
"Extension Period");
II. the deferred payment of 25% of the General Partner's
Equipment Management Fee (the "Deferred Management Fee")
for each Fund during a portion of the extended lives of
the Funds, which deferred amounts will be paid to the
General Partner only when, and if, the performance target
for such Fund during the Extension Period is reached , as
discussed in Section IV below;
III. the repurchase by each of the Funds from Equitable
Settlement Class Members electing to have their shares
repurchased, of up to ten percent (10%) of each Fund's
respective outstanding Units at a repurchase price of
eighty percent (80%) of the Fund's net asset value per
Unit as of the fiscal quarter immediately preceding [add
the last day by which Repurchase Request must be
returned]. To the extent that Equitable Settlement Class
Members request that a Fund repurchase more than ten
percent of its outstanding Units, the Fund will repurchase
up to ten percent of its outstanding Units, pro-rata, and
as more fully discussed below.
IV. the amendment of each of the Fund's respective Partnership
Agreements to effectuate the above provisions, as more
fully described below;
V. the dismissal of the Action and the release of the
Released Claims (as defined below) as against Defendants
and other Released Parties (as defined below). A more
detailed description of the terms of the Settlement is
contained below and in the Solicitation Statement to be
furnished separately by the Funds, and
VI. the contingent award of Plaintiffs' Class Counsel's fees
for the Equitable Settlement from each Fund, which fees
will be paid to Plaintiffs' Class Counsel only when, and
if, the performance target for such Fund during the
Extension Period is reached, as discussed in Section IV,
below.
IF THE COURT GRANTS FINAL APPROVAL TO THE PROPOSED EQUITABLE
SETTLEMENT, YOU WILL BE BOUND BY THIS SETTLEMENT, WHICH WILL CONFER CERTAIN
BENEFITS UPON YOU AND WILL AFFECT YOUR RIGHTS AS AN INVESTOR IN ONE OR MORE OF
THE FUNDS, AND ANY CLAIM YOU HAVE OR MAY HAVE AGAINST THE DEFENDANTS AND THE
RELEASED PARTIES FOR RELIEF OR CONCERNING THE TRANSACTIONS CONTEMPLATED BY THE
EQUITABLE SETTLEMENT WILL BE RELEASED.
ALTHOUGH EQUITABLE SETTLEMENT CLASS MEMBERS MAY NOT REQUEST
EXCLUSION ("OPT OUT") FROM THE EQUITABLE SETTLEMENT CLASS, ALL UNITHOLDERS AS OF
, 1999 HAVE THE RIGHT TO OBJECT TO OR COMMENT UPON THE SETTLEMENT AND TO HAVE
ANY SUCH OBJECTIONS CONSIDERED BY THE COURT IN CONNECTION WITH THE COURT'S
DETERMINATION OF WHETHER OR NOT TO FINALLY APPROVE THE EQUITABLE SETTLEMENT,
PROVIDED THAT YOU MAKE SUCH OBJECTION OR COMMENT IN ACCORDANCE WITH THE TIME
LIMITS AND PROCEDURES -------------------- DESCRIBED IN SECTION IX BELOW.
IN ADDITION, LIMITED PARTNERS IN ANY OF THE FUNDS ALSO HAVE THE
RIGHT TO VOTE AGAINST THAT FUND'S ADOPTION OF PROPOSED AMENDMENTS TO ITS
PARTNERSHIP AGREEMENT, WHICH AMENDMENTS ARE NECESSARY TO IMPLEMENT AND
EFFECTUATE THE EQUITABLE SETTLEMENT, BY SUBMITTING A VOTE IN RESPONSE TO THE
SOLICITATION STATEMENT FURNISHED SEPARATELY BY THE FUNDS.
IF YOU ARE A LIMITED PARTNER ELIGIBLE TO VOTE (SEE SECTION ,
ss.2.11 BELOW) AND YOU FAIL TO COMPLETE AND RETURN THE VOTING FORM WHICH
ACCOMPANIES THE SOLICITATION STATEMENT, YOUR UNITS WILL BE TREATED AS IF THEY
HAD BEEN VOTED IN FAVOR OF ADOPTION OF THE PROPOSED AMENDMENTS TO THE
PARTNERSHIP AGREEMENT.
YOU DO NOT HAVE TO DO ANYTHING IN RESPONSE TO THIS NOTICE OF THE
ACCOMPANYING SOLICITATION STATEMENT IF YOU DO NOT HAVE ANY OBJECTIONS TO THE
EQUITABLE SETTLEMENT. HOWEVER, IF YOU DESIRE TO OFFER YOUR UNITS FOR REPURCHASE
YOU MUST TIMELY COMPLETE AND RETURN THE ACCOMPANYING REPURCHASE REQUEST (SEE
SECTION III(1)(d) BELOW).
IN ADDITION TO THIS PROPOSED SETTLEMENT WITH RESPECT TO THE
EQUITABLE SETTLEMENT CLASS, THE COURT HAS ALSO SEPARATELY CERTIFIED FOR
SETTLEMENT PURPOSES A DIFFERENT CLASS IN THE ACTION (THE "MONETARY SETTLEMENT
CLASS") GENERALLY CONSISTING OF ALL PERSONS OR ENTITIES WHO PURCHASED OR
RECEIVED BY WAY OF ASSIGNMENT OR TRANSFER UNITS IN PLM EQUIPMENT GROWTH FUND IV,
FUND V, FUND VI, OR FUND VII BETWEEN MAY 23, 1989 AND , 1999 (THE "CLASS
PERIOD"), AND THEIR SUCCESSORS OR ASSIGNS, SUBJECT TO CERTAIN EXCLUSIONS. YOU
ARE ALSO A MEMBER OF THE MONETARY SETTLEMENT CLASS, UNLESS YOU CHOOSE TO EXCLUDE
YOURSELF FROM THAT CLASS. THE MONETARY SETTLEMENT PROVIDES FOR MEMBERS OF THE
MONETARY SETTLEMENT CLASS TO RECEIVE A CASH PAYMENT SEPARATE AND APART FROM THE
EQUITABLE RELIEF BEING AFFORDED TO THE EQUITABLE SETTLEMENT CLASS. YOU SHOULD BE
RECEIVING BOTH THIS NOTICE AND THE SEPARATE NOTICE THAT IS BEING SENT TO
MONETARY SETTLEMENT CLASS MEMBERS WHICH DESCRIBES IN DETAIL THE NATURE OF THAT
PROPOSED MONETARY SETTLEMENT. IF YOU HAVE NOT RECEIVED THE MONETARY CLASS
NOTICE, CONTACT THE CLAIMS ADMINISTRATOR AT GILARDI & CO., POST OFFICE BOX 8040,
SA-8040, [INSERT 800 #] TO REQUEST A COPY.
IF, AFTER HAVING READ THIS NOTICE, YOU HAVE QUESTIONS OR
COMMUNICATIONS CONCERNING THE EQUITABLE SETTLEMENT, THE SETTLEMENT FAIRNESS
HEARING OR ANY OF THE INFORMATION CONTAINED IN THIS NOTICE YOU MAY CALL OR WRITE
GILARDI & CO.
DO NOT WRITE OR TELEPHONE THE COURT.
This Notice (the "Notice") is not intended to be, and should not
be construed as, an expression of any opinion by the Court with respect to the
truth of the allegations in the Action or the merits of the claims or defenses
asserted. This Notice is to advise you of the pendency of the Action and the
proposed settlement thereof and of your rights in connection therewith.
I. THE ACTION
On January 22, 1997, six named plaintiffs filed an action against
Defendants PLM International, Inc., PLM Financial Services, Inc., PLM Investment
Management, Inc., PLM Transportation Equipment Corporation, and PLM Securities
Corp. (the "Defendants") in Alabama state court. On March 6, 1997, Defendants
removed the state court action to the United States District Court for the
Southern District of Alabama, Southern Division, before The Honorable William
Brevard Hand (the "Alabama Action"). On May 28, 1997, another representative
plaintiff filed an action in California state court, styled Romei vs. PLM
International, Inc., et al., in the Superior Court for the State of California
(No. 987062) (the "California Action") which is currently pending in that court.
(The California and Alabama Actions are referred to collectively as the
"Action", or the "Litigation", and the plaintiffs in both cases are referred to
collectively as "Plaintiffs"). The parties in the California Action have agreed
to stay that case pending settlement of the Alabama Action. Upon final approval
by the Court of this Stipulation, the plaintiff in the California Action will
dismiss the California Action with prejudice.
Plaintiffs, on behalf of themselves and all others similarly
situated, allege that Defendants (1) participated in and pursued a common scheme
and a continuous course of conduct of obtaining money from Plaintiffs and the
other Class Members by organizing, marketing and operating the Funds through
fraud and in breach of their respective fiduciary duties for their own benefit;
(2) fraudulently induced Plaintiffs to invest in the Funds; (3) breached their
fiduciary duties to Plaintiffs and the Class in their selection and/or
liquidation of investments for the Funds; (4) breached their fiduciary duties by
failing to exercise due care in selecting investments for the Funds; and (5)
created and disseminate standardized offering materials that omitted material
facts or misstated material facts. Plaintiffs alleged eight causes of action
against Defendants for (1) Fraud and Deceit; (2) Suppression; (3) Negligent
Misrepresentation and Suppression; (4) Intentional Breach of Fiduciary Duty; (5)
Negligent Breach of Fiduciary Duty; (6) Unjust Enrichment; (7) Conversion; and
(8) Conspiracy.
In connection with the proposed Settlement of the Action, on February
12, 1999 the parties signed a Stipulation providing that the Court could enter
an order certifying two classes in this Action for settlement purposes. The
class which is the subject of this Notice and the Solicitation Statement, is
called the Equitable Settlement Class and is a non-opt-out class certified by
court order dated ___________, 1999 under Federal Rule of Civil Procedure
23(b)(1) and (2) consisting of: All investors, Limited Partners, assignees or
Unit holders who on _____________ held any Units in PLM Equipment Growth Fund V
("Fund V"), PLM Equipment Growth Fund VI ("Fund VI"), or PLM Equipment Growth
and Income Fund VII ("Fund VII"), (collectively, the "Funds") and their assigns
and successors in interest.
The other class involved in the Settlement is the Monetary Settlement
Class which is the subject of a separate notice. The Monetary Settlement Class
generally includes (with certain exclusions) purchasers, transferees, or
assignees of Units in PLM Equipment Growth Fund IV ("Fund IV"), Fund V, Fund VI,
and Fund VII between May 23, 1989 and __________, 1999. Members of the Monetary
Settlement Class will be entitled, among other things, to share in a six million
dollar ($6,000,000) cash settlement fund. Persons may be members of both the
Equitable Settlement Class and the Monetary Settlement Class. In order to
participate in the Monetary Settlement Class cash settlement fund, you must
timely file a Proof of Claim and Release which accompanies the Monetary
Settlement Class Notice.
II. DEFINITIONS
In addition to the foregoing defined terms, and such other terms as may be
defined later in this Notice, the following terms have the meanings specified
below:
1. "Authorized Claim" means the claim of any Authorized Claimant
pursuant to the Monetary Settlement.
2. "Authorized Claimant" means any Monetary Settlement Class
Member whose Claim has been allowed pursuant to the terms of the Stipulation and
the Claims Administration Protocol.
3. "Claims Administrator" means Gilardi & Co. or any other
replacement Administrator.
4. "Defendants" means PLM International, Inc., PLM Financial
Services, Inc., PLM Investment Management, Inc., PLM Transportation Equipment
Corporation, and PLM Securities Corp.
5. "Effective Date for Equitable Settlement" means the first date
by which all of the events and conditions specified in Section III herein and
inss.ss.3.3, 3.4, 3.6, and those relevant sections ofss.11.2(a) of the
Stipulation have been met and have occurred.
6. "Equitable Settlement" means that portion of the Stipulation
that relates to the Settlement of the claims of the Equitable Settlement Class,
including the extension of the operating lives of Funds V, VI and VII, as more
detailed in Section V below.
7. "Equitable Settlement Class" means all investors, Limited
Partners, assignees or Unit holders who, as of____________, 1999 held Units in
PLM Equipment Growth Fund V, PLM Equipment Growth Fund VI, or PLM Equipment
Growth and Income Fund VII, and their assigns and successors in interest (also
referred to herein as the "Class").
8. "Extension Period" means the period from January 1, 1999
through 2006, by which the Equitable Settlement and Final Order and Judgment
extends the operating lives of Funds V, VI and VII.
9. "Final" means: (i) the date of final affirmance on an appeal of
either or both of the Final Orders and Judgments, (if Judgments are appealed and
affirmed on appeal) the expiration of the time for a petition for a writ of
certiorari to review either or both of the Final Orders and Judgments and, if
certiorari be granted, the date of final affirmance following review pursuant to
that grant; or (ii) the date of final dismissal of any appeal from, or
proceeding seeking certiorari review of, either or both of the Final Orders and
Judgments; or (iii) if no appeal is filed, the expiration date of the time for
the filing or noticing of any appeal from the Court's Final Orders and Judgments
approving the Stipulation, all as determined under the Federal Rules of Civil
Procedure. Any proceeding, order, appeal or petition for a writ of certiorari
pertaining solely to an application for or award of attorneys' fees, costs or
expenses, shall not in any way delay or preclude the Final Orders and Judgments
from becoming final.
10. "Final Orders and Judgments" means the judgments to be entered
by the Court with respect to the Monetary and Equitable Settlements.
11. "Limited Partner" means (1) a person who purchased Units in
the initial offering of a Fund, was accepted as a Limited Partner under the
terms of the Fund's partnership agreement and who owned Units as of
_____________, 1999 and (2) the assignees and successors in interest of Limited
Partners who have been accepted as substitute Limited Partners under the terms
of the partnership agreement and who owned Units as of , 1999.
12. "Monetary Settlement Class Member" means a Person (as defined
herein) who falls within the definition of the Monetary Settlement Class and who
has not validly and timely requested exclusion from the Monetary Settlement
Class, as provided in Section IV below.
13. "Monetary Settlement" means that portion of this Stipulation
that relates to the Settlement of the claims of the Monetary Settlement Class
and provides for payments to the Monetary Settlement Class out of the Net
Settlement Fund.
14. "Monetary Settlement Class" means all investors, Limited
Partners, assignees or Unitholders who purchased or received by way of transfer
or assignment any Units in PLM Equipment Growth Fund IV, PLM Equipment Growth
Fund V, PLM Equipment Growth Fund VI, and PLM Equipment Growth and Income Fund
VII (collectively the "Funds") during the period from May 23, 1989 through ,
1999("Monetary Settlement Class Period"), together with their assigns and
successors in interest. ------------------- Excluded from the Monetary
Settlement Class are:
(a) each and every person or entity whose claims against the
Defendants with respect to all the Funds invested in by that person or entity
have been finally adjudicated in litigation or arbitration, before any court or
arbitration tribunal;
(b) all persons or entities that have entered into valid releases
with the Defendants with respect to any or all of the wrongs alleged in the
Action:
(c) Defendants, their control persons, subsidiaries and
affiliates, employees, members of their immediate families and their legal
representatives, heirs, successors or assigns; and
(d) those persons who timely and validly request exclusion from
the Monetary Settlement Class.
15. "Monetary Settlement Distribution Date" means the tenth
business day following the date on which the Claims Administrator serves its
Initial Distribution Report on the signatories to the Stipulation.
16. "Net Settlement Fund" means the Settlement Fund for the
Monetary Settlement Class after deduction of all fees, costs, expenses, taxes
and other charges in accordance with the Stipulation.
17. "Person" means individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, or assigns.
18. "Plaintiffs' Class Counsel" means all counsel representing the
Representative Plaintiffs and Settlement Class Members who are a signatories to
the Stipulation.
19. "Plan of Allocation" means the plan of allocation of the
Settlement Fund whereby the Net Settlement Fund shall be distributed to
Authorized Claimants.
20. "Proof of Claim and Release" means the proofs of claim and
release that Monetary Settlement Class Members are required to complete pursuant
to the Stipulation.
21. "Related Parties" means each of a Defendant's past or present
directors, officers, employees, partners, principals, agents, insurers,
co-insurers, reinsurers, controlling shareholders, attorneys, accountants,
personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, related or affiliated
entities, any entity in which any Defendant has a direct or indirect controlling
interest, and all such related parties' heirs, members of their immediate
families or any trust of which any Defendant is the settler or which is for the
benefit of any Defendant and/or member(s) of his family.
22. "Released Claims" means any and all claims or causes of
action, including "Unknown Claims" as defined herein, demands, rights,
liabilities and causes of action of every nature and description whatsoever,
known or unknown, asserted or that might have been asserted, including without
limitation, claims for negligence, gross negligence, breach of duty of care
and/or breach of duty of loyalty, fraud, breach of fiduciary duty, breach of
contract, or violations of any state or federal statutes, rules or regulations,
by the Representative Plaintiffs, the Monetary Settlement Class Members, or any
of them, and their successors and assigns, whether directly, representatively,
derivatively or in any other capacity, based upon or related to any transaction
between Defendants and any Monetary Settlement Class Member involving the Funds
or the Units during the Class Period against all Defendants and all other
entities and persons, including specifically any and all broker-dealers or other
third parties involved in such sale or purchase. Released claims specifically
means all claims and potential claims arising out of: (a) the marketing, sale,
purchase or transfer of the Funds' limited partnership Units: (b) the operation,
oversight, monitoring or management of, any of the Funds until the date of final
approval of the Monetary Settlement against all Defendants and all other
entities and persons, including specifically any and all broker-dealers or other
third parties involved in such sale or purchase: or (c) any challenge to the
Stipulation by Monetary and/or Equitable Class Members and their successors and
assigns, whether directly representatively or derivatively or in any other
capacity, however, are not by this Settlement releasing (a) potential claims
arising out of alleged future mismanagement of the Funds that (1) occur after
the date of the Court's final approval of the Settlement, and (2) are not
related to, or derived from, the Action's presently pled mismanagement claims;
or (b) potential claims to enforce the terms of this Settlement.
23. "Released Persons" means each and all of the Defendants and
their Related Parties, and all other entities and persons, including
specifically Defendants' insurers, any and all broker-dealers or other third
parties involved in the sale or purchase of the limited partnership interests,
including their past or present officers, directors, shareholders, partners,
agents, employees, attorneys, advisors, accountants, representatives,
successors, or assigns.
24. "Representative Plaintiff(s)" means Daniel Koch, Glan Rawls,
Lois Romei, Leslie Walker, Larry Levin, William Polt, and Charles Leo acting on
behalf of themselves or on behalf of the Monetary and/or Equitable Settlement
Class and/or the Monetary and/or Equitable Settlement Class Members.
25. "Settlement Fund" means the sums to be delivered to the Claims
Administrator and held in an interest-bearing escrow account for the benefit of
the Monetary Settlement Class Members.
26. "Settlement Hearing" means the hearing held by the Court on
______, 1999 to consider final approval of the Stipulation pursuant to Rule 23
of the Federal Rules of Civil Procedure.
27. "Settling Party(ies)" means, individually or collectively,
each or all of the Defendants and the Monetary and/or Equitable Settlement Class
Members.
28. "Stipulation" means the Stipulation of Settlement and all
Exhibits attached hereto and the Document Letter executed by Plaintiffs' Class
Counsel and counsel for Defendants, and all Exhibits thereto.
29. "Units" means the limited partnership units in each of Funds
IV, V, VI, and VII.
30. "Unitholder" means a Person who owned Units in any of the
Funds as of ________, 1999, or as of a future date where specified, whether or
not such Unitholder has been accepted as a Limited Partner under the terms of
the respective partnership agreement.
31. "Unknown Claims" means any Released Claims which any Monetary
Settlement Class Member does not know or suspect to exist in his, her or its
favor at the time of the release of the Released Persons which, if known by him,
her or it, might have affected his, her or its settlement with and release of
the Released Persons, or might have affected his, her or its decision with
respect to the Settlement.
III. THE PROPOSED SETTLEMENT
A settlement has been reached in the Action between the Settling Parties which
Settlement is contained in the Stipulation. The following description of the
Settlement is only a summary. For the full details of the proposed Settlement,
you may refer to the Stipulation, which is in file with the Court.
1. The benefits of the Equitable Settlement include:
a. Extension of the operating lives of Fund V, Fund VI,
and Fund VII, authorizing the General Partner of each Fund to reinvest cash
flow, surplus partnership funds, or retained proceeds in equipment into the year
2004, and providing for the liquidation of the Funds' equipment no later than
2006 (the "Extension Period").
b. During the period January 1, 2002 through June 30, 2004
for Fund V, the period January 1, 2003 through June 30, 2005 for Fund VI, and
January 1, 2005 through June 30, 2006 for Fund VII (the "Deferral Period") the
General Partner will defer receipt of twenty-five percent (25%) of its Equipment
Management Fee (the "Deferred Management Fee"). The Deferred Management Fee for
each Fund will continue to be accrued for the benefit of the General Partner
during the applicable Deferral Period but will not be earned or paid unless the
stipulated performance target for such fund during the Extension Period is
reached, as discussed in Section IV below. For additional discussion of the
stipulated performance target, you should also review the Solicitation Statement
accompanying this Notice.
c. If, during the Extension Period the General Partner
determines that a Fund has achieved the stipulated performance target, the it
may then pay itself in full the Deferred Management Fee from additional cash
flow. Deferred Management Fees which are not payable to the General Partner by
virtue of a Fund not achieving the stipulated performance target shall be
forfeited by the General Partner and retained by that Fund for distribution to
the Unitholders at the time of forfeiture.
d. Each Fund approving the Equitable Settlement shall
offer to repurchase from Equitable Settlement Class Members an aggregate of up
to ten percent (10%) of that Fund's total Units outstanding at a price equal to
eighty percent (80%) of the Net Asset Value per Unit as of the fiscal quarter
immediately preceding [add the last date to file the Repurchase Request]. In the
event that more than ten percent of a Fund's Units are offered for repurchase,
the Units offered shall be purchased by the Fund on a pro rata basis. In such
event, preference will be given first to Units owned by estates, individual
retirement accounts, and qualified retirement plans that purchased in the
initial offering of the Fund, then to all remaining Limited Partners that
purchased in the initial offering, then to all remaining Limited Partners, and
then to all remaining Unitholders. In addition, Units which are offered for
repurchase, but which exceed the ten percent (10%) maximum, may be purchased by
the General Partner on the same financial terms with its own monies, but the
General Partner will not be obligated to do so. The complete terms governing the
repurchase are set forth in the Repurchase Protocol which is Exhibit C to the
Stipulation.
e. Each Equitable Settlement Class Member who desires to
offer Units for repurchase under the above repurchase provisions must timely
complete and return the form entitled Repurchase Request which accompanies this
Notice. The completed Repurchase Request must be sent, postmarked or received by
_________, 1999 to the Claims Administrator at the address set forth in the
Repurchase Request. All Equitable Settlement Class Members who fail to validly
and timely complete and file the Repurchase Request shall be barred from
offering their Units for repurchase (unless otherwise ordered by the Court), but
otherwise shall be bound by all of the terms of the Stipulation and any Judgment
entered pursuant thereto.
f. If not disapproved by a majority of the Units held by
Limited Partners of each Fund, the provisions of Funds V, VI, and VII's
respective Partnership Agreements will be amended to the extent necessary to
effectuate the terms of the Equitable Settlement including, but not limited to,
providing for: the extension of the operating lives of the Funds; the
reinvestment of cash flow or surplus funds; the repurchase of Units by the
Funds; the resolution of disputes relating to or arising from this Stipulation
by the Alabama Court; the lack of Unit holder objections necessary to effectuate
Partnership Agreement amendments; and the General Partner's right to continue to
earn fees for the management of the Funds and the reinvestment of assets. ALL
THESE PROPOSED AMENDMENTS ARE SET FORTH IN GREATER DETAIL IN THE ACCOMPANYING
SOLICITATION STATEMENT AND YOU ARE ENCOURAGED TO REVIEW ALL SUCH AMENDMENTS
CAREFULLY. YOU HAVE THE RIGHT TO VOTE AGAINST THESE AMENDMENTS.
2. The Stipulation also requires Defendants to pay or cause to be paid the sum
of $6,000,000 (the "Settlement Fund") for the primary benefit of the Monetary
Settlement Class. Defendants shall also pay $200,000 to the Claims Administrator
to be used to pay notice and administrative costs associated with both the
Monetary Settlement and the Equitable Settlement, (the "Cost Fund"). The terms
of the Monetary Settlement, and the allocation of the Settlement Fund among the
various Funds, are summarized in the Monetary Settlement Class Notice, and you
are encouraged to review that Notice as well.
3. If the Equitable Settlement is approved, the Court will enter an Order and
Final Judgment that will, among other things, judicially amend the Partnership
Agreements, without further solicitations or consents, as may be necessary or
appropriate to implement the transactions contemplated by the Equitable
Settlement in accordance with the terms of the Stipulation and the Solicitation
Statement.
4. (a) The Monetary Settlement and the Equitable Settlement may be presented to
and considered by the Court separately. If the Monetary Settlement is not
approved or does not become final for any reason, both the Monetary Settlement
and Equitable Settlement will be terminated even if the Equitable Settlement has
been separately approved.
(b) The failure of the Equitable Settlement to receive
final Court approval or become Final for any other reason will not operate to
terminate the Stipulation as to the Monetary Settlement or to affect or delay
the finality of any judgment approving the Monetary Settlement.
5. The Equitable Settlement is also conditioned upon the occurrence of a number
of events. The conditions include: (1) entry of the Order and Final Judgment by
the Court as provided for in the Stipulation; and (2) expiration of the time to
appeal from the Judgment. If, for any reason, any of the conditions specified in
the Stipulation are not met, or waived, the Stipulation may be terminated and,
if terminated, will become null and void, and the Settling Parties will be
restored to their respective positions before the execution of the Stipulation.
IV. RECOMMENDATION OF PLAINTIFFS' CLASS COUNSEL
In the opinion of Plaintiffs' Class Counsel, the equitable relief to be provided
to Equitable Settlement Class Members, as described above in Section III, is
beneficial. Plaintiffs' Class Counsel believe that Defendants' offer to extend
the operating lives of Fund V, Fund VI and Fund VII will provide the opportunity
for the Funds to make future cash distributions to the Equitable Settlement
Class Members which are greater than the cash distributions that are expected to
be achieved if the Funds are liquidated on their current schedules.
Plaintiffs' Class Counsel base their opinion, in part, on their independent
financial expert, Murray Devine & Co.'s ("Murray Devine") independent
investigation, analysis and review of financial and other information and
assumptions provided by the General Partner. Although no assurance can be given,
Plaintiffs' Class Counsel has been advised that due to present conditions in the
leasing and sale markets for the equipment owned by the Funds, an extension of
the operating lives of the Funds presents an opportunity for the Funds to
generate over the Extension Period more cash flow to the Equitable Settlement
Class Members than would be received if the Funds were liquidated as scheduled.
According to the General Partner, the Extension Period will give it more
flexibility to take advantage of market conditions. Plaintiffs' Class Counsel
are advised that liquidating the Funds as scheduled may cause the General
Partner to sell certain assets prior to realizing the full economic benefit that
may be available to the Funds. Extending the operating lives of the Funds is
likely to provide the General Partner with greater flexibility both to generate
additional revenue from continuing to lease an asset and to determine when to
sell an asset based on market conditions. In other words, the Extension Period
will provide the General Partner with discretion to ride out cyclical markets,
to hold or sell certain assets, to reinvest the proceeds of those assets and to
make other investment decisions in an effort to improve the performance of the
Funds. There can be no assurance, however, that the performance of the Funds
during the Extension Period will achieve the anticipated benefits described in
this Notice or that the equipment markets, looking forward, will support such
results when the General Partner determines to sell assets.
The Extension of the operating lives of the Funds is expected to provide the
opportunity for the Funds to make cash distributions to the Limited Partners for
a longer period of time than if the Funds are liquidated as scheduled. The
increased number of quarterly cash distributions resulting from the continuation
of existing leases, entering into new leases and the reinvestment of cash flow
in additional equipment combined with special cash distributions of proceeds
from asset sales and reserves creates the benefit of the extension for the
Equitable Settlement Class Members.
Under the terms of the Equitable Settlement, Plaintiffs' Class Counsel will not
receive any of their court awarded fees or expenses with respect to a particular
Fund unless the incremental cash flow to the limited partners during the
Extension Period achieves an internal rate of return ("IRR") of at least 12%
annualized, as provided for in the Stipulation and the IRR Protocol (which is
Exhibit D to the Stipulation). (See Section X - Fees and Expenses, below).
In addition to the extension of the operating lives of the Funds, the Equitable
Settlement Class benefits also include:
(1) The deferral of a portion of the General Partner's equipment
management fees (which will only become earned and payable in the
event the IRR, during the Extension Period, reaches 10%
annualized); and
(2) Each Fund's offer to repurchase up to 10% of its outstanding Units
as described above and in the accompanying Repurchase Request.
The IRR percentages pertaining to the General Partner's Deferred Management
Fee and Plaintiffs' Class Counsel's Equitable Class Fee and Expense Award
earned during the extension period do not represent a percentage return on
either a Unitholder's original or remaining investment in the Parntership.
Rather, these IRR percentages relate to the Extension Period benefits which
are calculated as the difference between the actual cash distributed to the
Unitholders in each Fund during the Extension Period and cash flow which is
assumed would have been received by the Unitholders (beginning with January
1, 1999), if the Fund was liquidated on its current schedule ("Assumed Cash
Flow"). The IRR calculation will determine the annualized rate of return of
the Extension Period benefit taking into account when the cash flows are
realized, and in effect, represents a return with respect to the Assumed
Cash Flow as if such Assumed Cash Flow was an investment of the Unitholders
in the Fund. As an example, an IRR of 10% could result if the Extension
Period benefit cash flow is positive every year from 1999 to 2006 or if the
Extension Period Benefit cash flow is zero for several years (as an
example, from 1999 to 2002) and then positive for several years (as an
example, from 2003 to 2006). In other words, for the General Partner to
begin to receive its deferred management fee, the IRR calculation in
substance requires an annualized increase of at least 10% in the actual
cash flow relative to the cash flow assumed to be received by the
Unitholders if the Funds were to be liquidated on their current schedules.
Similarly, for Plaintiff's Class Counsel to begin to receive their deferred
equitable settlement attorneys' fee and expense award, the IRR calculation
requires an annualized increase of at least 12% in actual cash flows
relative to Assumed Cash Flows.
CIVIL ACTION NO. 97-0177-BHC
Based upon their evaluation of the benefits and risks, Plaintiffs' Class
Counsel recommend that members of Equitable Settlement Class support the
proposed settlement. Defendants take no position with respect to
Plaintiffs' Class Counsel's recommendation to the Class.
V. FORWARD LOOKING STATEMENTS
Certain statements in this Notice and in the Stipulation relate to future
events and expectations, and as such, constitute what are called
"forward-looking statements." For purposes of this Settlement and your
right to be heard in Court regarding this Settlement, any statements
contained in this Notice or the Stipulation that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting themselves to the foregoing description, the words "believes,"
"anticipates," "expects," "projects," "determined" and similar expressions
used in this Notice or Stipulation are intended to identify forward-looking
statements. Such forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Funds to be materially
different from projected performance or achievements of the Funds expressed
in this Notice or other documents relating to the Settlement of this
Action. Such factors include the known and unknown risks of the business of
leasing and investing in equipment set forth in your Fund's Prospectus. If
you do not have a copy of the Prospectus, you may obtain one by contacting
the Claims Administrator, Gilardi & Co., P O Box 8040, San Rafael, CA
94912-8040 or call toll free, 1-800-XXX-XXXX for further information. FOR A
FULLER DISCUSSION OF THESE AND OTHER FACTORS THAT ARE MATERIAL TO YOUR
DECISION IN CONNECTION WITH THE EQUITABLE SETTLEMENT, YOU SHOULD CAREFULLY
REVIEW THE SOLICITATION STATEMENT AND, PARTICULARLY, THE DISCUSSION SET
FORTH UNDER THE CAPTION "RISK FACTORS."
VI. SETTLEMENT NEGOTIATIONS AND THE POSITIONS OF THE PARTIES
Counsel for the Parties engaged in extensive arm's-length negotiations that
culminated in this Settlement. Plaintiffs' Class Counsel conducted
extensive discovery and investigation during the prosecution of the Action
to determine how best to confer a benefit upon the Equitable Settlement
Class Members, in light of substantial obstacles to, and risks of,
establishing liability. This discovery and investigation has included inter
alia, (i) inspection and analysis of voluminous documents, including
Defendants' and broker-dealers' internal marketing and sales material,
solicitations, public filings, annual reports and other public statements;
(ii) Plaintiffs' Class Counsel's interviews with numerous investors; (iii)
research of applicable law with respect to the claims asserted in the
Action and the potential defenses thereto; (iv) the retention of and
consultation with independent financial and other experts; and (v)
litigation of the claims.
Plaintiffs' Class Counsel believe that the claims asserted in the Action
have merit. However, Plaintiffs' Class Counsel recognize and acknowledge
the uncertain outcome and the risk of any litigation, especially in complex
actions such as this Action, as well as the difficulties and delays
inherent in such litigation. Plaintiffs' Class Counsel have also taken into
account the expense and length of continued proceedings necessary to
prosecute the Action through trial and appeals. Plaintiffs' Class Counsel
believe that, in consideration of all the circumstances and after prolonged
and serious arm's-length negotiations with Defendants, the Settlement
embodied in the Stipulation is fair, reasonable and adequate and confers
substantial benefits on, and is in the best of interest of, the Equitable
Settlement Class and each of the Equitable Settlement Class Members.
Defendants have denied and continue to deny all liability with respect to
any and all of the facts or claims alleged in the Action. Defendants have
denied and continue to deny allegations that Defendants misrepresented or
concealed the risks, costs or characteristics of securities investments
made through Defendants, or that the Equitable Settlement Class suffered
any injury for which it is legally entitled to relief. There has been no
determination adverse to any of the Defendants by any court as to the
merits of the claims asserted by Plaintiffs.
Defendants have nonetheless concluded that it is desirable that the Action
be settled on the terms embodied in the Stipulation. Defendants reached
that conclusion after: (1) analyzing the factual and legal issues in the
Action; (2) determining that further conduct of the Action through fair
trial and any appeals that might be taken would be protracted and
expensive; and (3) considering the benefits to Defendants of resolving the
Action, including limiting further expense, inconvenience and distraction,
disposing of burdensome and protracted litigation, and permitting
Defendants to conduct their business unhampered by the distractions of
continued litigation. Defendants also determined to settle the Action after
taking into account the uncertainty and risks inherent in any litigation,
especially in protracted and complex cases such as the Action.
VII. RIGHTS AND OPTIONS OF EQUITABLE
SETTLEMENT CLASS MEMBERS
YOU DO NOT NEED TO TAKE ANY ACTION IF YOU HAVE NO OBJECTION TO THE
EQUITABLE SETTLEMENT. IF, HOWEVER, YOU WISH TO FILE AN OBJECTION WITH THE
COURT YOU MUST DO SO WITHIN THE TIME AND MANNER DESCRIBED IN SECTION XI
BELOW. ALL UNITHOLDERS (SEE ITEM 29 OF SECTION II DEFINITIONS) WHO ARE
EQUITABLE SETTLEMENT CLASS MEMBERS HAVE THE RIGHT TO FILE AN OBJECTION. IN
ADDITION, EQUITABLE SETTLEMENT CLASS MEMBERS WHO ARE LIMITED PARTNERS (SEE
ITEM 11 IN SECTION II DEFINITIONS) MAY VOTE THEIR UNITS AGAINST THEIR
FUNDS' ADOPTION OF AMENDMENTS TO THE PARTNERSHIP AGREEMENT WHICH ARE
NECESSARY TO IMPLEMENT THE TERMS OF THE SETTLEMENT. THE PROCEDURES FOR
VOTING ARE DESCRIBED IN THE ACCOMPANYING SOLICITATION STATEMENT FURNISHED
BY THE FUNDS. IF FIFTY PERCENT OR MORE OF THE UNITS ELIGIBLE TO BE VOTED BY
A FUND'S LIMITED PARTNERS VOTE AGAINST AMENDING A FUND'S PARTNERSHIP
AGREEMENT, THAT FUND WILL NOT PARTICIPATE IN THE EQUITABLE CLASS
SETTLEMENT.
IF YOU ARE A LIMITED PARTNER ELIGIBLE TO VOTE AND YOU FAIL TO COMPLETE AND
RETURN THE VOTING FORM WHICH ACCOMPANIES THE SOLICITATION STATEMENT, YOUR
UNITS WILL BE TREATED AS IF THEY HAD BEEN VOTED IN FAVOR OF ADOPTION OF THE
PROPOSED AMENDMENTS TO THE PARTNERSHIP AGREEMENT.
IN ADDITION IF YOU DESIRE TO OFFER YOUR UNITS FOR REPURCHASE YOU MUST
TIMELY COMPLETE AND RETURN THE REPURCHASE REQUEST FORM WHICH ACCOMPANIES
THIS NOTICE (SEE SECTION III (1)(d) ABOVE). ALL UNITHOLDERS WHO ARE
EQUITABLE SETTLEMENT CLASS MEMBERS MAY PARTICIPATE IN THE REPURCHASE
SUBJECT TO THE PRIORITY SET FORTH IN SECTION III (1) (d).
Under applicable law, Equitable Settlement Class Members may not opt out of
or exclude themselves from the Equitable Settlement Class. Equitable
Settlement Class Members do have the right to object to or comment on the
Equitable Settlement, in whole or in part, and to have their objections
considered by the Court in connection with the Court deciding whether to
approve the Equitable Settlement. Equitable Settlement Class Members may
also, at their own expense, appear and be heard in person or through their
counsel at the Settlement Hearing.
The procedures and requirements for timely filing valid objections and for
appearing at the Settlement Hearing are described below in Section XI under
the heading "The Right To Be Heard At The Settlement Hearing."
Implementation of the Equitable Settlement as to a particular Fund requires
both: (1) Court approval; and (2) the voting of less than fifty percent of
the Units eligible to be voted by Limited Partners in each of the affected
Funds against the necessary amendments to the Partnership Agreements.
If fifty percent or more of the Units eligible to be voted by Limited
Partners in any Fund are voted against the proposed amendments to that
Fund's Partnership Agreement, then that Fund (a "Non-Participating Fund")
will not participate in the equitable relief of this Settlement and will
continue to operate under the terms and conditions of its existing
Partnership Agreement. A Non-Participating Fund will not receive the
benefits of the equitable relief, including the extension of Fund's
operating life, deferral of certain General Partner fees, or the Fund's
offer to repurchase up to ten percent (10%) of the Fund's Units.
To the extent an Equitable Settlement Class Member holds Units in a
Non-Participating Fund and is also a Monetary Settlement Class Member, that
person may still participate in the Monetary Settlement, if approved,
subject to that Monetary Settlement's terms and conditions.
THE SOLICITATION STATEMENT CONTAINS FURTHER INFORMATION RESPECTING THE
EQUITABLE RELIEF, THE BENEFITS, RISKS AND CONSEQUENCES OF A FUND
PARTICIPATING IN THE EQUITABLE SETTLEMENT AND THE RIGHTS OF UNIT HOLDERS.
YOU SHOULD CONSULT WITH YOUR PERSONAL LEGAL AND FINANCIAL ADVISERS BEFORE
DECIDING WHETHER TO OBJECT TO THE EQUITABLE SETTLEMENT OR, IF YOU ARE A
LIMITED PARTNER, TO VOTE AGAINST YOUR FUND'S ADOPTION OF THE AMENDMENTS TO
THE PARTNERSHIP AGREEMENT WHICH ARE NECESSARY TO IMPLEMENT THE EQUITABLE
SETTLEMENT.
If you have any questions or require any additional information regarding
the Equitable Settlement, or any of the Funds in which you own Units,
please call or write Plaintiffs' Class Counsel identified in Section XI
below.
VIII. DISMISSALS AND RELEASES
If the Equitable Settlement is approved by the Court, the Court will enter
a Final Judgment and Order of Dismissal of the Action (sometimes referred
to as the "Judgment"). The Judgment will dismiss the Action, and all claims
alleged therein, with prejudice as to all Equitable Settlement Class
Members.
The Judgment will also provide that the Representative Plaintiffs and
Equitable Settlement Class Members release and forever discharge the
Released Parties from any and all causes of action, claims, demands, rights
to reimbursement, injunctive relief, disgorgement or restitution or any
other rights or liabilities, whether based on federal, state or local law,
statute, ordinance, regulation, contract, common law or any other source,
including, without limitation, claims arising under Section 10(b) of the
Securities Exchange Act of 1934, Section 20 of the Securities Exchange Act
of 1934, fraud, negligent misrepresentation, negligence, gross negligence,
professional negligence, negligent supervision, breach of duty of care,
breach of duty of loyalty, breach of duty of candor, breach of fiduciary
duty, fiduciary abuse, mismanagement, breach of contract, unjust
enrichment, conversion, conspiracy, California Business and Professions
Code " 17200 and 17500 or under any other similar statute or law of any
other jurisdiction invasion of privacy or negligent supervision, including
Unknown Claims that have been or could or might have been alleged in any
pleading or amended pleading in the Action based upon, related to or
arising out of the purchase, acquisition, sale, assignment, exchange,
redemption, transfer or ownership of any Units in the Funds during the
Class Period, including without limitation any claims relating to the
adequacy, accuracy or completeness of any disclosure statement, or
representation made orally or in writing, explicit or implicit, relating to
the nature, characteristics, risks, appropriateness, suitability,
descriptions, fees or operation of the Funds sold by or through Defendants.
With respect to any and all Released Claims, upon the Effective Date (as
defined below), representative Plaintiffs and Equitable Settlement Class
Members shall further be deemed to and by operation of the Judgment shall
waive and relinquish, to the fullest extent permitted by law, the
provisions, of Sec 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.
Also with respect to any and all Released Claims, the Representative
Plaintiffs and Equitable Settlement Class Members shall be deemed to, and
upon the Effective Date and by operation of the Judgment shall, waive 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 Section 1542 of the California Civil
Code.
The Equitable Settlement Class Members may hereafter discover facts in
addition to or different from those which they now know or believe to be
true with respect to the subject matter of the Released Claims, but the
Equitable Settlement Class Members, upon the Effective Date, shall be
deemed to have, and by operation of the Final Order and Judgment shall
have, fully, finally, and forever settled and released any and all Released
Claims, including "Unknown 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 or coming into existence in the future, 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 of such different or additional facts.
Following receipt of preliminary approval by the Court, pending final
determination of whether the Settlement should be approved, no
Representative Plaintiff, Equitable Settlement Class Member, or Plaintiffs'
Class Counsel, either directly, representatively, or in any other capacity,
shall commence or prosecute against any of the Released Persons, any action
or proceeding in any Court or tribunal asserting any of the Released
Claims.
In the event that any Equitable Settlement Class Member shall thereafter
bring any action involving any Released Claim against any Released Person,
such Class Member shall indemnify any such Released Person who may be made
a defendant in any such litigation against any liability or expense arising
from any such litigation, whether by reason of contribution, indemnity,
attorneys' fees, defense costs or any other liability, cost, fee or
expense.
Representative Plaintiffs and all Equitable Settlement Class Members will
be permanently barred and enjoined from commencing, prosecuting or
participating in any recovery in any action (other than participation in
the settlement as provided for in the Stipulation) in any forum in which
any of the Released Claims or any claims arising out of, relating to, or in
connection with the defense or resolution of the Action or the Released
Claims is asserted against the Released Parties.
In connection with the Settlement, Plaintiffs' Class Counsel will also file
a Notice of Voluntary Dismissal with Prejudice of the California Action and
shall use their best efforts to obtain an order from the California court
which acknowledges that dismissal with prejudice.
IX. FEES AND EXPENSES
Plaintiffs' Class Counsel shall apply to the Court for an award of fees and
expenses ("Equitable Class Fee and Expense Award"), to be paid out of the
Equitable Settlement and determined as follows. During the Extension Period
and during the liquidation of Funds V-VII (for the remainder of this
Section IX, Fund or Funds refers to Funds V, VI and VII) the General
Partner will calculate for each Fund the Internal Rate of Return ("IRR") on
the Distributions paid or made to each Fund's Equitable Class Members in
accordance with the IRR Protocol attached as Exhibit D to the Stipulation
of Settlement on file with the Court. At the time, if ever, that the IRR in
Funds V, VI or VII during the Extension Period exceeds 12.0% ("over 12.0%
distributions"), as discussed in Section IV above, Plaintiffs' Class
Counsel will be entitled to receive from each future distribution to the
Fund's Unitholders in such Fund(s), a percentage, as awarded by the Court,
of the over 12.0% distributions, in an amount not to exceed 27.5% of the
first $10 million of the over 12.0% class distributions for each Fund,
22.5% of such distributions between $10 million and $20 million, 15% of
such distributions between $20 million and $30 million, and 10% of such
distributions exceeding $30 million, plus expenses to the extent such
expenses have not previously been recovered from the Cost Fund or
Settlement Fund.
In the event a Fund does not achieve an IRR for the Extension Period
greater than twelve percent (12%), no fees or expenses will be paid to
Plaintiffs' Class Counsel by such Fund.
Plaintiffs' Class Counsel will also separately apply to the Court for an
award of attorneys' fees and reimbursement of expenses with respect to the
benefits achieved in the Monetary Settlement. The Monetary Class Notice
sets forth the terms of Plaintiffs' Class Counsel's application for a fee
award in that Monetary Settlement.
X. RIGHT TO BE HEARD AT THE SETTLEMENT HEARING
The Settlement Hearing will be held before The Honorable William Brevard
Hand, United States District Court for the Southern District of Alabama, at
113 St. Joseph Street, Mobile, Alabama 36602, on _________________ for the
purpose of determining whether a judgment and/or orders should be entered:
(1) approving the proposed Equitable Settlement as fair, reasonable and
adequate and directing its implementation; (2) dismissing the Alabama
Action with prejudice; (3) amending each participating Fund's respective
Partnership Agreement as necessary to effectuate the terms of the Equitable
Settlement; (4) awarding Plaintiffs' Class Counsel's attorneys' fees, costs
and expenses; and (5) barring Representative Plaintiffs and Equitable
Settlement Class Members from prosecuting, pursuing or litigating any of
the Released Claims against any of the Released Parties. The Settlement
Hearing may be continued or adjourned from time to time by the Court at the
Settlement Hearing or any continued or adjourned session thereof without
further notice.
Members of the Equitable Settlement Class may not opt out of or exclude
themselves from the Equitable Settlement Class. However, Equitable
Settlement Class Members also have the right to object to or comment upon
the Settlement, in whole or in part, and to have their objections or
comments considered by the Court. In addition, any Equitable Settlement
Class Member may, at their own cost and expense, appear in person or
through counsel, at the Settlement Hearing and be heard on any of the terms
of the Settlement. Provided, however, that no Equitable Settlement Class
Member shall be entitled to object to or comment on any of the foregoing
matters unless they have filed their objections or comments in writing
(together with any brief or other papers in support of any such objection
or comment) with the Court, on or before ___________, showing service of
all such papers, by hand or with postmark on or before ____________, 1999
on Plaintiffs' Class Counsel identified below, and on Defendants' counsel
at the following addresses:
Clerk of the Court Plaintiffs' Co-Counsel Defendants' Counsel
United States District Court HANZMAN, CRIDEN, FARELLA, BRAUN
113 St. Joseph Street CHAYKIN, PONCE & MARTEL, L.L.P.
Mobile, Alabama 36602 & HEISE, P.A. Neil A. Goteiner
Michael A. Hanzman C. Brandon Wisoff
Michael E. Criden Claudia E. Lewis
Alan H. Rolnick Russ Bldg., 30th Floor
2100 First Union 235Montgomery Street
Financial Center San Francisco, CA
200 South Biscayne Blvd. 94104
Miami, FL 33131 415-954-4400
305-579-1222
HAND ARENDALL,
L.L.P.
Douglas L. McCoy
Post Office Box 123
Mobile, Alabama 36601
334-432-5111
Any objection or comment should demonstrate the objecting person's
membership in the Equitable Settlement Class and contain a statement of the
reasons for the objection. Any Equitable Settlement Class Member who does
not make his or her objection or comment in the time and manner provided
shall be deemed to have waived all objections and opposition to the
foregoing matters, unless the Court orders otherwise.
XI. EXAMINATION OF PAPERS
This Notice is only a summary of the terms of the proposed Settlement and
does not describe all of the details of the Stipulation. For a more
detailed statement of the matters discussed in this Notice, you may desire
to review the Stipulation and exhibits filed with the Court, as well as
other matters of record in the Action, which may be inspected at the office
of the Clerk of the Court, at the United States Courthouse, 113 St. Joseph
Street, Mobile, Alabama 36602 between 9:00 a.m. and 4:00 p.m. of each
business day. In addition, you may contact the Claims Administrator,
Gilardi & Co., P O Box 8040, San Rafael, CA 94912-8040, or call toll free,
1-800-XXX-XXXX for further information.
PLEASE DO NOT CALL THE COURT.
DATED:
BY ORDER OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF ALABAMA
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF ALABAMA
- ------------------------------------------------------------------------------
DANIEL KOCH; GLAN RAWLS;
LARRY LEVIN; WILLIAM POLT; and )
CHARLES LEO; on their own behalf and on )
behalf of all class members similarly situated, )
) CIVIL ACTION NO.
Plaintiffs, )
) 97-0177-BH-C
vs. )
)
PLM INTERNATIONAL, INC.; PLM )
FINANCIAL SERVICES, INC.; )
PLM INVESTMENT MANAGEMENT, )
INC.; PLM TRANSPORTATION )
EQUIPMENT CORPORATION; )
and PLM SECURITIES CORP., )
)
Defendants. )
)
)
)
)
)
- ---------------------------------------------------------------------------
SUMMARY PUBLICATION NOTICE OF CLASS ACTION,
PROPOSED SETTLEMENT OF CLASS ACTION, SETTLEMENT
HEARING, AND RIGHT TO APPEAR
TO: ALL INVESTORS, LIMITED PARTNERS, ASSIGNEES, OR UNIT HOLDERS WHO PURCHASED OR
RECEIVED BY WAY OF TRANSFER OR ASSIGNMENT ANY UNITS IN PLM EQUIPMENT GROWTH FUND
IV, PLM EQUIPMENT GROWTH FUND V, PLM EQUIPMENT GROWTH FUND VI, OR PLM EQUIPMENT
GROWTH AND INCOME FUND VII ("FUNDS IV, V ,VI AND VII") BETWEEN MAY 23, 1989 AND
_________ ("THE MONETARY SETTLEMENT CLASS MEMBERS"); AND;
ALL INVESTORS, LIMITED PARTNERS, ASSIGNEES, OR UNIT HOLDERS WHO ON
____________, 1999 HELD ANY UNITS IN PLM EQUIPMENT GROWTH FUND V, PLM EQUIPMENT
GROWTH FUND VI OR PLM EQUIPMENT GROWTH AND INCOME FUND VII ("THE EQUITABLE
SETTLEMENT CLASS MEMBERS").
PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO PROPOSED MONETARY AND
EQUITABLE SETTLEMENTS OF THE CLAIMS OF THIS LITIGATION AND CONTAINS IMPORTANT
INFORMATION REGARDING YOUR RIGHTS.
You may be entitled to receive benefits and your rights may be affected
by a proposed Stipulation of Settlement (the "Stipulation") in a lawsuit
currently pending in the United States District Court for the Southern District
of Alabama (the "Court"), styled Koch, et al. v. PLM International, Inc., PLM
Financial Services, Inc., PLM Investment Management, Inc., PLM Transportation
Equipment Corporation, and PLM Securities Corp ("Defendants"), Case No. 0177-
BH-C (the "Action"), in which Plaintiffs alleged causes of action against
Defendants arising out of the purchase and sale of Units in the Funds, including
fraud, negligent misrepresentation, breach of fiduciary duty, unjust enrichment,
conversion, and conspiracy. The proposed "Monetary Settlement" involves
Defendants' payment of Six Million Dollars ($6,000,000) into a Settlement Fund,
from which a cash payment will be made to Authorized Claimants who are Members
of the Monetary Settlement Class. The proposed "Equitable Settlement" includes
an extension of the operating lives of Funds V, VI, and VII by Solicitation, a
deferral in payment of a portion of the Management Fees for those Funds, and the
repurchase of up to 10% of Equitable Settlement Class Members' Units in those
Funds at a set repurchase price (hereinafter collectively referred to as the
"Settlements").
IF YOU ARE A MONETARY AND/OR EQUITABLE SETTLEMENT CLASS MEMBER AS
DESCRIBED ABOVE, YOUR RIGHTS MAY BE AFFECTED AND YOU MAY BE ENTITLED TO A CASH
PAYMENT AND/OR CERTAIN EQUITABLE RELIEF. The "Notice of Pendency of Class
Litigation, Class Action Determination for the Monetary Settlement Class,
Proposed Settlement and Settlement Fairness Hearing" (the "Monetary Class
Notice") was mailed on ____________; the "Notice of Pendency of Class
Litigation, Class Action Determination for the Equitable Settlement Class,
Proposed Settlement and Settlement Fairness Hearing" (the "Equitable Class
Notice") was mailed on __________. Both notices describe in detail the proposed
Settlements and your rights thereunder. You may obtain copies thereof by
contacting the: Claims Administrator, Gilardi & Co., PO Box 8040, San Rafael, CA
94912-8040, 1-800-________. Additionally, the Stipulation is on file with the
Clerk of the Court, Southern District of Alabama, 113 St. Joseph Street, Mobile,
Alabama 36602, which you may inspect at the Clerk's Office at any time during
normal business hours.
TO BE ELIGIBLE TO RECEIVE A MONETARY PAYMENT, YOU MUST BE A MEMBER OF THE
MONETARY SETTLEMENT CLASS AND YOU MUST COMPLETELY FILL OUT AND SIGN THE PROOF OF
CLAIM FORM WHICH ACCOMPANIES THE MONETARY CLASS NOTICE. TO BE ELIGIBLE TO TAKE
PART IN THE EQUITABLE SETTLEMENT, YOU DO NOT HAVE TO DO ANYTHING IN RESPONSE TO
THE EQUITABLE CLASS NOTICE OR SOLICITATION. HOWEVER, IF YOU DESIRE TO OFFER YOUR
UNITS FOR REPURCHASE, YOU MUST TIMELY COMPLETE AND RETURN THE REPURCHASE REQUEST
WHICH YOU SHOULD RECEIVE WITH THE EQUITABLE CLASS NOTICE.
The Settlements also provide that Representative Plaintiffs, Equitable
Settlement Class Members and Monetary Settlement Class Members who do not submit
valid and timely requests for exclusion from the Monetary Settlement Class,
release and forever discharge the Released Parties, as that term is defined in
the Stipulation, from any and all causes of action, claims, demands, rights to
reimbursement, injunctive relief, disgorgement or restitution or any other
rights or liabilities, whether based on federal, state or local law, statute,
ordinance, regulation, contract, common law or any other source, including,
without limitation, claims arising under Section 10(b) of the Securities
Exchange Act of 1934, Section 20 of the Securities Exchange Act of 1934, fraud,
negligent misrepresentation, negligence, gross negligence, professional
negligence, negligent supervision, breach of duty of care, breach of duty of
loyalty, breach of duty of candor, breach of fiduciary duty, fiduciary abuse,
mismanagement, breach of contract, unjust enrichment, conversion, conspiracy,
California Business and Professions Code " 17200 and 17500 or any other similar
statute or law of any other jurisdiction, invasion of privacy or negligent
supervision, including Unknown Claims that have been or could or might have been
alleged in any pleading or amended pleading in the Actions based upon, related
to or arising out of the purchase, acquisition, sale, assignment, exchange,
redemption, transfer or ownership of any Units in the Funds during the Class
Period, including without limitation any claims relating to the adequacy,
accuracy or completeness of any disclosure statement, or representation made
orally or in writing, explicit or implicit, relating to the nature,
characteristics, risks, appropriateness, suitability, descriptions, fees or
operation of the Funds sold by or through Defendants.
A hearing on the Monetary and Equitable Settlements is scheduled for
[date], at [time], in the Courtroom of The Honorable William Brevard Hand,
located at United States District Court for the Southern District of Alabama,
113 St. Joseph Street, Mobile, Alabama 36602. A Settlement is scheduled for
[date], at [time], in the Courtroom of The Honorable Wiliam Brevard Hand,
located at United States District Court for the Southern District of Alabama,
113 St. Joseph Street, Mobile, Alabama 36602. The purpose of the hearing is to
determine whether or not the Settlements are fair, reasonable and in the best
interests of the Class members, and whether the Court should enter a final
judgment approving the Settlements. IF THE COURT ENTERS A FINAL JUDGMENT
APPROVING THE SETTLEMENTS, ALL MONETARY SETTLEMENT CLASS MEMBERS WHO HAVE NOT
REQUESTED EXCLUSION IN WRITING BY [DATE] TOGETHER WITH ALL EQUITABLE SETTLEMENT
CLASS MEMBERS, WILL BE BOUND BY THE TERMS OF THE STIPULATION.
YOU ARE NOT REQUIRED TO FILE ANY PAPERS WITH THE COURT OR TO APPEAR AT THE
HEARING TO BE ELIGIBLE TO RECEIVE THE BENEFITS THAT WILL BE OFFERED TO EQUITABLE
SETTLEMENT CLASS MEMBERS IF THE PROPOSED SETTLEMENTS ARE APPROVED. YOU MUST
HOWEVER, SUBMIT A PROOF OF CLAIM FORM NO LATER THAN _____1999 TO BE ENTITLED TO
RECEIVE A PORTION OF THE MONETARY SETTLEMENT. IF YOU DO NOT TIMELY SUBMIT A
PROOF OF CLAIM AND RELEASE FORM, YOU WILL NOT SHARE IN THE SETTLEMENT BUT YOU
WILL BE BOUND BY THE FINAL ORDER AND JUDGMENT
OF THE COURT UNLESS YOU HAVE PREVIOUSLY TAKEN ACTION TO EXCLUDE YOURSELF FROM
THE MONETARY SETTLEMENT CLASS. YOU MUST ALSO SUBMIT THE REPURCHASE REQUEST IF
YOU DECIDE YOU WISH TO OFFER UNITS FOR REPURCHASE.
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION. You may
call the Claims Administrator, Gilardi & Co., 1-800-XXX-XXXX for information
about the Settlements. No oral or written statements that you may receive about
the Settlements can alter the Stipulation. The Stipulation shall control to the
extent that any conflicts exist between it and any oral or written statement you
may receive.
Dated: [INSERT DATE]
Clerk, United States District Court
Southern District of Alabama
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF ALABAMA
DANIEL KOCH; GLAN RAWLS; )
LARRY LEVIN; WILLIAM POLT; and )
CHARLES LEO; on their own behalf and on )
behalf of all class members similarly situated, ) CIVIL ACTION NO.
)
Plaintiffs, ) 97-0177-BH-C
)
vs. )
)
PLM INTERNATIONAL, INC.; PLM )
FINANCIAL SERVICES, INC.; )
PLM INVESTMENT MANAGEMENT, )
INC.; PLM TRANSPORTATION )
EQUIPMENT CORPORATION; )
and PLM SECURITIES CORP., )
)
Defendants. )
)
)
)
)
- ----------------------------------------------------------
PROOF OF CLAIM AND RELEASE
PLM EQUIPMENT GROWTH FUND IV,
PLM EQUIPMENT GROWTH FUND V,
PLM EQUIPMENT GROWTH FUND VI, AND
PLM EQUIPMENT GROWTH AND INCOME FUND VII
(EACH A CALIFORNIA LIMITED PARTNERSHIP)
YOU MUST FILE A COMPLETED AND SIGNED PROOF OF CLAIM FORM TO
PARTICIPATE IN THE BENEFITS OF THIS MONETARY SETTLEMENT, INCLUDING
THE CASH DISTRIBUTION.
PLEASE VERIFY THE FOLLOWING INFORMATION. NOTE ANY ADDITIONS,
DELETIONS OR CHANGES BY ENCLOSING SUPPORTING DOCUMENTATION WITH THE CLAIM
FORM. EACH ADDITIONAL PAGE ENCLOSED MUST BE SIGNED BY YOU.
Your failure to submit your claim by ________, 1999 will subject your claim to
rejection and preclude your receiving any money in connection with the Monetary
Settlement of this litigation. Do not mail or deliver your claim to the Court or
to any of the parties or their counsel, as such claim will be deemed to have
been not submitted. This will be your only opportunity to share in the Monetary
Settlement of this litigation. However, even if you do not submit this Proof of
Claim and Release, you will be bound by the Court's final judgment in this
matter and forever barred from pursuing any action against any of the Defendants
in this litigation or any persons through whom you purchased your limited
partnership units, unless you have been properly excluded from the Monetary
Settlement Class. This is a legal document which may affect your rights. You
should read this document in its entirety.
Record Owner's Name (if different from Beneficial Owner listed above)
==================================================================
Check one:
__ Individual __ Corporation __ Estate __ Other
- ------------------------------------------------------------------
In the event it is necessary for us to contact you in order to process your
claim, please provide telephone numbers where you may be reached.
Daytime Evening
This Proof of Claim pertains to claims which you have as a Monetary
Settlement Class Member arising out of the purchase of units or other interests
in the one or several of the Funds specified on the cover page. Capitalized
terms in this Proof of Claim and Release have the same meaning as in the
Monetary Class Notice. This document is being executed in connection with the
Monetary Settlement with the Defendants and is conditioned on the approval of
the Stipulation of Settlement and its becoming effective. In the event the
Stipulation of Settlement does not become effective, then this Proof of Claim
and Release will be without effect and will be unenforceable against you.
By participating in the class action, you have consented to the
jurisdiction of the Court with respect to this claim, the Monetary Settlement
and all matters pertaining to it.
A. CLASS PARTICIPATION
ALL PERSONS OR ENTITIES WHO PURCHASED LIMITED PARTNERSHIP UNITS IN THE
FUNDS, BETWEEN MAY 23, 1989 AND ___________________.
B. INVESTMENT INFORMATION
According to information provided by the General Partner and the Claims
Administrator, you purchased, sold or transferred Units as specified below.
If you believe the information is correct, complete Sections E through
G, do not complete Section C.
If the information is missing, incomplete or wrong, complete Sections C
through G below and include with the claim form the documentation described in
Section C-5.
OWNERSHIP DATA
TRANSACTION # UNITS
DATE OWNED FUND TRANSFEREE
== == == ====== ========= =========
== == == ====== ========= =========
C. CHANGES TO INVESTMENT INFORMATION
IF YOU ARE UNSURE HOW TO COMPLETE THIS FORM OR WHAT DOCUMENTATION TO
INCLUDE, CALL THE CLAIMS ADMINISTRATOR TOLL FREE NUMBER ___________________ AND
WE WILL BE GLAD TO ASSIST YOU. YOU MAY TELEPHONE OR WRITE TO THE CLAIMS
ADMINISTRATOR FOR ADDITIONAL INFORMATION. DO NOT CALL THE COURT.
INSTRUCTIONS AND DEFINITIONS
Purchase means you received Units in exchange for cash. A "conveyance",
defined below, is not a purchase.
Sale means the exchange of units for cash. A "conveyance", defined
below, is not a sale.
Conveyance means a change in ownership without an exchange of cash and
includes the following situations: (i) a change in the type of account such as a
regular account to an IRA; (ii) a change in the name or title of an account such
as an individual account changing to joint tenants or a change in the name of
the account holder due to marriage or divorce; (iii) a gift of units during
lifetime or upon death from the original purchaser to one or several family
members or friends; or (iv) a transfer of units to a former spouse due to
divorce.
C-1. PURCHASES
List all purchases. Each purchase date should be written on a separate
line. Be sure to include with the Claim Form the required documentation (see
Section C-5).
DATE OF PURCHASE NUMBER
MONTH DAY YEAR OF UNITS FUND
== == == ====== ==========
== == == ====== ==========
If you need more space, attach a separate sheet of paper on which you
print your name, social security or tax identification number and the additional
purchases. Be sure to sign and date all additional pages that you add. ---
C-2. SALES
List all sales. Each sale date should be written on a separate line. Be
sure to include with the Claim Form the required documentation (see Section
C-5).
DATE OF SALE NUMBER
MONTH DAY YEAR OF UNITS FUND
== == == ====== ==========
== == == ====== ==========
Note: Sales transaction data may be found on Schedule D of your
individual income tax returns.
If you need more space attach a separate sheet of paper on which you
print your name, social security or tax identification number and the additional
sales. Be sure to sign and date all additional pages that you add. ---
C-3. CONVEYANCES TO OTHERS
List all conveyances to others. Each conveyance should be listed
separately. Be sure to include with the Claim Form the required documentation
(see Section C-5).
DATE OF CONVEYANCE NUMBER PERSON OR ENTITY
MONTH DAY YEAR OF UNITS WHO RECEIVED UNITS FUND
- -- -- -- ------ ---------- -----
== == == ====== ========== =====
- -- -- -- ------ ---------- -----
If you need more space attach a separate sheet of paper on which you
print your name, social security or tax identification number and the additional
conveyances. Be sure to sign and date all additional pages that you add. ---
C-4. CONVEYANCES FROM OTHERS
List all conveyances from others. Each conveyance should be listed
separately. Be sure to include with the Claim Form the required documentation
(see Section C-5).
PERSON OR ENTITY
DATE OF CONVEYANCE NUMBER WHO CONVEYED
MONTH DAY YEAR OF UNITS UNITS TO YOU FUND
- -- -- -- ------ ---------- -----
== == == ====== ========== =====
- -- -- -- ------ ---------- -----
If you need more space attach a separate sheet of paper on which you
print your name, social security or tax identification number and the additional
conveyances. Be sure to sign and date all additional pages that you add. ---
C-5. DOCUMENTATION REQUIREMENTS
1. No documentation is required to be included with this Claim Form if
all pre-printed information is correct.
2. Documentation must be included with this Claim Form if you
change/correct any of the pre-printed information or if you add any information.
ACCEPTABLE DOCUMENTATION INCLUDES: BROKERAGE CONFIRMATIONS, BROKERAGE
MONTHLY STATEMENTS, OR LETTERS FROM BROKERS.
D. ELIGIBILITY
BY SUBMITTING THIS CLAIM, YOU REPRESENT AND WARRANT THAT YOU HAVE NOT
PREVIOUSLY SETTLED ANY CLAIM WITH ANY DEFENDANT RELATING TO THESE INVESTMENTS
AND ARE NOT EXCLUDED FROM PARTICIPATION IN THE SETTLEMENT AS SET FORTH IN
PARAGRAPH 12 OF THE NOTICE AND HAVE NOT FILED A REQUEST FOR EXCLUSION.
E. SIGNATURE (YOU MUST SIGN BELOW
FOR THE CLAIM TO
BE VALID. IF YOU
DO NOT SIGN,
YOUR CLAIM WILL
BE REJECTED.)
You hereby certify, under penalty of perjury, that the above
information is true and correct to the best of your knowledge.
- ------------------------------------------------------------------------------
- ---------------------------------------- ---------------------------------
Owner's Signature Date
- ---------------------------------------- ---------------------------------
Joint Owner's Signature Date
- ------------------------------------------------------------------------------
IF ANY OF THE UNITS FOR WHICH YOU HAVE PROVIDED INFORMATION WAS
PURCHASED JOINTLY WITH ANOTHER PERSON OR ENTITY, EACH PERSON WHO OWNED ANY SUCH
UNIT MUST SIGN THIS DOCUMENT.
IF YOU ARE SUBMITTING THIS PROOF OF CLAIM AND RELEASE OTHER THAN IN
YOUR OWN INDIVIDUAL CAPACITY (FOR EXAMPLE, AS A TRUSTEE, EXECUTOR,
ADMINISTRATOR, CUSTODIAN OR GUARDIAN) PLEASE INDICATE THAT CAPACITY AND IDENTIFY
THE ENTITY ON WHOSE BEHALF YOU ARE SO ACTING and include any documentation
regarding your authority to sign in such capacity.
MAIL THIS COMPLETED PROOF OF CLAIM AND RELEASE FORM, AND ANY REQUIRED
DOCUMENTATION, ON OR BEFORE ___________________, 1999 TO:
BEFORE YOU MAIL THIS PROOF OF CLAIM AND RELEASE:
IF YOU ARE UNSURE HOW TO COMPLETE THIS FORM OR WHAT DOCUMENTATION TO
INCLUDE, CALL OUR TOLL FREE NUMBER _________________ AND WE WILL BE GLAD TO
ASSIST YOU. YOU MAY TELEPHONE OR WRITE TO THE CLAIMS ADMINISTRATOR FOR
ADDITIONAL INFORMATION. DO NOT CALL THE COURT.
F. RELEASE
By submitting this Proof of Claim and Release, I state that I believe
in good faith that I am a Member of the Monetary Settlement Class as defined in
the Notice of Proposed Settlement of Monetary Class Action, Settlement Hearing
and Right to Appear (the "Monetary Class Notice") and the Court's order of
__________, 1999, that I have read and understood the contents of the Monetary
Class Notice; that I am not, and that I am not acting for, any of the defendants
herein, or members of their immediate families, subsidiaries or corporations
under common control, successors or assigns or any of the defendants; that I
have not previously filed a request for exclusion, seeking to be excluded from
the Monetary Settlement Class; and that I believe I am entitled to receive a
share of the Net Settlement Fund.
I understand that if the proposed Monetary Settlement is approved by
the Court and becomes effective, all claims, demands or causes of action against
any or all of the Defendants and/or Released Persons which have been asserted or
could have been asserted by me relating to the subject matter of the Litigation
will be satisfied, discharged and extinguished forever.
I further understand that if the proposed Monetary Settlement is
approved by the Court and becomes effective, I am specifically releasing any and
all claims or causes of action, demands, rights, liabilities and causes of
action of every nature and description whatsoever, known or unknown, asserted or
that might have been asserted by me, including, without limitation, claims for
negligence, gross negligence, breach of duty of care and/or breach of duty of
loyalty, fraud, breach of fiduciary duty, breach of contract, or violations of
any state or federal statutes, rules or regulations, or by any of my successors
and assigns, whether directly, representatively, derivatively or in any other
capacity, based upon or related to any transaction between Defendants and me
involving the Funds or the Units during the Class Period against all Defendants
and all other related entities and persons, including Defendants' purchase. I
further understand that the broker-dealers whom I am releasing by filing this
claim include any and all broker-dealers or other third parties involved in the
sale or purchase of the limited partnership interests, including their past or
present officers, directors, shareholders, partners, agents, employees,
attorneys, advisors, accountants, representatives, successors, or assigns.
Released claims, which I am releasing by making this claim specifically
means all claims and potential claims arising out of: (a) the marketing, sale,
purchase, or transfer of the Funds' limited partner Units; (b) the operation,
oversight, monitoring or management of, any of the Funds until _____________,
1999 [the date of final approval of the Monetary Settlement] against all
Defendants and all other entities and persons, including specifically any and
all broker-dealers or other third parties involved in such sale or purchase; or
(c) any challenge to the Stipulation of Settlement. I understand, however, that
neither I nor my successors and assigns, whether directly representatively or
derivatively or in any other capacity, are releasing (a) potential claims
arising out of alleged future mismanagement of the Funds that: (1) occur after
the date of the Court's final approval of the Monetary Settlement, and (2) are
not related to, or derived from, the Action's presently pled mismanagement
claims; or (b) potential claims to enforce the claims of this Monetary
Settlement.
My signature hereto constitutes a full and complete release and
discharge by me or if I am submitting this Proof of Claim and Release on behalf
of a corporation, a partnership, an estate or one or more persons, by it, him,
her or them, and by my, its, his, her or their heirs, executors, administrators,
successors, and assigns of persons listed above (see the Stipulation of
Settlement for a more complete description of the bar and injunction to which
the Monetary Class Settlement Members will be subject as a result of the
Monetary Settlement.) I understand that I will conclusively be deemed to have
released, absolutely and forever, all such claims against the Defendants and/or
Released Persons and that the final order and judgment in this action will
enjoin and bar me from asserting any such claims and any court or forum whether
or not I file this Proof of Claim and Release unless I previously elected to be
excluded from the Monetary Settlement Class and the Monetary Settlement itself.
- ------------------------------ ----------------------------------
Owner's Signature Date
- ------------------------------ ----------------------------------
Joint Owner's Signature Date
G. CERTIFICATION
I (we) certify that all the information provided on this form,
including the social security or employer identification number shown on this
Proof of Claim and Release, are true, correct and complete. If I am signing on
behalf of someone else, I hereby certify and warrant that I am authorized to
make this Proof of Claim and Release. I hereby certify and warrant that I have
not previously sold, transferred, assigned, or granted any interest in any of
the claims released hereby (as set forth in the Release above) to any other
person or entity.
I (we) certify that I am (we are) NOT subject to backup withholding
under the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code
("Internal Revenue Code"). NOTE: If you have been notified by the IRS that you
are subject to backup withholding, strike out the word "NOT" in the
Certification above.
- ------------------------------ ----------------------------------
Owner's Signature Date
- ------------------------------ ----------------------------------
Joint Owner's Signature Date
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
DANIEL KOCH; GLAN RAWLS; )
LARRY LEVIN; WILLIAM POLT; and )
CHARLES LEO; on their own behalf and on )
behalf of all class members similarly situated, )
) CA 97-0177-BH-C
Plaintiffs, )
)
vs. )
)
PLM INTERNATIONAL, INC.; PLM )
FINANCIAL SERVICES, INC.; )
PLM INVESTMENT MANAGEMENT, )
INC.; PLM TRANSPORTATION )
EQUIPMENT CORPORATION; )
and PLM SECURITIES CORP., )
)
Defendants. )
)
)
)
)
- ----------------------------------------------------------
ORDER ON JOINT MOTION FOR
PRELIMINARY APPROVAL OF SOLICITATION STATEMENT
As part of the parties' Joint Motion for Preliminary Approval of
Settlement as to the Equitable Settlement Class, defendants on June 24, 1999
submitted for the Court's review and preliminary approval a Solicitation
Statement which in substance, and after minor adjustments tailored to each of
the Funds participating in the Equitable Settlement, is to be distributed to the
Limited Partners of those Funds as provided for in the Stipulation of
Settlement. Plaintiffs' counsel have reviewed, amended, and approved the form
and substance of the submitted Solicitation Statement. The parties have further
agreed that Defendants will: (1) finalize the Solicitation Statement for each
Fund participating in the Equitable Settlement by filling in and adjusting
certain details specific to each Fund without materially changing the content of
the submitted Solicitation Statement, (2) submit the Fund-specific Solicitation
Statements to the Securities and Exchange Commission for review and clearance as
provided for in the Stipulation of Settlement and applicable law, and (3) if
cleared by the SEC, distribute the Fund-specific Solicitation Statements to the
Limited Partners in the respective Funds, as also provided for in the
Stipulation of Settlement. The Court has considered the submitted Solicitation
Statement, and upon such consideration, it is hereby ORDERED:
That the Court approves the submitted Solicitation Statement as to form
and substance, and further approves those changes necessary to finalize the
Solicitation Statement, make it Fund-specific, and comply with the comments, if
any, of the Securities and Exchange Commission in its review and clearance
procedures, all as provided for in the Stipulation of Settlement.
DONE AND ORDERED this the 29th day of June, 1999.
/S/ WILLIAM E. CASSADY
------------------------
WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
- ----------------------------------------------------------------------------
DANIEL KOCH; GLAN RAWLS; )
LARRY LEVIN; WILLIAM POLT; and )
CHARLES LEO; on their own behalf and on )
behalf of all class members similarly situated, )
)
Plaintiffs, ) CA 97-0177-BH-C
)
vs. )
)
PLM INTERNATIONAL, INC.; PLM )
FINANCIAL SERVICES, INC.; )
PLM INVESTMENT MANAGEMENT, )
INC.; PLM TRANSPORTATION )
EQUIPMENT CORPORATION; )
and PLM SECURITIES CORP., )
)
Defendants.
- -------------------------------------/
- ------------------------------------------------------------------------------
ORDER ON MOTION FOR NOTICE, SETTLEMENT
HEARING, AND PRELIMINARY APPROVAL OF
EQUITABLE CLASS ACTION
This cause is before the Court on plaintiffs' Motion for Preliminary
Approval of Settlement as to the Equitable Settlement Class. In accordance with
Rules 23(c)(2) and 23(e) of the Federal Rules of Civil Procedure, the Court has
considered the Stipulation of Settlement dated February 9, 1999 and the exhibits
annexed thereto or incorporated therein (the "Stipulation"), executed on behalf
of the Representative Plaintiffs (on behalf of themselves and each of the
Equitable Settlement Class Members) and Defendants PLM International, Inc., PLM
Financial Services, Inc., PLM Investment Management, Inc., PLM Transportation
Equipment Corporation, and PLM Securities Corp. Upon review of the Stipulation
of Settlement and the Motion for Preliminary Approval, the following Order is
entered.
1. The terms of the Stipulation and Settlement, the Equitable Class
Settlement, amendments to the Partnership Agreements for Funds V, VI, and VII,
and releases provided for in the Stipulation, are preliminarily approved as
fair, reasonable and adequate. The Motion for Preliminary Approval of Settlement
as to the Equitable Settlement Class is therefore GRANTED.
2. The definitions set forth in the Stipulation are hereby incorporated
into this Order.
3. Pursuant to and in accordance with Fed.R.Civ.P. 23(a), 23(b)(1) and
23(b)(2), the Court conditionally certifies the Equitable Settlement Class
consisting of all investors, Limited Partners, assignees, or Unit Holders who,
on June 29, 1999 held any Units in PLM Equipment Growth Fund V, PLM Equipment
Growth Fund VI, or PLM Equipment Growth and Income Fund VII, and their assigns
and successors in interest. This preliminary approval is subject to further
consideration at a final fairness hearing which shall be held before the Court
on November 16, 1999 at 10:00 a.m., Central Standard Time, Courtroom 3A, United
States Courthouse, 113 St. Joseph Street, Mobile, Alabama.
4. At the final fairness hearing, the Court will consider whether the
terms of the proposed Equitable Settlement are fair, reasonable, adequate and in
the best interest of the Class, and whether the final judgment in accordance
with the terms of the Equitable Settlement should be entered.
5. The Court approves, as to form and content, the Notice of Pendency
of Class Litigation, Class Action Determination for the Equitable Settlement
Class, Proposed Settlement and Settlement Fairness Hearing ("Equitable Class
Notice") submitted by the Plaintiffs and finds that the procedures described in
paragraphs 6-9 herein meet the requirements of Rule 23 of the Federal Rules of
Civil Procedure and due process, and provide the best notice practicable under
the circumstances.
6. Defendants shall, at their expense, furnish to the Claims
Administrator the names and addresses of all readily identifiable Equitable
Settlement Class Members as of the date of this Order. The Claims Administrator,
or his duly designated representative, shall, as soon as practicable, cause
notice of the Stipulation and the Settlement Hearing to be given to Equitable
Class Members as follows:
a. The Equitable Class Notice (substantially in the form attached
hereto as Exhibit "A") which shall include a description of the general terms of
the Settlement, and the PLM Solicitation Statement (after SEC clearance), by
first class mail, postage prepaid to all Equitable Class Members appearing on
the records provided by Defendants to the Claims Administrator or his designee;
b. The Summary Notice (substantially in the form annexed to the
Stipulation as Exhibit A-3) shall be published once in the national edition of
The Wall Street Journal approximately one week after the initial mailing of the
Equitable Class Notice to the Equitable Settlement Class Members.
7. The Claims Administrator shall pay the costs and expenses reasonably
incurred in connection with providing notice to the Equitable Settlement Class,
soliciting the filing of Proof of Claim and Release Forms, locating members of
the Equitable Settlement Class including forwarding addresses to the extent
reasonably obtainable. The Claims Administrator may contract with an outside
service provider to obtain these services. The Claims Administrator shall be
permitted to withdraw funds from the Cost Fund and, if necessary, from the
Settlement Fund to pay any reasonable costs described above without prior
approval of the Court or any of the other signatories to the Stipulation.
8. Equitable Settlement Class Members who desire to object to the
Equitable Settlement must send their objections by first class mail or hand
delivery to the Court no later than forty-five (45) days after the Equitable
Class Notices are mailed. Equitable Settlement Members who are Limited Partners
and who desire to vote against the Amendments to the Partnership Agreements,
must send in their Notice of Vote Against the Amendments, attached to the PLM
Solicitation Statement, no later than 45 days after the PLM Solicitation
Statements are mailed.
9. A final fairness hearing as to whether the Equitable Settlement
should be approved as fair, reasonable and adequate to the Equitable Settlement
Class (the "Final Fairness Hearing") will be held before the undersigned at
10:00 a.m. Central Standard Time, on November 16, 1999 in the United States
District Court for the Southern District of Alabama, which hearing shall be no
earlier than sixty (60) days after the Equitable Class Notices and Solicitation
Statements are mailed, and at least two weeks after the last day to vote on the
amendments to the Fund V, VI, and VII's Partnership Agreements pursuant to the
PLM Solicitation Statement. The Court will determine at the Final Fairness
Hearing whether the Settlement should be approved by the Court, whether to
approve Plaintiffs' Class Counsel's application for the Equitable Class Fee and
Expense Award described in P. 16 herein, whether to amend certain provisions of
the Partnership Agreements for Funds V, VI and VII as summarized in P. 10 of
this Order, and whether the Final Orders and Judgments approving the Equitable
and Monetary Settlements and dismissal of the Litigation in the form of Exhibits
B-1 and B-2 to the Stipulation should be entered.
10. The Settling Parties will move the Court jointly to judicially
amend certain terms in the Partnership Agreements for Funds V, VI, and VII to
provide for the extension of the operating lives of those Funds. The specific
terms of the amendments and the new provisions of the Partnership Agreements are
set forth in the Final Order and Judgment approving the Equitable Settlement
(Exhibit B-2 to the Stipulation) and in the PLM Solicitation Agreement. By way
of summary, these amendments include amending for Fund V and Fund VI, Sections
2.02(r), 2.05(h), 6.11, 10.01(e), Article XIV, Article XV and Article XVIII; and
for Fund VII, Sections 2.02(q), 2.05(i), 6.11, 10.01(e), Article XV and Article
XVIII of the Partnership Agreements to provide as follows:
(a) Extension of Operating Lives as described in Sec.3.1 of the
Stipulation: Section 10.01(e) of each Partnership Agreement will be amended to
state that an event of dissolution shall occur when the General Partner
determines that it is necessary to commence the liquidation of the Equipment in
order for the liquidation of all of the Equipment to be completed in an orderly
and businesslike fashion prior to January 1, 2007;
(b) Fee Limitation: Section 2.05(h) of the Partnership Agreement for
Fund V and Fund VI, and Section 2.05(i) for Fund VII will be amended to increase
the limitations on the General Partners' fees by 20% of the limitations
presently stated in the Partnership Agreements so as to allow the General
Partner to earn fees in excess of the compensatory limitations set forth in the
NASAA Statement of Policy during the Extension Period, and for work on behalf of
the Funds, including fees for reinvestment of assets;
(c) Reinvestment of Cash Flow or Surplus Funds: Section 2.02(r) of the
Partnership Agreements for Fund V and Fund VI, and Section 2.02 (q) of the
Partnership Agreement for Fund VII will be amended to allow the General Partner
to reinvest such amounts until 2004;
(d) Repurchase: Section 6.11 of each of Funds V, VI and VII's
Partnership Agreements shall be amended to allow repurchase by the Funds of up
to ten percent (10%) of outstanding Units at eighty percent (80%) of Net Asset
Value in accordance with the terms of this Stipulation and the Repurchase
Protocol;
(e) Amendments: Article XVIII of the Partnership Agreements for Funds
V, VI and VII shall be amended to provide that the Limited Partners of each Fund
may amend that Fund's Partnership Agreement in order to extend the Fund's term
and to make all other amendments in the Partnership Agreement necessary to such
extension, including amendments to Section 10.01. Any such amendment may be made
by approval of a Majority in Interest of the Limited Partners in connection with
Court Approval of this Settlement, as provided for in Secs.3.6(a) and (f);
(f) Actions by Limited Partners: Article XV of the Partnership
Agreements shall be amended to provide that written consent of the Limited
Partners respecting any matters in this Settlement shall be deemed to have been
given if less than half of the Outstanding Units held by Limited Partners are
voted against any matter;
(g) Disputes and Resolutions: Article XIV of the Partnership Agreements
shall be amended to provide (consistent with ss.ss.8.7, and 12.2) that all
disputes relating to, or arising out of this Settlement, shall be subject to
this Court's continuing jurisdiction over the interpretation and administration
of this Settlement and all the Settlement documents incorporated herein.
11. Prior to the Final Fairness Hearing, Plaintiffs' Class Counsel
shall file with the Court affidavits confirming that the required Equitable
Class Notice has been disseminated, together with all papers in support of the
Settlement and Plaintiffs' Class Counsel's application for an Equitable Class
Fee and Expense Award.
12. All persons or entities who purchased interests or invested in the
Funds on behalf of another are directed to provide Plaintiffs' Class Counsel
with the last known address of the beneficial owner or to forward copies of the
Equitable Class Notice to such beneficial owners within ten (10) days of receipt
of the Equitable Class Notice.
13. The Court finds that all putative Equitable Settlement Class
Members will be bound by any judgments in this action, including any judgments
entered in accordance with the Stipulation that is the subject of this Order.
14. Any Equitable Class Member may appear at the Final Fairness Hearing
in person or by counsel, if an appearance is filed and served as hereinafter
provided, and may be heard to the extent allowed by the Court in support of, or
in opposition to, the fairness, reasonableness and adequacy of the proposed
Equitable Settlement, the certification of the Equitable Settlement Class, or
why judgment should or should not be entered. Only Equitable Settlement Class
Members and others with standing shall have rights with respect to the approval
of, or objection to, the Equitable Settlement. At the Final Fairness Hearing,
any Equitable Settlement Class Member or other party with standing may also show
cause why Plaintiffs' Class Counsels' application for Equitable Class Fee and
Expense award should or should not be approved. Any Equitable Settlement Class
Member who may wish to appeal any decision with respect to the approval of the
Equitable Settlement, the amendments to the Partnership Agreements or
Plaintiffs' Class Counsel's Motion for Equitable Class Fee and Expense Award,
must first formally intervene as a party under Rule 24 of the Federal Rules of
Civil Procedure. No Equitable Settlement Class Member or other person with
standing shall, however, be heard, nor will their objections be considered or
accepted, unless that Equitable Settlement Class Member or other person with
standing has previously filed a timely objection and has filed with the Court
and served by hand or by first class mail copies of any supporting papers and
briefs, including proof of membership in the Equitable Settlement Class, no
later than November 1, 1999, upon counsel of record as identified in Section XI
of the Equitable Class Notice.
15. Any Equitable Class Member who does not make an objection in the
manner provided herein shall be deemed to have waived such objection and shall
forever be foreclosed from making any objection to the fairness, adequacy or
reasonableness of the Equitable Settlement, or Plaintiffs' Class Counsels'
application for Equitable Class Fee and Expense Award.
16. Plaintiffs' Class Counsel will apply for an award of fees and
expenses from the Equitable Class Settlement ("Equitable Class Fee and Expense
Award") to be considered by the Court at the Final Fairness Hearing. Plaintiffs'
Class Counsel will request that the Equitable Class Fee and Expense Award be
paid out of the Equitable Settlement and determined as follows. During the
Extension Period (as defined in ss.1.16 of the Stipulation) and during the
liquidation of Funds V-VII the General Partner will calculate for each Fund the
Internal Rate of Return ("IRR") on the Distributions paid or made to each Fund's
Unitholders in accordance with the IRR Protocol, as calculated pursuant to the
IRR Protocol attached to the Stipulation. At the time, if ever, that the IRR in
Funds V, VI or VII during the Extension Period exceeds 12.0% (an amount defined
as "over 12.0% class distributions"), Plaintiffs' Class Counsel would be
entitled to receive from each future distribution to the Unitholders in such
Fund(s), a percentage of the over 12.0% class distributions, such percentage not
to exceed 27.5% of the first $10 million of the over 12.0% class distributions
for each Fund, 22.5% of such distributions between $10 million and $20 million,
15% of such distributions between $20 million and $30 million, and 10% of such
distributions exceeding $30 million, plus expenses (as defined in ss.10.2 of the
Stipulation), to the extent such expenses have not previously been recovered
from the Cost Fund or Settlement Fund.
17. Plaintiffs' Class Counsel will allocate the Equitable Class Fee and
Expense Award among counsel for the Representative Plaintiffs within their
discretion.
18. The Equitable Class Fee and Expense Award is an obligation of the
Equitable Settlement Class Members. Defendants shall have no separate liability
for the payment of any such fees, costs and expenses.
19. Upon consummation and approval of the Equitable Settlement provided
for in the Stipulation, the Stipulation and each and every term and provision
thereof, shall be deemed incorporated herein as if explicitly set forth and
shall have the full force and effect of an Order of this Court.
20. Plaintiffs' Class Counsel shall file their memorandum in support of
the Settlement on or before October 15, 1999, and may file a supplemental
memorandum addressing any objections no later than November 10, 1999.
21. The Court expressly reserves its right to adjourn the Final
Fairness Hearing or any adjournment thereof without any further notice other
than announcement at the Hearing or any adjournment thereof, and to approve the
Stipulation with modifications and without further notice to the Equitable
Settlement Class.
22. All claims, counterclaims and crossclaims of any nature whatsoever
by the Equitable Settlement Class, or any Equitable Class Member against any
settling defendant, as defined in the Equitable Class Notice, and all claims,
counterclaims and crossclaims of any nature whatsoever by (or against) any
settling defendant against (or by) any other party to this action are STAYED
pending the Court's consideration of the fairness of the Equitable Settlement at
the Final Fairness Hearing.
23. The Court retains jurisdiction of this action, including the right
to consider all further applications arising out of, or connected with the
Equitable Settlement.
24. If the Equitable Settlement is terminated, such termination shall
have no impact on the Monetary Settlement. If the entire Settlement is
terminated for any reason whatsoever, the Order on Motion for Notice Settlement
Hearing, and Preliminary Approval of Monetary Class Action Settlement will
control the obligations and rights of the Parties to the Stipulation. Further,
if the Settlement in its entirety is terminated all negotiations concerning it
shall not be used or referred to for any purpose whatsoever.
DONE AND ORDERED this 29th day of June, 1999.
/s/ WILLIAM E. CASSADY
--------------------------
WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE