<HTML>
<HEAD>
<TITLE>sv1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->

<!-- XBRL,dc -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>As filed with the Securities and Exchange Commission on April
    20, 2010</B>
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><!-- /XBRL,dc -->
    Registration
    <FONT style="white-space: nowrap">Number&#160;333-&#160;&#160;&#160;&#160;&#160;&#160;</FONT></B>
</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">Washington,&#160;D.C.
    20549</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt"><FONT style="white-space: nowrap">Form&#160;S-1</FONT></FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">REGISTRATION
    STATEMENT</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">UNDER</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">THE SECURITIES ACT OF
    1933</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">SQN Alternative Investment
    Fund&#160;III, L.P.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Exact name of registrant as
    specified in its charter)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="34%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="center" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Delaware</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <B>7359</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <B>27-2173346</B>
</TD>
</TR>
<TR valign="bottom">
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(State or other jurisdiction<BR>
    of incorporation or organization)</FONT></I>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(I.R.S. Employer<BR>
    Identification No.) </FONT></I>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>48 Wall Street</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>24<SUP style="font-size: 85%; vertical-align: top">th</SUP>

    Floor</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>New York, New York 10005</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="white-space: nowrap">(212)&#160;422-2166</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Address, including zip code,
    and telephone number,</FONT></I>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">including area code, of
    registrant&#146;s principal executive offices)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Jeremiah J. Silkowski</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>President and Chief Executive Officer</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>SQN Capital Management, LLC</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>48 Wall Street</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>24<SUP style="font-size: 85%; vertical-align: top">th</SUP></B>

    <B>Floor</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>New York, New York 10005</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="white-space: nowrap">(212)&#160;422-2166</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Name, address, including zip
    code, and telephone</FONT></I>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">number, including area code, of
    agent for service)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>With a Copy to:</I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Brinkley Dickerson,&#160;Esq.</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Troutman Sanders LLP</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Bank of America Plaza</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>600 Peachtree Street, NE</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Atlanta, Georgia 30308</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="white-space: nowrap">(404)&#160;885-3000</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Approximate date of commencement of proposed offering to the
    public:</B>&#160;&#160;As soon as practicable after this
    registration statement becomes effective.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any of the securities being registered on this Form are to be
    offered on a delayed or continuous basis pursuant to
    Rule&#160;415 under the Securities Act of 1933, check the
    following
    box:&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#254;
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is filed to register additional securities for an
    offering pursuant to Rule&#160;462(b) under the Securities Act,
    please check the following box and list the Securities Act
    registration statement number of the earlier effective
    registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(c) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(d) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    &#147;large accelerated filer,&#148; &#147;accelerated
    filer&#148; and &#147;smaller reporting company&#148; in Rule
    <FONT style="white-space: nowrap">12b-2</FONT> of the
    Exchange Act. (Check one):
</DIV>

<DIV style="margin-top: 5pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">Large
    accelerated
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    </FONT></TD>
    <TD nowrap align="center">    <FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">
    Accelerated
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    </FONT></TD>
    <TD nowrap align="center">    <FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">
    <FONT style="white-space: nowrap">Non-accelerated</FONT>
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    </FONT></TD>
    <TD nowrap align="right">    <FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">
    Smaller reporting
    company&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#254;</FONT>
    </FONT></TD>
</TR>

</TABLE>



<DIV align="center" style="margin-left: 22%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt">(Do not check if a smaller
    reporting company)
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CALCULATION
    OF REGISTRATION FEE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterright -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Proposed Maximum<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Proposed Maximum<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Amount of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Title of Each Class of<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Amount to<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Offering Price<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Aggregate <BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Registration<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Securities to be Registered</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>be Registered</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>per Unit</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Offering Price</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Fee</B>
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top" style="border-top: 1px solid #000000">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Limited Partner Units
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    50,000
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    $1,000
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    $50,000,000
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    $3,565
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the Registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section&#160;8(a)
    of the Securities Act of 1933 or until this Registration
    Statement shall become effective on such date as the Commission,
    acting pursuant to said Section&#160;8(a), may determine.</B>
</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE style="color: #FF0000" width="100%" border="1" cellpadding="5"><TR><TD style=text-align:justify>
<B><FONT style="font-size: 8pt; font-family: Arial, Helvetica; color: #E8112D">The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not
permitted.<BR>
</FONT></B>
</TD></TR></TABLE>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 91%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="color: #E8112D">SUBJECT TO COMPLETION, DATED
    APRIL 20, 2010</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <IMG src="y03348y0334800.gif" alt="(SQN LOGO)"><B><FONT style="font-family: 'Times New Roman', Times">
    </FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">SQN Alternative Investment
    Fund&#160;III, L.P.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Units of Limited Partner
    Interests at $1,000 per Unit</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Minimum Offering
    Proceeds&#160;&#151; 1,200 Units ($1,200,000)</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Maximum Offering
    Proceeds&#160;&#151; 50,000 Units ($50,000,000)</FONT></B>
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are SQN Alternative Investment Fund&#160;III, L.P., a
    Delaware limited partnership. Our General Partner is SQN AIF III
    GP, LLC, a Delaware limited liability company, and our
    Investment Manager is SQN Capital Management, LLC, a Delaware
    limited liability company. We are offering a minimum of
    1,200&#160;units ($1.2&#160;million) and a maximum of
    50,000&#160;units ($50.0&#160;million). We intend to use the net
    proceeds from this offering to invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams. Many of our investments will be
    structured as equipment leases, but we also intend to use other
    structures, including, but not limited to, participation
    agreements, residual sharing agreements, project financings and
    vendor and rental (hire) programs.
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that approximately 95.0% of the proceeds of this
    offering will be available for investment and to pay fees, 4.0%
    of the proceeds of this offering will be used to pay fees and
    expenses associated with our organization and this offering and
    1.0% of the proceeds from this offering will be used to fund a
    capital reserve. Our principal objectives are to generate
    non-correlated capital appreciation and make regular cash
    distributions to you. We anticipate that during our initial
    years of operation our distributions will be substantially
    tax-deferred due primarily to depreciation deductions on a
    portion of our equipment and operating losses.
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 11pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in our units involves a high degree of
    risk.&#160;You should purchase these securities only if you can
    afford a complete loss of your investment. You should read
    &#147;Risk Factors,&#148; beginning on page&#160;16 of this
    prospectus, for a discussion of factors you should consider
    before buying our units. Among the most prominent of these risks
    are the following:</B>
</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital
    and not a return on capital.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    This is a &#147;blind-pool&#148; offering because we have not
    specifically identified our investments at the time you invest.
    As a result, you cannot evaluate the risks of, or potential
    returns from, any of our investments at the time you invest.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Since there is no public market for our units, an investment in
    our units is considered illiquid. You should be prepared to hold
    your units for the life of the fund, which is anticipated to be
    approximately seven years, but may be longer.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    You will have very limited voting rights and you must rely on
    our General Partner, our Investment Manager and their affiliates
    to manage us.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A prolonged economic recession and/or changes in general
    economic conditions, including fluctuations in demand for
    equipment and other portfolio assets, lease rates, and interest
    rates may result in delays in investment and reinvestment,
    delays in leasing, re-leasing and disposition of equipment, and
    reduced returns on capital.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our performance will be subject to the risk of lease and other
    investment defaults. Uncertainties associated with the equipment
    leasing and financing industry may have an adverse effect on our
    business and may adversely affect our ability to provide you any
    economic return from our units or a complete return of your
    capital.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our success will depend in part on our ability to realize
    residual value from a portion of our assets and equipment once
    the leases on those assets and equipment terminate.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our General Partner, our Investment Manager and their affiliates
    will receive significant compensation from us, which will reduce
    distributions to you.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    There are potential conflicts of interest between us and our
    General Partner, our Investment Manager and their affiliates.
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    There are material federal income tax risks associated with this
    offering.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="74%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Proceeds<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>to Us<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Price to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Distribution<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Before Other<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Public</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Expenses(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Expenses(2)</B>
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Per Unit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    980
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Total Minimum
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    24,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,176,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Total Maximum(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    998,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    49,002,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 11%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">To be paid by us to SQN Securities,
    LLC, our exclusive selling agent.
    </FONT></TD>
</TR>




<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Before deducting total
    Organizational and Offering Expenses. The total Distribution
    Expenses and Organizational and Offering Expenses are estimated
    at $48,000 for the minimum offering and $1,998,000 for the
    maximum offering. See &#147;Estimated Use of Proceeds.&#148;
    </FONT></TD>
</TR>




<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Assumes that our General Partner or
    its affiliates purchases 100&#160;units.
    </FONT></TD>
</TR>

</TABLE>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner or its affiliates currently intend to
    purchase 100 of our units offered hereby at a purchase price of
    $1,000 per unit. We will not pay any Distribution Expenses in
    connection with units sold to our General Partner or its
    affiliates.
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN Securities, LLC, which is an affiliate of our General
    Partner, will act as the exclusive selling agent for the
    offering of our units. The units will be offered on a &#147;best
    efforts,&#148; &#147;minimum-maximum&#148; basis. This means the
    selling agent must sell at least 1,200&#160;units and receive
    subscription proceeds of at least $1.2&#160;million in order for
    this offering to close (excluding subscription proceeds from our
    General Partner or its affiliates and from residents of
    Pennsylvania), and it must use only its best efforts to sell our
    remaining units. Our subscription proceeds will be held in an
    interest bearing escrow account until $1.2&#160;million has been
    received. This offering will not extend
    beyond&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    2012. If the minimum subscription proceeds are not received by
    January&#160;1, 2011, then your subscription will be promptly
    returned to you from the escrow account with interest earned, if
    any, and without deduction for any fees.
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or passed upon the adequacy or accuracy of this
    prospectus. Any representation to the contrary is a criminal
    offense.</B>
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The use of forecasts in this offering is prohibited. Any
    representations to the contrary and any predictions, written or
    oral, as to the amount or certainty of any present or future
    cash benefit or tax consequence which may flow from an
    investment in this program is not permitted</B>.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">SQN Securities, LLC&#160;&#151;
    Selling Agent</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt">The date of this prospectus
    is&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    2010
    </FONT>
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 91%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><U>Page</U></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'><B>INVESTOR SUITABILITY</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    iv
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#102'>General</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    iv
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#103'>General Investor Suitability Requirements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    iv
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#104'>Additional State Investor Suitability
    Requirements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    v
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#105'>Additional Considerations for IRAs, Qualified
    Plans and Tax-Exempt Organizations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    vii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#106'>Investor Suitability Requirements in Connection
    with Transfers of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    vii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#107'>Who Should Invest</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    viii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'><B>QUESTIONS AND ANSWERS ABOUT THIS
    OFFERING</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    viii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'><B>PROSPECTUS SUMMARY</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#110'>SQN Alternative Investment Fund&#160;III,
    L.P.&#160;</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#111'>The Offering</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'><B>ESTIMATED USE OF PROCEEDS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'><B>MANAGEMENT COMPENSATION</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#114'>Summary Table</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#115'>Limitations on Fees</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#116'>Defined Terms Used in the &#147;Management
    Compensation&#148; Section</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'><B>RISK FACTORS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#118'>Risks Associated with this Offering</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#119'>Risks Associated with our Business</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#120'>Risks Associated with our Organization and
    Structure</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#121'>Risks Associated With the Tax Treatment of Our
    Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'><B>FORWARD-LOOKING STATEMENTS AND ASSOCIATED
    RISKS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'><B>CONFLICTS OF INTEREST AND FIDUCIARY
    RESPONSIBILITIES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#124'>General</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#222'>Our General Partner, Our Investment Manager and
    Their Affiliates Will Receive Fees and Other Substantial
    Compensation From Us</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#125'>Actions Taken by Our General Partner and Our
    Investment Manager Will Affect the Amount of Cash Available for
    Distribution to Limited Partners and Our General Partner&#146;s
    and Investment Manager&#146;s Compensation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#126'>Our General Partner, Our Investment Manager and
    Their Affiliates Will Engage in Activities That Compete With
    Us</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#127'>We May Enter Into Joint Ventures With Affiliated
    Programs</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#128'>We Do Not Have Any Employees and Rely on the
    Employees of Our General Partner, Our Investment Manager and
    Their Affiliates</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#129'>We May Reimburse Our General Partner, Our
    Investment Manager and Their Affiliates for Expenses</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#130'>We Have Not Retained Separate Counsel or Other
    Professionals</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#131'>Lack of Independent Underwriter and Due Diligence
    Investigation in This Offering</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#132'>Conflicts Regarding Redemption of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#133'>Our General Partner is Our Tax Matters Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#134'>Our General Partner or Its Affiliates Will
    Purchase Units as Investors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#135'>General Restrictions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#136'>Fiduciary Duty of Our General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    36
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><U>Page</U></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#137'><B>MANAGEMENT</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#138'>Our General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#139'>Our Investment Manager</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#140'>Investment Committee</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#141'>Code of Business Conduct and Ethics</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#142'>Compensation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#143'>Change in Partnership Management</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#144'>Affiliated Company</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#145'><B>CAPITALIZATION</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    42
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#146'><B>OTHER PROGRAMS MANAGED BY OUR INVESTMENT
    MANAGER OR ITS AFFILIATES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#147'><B>INVESTMENT OBJECTIVES AND STRATEGIES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#148'>Principal Investment Objectives</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#149'>Principal Investment Strategies</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#150'>Equipment and Other Assets for Lease to
    End&#160;&#150; Users</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#151'>Equipment and Other Assets Already Subject to
    Lease</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#152'>Types of Equipment and Other Assets</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#153'>Market</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#154'>Industry Participants and Segments</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#155'>Industry and Market Data</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#156'>Equipment Leasing Figures</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#157'>Competitive Conditions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#158'>Leasing and Financing Strategies</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#159'>Sales of Revenue Streams</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    55
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#160'>Management, Origination and Servicing
    Agreement</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#161'>Changes in Investment Objectives and Policies</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#162'><B>INCOME, LOSSES AND DISTRIBUTIONS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#163'>Allocations of Net Income, Net Loss and
    Distributions Among Investors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#164'>Timing of Distributions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#165'>Reinvestments in Additional Equipment, Other
    Assets, Leases and Other Investments During the Operating
    Period</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#166'>Return of Unused Capital</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#167'>Reserve Account and Sources of Funds for
    Distributions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    58
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#168'><B>MATERIAL U.S. FEDERAL INCOME TAX
    CONSEQUENCES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    59
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#169'><B>INVESTMENT BY QUALIFIED PLANS AND IRAS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    79
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#170'>Fiduciaries under ERISA</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    79
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#171'>Prohibited Transactions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    79
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#172'>Plan Assets</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#173'>Other ERISA Considerations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#174'><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#175'><B>SUMMARY OF OUR PARTNERSHIP AGREEMENT</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#176'>General</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#177'>Capital Contributions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#178'>Powers of our General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#179'>Liability of Our General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    ii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><U>Page</U></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#180'>Limited Liability of Limited Partners</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#181'>Withdrawal or Removal of Our General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#182'>Consequences of Withdrawal or Removal of Our
    General Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#183'>Liability of Withdrawn or Removed General
    Partner</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#184'>Transfer of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#185'>Redemption of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    84
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#186'>Books and Records</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    84
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#187'>Meetings of Limited Partners</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#188'>Voting Rights of Limited Partners</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#189'>Amendment by Limited Partners Without Our General
    Partner&#146;s Concurrence</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#190'>Amendment by Our General Partner Without the
    Consent of the Limited Partners</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#191'>Events Causing Dissolution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#192'>Liquidation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#193'><FONT style="white-space: nowrap">Roll-Up</FONT>
    Transactions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#194'><B>REDEMPTION&#160;OF UNITS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#195'>Redemption&#160;Price of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#196'>Procedure for Redemption of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#197'>Restrictions on Redemption of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#198'>Consequences of Redemption of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    89
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#199'><B>REPORTS TO LIMITED PARTNERS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#200'>Tax Reports</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#201'>Annual Reports</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#202'>Quarterly Reports</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#203'>Reports to State Securities Laws
    Administrators</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    91
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#204'><B>PLAN OF DISTRIBUTION</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    92
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#205'>Compensation of the Selling Agent</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    92
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#206'>Indemnification</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    92
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#207'><B>THE OFFERING</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    93
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#208'>Terms of this Offering and the Offering Period</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    93
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#209'>Escrow Arrangements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    93
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#210'><B>HOW TO SUBSCRIBE</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    95
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#211'><B>SUPPLEMENTAL SALES LITERATURE</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#212'><B>LEGAL MATTERS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#213'><B>EXPERTS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#214'><B>FORECASTS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#215'><B>WHERE YOU CAN FIND MORE INFORMATION</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#216'><B>GLOSSARY</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#217'><B>INDEX TO FINANCIAL STATEMENTS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#225'><B>APPENDIX&#160;A AMENDED AND RESTATED AGREEMENT
    OF LIMITED PARTNERSHIP OF SQN ALTERNATIVE INVESTMENT
    FUND&#160;III, L.P.&#160;</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#218'><B>APPENDIX&#160;B PRIOR PERFORMANCE
    TABLES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    B-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#219'><B>APPENDIX&#160;C SUBSCRIPTION AGREEMENT</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    C-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#220'><B>SIGNATURES</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    II-5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#221'><B>INDEX TO EXHIBITS</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    II-6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv1w1.htm">EX-1.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv3w1.htm">EX-3.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv5w1.htm">EX-5.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv10w1.htm">EX-10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv10w3.htm">EX-10.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv23w1.htm">EX-23.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y03348exv23w2.htm">EX-23.2</A></FONT></TD></TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    iii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>In this prospectus, &#147;we,&#148; &#147;us,&#148;
    &#147;our,&#148; &#147;the Fund,&#148; and &#147;SQN&#148; refer
    to SQN Alternative Investment Fund&#160;III, L.P., a Delaware
    limited partnership, references to our &#147;General
    Partner&#148; refer to SQN AIF III GP, LLC, a Delaware limited
    liability company, and references to our &#147;Investment
    Manager&#148; refer to SQN Capital Management, LLC, a Delaware
    limited liability company.</I>
</DIV>

<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTOR
    SUITABILITY</FONT></B>
</DIV>

</A>
<A name='102'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units are illiquid assets and are not freely transferable.
    There is no public market in which to sell our units, and we do
    not expect a public market for the sale of our units to develop.
    You should purchase our units only if you:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    have adequate financial means;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    do not need liquidity of your investment;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    are able to withstand the risks inherent in a long-term
    investment.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units are not an appropriate investment if you must rely on
    distributions from us as an important source of income. Thus,
    you must, at a minimum, meet the requirements described below in
    order to purchase our units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We, or the selling agent, must have reasonable grounds to
    believe, on the basis of information obtained from you,
    (i)&#160;that an investment in our units is suitable and
    appropriate for you in light of your age, investment objectives,
    investment experience, income, financial situation and needs and
    other investments; (ii)&#160;that your net worth is sufficient
    to sustain the risks inherent in an investment in our units,
    including loss of investment and lack of liquidity; and
    (iii)&#160;that you are or will be in a financial position
    appropriate to enable you to realize to a significant extent the
    benefits described in this prospectus. We and the selling agent
    will rely on what you tell us in your subscription agreement,
    the form of which is attached to this prospectus as
    Appendix&#160;C, about your financial situation and investment
    objectives, and the selling agent must maintain documents in its
    files disclosing the basis on which it made the suitability
    determination of an investment in us by the investors to whom it
    sold our units. Thus, it is important that you provide complete
    and accurate information on your subscription agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When evaluating your suitability for this investment using the
    standards listed below, keep in mind that net worth does not
    include the value of your home furnishings, personal automobiles
    and the equity in your home. Also, you must value the assets
    included in your net worth calculation at their fair market
    value. For fiduciary accounts, such as IRA&#146;s, Keogh Plans,
    and other benefit plans or trusts, these suitability standards
    must be met by the beneficiary, the IRA, plan or trust or the
    donor or grantor who directly or indirectly supplies the funds
    to purchase our units, if that donor or grantor is the fiduciary
    of the IRA, plan or trust. We will maintain your suitability
    records for a minimum period of six years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investment in our units involves substantial risks. You should
    carefully consider the information in the &#147;Risk
    Factors&#148; section and all other information included in this
    prospectus before investing in our units.
</DIV>

<A name='103'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General
    Investor Suitability Requirements</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You must meet our general suitability requirements in order to
    purchase our units. In general, you must have either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a net worth of at least $70,000 plus at least $70,000 of annual
    gross income;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a net worth of at least $250,000.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    iv
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='104'>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    State Investor Suitability Requirements</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Residents of certain states are required to meet suitability
    requirements that differ or are in addition to the general
    investor suitability requirements stated above. In addition, we
    are required to make certain disclosures regarding an investment
    in the units and their transferability. If you are a resident of
    one of the following states, the differing investor suitability
    requirements
    <FONT style="white-space: nowrap">and/or</FONT>
    disclosures apply to you. Any additional investor suitability
    requirements imposed by a state after the date of this
    prospectus will be disclosed in a supplement to this prospectus.
    You are urged to review any supplement to this prospectus to
    determine whether more restrictive standards apply to your
    investment.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Alabama Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and similar equipment leasing programs may
    not exceed 10% of your liquid net worth.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>California Investors.</I>&#160;&#160;You must have either
    (1)&#160;a liquid net worth of not less than $100,000 and a
    gross annual income of not less than $75,000, or (2)&#160;a
    liquid net worth of $250,000, in both instances exclusive of
    your home, home furnishings and automobiles.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You will receive units that have certain additional restrictions
    on transfer as summarized by the following legend:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
    SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
    CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
    COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
    AS PERMITTED IN THE COMMISSIONER&#146;S RULES.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Connecticut Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Florida Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Illinois Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Iowa Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliates may not exceed 10% of
    your net worth, calculated exclusive of your home, home
    furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Kansas Investors.</I>&#160;&#160;Under suitability guidelines
    of the Office of the Kansas Securities Commissioner, you are
    cautioned to carefully evaluate whether your aggregate
    investment in us and other similar investments should exceed 10%
    of your liquid net worth. Liquid net worth is that portion of
    your total net worth, or total assets minus total liabilities,
    that is comprised of cash, cash equivalents and readily
    marketable securities. Readily marketable securities may include
    investments in an IRA or other retirement plan that can be
    liquidated within a short time, less any income tax or other
    penalties that may apply for early distribution.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Kentucky Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Maryland Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    v
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Michigan Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliated programs may not exceed
    10% of your liquid net worth.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Missouri Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>New Jersey Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $60,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $60,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $225,000 in excess of your invested capital. It is
    recommended by the New Jersey Office of the Attorney General
    that New&#160;Jersey investors not invest, in the aggregate,
    more than 10% of their Liquid Net Worth in this and similar
    direct participation investments. Liquid Net Worth is defined as
    that portion of Net Worth which consists of cash, cash
    equivalents and readily marketable securities.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>New York Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>North Carolina Investors.</I>&#160;&#160;You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Ohio Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and in affiliated programs may not exceed
    10% of your liquid net worth, calculated exclusive of your home,
    home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Oklahoma Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth,
    calculated exclusive of your home, home furnishings and
    automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Oregon Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Pennsylvania Investors.</I>&#160;&#160;Because the minimum
    offering amount is less than $5,000,000, which represents 10% of
    the maximum offering amount, you are cautioned to carefully
    evaluate the program&#146;s ability to fully accomplish its
    stated objectives and to inquire as to the current dollar volume
    of program subscriptions. In addition, subscription proceeds of
    Pennsylvania investors will be held in an escrow account until
    we receive and accept subscriptions for at least $7,500,000 in
    offering proceeds. We must offer you the opportunity to rescind
    your subscription if we have not received subscriptions for
    $7,500,000 within 120&#160;days of the date the escrow agent
    receives your subscription proceeds. We must repeat this offer
    to you every 120&#160;days during the Offering Period until we
    have received and accepted subscriptions for $7,500,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Rhode Island Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>South Carolina Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Texas Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    vi
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Tennessee Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us must not exceed 10% of your liquid net
    worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Vermont Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your maximum investment in us and our affiliates may not exceed
    10% of your net worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Virginia Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Washington Investors.</I>&#160;&#160;You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
</TD>
</TR>

</TABLE>

<A name='105'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    Considerations for IRAs, Qualified Plans and Tax-Exempt
    Organizations</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An investment in our units will not, in and of itself, create an
    IRA or qualified plan. To form an IRA or qualified plan, an
    investor must comply with all applicable provisions of the
    Internal Revenue Code (the &#147;Code&#148;) and the Employee
    Retirement Income Security Act of 1974 (&#147;ERISA&#148;).
    IRAs, qualified plans and tax-exempt organizations should
    consider the following when deciding whether to invest:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any income or gain realized could be unrelated business taxable
    income (&#147;UBTI&#148;), which is subject to the unrelated
    business income tax;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    for qualified plans and IRAs, ownership of our units may cause a
    pro rata share of our assets to be considered plan assets for
    the purposes of ERISA and the excise taxes imposed by the Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any entity that is exempt from federal income taxation will be
    unable to take full advantage of any tax benefits generated by
    us;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    charitable remainder trusts that have any UBTI will be subject
    to an excise tax equal to 100% of such UBTI.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although our units may represent suitable investments for some
    IRAs, qualified plans and tax-exempt organizations, our units
    may not be suitable for your plan or organization due to the
    particular tax rules that apply to your plan or organization.
    Furthermore, the investor suitability requirements represent
    minimum requirements, and the fact that your plan or
    organization satisfies them does not mean that an investment
    would be suitable or prudent under your particular facts and
    circumstances. You should consult your plan&#146;s tax and
    financial advisors to determine whether this investment would be
    advantageous for your particular situation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If you are a fiduciary or investment manager of a qualified plan
    or IRA, or if you are a fiduciary of another tax-exempt
    organization, you should consider all risks and investment
    concerns, including those related to tax considerations, in
    deciding whether this investment is appropriate and economically
    advantageous for your plan or organization. See the &#147;Risk
    Factors&#148; and &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#148; sections of this prospectus beginning on
    page&#160;59.
</DIV>

<A name='106'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investor
    Suitability Requirements in Connection with Transfers of
    Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units are subject to substantial transfer restrictions and
    may be transferred only under certain circumstances and then
    subject to certain conditions. One condition is that you may
    sell or transfer our units only to a recipient who meets all
    applicable investor suitability requirements. If the transfer is
    affected through a member firm of the Financial Industry
    Regulatory Authority (&#147;FINRA&#148;), the member firm must
    be satisfied that a proposed buyer meets investor suitability
    standards for this investment. FINRA conduct rules also require
    the member firm to inform the proposed buyer of all pertinent
    facts relating to the liquidity and marketability of our units.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    vii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='107'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Who
    Should Invest</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should purchase our units only if you:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    meet the minimum income, net worth standards and other investor
    suitability requirements specified above;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    are prepared to hold your investment in us for our entire term,
    which we expect will be approximately seven years, but may be
    longer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    have no need for your investment in us to be liquid;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    are prepared to assume the substantial risks associated with an
    investment in us.
</TD>
</TR>

</TABLE>

<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">QUESTIONS
    AND ANSWERS ABOUT THIS OFFERING</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q-1.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What is SQN Alternative Investment Fund&#160;III, L.P. and
    what does it do?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-1.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    We are a form of investment opportunity that is commonly
    referred to as a direct participation program. That means you
    will beneficially own a pro-rata share of the equipment and
    other assets in which we invest and that you are eligible to
    receive the tax benefits inherent in the ownership of certain
    leased equipment and other assets.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    We will offer our units and raise funds on a continuous basis
    until the earlier of (i)&#160;two years from the date hereof, or
    (ii)&#160;the date that we have raised $50.0&#160;million. We
    will hold our initial closing once a minimum of
    $1.2&#160;million in cash subscriptions has been received
    (excluding cash subscriptions from our General Partner or its
    affiliates and from residents of Pennsylvania) on or prior to
    January&#160;1, 2011. At such time we will pay fees and expenses
    associated with our organization and this offering and fund a
    small capital reserve. In addition, we will begin to invest in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as equipment leases, but we also
    intend to use other structures, including, but not limited to,
    participation agreements, residual sharing agreements, project
    financings and vendor and rental (hire) programs.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of our investment objectives
    and strategies, please refer to the &#147;Investment Objectives
    and Strategies&#148; section of this prospectus beginning on
    page&#160;45.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-2.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What types of investments will be in our portfolio?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-2.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    Although the composition of our portfolio cannot be determined
    at this stage, we expect to invest in equipment and other assets
    that are considered essential use or core to a business or
    operation in the agricultural, energy, environmental, medical,
    manufacturing, technology, and transportation industries. Our
    Investment Manager also may identify other assets or industries
    that meet our investment objectives such as modular
    accommodations. We expect to invest in equipment and other
    assets located primarily within the United States, Canada and
    the European Union.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Many of our investments will be structured as full payout or
    operating leases. Full payout leases generally are leases under
    which the rent over the initial term of the lease will return
    our invested capital plus an appropriate return without
    consideration of the residual value, and where the lessee may
    acquire the equipment or other assets at the end of the lease
    term. Operating leases generally are leases under which the
    aggregate noncancellable rental payments during the original
    term of the lease, on a net present value basis, are not
    sufficient to recover the purchase price of the equipment or
    other assets leased under the lease. <I>For a more detailed
    discussion of our strategies to recover the residual value of
    equipment it leases to others under operating leases, see the
    &#147;Investment Objectives and Strategies&#160;&#151; Leasing
    and Financing Strategies&#160;&#151; Residual realization&#148;
    section of this prospectus beginning on page&#160;52.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    In addition, we intend to invest by way of participation
    agreements and residual sharing agreements where we would
    acquire an interest in a pool of equipment or other assets, or
    rights to those equipment </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    viii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    or other assets, at a future date. We also may structure
    investments as project financings that are secured by, among
    other things, essential use equipment and/or assets. Finally, we
    may use other investment structures that our Investment Manager
    believes will provide us with the appropriate level of security,
    collateralization, and flexibility to optimize our return on
    investment while protecting against downside risk, such as
    vendor and rental (hire) programs. In most cases, the structure
    will include us holding title to or a priority position in the
    equipment or other asset.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of the factors our Investment
    Manager will consider in selecting our investments please refer
    to the &#147;Investment Objectives and Strategies&#148; section
    of this prospectus beginning on page&#160;45.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-3.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What are the credits and the terms of the investments that
    will make up the portfolio?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-3.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    We will invest in a variety of credits ranging from small
    private businesses, publicly listed entities, international
    organizations, colleges and universities, hospitals, governments
    and municipalities. Our Investment Manager is primarily an asset
    investor and will look at the underlying credit as further
    investment enhancement. In all cases, the investment committee
    of our Investment Manager, when contemplating investments, will
    consider a range of factors including, but not limited to, the
    following:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the remaining economic useful life of the equipment
    or other assets;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the anticipated residual value of the equipment or
    other asset;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;whether the equipment or other assets are new or
    used and their condition;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;required registrations;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;regulatory considerations;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;portfolio diversification;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;how essential the equipment or other assets are to
    the operations of the business; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the cash flow profile of the equipment or other
    assets, and the depth of the market and exit mechanisms.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Typical investments are expected to have a term of 36 to
    60&#160;months with some investments being shorter and others
    being longer. It is anticipated that our portfolio will be
    divided between investments that generate regular income on a
    monthly, quarterly, semi-annual, or annual basis and other
    investments that will not have cash flows until the end of their
    initial term. The investments that do not generate regular cash
    flows are intended to be higher yielding while the investments
    that do generate regular cash flows are intended to provide cash
    for operations and distributions during the Operating Period (as
    described below).</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of the lease types anticipated
    in us, please refer to the &#147;Investment Objectives and
    Strategies&#148; section of this prospectus beginning on
    page&#160;45.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-4.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What are the investor suitability requirements for this
    investment?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-4.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    In general, you must have either (i)&#160;a net worth of at
    least $70,000, plus at least $70,000 of annual gross income, or
    (ii)&#160;a net worth of at least $250,000. Net worth is
    determined excluding home, home furnishings and automobiles.
    Some states impose higher suitability requirements. Also, the
    minimum investment amount for most investors is $25,000
    (25&#160;units). Since there is no public market for our units,
    an investment in our units is considered illiquid. You should
    invest in us only if you are prepared to hold your units for the
    life of the Fund which is anticipated to be approximately seven
    years, but may be longer.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of investor suitability
    requirements in particular states, please refer to the
    &#147;Investor Suitability&#148; section of this prospectus
    beginning on page&#160;iv, above.</I></TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    ix
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q-5.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>Who are our General Partner, SQN AIF III GP, LLC, and our
    Investment Manager, SQN Capital Management, LLC?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-5.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our General Partner, SQN AIF III GP, LLC, was formed in March
    2010 as a limited liability company to serve as our general
    partner. Our General Partner is wholly-owned by our Investment
    Manager, SQN&#160;Capital Management, LLC, which was formed in
    December 2007 to manage direct participation programs.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Our Investment Manager&#146;s senior management team has
    substantial experience in the lease investment and finance
    industries. For the four-year period ended December&#160;31,
    2009, our Investment Manager and its affiliates had originated
    approximately $150.0&#160;million of equipment leasing and
    finance transactions. The Managing Directors of our Investment
    Manager have collective experience in managing over
    $2.0&#160;billion of assets over the past two decades. Our
    Investment Manager is expected to act as servicer of all of our
    investments.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    In addition, our Investment Manager serves as manager of SQN
    Alternative Investment Fund&#160;I, LLC (&#147;SQN I&#148;) and
    SQN Alternative Investment Fund&#160;II, LLC (&#147;SQN
    II&#148;), which are prior equipment leasing and finance
    programs that were privately offered beginning in February 2008.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of our General Partner and our
    Investment Manager, please refer to the &#147;Management&#148;
    section of this prospectus beginning on page&#160;38 and for a
    more detailed discussion of the operating results of SQN I and
    SQN II, please refer to the &#147;Prior Performance Tables&#148;
    in Appendix&#160;B to this prospectus.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-6.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What can you expect happens after you invest in us?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-6.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    Once our General Partner has accepted your subscription, you
    will receive a confirmation letter indicating our acceptance of
    your investment and a copy of your fully executed subscription
    agreement. We have three phases of different lengths. It is very
    important to be aware of how we will operate during these three
    phases so you can evaluate this investment opportunity.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    We call the period when we are raising money from investors the
    &#147;Offering Period.&#148; This period will not exceed two
    years. We will hold our initial closing once a minimum of
    $1.2&#160;million in cash subscriptions (excluding cash
    subscriptions from our General Partner or its affiliates and
    from residents of Pennsylvania) has been received on or prior to
    January&#160;1, 2011. We then will begin to make investments in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as equipment leases but we also
    will use other structures, including, but not limited to,
    participation agreements, residual sharing agreements, project
    financings and vendor and rental (hire) programs. After we have
    raised a minimum of $1.2&#160;million, we will continue to hold
    regular closings to admit new investors until the earlier of
    (i)&#160;two years from the date hereof, or (ii)&#160;the date
    that we have raised $50.0&#160;million.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Once we begin investing offering proceeds, the &#147;Operating
    Period&#148; will commence. We anticipate that the Operating
    Period will overlap with the Offering Period and, unless
    extended by our General Partner, will last for three years from
    the date it begins. During this period, we will continue to
    invest and re-invest in business-essential, revenue-producing
    (or cost-saving) equipment and other physical assets with
    substantial economic lives and, in many cases, associated
    revenue streams.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    During the Operating Period, we plan to make semi-annual
    distributions of cash to you and our other partners if, in our
    Investment Manager&#146;s opinion, such distributions are in our
    best interests. Therefore, the amount and rate of cash
    distributions could vary and are not guaranteed. The targeted
    distribution rate is 6% annually, paid semi-annually at 3%, of
    your capital contributions.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of our distributions to you,
    please refer to the &#147;Income, Losses and Distributions&#148;
    section of this prospectus beginning on page&#160;57.</I></TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    x
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Following the Operating Period, the &#147;Liquidation
    Period&#148; will begin. Unless extended by our General Partner,
    the Liquidation Period will last for four years. During the
    Liquidation Period we will make irregular distributions to you
    and our other limited partners as the investments in the
    portfolio mature. We generally will not be reinvesting the
    proceeds from investments during this period. However, if, in
    our Investment Manager&#146;s opinion, it would be in the best
    interests of our limited partners to reinvest, we may do so. It
    is our intention to wind down the portfolio and distribute
    proceeds to you and our other limited partners during the
    Liquidation Period.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of our investment objectives,
    please refer to the &#147;Investment Objectives and
    Strategies&#148; section of this prospectus beginning on
    page&#160;45.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-7.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>What will be the terms of the investments?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-7.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    We expect our investments to meet economic and legal standards
    that our Investment Manager has derived from its experience in
    the equipment lease investment and finance business. In general,
    we expect that the investment documents will be enforceable
    contracts that create non-cancelable obligations of the lessee
    or other counterparty with respect to timely payments,
    insurance, proper maintenance of the assets or equipment in
    which we invest, and, if applicable, the return of such assets
    or equipment in a specified condition. Often such investment
    documents will create rights for us in the event of a failure of
    the lessee or other counterparty to perform its payment and
    other obligations over and above the obligation to cure such a
    failure. In addition, such investment documents also may include
    guarantees by parent companies, affiliates, and individual
    owners of such lessees and other counterparties of such
    entities&#146; obligations to us under the investment documents.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion of our distributions to you,
    please refer to the &#147;Investment Objectives and
    Strategies&#148; section of this prospectus beginning on
    page&#160;45.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-8.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>Are there tax benefits and consequences of investing in
    us?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-8.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    We, as a limited partnership, will not pay income taxes
    ourselves. Instead, all of our taxable income or losses and
    other tax items will be passed through to you and our other
    limited partners. Our General Partner anticipates that during
    our early years income taxes on distributions to you and to our
    other limited partners will be substantially tax-deferred by
    operating losses and depreciation deductions available from the
    portion of our equipment leased to third-party end users under
    our operating leases, but not under its full payout leases or
    other investments.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    By the time we are in liquidation, the total tax you pay in the
    aggregate may likely be consistent with the tax you would pay
    with respect to other taxable investments. The benefit of paying
    taxes later instead of currently is commonly referred to as
    &#147;tax deferral.&#148; We use the term &#147;tax
    deferral&#148; to mean that, in the early years of the
    investment, only a small portion of the cash distributed to you
    will be considered a return on investment. To the extent in
    later years the portion considered a return on investment grows,
    it will be taxable at that time. This is not the same as a tax
    deferral commonly associated with qualified plans or IRAs where
    even the portion of your portfolio performance considered a
    return on investment is not taxable when distributed to the
    qualified plan or IRA and such earnings remain untaxed until
    withdrawn. An investment in our units should not be made solely
    because of the potential for tax deferral. In addition, in some
    cases other taxes or loss disallowance rules may offset the
    deferral benefit.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Also, the passive activity rules under the Code will apply to
    natural persons and most other types of investors in us. Thus,
    you should anticipate that your share of our net income or net
    loss in each of our taxable years generally will be
    characterized as passive activity income or loss.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Employee benefit plans, such as qualified pension and profit
    sharing plans, Keogh plans and IRA&#146;s, generally are exempt
    from federal income tax, except that any net UBTI that exceeds a
    specific deduction of $1,000 in any taxable year is subject to
    tax. Other charitable and tax exempt organizations are also
    subject to tax on UBTI. Most of our net income, if any, in a
    given year may constitute UBTI, because of the nature of
    equipment leasing.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    xi
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion, please refer to the
    &#147;Material U.S. Federal Income Tax Consequences&#148;
    section of this prospectus beginning on page&#160;59 and the
    &#147;Investment by Qualified Plans and IRAs&#148; section of
    this prospectus beginning on page&#160;79. You are urged to seek
    advice based on your individual circumstances from an
    independent tax advisor with respect to the tax consequences to
    you of an investment in us.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-9.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>Will you be able to sell your investment in our units?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-9.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    Since there is no public market for our units, an investment in
    our units is considered illiquid. You should only invest money
    that you can afford to have unavailable for at least seven
    years, net of distributions that are expected to be made to you
    during those years. Our units will not be listed on any national
    securities exchange at any time and we will take steps to ensure
    that no public trading market develops for our units. Also, in
    any calendar year, we are limited as to the number of units we
    may redeem so that we will not be treated as a publicly traded
    partnership for tax purposes. In addition, the redemption price
    for your units is unlikely to reflect the fair market value of
    your units at the time of redemption, particularly during the
    Liquidation Period. You may realize a greater return by holding
    on to your units for the duration of our term.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion, please refer to the
    &#147;Redemption of Units&#148; section of this prospectus
    beginning on page&#160;88.</I></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Q-10.</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>Where can I get more information?</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="white-space: nowrap">A-10.</FONT> </TD>
    <TD></TD>
    <TD valign="bottom">
    We have filed a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    with the Securities and Exchange Commission (the
    &#147;SEC&#148;) regarding the units we offer by this prospectus
    and we will file periodic reports and other information with the
    SEC. These documents are available at the SEC&#146;s web site at
    <FONT style="white-space: nowrap">http://</FONT><U>www.sec.gov</U>.
    After you are an investor in us, you may contact Investor
    Relations regarding your account information. The telephone
    number is
    <FONT style="white-space: nowrap">(800)&#160;258-6610.</FONT>
    You are urged to thoroughly discuss an investment in us with
    your financial, tax and legal advisors.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>For a more detailed discussion, please refer to the
    &#147;Where You Can Find More Information&#148; section of this
    prospectus beginning on page&#160;97.</I></TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    xii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following summary highlights information contained
    elsewhere in this prospectus. It does not contain all of the
    information that may be important to you in making your
    investment decision. You should read this entire prospectus,
    including the &#147;Risk Factors&#148; section, before deciding
    to invest in our units. Throughout this prospectus when there is
    a reference to you it is a reference to you as a potential
    investor or limited partner in us.</I>
</DIV>

<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN
    Alternative Investment Fund&#160;III, L.P.</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>The Partnership</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We are a Delaware limited partnership formed on March&#160;10,
    2010. We will operate a fund in which the capital you invest
    will be pooled with capital invested by other investors. This
    pool of capital is then used to invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams. The pooled capital contributions
    also will be used to pay fees and expenses associated with our
    organization and this offering and to fund a capital reserve.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Many of our investments will be structured as full payout or
    operating equipment leases. In addition, we intend to invest by
    way of participation agreements and residual sharing agreements
    where we acquire an interest in a pool of equipment or other
    assets or rights to those equipment or other assets, at a future
    date. We also may structure investments as project financings
    that are secured by, among other things, essential use equipment
    and/or assets. Finally, we may use other investment structures,
    such as vendor and rental (hire) programs, that our Investment
    Manager believes will provide us the appropriate level of
    security, collateralization, and flexibility to optimize our
    return on investment while protecting against downside risk. In
    most cases, the structure will include us holding title to or a
    priority position in the equipment or other asset.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Although the composition of our portfolio cannot be determined
    at this stage, we expect to invest in assets and equipment that
    are considered essential use or core to a business or operation
    in the agricultural, energy, environmental, medical,
    manufacturing, technology, and transportation industries. Our
    Investment Manager also may identify other assets or industries
    that meet our investment objectives such as modular
    accommodations. We expect to invest in assets and equipment
    located primarily within the United&#160;States, Canada and the
    European Union. See &#147;Investment Objectives and
    Strategies&#148; section of this prospectus beginning on
    page&#160;45.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    We expect that we will conduct our activities for at least seven
    years and divide the life of the Fund into three periods:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>Offering Period.&#160;&#160;</I>We will raise money from
    investors during this period which we expect will last for up to
    two years from the date of this prospectus. After we have raised
    $1.2&#160;million (excluding cash subscriptions from our General
    Partner or its affiliates and from residents of Pennsylvania),
    we will begin to invest in business-essential, revenue-producing
    (or cost-saving) </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    equipment and Other Physical Assets with substantial economic
    lives and, in many cases, associated revenue streams.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>Operating Period.&#160;&#160;</I>After we begin investing the
    offering proceeds, the Operating Period will begin and, unless
    extended by our General Partner, will last for three years from
    the date it begins. We anticipate that the Operating Period will
    overlap with the Offering Period. During this period, we will
    continue to invest and re-invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <I>Liquidation Period.&#160;&#160;</I>Unless extended by our
    General Partner, the Liquidation Period will last four years.
    During the Liquidation Period we will make irregular
    distributions to you and our other limited partners as the
    investments in the portfolio mature. We generally will not be
    reinvesting the proceeds from investments during this period. It
    is our intention to wind down the portfolio and distribute
    proceeds to you and the other limited partners during this
    period.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Management</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our General Partner, SQN AIF III GP, LLC, and our Investment
    Manager, SQN Capital Management, LLC, will manage all aspects of
    our business. Our General Partner will manage all of our day to
    day activities and operations and our Investment Manager will
    make all of our investment decisions and manage our investment
    portfolio. The principal office of our General Partner and
    Investment Manager is 48 Wall Street, 24th Floor, New York, New
    York 10005, and their telephone number is
    <FONT style="white-space: nowrap">(212)&#160;422-2166.</FONT>
    Neil A. Roberts is the Chairman and Jeremiah J. Silkowski is the
    President and CEO of our General Partner and our Investment
    Manager. Neil A. Roberts, Jeremiah J. Silkowski, Michael
    Miroshnikov, Hugh Shelmerdine and Timothy R. Spring are the
    current members of our Investment Manager&#146;s investment
    committee. Messrs.&#160;Silkowski and Roberts will maintain
    ultimate investment discretion and will have to be in agreement
    on the funding of any transactions. They may be contacted at SQN
    Capital Management, LLC, 48 Wall Street, 24th Floor, New York,
    New York 10005, telephone
    <FONT style="white-space: nowrap">(212)&#160;422-2166.</FONT>
    See the &#147;Management&#160;&#151; Investment Committee&#148;
    section of this prospectus beginning on page&#160;40.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The management team of our General Partner, our Investment
    Manager and their affiliates has substantial experience in the
    lease investment and finance industries. See the
    &#147;Management&#148; section of this prospectus beginning on
    page&#160;38.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Investment Objectives</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our investment objectives are to:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;preserve, protect and return your invested capital;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;generate semi-annual cash distributions to you and
    our other partners during the Operating Period;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;during the period from the date of the initial
    closing through the end of the Operating Period (i)&#160;make
    investments in business-essential, revenue-producing (or
    cost-saving) equipment and </DIV>
</TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    other physical assets with substantial economic lives and, in
    many cases, associated revenue streams;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;during the Liquidation Period wind down our
    portfolio and distribute the proceeds therefrom to you and our
    other limited partners;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;generate investment returns that are not correlated
    to stock, bond, real estate or commodity markets; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;generate a favorable total return on your investment.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    During the Operating Period, we plan to make semi-annual
    distributions of cash to you and our other partners, if, in our
    Investment Manager&#146;s opinion, such distributions are in our
    best interests. Therefore, the amount and rate of cash
    distributions could vary and are not guaranteed. The targeted
    distribution rate is 6% annually, paid semi-annually as 3%, of
    your capital contribution.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    See the &#147;Investment Objectives and Strategies&#148; section
    of this prospectus beginning on page&#160;45 and the
    &#147;Income, Losses and Distributions&#148; section of this
    prospectus beginning on page&#160;57.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Most, if not all, of our equipment under our operating leases,
    but not under our full payout leases or other investments, is
    expected to be depreciated using accelerated depreciation
    methods under the Modified Accelerated Cost Recovery System. See
    the &#147;Material U.S. Federal Income Tax Consequences&#148;
    section of this prospectus beginning on page&#160;59.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Risk Factors</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    <B>Investing in our units involves a high degree of risk.
    Accordingly, you should read this entire prospectus, including
    the section entitled &#147;Risk Factors,&#148; before making an
    investment decision.</B></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital
    and not a return on capital.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;This is a &#147;blind-pool&#148; offering because we
    have not specifically identified our investments at the time you
    invest. As a result, you cannot evaluate the risks of, or
    potential returns from, any of our investments at the time you
    invest.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;Our units will not be listed on any stock exchange
    or interdealer quotation system, and there are significant
    restrictions in our partnership agreement on your ability to
    transfer your units. We do not intend to assist in the
    development of any secondary market for, or provide qualified
    matching services for purchasers and sellers of, our units. Any
    sale that you may be able to arrange for your units, including
    the redemption of the units by us, which is at our General
    Partners sole discretion, is likely to be at a substantial
    discount to your investment, partnership equity per unit or
    other measures of value. Therefore, your units will effectively
    be illiquid. You should be prepared to hold your units for the
    life of the Fund, which is anticipated to be approximately seven
    years, but may be longer.</DIV>
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;You will have very limited voting rights and you
    must rely on our General Partner, our Investment Manager and
    their affiliates to manage us.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;A prolonged economic recession and/or changes in
    general economic conditions, including fluctuations in demand
    for equipment and other portfolio assets, lease rates, and
    interest rates may result in delays in investment and
    reinvestment, delays in leasing, re-leasing and disposition of
    equipment, and reduced returns on capital.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;Higher than expected lease and other investment
    defaults may result in our inability to fully recover our
    investment or expected income from the affected equipment or
    physical assets and could reduce our cash distributions to you
    and our other limited partners. Uncertainties associated with
    the equipment leasing industry may have an adverse effect on our
    business and may adversely affect our ability to provide you any
    economic return from our units or a complete return of your
    capital.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;Our success will depend in part on our ability to
    realize residual value from a portion of our assets and
    equipment once the leases on those assets and equipment
    terminate.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;Our General Partner, our Investment Manager and
    their affiliates will receive significant compensation from us,
    which will reduce distributions to you.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;There are potential conflicts of interest between us
    and our General Partner, our Investment Manager and their
    affiliates.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;There are material income tax risks associated with
    this offering.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    See the &#147;Risk Factors&#148; section of this prospectus
    beginning on page&#160;16.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Sale of Revenue Streams</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments. See
    the &#147;Investment Objectives and Strategies&#160;&#151; Sale
    of Revenue Streams&#148; section of this prospectus beginning on
    page&#160;55 of this prospectus.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Income, Losses, and</B> <B>Distributions</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our income, losses and distributions will be allocated 99% to
    you and our other limited partners and 1% to our General Partner
    until you and our other limited partners have received total
    distributions equal to your and their capital contributions plus
    an 8% per annum, compounded annually, cumulative return on your
    and their capital contributions. After such time, all
    distributed Cash Available for Distribution and distributed Net
    Disposition Proceeds will be allocated 80% to you and our other
    limited partners and 20% to our General Partner. Until the end
    of the Operating Period (and in certain circumstances, during
    the Liquidation Period), we may invest our Net Disposition
    Proceeds in additional investments. See </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    the &#147;Income, Losses and Distributions&#148; section of this
    prospectus beginning on page&#160;57.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    <B>Material U.S. Federal Income Tax</B> <B>Consequences</B> </DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    This prospectus has a discussion of material U.S. Federal income
    tax consequences relating to an investment in our units. For a
    more complete description of the Federal income tax consequences
    you should read the &#147;Material U.S. Federal Income Tax
    Consequences&#148; section of this prospectus beginning on
    page&#160;59. Investors should consult with their tax and
    financial advisors to determine whether an investment in our
    units is suitable for their portfolio.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Investor Suitability Requirements</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    The units are a long-term investment. Investors must satisfy
    minimum net worth and income requirements. We have established
    minimum investor suitability requirements and many state
    securities commissioners have established investor suitability
    standards different from these minimum standards which apply to
    investors in their respective jurisdictions. See the
    &#147;Investor Suitability&#148; section of this prospectus
    beginning on page&#160;iv.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Glossary</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    In general, defined terms in this prospectus have the meanings
    assigned to them in the Glossary to this prospectus, or if not
    defined therein, in our partnership agreement, which is attached
    as Appendix&#160;A to this prospectus.</TD>
</TR>

</TABLE>

<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Offering</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Securities Offered</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    A minimum of 1,200&#160;units ($1.2&#160;million) and a maximum
    of 50,000&#160;units ($50.0&#160;million). Our General Partner
    and Investment Manager have determined that the minimum offering
    amount represents a level of subscription proceeds which will
    enable our portfolio to be sufficiently diversified. Our General
    Partner and Investment Manager limited our maximum offering
    amount to 50,000&#160;units ($50.0&#160;million) in order to be
    able to remain selective in choosing our investments.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Minimum Investment</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    You must purchase a minimum of 25&#160;units for $25,000.
    However, the minimum may be waived by our General Partner, at
    its sole discretion, on a case by case basis.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Offering Period</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    The earlier of (i)&#160;two years from the date hereof, or
    (ii)&#160;the date that the we have raised $50.0&#160;million.
    This offering will terminate if we do not receive and accept
    subscriptions for the minimum offering amount of
    1,200&#160;units ($1.2&#160;million), excluding cash
    subscriptions from our General Partner or its affiliates and
    from residents of Pennsylvania, by January&#160;1, 2011.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Escrow</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We will deposit your investment in an interest-bearing escrow
    account until we have received the minimum offering amount or
    until January&#160;1, 2011, whichever is earlier. If we have not
    received the minimum offering amount by January&#160;1, 2011,
    all of your funds will be promptly returned to you with any
    interest earned, and without deduction for any fees. If we
    receive the minimum offering amount on or before January&#160;1,
    2011, however, then:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;you will be admitted as a limited partner, in our
    General Partner&#146;s discretion;</DIV>
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;your escrowed subscription proceeds will be
    delivered to us for use as described in this prospectus; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the interest earned on your escrowed subscription
    proceeds, if any, net of bank fees, will be paid to you.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Estimated Use of Proceeds</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Assuming that the maximum offering of 50,000&#160;units being
    offered hereby are sold, we expect that approximately 95.0% of
    the gross proceeds will be available for investment and to pay
    fees, 4.0% of the gross proceeds will be used to pay fees and
    expenses associated with our organization and this offering and
    1.0% of the gross proceeds will be used to fund a capital
    reserve. See the &#147;Estimated Use of Proceeds&#148; section
    of this prospectus beginning on page&#160;9.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    <B>Fees of Our General Partner and its Affiliates</B> </DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    Our General Partner, our Investment Manager and their
    affiliates, including SQN Securities, LLC in its capacity as the
    selling agent, will receive fees and compensation from the
    offering of our units, including the following:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Distribution Expense</I>:&#160;&#160;We will pay
    the selling agent Distribution Expenses of 2.0% of the aggregate
    offering proceeds (excluding proceeds we receive from the sale
    of our units to our General Partner or its affiliates).</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>O&#038;O Expense</I>:&#160;&#160;Our General
    Partner will receive an organization and offering expense
    allowance (the &#147;O&#038;O Expense Allowance&#148;) of 2.0%
    of our offering proceeds to reimburse it for expenses incurred
    in preparing us for registration or qualification under federal
    and state securities laws and subsequently offering and selling
    our units. The O&#038;O Expense Allowance will not exceed the
    actual fees and expenses incurred by our General Partner and its
    affiliates.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Management Fee</I>:&#160;&#160;Our Investment
    Manager will receive a management fee in an amount equal to the
    greater of (i)&#160;1.975% per annum of the aggregate offering
    proceeds, or (ii)&#160;$60,000, payable monthly.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    <B>Our General Partner&#146;s and Investment Manager&#146;s</B>
    <B>Relationship with Us May be Conflicted</B> </DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    Our General Partner, our Investment Manager and their affiliates
    may be subject to conflicts of interest because of their
    relationship to us. These potential conflicts include:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;our General Partner, our Investment Manager and
    their affiliates may compete with us;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;no independent underwriter conducted due diligence
    with respect to this offering;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;we and our General Partner, our Investment Manager
    and their affiliates are not represented by separate counsel;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the receipt of fees and other compensation by our
    General Partner, our Investment Manager and their affiliates;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;we will rely on employees of our General Partner,
    our Investment Manager and their affiliates;</DIV>
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the resolution of conflicts will be undertaken by
    the investment committee of our Investment Manager; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;our General Partner will act as our tax matters
    partner.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    See the &#147;Conflicts of Interest and Fiduciary
    Responsibilities&#148; section of this prospectus beginning on
    page&#160;30.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Partnership Agreement</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    You and the other purchasers of our units will be our limited
    partners. Our partnership agreement will govern the following:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;our activities;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the relationships among you and our other limited
    partners; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the relationship between our General Partner, our
    Investment Manager and their affiliates, on the one hand, and
    you and our other limited partners, on the other hand.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The following is a brief summary of some of the principal
    provisions of our partnership agreement, apart from the income,
    loss and distribution allocation provisions and the fees of our
    General Partner, our Investment Manager and their affiliates
    described previously in this summary. See the &#147;Summary of
    Our Partnership Agreement&#148; section of this prospectus
    beginning on page&#160;82. In addition, you should read the form
    of our partnership agreement, which is included as
    Appendix&#160;A to this prospectus.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Voting rights</I>:&#160;&#160;You will have one
    vote for each unit you purchase. You and our other limited
    partners are entitled to vote on specified fundamental matters,
    such as:</DIV>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="39%"></TD>
    <TD width="1%"></TD>
    <TD width="60%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;amendments to our partnership agreement;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;removal of our General Partner and election of a
    substitute general partner;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;our merger with another entity;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;the sale of all, or substantially all, of our assets
    (except during the Liquidation Period); or</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;our dissolution.</DIV>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Otherwise, you and our other limited partners have no
    participation in determining our operations or policies.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Meetings:&#160;&#160;</I>Our General Partner, or
    our limited partners holding 10% or more of our outstanding
    units, may call a meeting of the limited partners on matters on
    which they are entitled to vote.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Limited liability: </I>&#160;&#160;So long as you
    do not participate in the control of our business and otherwise
    act in conformity with our partnership agreement, your liability
    as a limited partner will be limited to the amount of your
    invested capital, plus your share of any of our undistributed
    profits and assets.</DIV>
</TD>
</TR>
    <FONT style="font-size: 10pt">
    </FONT>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Transferability of units</I>:&#160;&#160;Our
    partnership agreement restricts the transfer of units so that we
    will not be treated as a &#147;publicly traded partnership&#148;
    for federal income tax purposes and will not be taxed as a
    corporation. As a result of these restrictions, you </DIV>
</TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    probably will not be able to transfer your units if, or when,
    you want to.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Removal of general partner:&#160;&#160;</I>Our
    General Partner may be removed only on a vote of limited
    partners holding a majority of our outstanding units. Neither
    our General Partner nor any of its affiliates may participate in
    any vote by you and our other limited partners to remove our
    General Partner as general partner.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Amendment of partnership
    agreement:&#160;&#160;</I>Our partnership agreement generally
    may be amended by the vote of limited partners holding a
    majority of our outstanding units. However, no amendment may be
    made that would change any partner&#146;s interest in
    distributions without the consent of all affected partners.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;<I>Term</I>:&#160;&#160;Our term will end at
    midnight on December&#160;31, 2034, unless sooner dissolved or
    terminated by our General Partner.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Subscription Procedure</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    You must fill out and sign a subscription agreement, the form of
    which is attached to this prospectus as Appendix&#160;C, in
    order to purchase our units. You should send your subscription
    agreement and a check for the purchase price of your units as
    instructed in the subscription agreement. Wire transfer
    instructions are available on request.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Closings</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We will hold the initial closing of this offering when we
    receive subscription proceeds of at least $1.2&#160;million,
    excluding subscription proceeds from Pennsylvania residents and
    from our General Partner and its affiliates. At that time, we
    will admit investors as limited partners and receive the
    escrowed subscription proceeds from the escrow agent. After the
    initial closing, we will hold regular closings until we have
    sold all of the units or this offering closes, whichever comes
    first.</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ESTIMATED
    USE OF PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The table below sets forth information about our expected use of
    proceeds from this offering, assuming we pay the maximum
    compensation and expense reimbursements under our partnership
    agreement. Many of the amounts set forth below, such as the
    amount of offering and organization expenses, distribution
    expenses and capital reserves, are only estimates and not
    statements of expenditures already incurred. The actual amounts
    will depend on the course of the offering of our units and our
    operations. We expect to commit approximately 95.0% of the gross
    proceeds of this offering to the cash portion of the purchase
    price of our portfolio.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="55%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Minimum Offering</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Maximum Offering</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gross Offering Proceeds
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less Offering and Organization
    Expenses<SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Distribution
    Expenses<SUP style="font-size: 85%; vertical-align: top">(2)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    998,000
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
    %<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net Offering Proceeds
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,152,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48,002,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Capital
    Reserves<SUP style="font-size: 85%; vertical-align: top">(4)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Proceeds Available for
    Investment<SUP style="font-size: 85%; vertical-align: top">(5)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,140,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    95.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    47,502,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    95.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes expenses incurred in connection with our organization.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    We will pay SQN Securities, LLC, our exclusive sales agent,
    Distribution Expenses of 2.0% of the aggregate offering proceeds
    (excluding proceeds we receive from the sale of our units to our
    General Partner or its affiliates). See &#147;Plan of
    Distribution&#148; beginning on page&#160;92 of this prospectus.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Our General Partner and its affiliates currently intend to
    purchase 100 of our units offered hereby. Our General Partner
    and its affiliates who participate in the offering will pay
    $1,000 per unit and we will not pay any Distribution Expenses in
    connection with the sale of such units.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    We will initially establish capital reserves in an amount equal
    to 1.0% of offering proceeds for general working capital
    purposes. This amount may fluctuate from time to time as our
    General Partner determines the level of reserves necessary for
    our proper operation in the exercise of its business judgment.
    Any net offering proceeds not used to acquire portfolio
    investments or needed as capital reserves will be returned to
    our limited partners as described under &#147;Investment
    Objectives and Strategies&#148; beginning on page&#160;45 of
    this prospectus.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    The amount available to pay the cash portion of the purchase
    price of equipment or other assets plus related acquisition
    expenses, which are treated for tax and accounting purposes as
    capitalized costs added to the basis of the items of equipment
    or other assets to which they relate and management fees.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT
    COMPENSATION</FONT></B>
</DIV>

</A>
<A name='114'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    Table</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table includes estimates of the maximum amounts of
    all compensation and other payments that our General Partner,
    our Investment Manager and their affiliates will receive,
    directly or indirectly, in connection with our operations. The
    terms of the compensation of our General Partner, our Investment
    Manager and their affiliates were not determined by
    arms&#146;-length negotiation, but are consistent with the
    guidelines set forth by the North American Securities
    Administrators Administration. Our partnership agreement does
    not permit our General Partner, our Investment Manager or their
    affiliates to receive more than the maximum fees or expenses
    stated for each type of compensation by reclassifying such items
    under a different category.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="33%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Estimated Amount Assuming<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Entity Receiving Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Type of Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Maximum Units Sold</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD colspan="5" align="center" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>ORGANIZATIONAL AND OFFERING STAGE</B>
</DIV>
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Selling Agent
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <I>Distribution Expenses. </I>2.0% of the aggregate offering
    proceeds (excluding proceeds we receive from the sale of our
    units to our General Partner or its affiliates).
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The total amount of Distribution Expenses cannot be determined
    because it is based on the number of units sold. If the minimum
    amount of $1.2 million is raised, the total amount of
    Distribution Expenses will be $24,000. If the maximum amount of
    $50.0 million is raised, inclusive of the $100,000 that will be
    purchased by our General Partner or its affiliates, the total
    amount of Distribution Expenses will be $998,000.
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    General Partner and affiliates
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <I>Organizational and Offering Expense Allowance (&#147;O&#038;O
    Expense Allowance&#148;).&#160;&#160;</I>We will pay our General
    Partner an allowance for the O&#038;O Expense. The amount of the
    O&#038;O Expense Allowance is based upon the number of units
    that are sold, including units sold to our General Partner or
    its affiliates. Total O&#038;O Expense Allowance payable or
    reimbursable by us may not exceed 2.0% of all offering proceeds.
    The O&#038;O Expense Allowance will not exceed the actual fees
    and expenses incurred by our General Partner or its affiliates
    in connection with our organization and this offering.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The total amount of O&#038;O Expense Allowance cannot be
    determined because it is based on the number of units sold. If
    the minimum amount of $1.2 million is raised, the total amount
    of O&#038;O Expense Allowance will be $24,000. If the maximum
    amount of $50.0 million is raised, the total amount of O&#038;O
    Expense Allowance will be $1.0 million.<BR>
    <BR>
    Collectively, the O&#038;O Expense Allowance and the
    Distribution Expenses will not exceed 4.0% of the aggregate
    offering proceeds.
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="33%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Estimated Amount Assuming<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Entity Receiving Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Type of Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Maximum Units Sold</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD colspan="5" align="center" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>OPERATIONAL STAGE</B>
</DIV>
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Investment Manager
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <I>Management Fee</I>.&#160;&#160;We will pay our Investment
    Manager a Management Fee in an amount equal to the greater of
    1.975% per annum of the aggregate offering proceeds, or $60,000,
    paid monthly.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The total amount of Management Fee to be paid each month cannot
    be determined because it is based on the aggregate offering
    proceeds. If the minimum amount of $1.2 million is raised, the
    monthly Management Fee will be $60,000. If the maximum amount of
    $50.0 million is raised, the monthly Management Fee will be
    $82,292.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The amount of the Management Fee and/or the Promotional
    Interest, as described below, payable in any year will be
    reduced for that year to the extent it would otherwise exceed
    the Sponsor Fee Limit, as described below. The Management Fee
    will be paid for services rendered by our Investment Manager and
    its affiliates in determining portfolio and investment
    strategies and generally managing or supervising the management
    of the investment portfolio. Our Investment Manager will
    supervise performance of all management activities, including,
    among other activities:
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;the acquisition and financing of the
    investment portfolio;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;the collection of lease and other
    revenues;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;monitoring compliance by lessees and
    other counterparties with their contract terms;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;assuring that investment assets are
    being used in accordance with all operative contractual
    arrangements;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;paying operating expenses and arranging
    for necessary maintenance and repair of equipment and property
    in the event a lessee fails to do so;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;monitoring property, sales and use tax
    compliance;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;originating and servicing our investment
    portfolio; and
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;preparation of operating financial data
    (excluding financial statements and tax matters).
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="33%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Estimated Amount Assuming<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Entity Receiving Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Type of Compensation</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Maximum Units Sold</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    General Partner and affiliates
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <I>Reimbursement of Operating and Acquisition
    Expenses</I>.&#160;&#160;We may reimburse our General Partner,
    our Investment Manager and their affiliates for expenses they
    pay on our behalf. These reimbursements will include:
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The total amount of Operating and Acquisition Expenses cannot be
    determined at this time.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;the actual cost to our General Partner,
    our Investment Manager or their affiliates of services, goods
    and materials used for and by us and obtained from unaffiliated
    parties; and
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;the cost of administrative services
    provided by our General Partner, our Investment Manager and
    their affiliates and necessary or prudent for our operation,
    provided that reimbursement for administrative services will be
    at the lower of (i) the actual cost of such services, or (ii)
    the amount that we would be required to pay to independent
    parties for comparable services<B>.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    General Partner and affiliates
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <I>Distributions and Promotional Interest</I>.&#160;&#160;Our
    General Partner will initially receive 1.0% of all distributed
    Cash Available for Distribution and distributed Net Disposition
    Proceeds. Our General Partner will have a Promotional Interest
    in us equal to 20.0% of all distributed Cash Available for
    Distribution and distributed Net Disposition Proceeds after we
    have provided a return to our limited partners of their
    respective capital contributions plus an 8.0% per annum,
    cumulative return, compounded annually on their capital
    contributions. Our General Partner will not contribute any cash
    to us in return for the Promotional Interest.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The total amount of Promotional Interest cannot be determined
    because it will depend upon the amount by which our income from
    operations and from the disposition of investments exceeds our
    expenses as well as whether the required investor return has
    been achieved.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    The amount of the Management Fee and/or the Promotional Interest
    payable in any year will be reduced for that year to the extent
    it would otherwise exceed the Sponsor Fee Limit, as described
    below.
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We estimate that the total amount of expenses we will reimburse
    to our General Partner, our Investment Manager and their
    affiliates for their administrative services on our behalf
    during our first full year of operations, assuming we sell the
    maximum number of units, will be approximately $0.
</DIV>

<A name='115'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitations
    on Fees</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have adopted a single Management Fee plus the Promotional
    Interest as a means of compensating our General Partner and the
    Investment Manager for sponsoring us and managing our
    operations, respectively. While this compensation structure is
    intended to simplify management compensation for purposes of
    investors&#146; understanding, state securities administrators
    use a more complicated compensation structure in their review of
    equipment program offerings in order to assure that those
    offerings are fair under the states&#146; merit review
    guidelines. The total of all Front-End Fees, the Promotional
    Interest and the Management Fee will be subject to the Sponsor
    Fee Limit in order to assure these state administrators that we
    will not bear greater fees than permitted under the states&#146;
    merit review guidelines. The North American Securities
    Administrators Association (&#147;NASAA&#148;) is an
    organization of state securities administrators and those state
    government agencies responsible for qualifying securities
    offerings in their respective states. NASAA has established
    standards for the qualification of a number of different types
    of securities offerings and investment products, including its
    Statement of Policy on Equipment Programs (the &#147;NASAA
    Equipment Leasing Guidelines&#148;). Article&#160;IV,
    Sections&#160;C through G of the NASAA Equipment Leasing
    Guidelines establish the standards for payment to program
    sponsors of reasonable carried interests, promotional interests
    and fees for equipment acquisition, management, resale and
    releasing services, and sets the maximum compensation payable to
    the sponsor and its affiliates from an equipment leasing program
    such as us. The Sponsor Fee Limit will equal the maximum
    compensation payable under Article&#160;IV, Sections&#160;C
    through G of the NASAA Equipment Leasing Guidelines as in effect
    on the date of our prospectus (the &#147;NASAA Fee
    Limitation&#148;). Under the Sponsor Fee Limit, we will
    calculate the maximum fees payable under the NASAA Fee
    Limitation and guarantee that the Management Fee we will pay the
    Investment Manager and its affiliates, when added to our General
    Partner&#146;s Promotional Interest, will never exceed the fees
    and interests payable to a sponsor and its affiliates under the
    NASAA Fee Limitation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Sponsor Fee Limit.</I>&#160;&#160;The Sponsor Fee Limit will
    be calculated each year during our term by calculating the total
    fees that would be paid to our General Partner, our Investment
    Manager and their affiliates, if our General Partner, our
    Investment Manager and their affiliates were to be compensated
    on the basis of the maximum compensation payable under the NASAA
    Fee Limitation through the end of such year, including our
    General Partner&#146;s Promotional Interest. To the extent that
    the amount paid as Front-End Fees, the Management Fee, and the
    Promotional Interest for any year would, when added to amounts
    paid in all prior years, cause the total fees through the end of
    such year to exceed the aggregate amount of fees calculated
    under the NASAA Fee Limitation for the same period, the
    Management Fee
    <FONT style="white-space: nowrap">and/or</FONT>
    Promotional Interest for that year will be reduced so that the
    total of all such compensation paid through the end of the
    period will not exceed the maximum aggregate fees under the
    NASAA Fee Limitation. To the extent any such fees are reduced,
    the amount of such reduction will be accrued and deferred, and
    such accrued and deferred compensation would be paid to our
    Investment Manager or our General Partner, as the case may be,
    in a subsequent period, but only to the extent that the deferred
    compensation would be within the Sponsor Fee Limit as calculated
    through that later period. Any deferred fees that cannot be paid
    under the applicable limitations through the date of liquidation
    would be forfeited by our General Partner or Investment Manager,
    as the case may be, at liquidation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the NASAA Equipment Leasing Guidelines, we are required to
    commit a minimum percentage of the Gross Offering Proceeds to
    Investment in Equipment, calculated as the greater of:
    (i)&#160;80% of the Gross Offering Proceeds reduced by 0.0625%
    for each 1% of indebtedness encumbering our equipment; or
    (ii)&#160;75% of such Gross Offering Proceeds. We intend to
    incur total indebtedness equal to 0% of the aggregate cost of
    its equipment. Our partnership agreement requires us to commit
    at least 95.0% of the Gross Offering Proceeds to Investment in
    Equipment and to pay fees. Based on the formula in the NASAA
    Equipment Leasing Guidelines, our minimum Investment in
    Equipment would equal 80.00% of gross proceeds (80%&#8722;0%
    &#215;.0625% = 80.00%),
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and our minimum Investment in Equipment therefore would exceed
    the NASAA Fee Limitation minimum by 15.0%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount of the Promotional Interest our General Partner is
    permitted under the NASAA Fee Limitation will be dependent on
    the amount by which the percentage of Gross Offering Proceeds we
    ultimately commit to Investment in Equipment exceeds the minimum
    Investment in Equipment under the NASAA Fee Limitation. The
    NASAA Fee Limitation permits our General Partner and its
    affiliates to receive compensation in the form of a carried
    interest in Fund&#160;Net Income, Net Loss and Distributions
    equal to 1% for the first 2.5% of excess Investment in Equipment
    over the NASAA Guidelines minimum, 1% for the next 2% of such
    excess, and 1% for each additional 1% of excess Investment in
    Equipment. With a minimum Investment in Equipment of 95.0%, our
    General Partner and its affiliates may receive an additional
    carried interest equal to 12.5% of Net Profit, Net Loss and
    Distributions under the foregoing formula (2.5% + 2% + 10.5% =
    15%; 1% + 1% + 10.5% = 12.5%). At the lowest permitted level of
    Investment in Equipment, the NASAA Guidelines would permit our
    General Partner and its affiliates to receive a promotional
    interest equal to 5% of Distributions of Cash from Operations
    and 1% of Distributions of Sale or Refinancing Proceeds until
    limited partners have received total Distributions equal to
    their capital contributions plus an 8% per annum cumulative
    return on their adjusted invested capital, as calculated under
    the NASAA Equipment Leasing Guidelines and, thereafter, the
    promotional interest may increase to 15% of all Distributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With the additional carried interest calculated as described
    above, the maximum aggregate fees payable to our General
    Partner, our Investment Manager and their affiliates under the
    NASAA Equipment Leasing Guidelines as carried interest and
    promotional interest would equal 17.5% of Distributions of Cash
    from Operations (12.5% + 5% = 17.5%), and 13.5% of Distributions
    of Sale or Refinancing Proceeds
    (12.5%&#160;+&#160;1%&#160;=&#160;13.5%), before the
    subordination level was reached, and 27.5% of all Distributions
    thereafter. The maximum amounts to be paid under the terms of
    the our partnership agreement are subject to the application of
    the Sponsor Fee Limit provided in Section&#160;9.4(e) of our
    partnership agreement, which limits the annual amount payable to
    our General Partner, our Investment Manager and their affiliates
    as the Front-End Fees, Management Fee and the Promotional
    Interest to an aggregate not to exceed the total amount of fees
    that would be payable to our General Partner, our Investment
    Manager and their affiliates under the NASAA Fee Limitation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of the offering of our units, final commitment
    of offering proceeds to acquisition of equipment and other
    assets and establishment of final levels of permanent portfolio
    debt, if any, our General Partner will calculate the maximum
    carried interest and promotional interest payable to our General
    Partner and its affiliates under the NASAA Fee Limitation and
    compare such total permitted fees to the total of the Front-End
    Fees, Management Fee and Promotional Interest. If and to the
    extent that the Front-End Fees, Management Fee and Promotional
    Interest would exceed the fees calculated under the NASAA Fee
    Limitation, the fees payable to our General Partner, our
    Investment Manager and their affiliates will be reduced by an
    amount sufficient to cause the total of such compensation to
    comply with the NASAA Fee Limitation. The adjusted Sponsor Fee
    Limit will then be applied to the Management Fee
    <FONT style="white-space: nowrap">and/or</FONT>
    Promotional Interest as described above. A comparison of the
    Front-End Fees actually paid by us and the NASAA Fee Limitation
    maximums will be repeated, and any required adjustments will be
    made, at least annually thereafter.
</DIV>

<A name='116'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Defined
    Terms Used in the &#147;Management Compensation&#148;
    Section</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Definitions of certain capitalized terms used in the foregoing
    &#147;Management Compensation&#148; section are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Cash Available for Distribution&#148;</I> means our
    cash funds provided from operations, without deduction for
    depreciation, but after deducting cash funds used to pay all
    other expenses plus cash available for distribution from our
    reserves less amounts set aside for restoration or creation of
    reserves.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Distributions&#148;</I> means any cash distributed to
    holders and our General Partner arising from their respective
    interests in us.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Front-End Fees&#148;</I> means fees and expenses paid
    by any party for any services rendered during our organization
    and acquisition phase including organization and offering
    expenses, leasing fees, acquisition fees, acquisition expenses,
    and any other similar fees, however designated. Notwithstanding
    the foregoing, Front-End Fees shall not include any acquisition
    fees or acquisition expenses paid by a manufacturer of equipment
    to any of its employees unless such persons are affiliates of
    our General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Investment in Equipment&#148;</I> means the amount of
    capital contributions actually paid or allocated to purchase,
    manufacture, or renovate equipment and other portfolio assets
    (such as physical assets or leases) acquired by us, including
    the purchase of equipment, working capital reserves allocable
    thereto (except that working capital reserves shall not be
    included), and other cash payments such as interest and taxes
    but excluding Front-End Fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Net Disposition Proceeds&#148;</I> means the proceeds
    we realized from the sale, refinancing or other disposition of
    our investments (including insurance proceeds or lessee or
    borrower indemnity payments arising from the loss or destruction
    of an asset) less all our liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Net Income&#148;</I> or <I>&#147;Net Loss&#148;</I>
    means our taxable income or taxable loss as determined for
    federal income tax purposes, computed by taking into account
    each item of income, gain, loss, deduction or credit not already
    included in the computation of taxable income and taxable loss,
    but does not mean Distributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Promotional Interest&#148;</I> means the allocable
    share of all distributed Cash Available for Distribution and
    distributed Net Disposition Proceeds (after a return to our
    limited partners of their respective capital contributions plus
    an 8% per annum cumulative return on their capital
    contributions) payable to our General Partner pursuant to
    Sections&#160;9.4 of our partnership agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Sponsor Fee Limit&#148;</I> means the total fees
    payable calculated pursuant to the NASAA Fee Limitation
    determined in the manner described therein.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>This investment involves a high degree of risk. You should
    consider the following risk factors together with all of the
    other information included in this prospectus in evaluating the
    purchase of our units. If any of the following risks actually
    occurs, our business, financial condition or results of
    operations could be materially adversely affected. In that case,
    you may lose some or all of your investment.</I>
</DIV>

<A name='118'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Associated with this Offering</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not return all of your investment or any rate of return on your
    investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital.
    The portion of your total distributions that is a return of
    capital and the portion that is investment income will depend on
    a number of factors and cannot be determined until all of our
    investments have been sold or matured. At that time, you will be
    able to compare the total amount of all cash distributions
    received by you to your total capital invested in us, and
    determine your investment income.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    cannot predict the amount of cash we will generate. Therefore,
    we cannot predict the amount of cash distributions we will make
    to you and our other partners.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot predict the amount of cash we will generate and, as a
    result, the amount of distributions we may pay you and our other
    partners, if any. The actual amounts of cash we generate will
    depend on numerous factors which may be beyond our control and
    may reduce or delay our cash distributions to you and our other
    partners, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the demand for the leases we provide;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to obtain financings or leverage on acceptable terms
    to build our portfolio;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    profitability of our operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    lease and other investment defaults;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prevailing economic conditions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    government regulations.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    amount and timing of distributions may vary over time and cash
    distributions may not be made on schedule.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    From time to time, our General Partner may vary the amount of,
    or completely suspend, cash distributions to you and our other
    partners if it believes it to be in our best interests to do so.
    Losses from our investments or unavailability of liquid assets
    also may result in suspensions of distributions. Furthermore:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    during the Liquidation Period, cash distributions will be
    irregular while our investments are being disposed of;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    large returns of capital during our term will reduce the cash
    available for future distributions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the Operating Period, we plan to pay you and our other
    partners semi-annual distributions in an aggregate amount equal
    to 3.0% on your and their respective capital contributions.
    However, you should not assume that we will generate cash
    sufficient to pay you and our other partners all or any part of
    the 3.0% semi-annual distribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should not rely on the cash distributions from your units as
    a regular source of cash.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Because
    we do not know what the composition of our investment portfolio
    will be, you cannot evaluate our portfolio at the time you
    invest.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are what is typically referred to as a &#147;blind pool&#148;
    offering because we have not specifically identified any of our
    investments. We will begin to develop our portfolio after we
    receive the minimum offering
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    proceeds and are ready to invest our funds. Therefore, you will
    not be able to assess all of the potential risks associated with
    the investment in our units as you do not have information about
    the transactions we will enter into, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the types, ages, manufacturers, model or condition of the
    equipment and other assets in our portfolio;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the identity, financial condition and creditworthiness of the
    end-users;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms and conditions of the transactions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the type of collateral securing the investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the purchase price that will be paid for our investments;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the expected residual value of the investments.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You must rely upon our Investment Manager&#146;s judgment and
    ability to select our investments, evaluate the asset&#146;s
    condition, evaluate the ability of end-users to perform their
    obligations to us and negotiate transaction documents. We cannot
    assure you that our Investment Manager will be able to perform
    such functions in a manner that will achieve our investment
    objectives.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    and our General Partner&#146;s and our Investment Manager&#146;s
    lack of operating history decreases your ability to evaluate
    your investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We and our General Partner were formed in March 2010 and have no
    performance history upon which to evaluate your investment.
    Also, we cannot predict whether our intended operations will
    meet our stated investment objectives. SQN I and SQN II, which
    are prior private equipment leasing and finance funds sponsored
    by our Investment Manager are still in their operating stages
    and have only a limited performance history. Thus, our
    Investment Manager has only a limited history in managing funds
    similar to us for you to evaluate. See
    &#147;Appendix&#160;B&#160;&#151; Prior Performance
    Tables,&#148; to this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Since
    there is no public market for our units, an investment in our
    units is considered illiquid. You should be prepared to hold
    your units for the duration of the Fund, which is anticipated to
    be approximately seven years, but may be longer.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units will not be listed on any national securities exchange
    at any time and we will take steps to ensure that no public
    trading market develops for our units. Your ability to sell or
    transfer your units will be very limited. You should be prepared
    to hold your units for the life of the Fund, which is
    anticipated to be approximately seven years, but may be longer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have established these restrictions to comply with federal
    and state securities laws and so that we will not be considered
    to be a publicly traded partnership that is taxed as a
    corporation for federal income tax purposes. Thus, you probably
    will not be able to sell or otherwise liquidate your units in
    the event of an emergency and if you were able to arrange a
    sale, the price you would receive for your units would likely be
    at a substantial discount to the price you paid for your units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should invest in us only if you are prepared to hold your
    units for at least seven years, which is the period consisting
    of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an Offering Period of up to two years;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an Operating Period of three years which we expect will overlap
    with the Offering Period;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a subsequent Liquidation Period of approximately four years,
    during which our investments will either mature or be sold.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner, our Investor Manager and their affiliates will
    manage our operations and may make decisions with which you do
    not agree or which do not achieve our business
    objectives.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner, our Investment Manager and their affiliates
    will have all management control over our operations and you are
    not permitted to take part in managing, establishing or changing
    our investment objectives or policies. Our success will
    significantly depend upon:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ability of our Investment Manager to source appropriate
    transactions for us in a timely manner;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the quality of the investment decisions our Investment Manager
    makes, especially relating to the types of investments into
    which we invest, the timing and management of those investments,
    assessments of potential end-users and the residual value of our
    investments;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Investment Manager&#146;s ability to extract maximum value
    from assets and equipment once they reach the end of the lease
    term.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unlike a holder of common stock in a corporation, as a limited
    partner you will have only limited voting rights on matters
    affecting our business. For example, an affirmative vote of
    partners owning not less than a majority of our units is
    required to remove our General Partner or anyone else as general
    partner. You should not purchase our units unless you are
    willing to entrust all aspects of our management to our General
    Partner and our Investment Manager.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If you
    request that we redeem your units you may receive much less than
    if you kept your units for the duration of our
    term.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time after you have been admitted as one of our limited
    partners, you may request us to redeem some or all of your
    units. However, the redemption of your units is subject to the
    following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we have no obligation to redeem any of your units;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we will not maintain a cash reserve for this purpose;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in any given year our total unit transfers, including
    redemptions of our units, may not exceed 2% of our total capital
    or profits interests.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we do agree to redeem your units, the redemption price may
    provide you a much lower value than the value you would realize
    if you kept your units for the duration of our term. Depending
    on when you request redemption, the redemption price may be less
    than the unreturned amount of your investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Spreading
    the risks of leasing by diversifying our investments will be
    reduced if we raise only the minimum offering
    proceeds.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may begin operations with a minimum capitalization of
    $1.2&#160;million (excluding cash subscriptions from our General
    Partner or its affiliates and from residents of Pennsylvania).
    Should we raise less than our maximum offering amount of
    $50.0&#160;million, our portfolio may be less diversified than
    would otherwise be the case. As we will be limited in the types
    and number of transactions we may enter into, a single
    transaction may have a greater impact on the overall performance
    of our portfolio. If we only raise the minimum offering, or have
    a low level of capitalization, a loss on any single transaction
    may have a greater negative impact on our financial performance.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    do not raise our minimum offering amount we will not commence
    operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We require a minimum capitalization of $1.2&#160;million to
    commence operations. If the amount of proceeds raised as of
    January&#160;1, 2011 are insufficient to constitute the minimum
    offering, all subscription proceeds deposited by you into our
    escrow account will be returned to you, together with any
    interest earned and without deduction for fees, commissions or
    expenses. In such a case we will not begin any business
    operations, we will not make any investments and we will not
    make any distributions.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Any
    delays in the investment of the offering proceeds may diminish
    the returns on our investments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will receive only minimal, if any, returns on the offering
    proceeds until the time the offering proceeds are invested in
    equipment, other assets or other investments. If we do not
    invest the offering proceeds promptly, the delay may diminish
    the returns that the investment would have otherwise realized
    had a given investment been made earlier.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    price of the units offered by this prospectus has been
    arbitrarily determined. You should not rely on this price as an
    indication of the value of the units.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The offering price per unit has been determined arbitrarily and
    is not based upon our actual or potential earnings or any other
    criteria for determining value. No representation is made hereby
    that a unit has a market value equal to the purchase price or
    could be sold at the purchase price or at any other price.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Lack
    of independent counsel or an independent underwriter may reduce
    the due diligence review of us and our General Partner, our
    Investment Manager and their affiliates.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The legal counsel that represents our General Partner, our
    Investment Manager and their affiliates, including our selling
    agent, also represents us. You and our other limited partners,
    as a group, have not been represented by separate legal counsel,
    and the selling agent&#146;s due diligence examination of us and
    this offering cannot be considered to be independent. See the
    &#147;Conflicts of Interest and Fiduciary
    Responsibilities&#160;&#151; Lack of Independent Underwriter and
    Due Diligence Investigation in This Offering&#148; section of
    this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    could be liable for our obligations if you participate in the
    control of our business, and you may be required to return
    improperly received distributions.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In general, limited partners are not liable for the obligations
    of a limited partnership unless they participate in the control
    of the limited partnership&#146;s business. If it were
    determined that any of the following rights, or the exercise of
    those rights by the limited partners as a group, constituted
    participation in the control of our business, then you could be
    held liable for our obligations to the same extent as a general
    partner:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the right to remove our General Partner and elect a substitute
    general partner;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the right to approve certain amendments to our partnership
    agreement;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the right to take other specified actions under our partnership
    agreement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This means that if you were deemed to be a general partner, you
    could be held personally liable for our obligations and losses
    beyond the amount you paid for your units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, under the laws of the State of Delaware you may be
    required to return to us any distribution you received from us
    if you knew at the time the distribution was made that it was
    improper because it rendered us insolvent. For a further
    discussion of your liabilities as a limited partner, you should
    read the &#147;Summary of Our Partnership Agreement&#160;&#151;
    Limited Liability of Limited Partners&#148; section of this
    prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Your
    ability to begin an action against our General Partner, our
    Investment Manager and their affiliates is limited by our
    partnership agreement.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement provides that none of our General
    Partner, our Investment Manager or their affiliates will have
    any liability to us for any loss we suffer arising out of any
    action or inaction of our General Partner, our Investment
    Manager or their affiliates, if our General Partner, our
    Investment Manager or their affiliates, as the case may be,
    determined, in good faith, that the course of conduct was in our
    best interests and did not constitute negligence or misconduct.
    As a result of these provisions in our partnership agreement,
    your right to begin an action against our General Partner may be
    more limited than it would be without these provisions. For a
    discussion of these provisions of our partnership agreement, you
    should read the &#147;Conflicts of Interest and Fiduciary
    Responsibilities&#160;&#151; Fiduciary Duty of Our General
    Partner&#148; section of this prospectus.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='119'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Associated with our Business</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Poor
    economic conditions may adversely affect our ability to build
    our portfolio.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A prolonged economic slowdown in the United States, European
    Union,
    <FONT style="white-space: nowrap">and/or</FONT>
    Canada could adversely affect our ability to invest the proceeds
    of this offering as quickly as we would like to if businesses
    aggressively seek to reduce their costs. If this happens, our
    distributions to you and our other partners during the initial
    period of our operations may be less than if our offering
    proceeds were fully invested in accordance with our timetable.
    It also could result in reduced interest rates, which could
    reduce the returns we can obtain on our investments and, as a
    consequence, the distributions we can make to you and our other
    partners. Depending primarily on the severity and duration of a
    general economic slowdown, the creditworthiness of our end-users
    could be adversely affected if they have difficulty obtaining
    financing for their business operations, which could cause them
    to default on their obligations to us and cause us to incur a
    loss.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    success will be subject to risks inherent in the equipment
    leasing and finance business, any of which may affect our
    ability to operate profitably.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A number of factors may affect our ability to operate profitably
    including, the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in economic conditions, including fluctuations in demand
    for equipment and other assets, interest rates and inflation
    rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the quality of the equipment or other assets we acquire and
    lease or finance;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the continuing strength of equipment manufacturers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing of our investments and our ability to forecast
    technological advances;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    technological and economic obsolescence of the equipment and
    other assets we acquire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to obtain financings or leverage on acceptable terms
    to build our portfolio;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    defaults by our lessees or other counterparties;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    increases in our expenses, including labor, tax and insurance
    expenses.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fluctuations in demand for equipment may affect the ability of a
    leasing and finance program to invest its capital in a timely
    manner. Equipment lessors have experienced a more difficult
    market in which to make suitable investments during historical
    periods of reduced growth and recession in the U.S.&#160;economy
    as a result of the softening demand for capital equipment during
    these periods. Economic recession resulting in lower levels of
    capital expenditure by businesses may result in more used
    equipment becoming available on the market and downward pressure
    on prices and lease rates due to excess inventory. Periods of
    low interest rates exert downward pressure on lease rates and
    may result in less demand for lease financing. There can be no
    assurance as to what future developments may occur in the
    economy in general or in the demand for equipment and lease
    financing in particular.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Higher
    than expected equipment lease or other investment defaults may
    result in losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Higher than expected equipment lease or other investment
    defaults may result in a loss of anticipated revenues. These
    losses may adversely affect our ability to make distributions to
    you and our other partners and, if the level of defaults is
    sufficiently large, may result in our inability to fully recover
    our investment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While we will seek to repossess and re-lease or sell any
    equipment or other asset that is subject to a defaulted lease,
    we may not be able to do so on terms that are favorable to us.
    In some cases, the cost of repossessing the equipment or other
    asset subject to a defaulted lease or other investment may make
    trying to recover the equipment or other asset impractical.
    Also, if a lessee or borrower under a defaulted lease or other
    investment files for protection under the bankruptcy laws, then:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may experience difficulties and delays in recovering the
    equipment or other asset from the defaulting party;&#160;and
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may be unable to enforce important contract provisions
    against the insolvent party, including the contract provisions
    that require the equipment or other asset to be returned to us
    in good condition.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we may suffer a loss, or our ability to make
    distributions may be adversely affected, by the high costs of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    enforcing a lessee&#146;s or borrower&#146;s contract
    obligations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    recovering equipment or other asset from the defaulting party;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    transporting, storing, and repairing the equipment or other
    asset;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    finding a new lessee or purchaser for the equipment or other
    asset.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    equipment leasing industry is highly competitive, which may
    hinder our ability to source appropriate or attractive
    investments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The equipment leasing industry both in the U.S.&#160;and abroad,
    and across different equipment classes, is highly competitive.
    In particular:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    it is often relatively easy for new entrants to enter the
    equipment leasing industry as lessors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    leasing companies often act irrationally or unprofitably to gain
    market share, reducing the availability of attractive lease
    transactions to other lessors in the market;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    lease transactions are not always written in a manner which
    provide the lessor with an appropriate rate of return for the
    risk being assumed.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The equipment leasing and finance business is highly fragmented.
    We will compete with:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a large number of national, regional and local banks, savings
    banks, leasing companies and other financial institutions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    captive finance and leasing companies affiliated with major
    equipment manufacturers;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other sources of equipment lease financing, including other
    publicly-offered partnerships.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of our competitors are substantially larger and have
    considerably greater financial, technical and marketing
    resources than either we or our General Partner and its
    affiliates will have, even if we sell the maximum number of
    units in this offering.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to realize the residual value of our equipment or
    other assets under our operating leases, we may incur
    losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that some of our leases will be &#147;operating
    leases,&#148; under which the net present value of aggregate
    rental payments during the initial lease term is structured to
    result in our recovery of an amount less than or equal to 90% of
    the purchase price of the equipment or other asset. Thus, our
    ability to recover the full purchase price of the equipment or
    other asset and our expected return in connection with an
    operating lease depends on the potential value of the equipment
    or other asset once the primary lease term expires. We call this
    the &#147;residual value.&#148; The residual value will depend
    on numerous factors beyond our control, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the original lessee wants to keep the equipment or other
    asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost of comparable new equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the leased equipment or other asset is obsolete or in
    poor condition;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether there is a secondary market for the type of used
    equipment or other asset.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot assure you that our value assumptions will be accurate
    or that the equipment or other assets will not lose value more
    rapidly than we anticipated.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    market value of our equipment or any asset may be lower than
    anticipated, resulting in a loss on our
    investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When we enter into a lease, we will not know what the
    remarketing price of the equipment or other asset leased will be
    when the lease ends and the equipment or other asset is returned
    to us. If the remarketing price is lower than anticipated, we
    will either lose money or receive lower returns than
    anticipated. There are numerous factors beyond our control which
    can materially adversely affect the remarketing price we can
    achieve for equipment or other asset, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the general market value for the equipment or other asset at the
    time we are attempting to remarket that equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost of new equipment or other asset at the time we are
    remarketing the used equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    technological and regulatory developments since our initial
    purchase of the equipment or other asset which could reduce the
    market value of the equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    general economic conditions and the conditions in
    industry-specific market sectors;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the condition of the equipment or other asset returned to or
    repossessed by us.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, there is a risk that the best remarketing price
    available is only obtainable in a market where we do not have
    appropriate or adequate remarketing resources. We cannot assure
    you that our assumptions with respect to value will be accurate
    or that the equipment or other asset will not lose value more
    rapidly than we anticipate.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    inability to obtain insurance for certain types of losses means
    we must bear the cost of any losses from the non-insurable
    risks.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While our leases will generally require lessees to have
    comprehensive insurance on the equipment or other assets under
    lease and to assume the risk of loss, some losses may be either
    uninsurable or not economically feasible to insure, such as
    losses from war, earthquakes or terrorist acts. Furthermore, we
    can neither anticipate nor obtain insurance against all possible
    contingencies that may affect the equipment or other asset. If
    an event occurs for which we have no insurance, we could lose
    some or all of our investment in the affected equipment or other
    asset. Furthermore, lessees who are obliged to insure equipment
    or any asset may nevertheless fail to do so in breach of their
    lease contract.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">In
    leasing some types of equipment and other assets we may be
    exposed to environmental tort liability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In leasing some types of equipment and other assets, such as
    transportation assets designed to carry hazardous materials, we
    may be exposed to environmental tort liability. Although we will
    use reasonable efforts to minimize the possibility of and
    exposure to environmental tort liability, including by means of
    attempting to obtain insurance, we cannot assure you that our
    equipment and other assets will be protected against those
    claims.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Failure
    to maintain equipment registrations and unexpected regulatory
    compliance costs may result in losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain types of transportation equipment are subject to
    registration requirements by governmental agencies in the United
    States and abroad. Should we fail to properly maintain
    registration of that equipment, we may lose the ability to own
    or operate that equipment. In addition to impairing our ability
    to earn rentals from that equipment, penalties may be imposed
    upon us and we may be forced into a sale of that equipment on
    unfavorable terms. Furthermore, governmental agencies may
    require changes or improvements to equipment resulting in
    increased costs and loss of rental revenue while the changes are
    made. This would adversely affect our anticipated returns from
    that investment.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are, or become, subject to usury laws, it could result in
    reduced revenues or, possibly, loss on our
    investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Leases of equipment and other assets have sometimes been deemed
    to be loan transactions subject to state usury laws. These laws
    impose maximum interest rates that may be charged on loans as
    well as penalties for violation, including restitution of any
    excess interest received and declaring the debt to be
    unenforceable. We will seek to structure our leases of equipment
    and other assets so that they will not be deemed to be loans and
    violate state usury laws. However, uncertainties in the
    application of some laws may result in inadvertent violations
    which could result in reduced investment returns or, possibly,
    loss on our investment in the affected equipment and other
    assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Interest
    rate changes may reduce the value of our portfolio and our
    returns.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Changes in interest rates will affect the market value of our
    portfolio. In general, the market value of an equipment lease
    will change in inverse relation to an interest rate change when
    the lease has a fixed rate of return. Thus, in a period of
    rising interest rates, the market value of our equipment leases
    will decrease. A decrease in the market value of our portfolio
    will adversely affect our ability to liquidate&#160;it.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Participation
    with affiliated programs or third-parties in joint ventures may
    require us to pay additional costs or incur losses because of
    actions taken by the third-parties.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement permits us to invest in equipment or
    other assets through joint venture arrangements with our General
    Partner&#146;s affiliated investment programs or independent
    third-parties. Investing in joint ventures involves risks not
    present when we invest by ourself. These risks include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our co-venturer may have business or economic objectives or
    interests that are inconsistent with ours and it may want to
    manage the joint venture in ways that do not maximize our return;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    actions by a co-venturer might subject equipment or other asset
    leases owned by the joint venture to liabilities greater than
    those we contemplate;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    when more than one person owns property, there may be a
    stalemate on decisions, including decisions regarding a proposed
    sale or other transfer of the equipment or other assets.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although our partnership agreement requires that any joint
    venture arrangement in which we participate must permit us to
    buy equipment or other assets from the other co-venturer in the
    case of a proposed sale of the equipment or other assets, we may
    not have the resources to do so. See the &#147;Conflicts of
    Interest And Fiduciary Responsibilities&#160;&#151; We May Enter
    Into Joint Ventures With Affiliated Programs&#148; section of
    this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    suffer losses as a result of transacting business in foreign
    countries, dealing with foreign clients or having our equipment
    or other assets located in a foreign jurisdiction.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is likely that we will enter into transactions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    with foreign clients;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    where the equipment or other asset is permanently or temporarily
    located outside the U.S.;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    where the contracts are governed by foreign laws.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These transactions involve a number of risks, including the
    following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may have difficulty enforcing our rights under foreign
    contracts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may have difficulty repossessing our equipment or other asset
    outside the U.S.;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    legal costs may be more expensive outside the U.S.;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    foreign governments may confiscate equipment or other assets,
    nationalize equipment, retrospectively change laws, impose new
    or changed fees, duties or taxes or impose foreign exchange
    restrictions which hamper our ability to receive payment in the
    U.S.;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    foreign courts may not recognize judgments obtained in
    U.S.&#160;courts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may have documentary risks where contracts are written in a
    language other than English;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    complications may arise from interpretations of tax or legal
    codes and any regulatory registration requirements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in, or interpretations of, foreign laws and regulations
    may adversely affect our ability to enter into leases, sell
    equipment or other assets or repatriate profits to the U.S.;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the income earned in foreign jurisdictions may be subject to
    withholding
    <FONT style="white-space: nowrap">and/or</FONT>
    income taxes, and depending on the foreign country, the
    U.S.&#160;may not have a tax treaty in place to reduce or
    eliminate the tax;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the U.S.&#160;tax code imposes restrictions on the use of
    foreign tax credits, which may prevent you from claiming full
    credit for your share of foreign taxes. See the &#147;Material
    U.S.&#160;Federal Income Tax Consequences&#148; section of this
    prospectus.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Movements
    in foreign currency rates may result in losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will enter into purchase, sale and lease contracts for
    equipment and other assets where the payments to be made or
    received are not in U.S.&#160;dollars. We do not anticipate that
    we will hedge our portfolio against foreign currency fluctuation
    risk. If we are due to receive payments from a client or
    purchaser in a currency other than U.S.&#160;dollars, a
    strengthening of the U.S.&#160;dollar against that currency will
    mean we are receiving less, as expressed in U.S.&#160;dollars,
    than initially anticipated, which would have a negative impact
    on our returns.
</DIV>

<A name='120'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Associated with our Organization and Structure</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner, our Investment Manager and their affiliates may
    be subject to various conflicts of interest arising out of their
    relationship to us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The decisions of our General Partner, our Investment Manager and
    their affiliates will be subject to various conflicts of
    interest arising out of their relationship to us and their
    affiliates. Conflicts of interest that may affect us and our
    limited partners include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our partnership agreement does not prohibit our General Partner,
    our Investment Manager or any of their affiliates from competing
    with us for investments and engaging in other types of business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the selling agent, which is an affiliate of our General Partner
    and our Investment Manager and not an independent securities
    firm, will review and perform due diligence on us and the
    information in this prospectus and thus its review cannot be
    considered an independent review and may not be as meaningful as
    a review conducted by an unaffiliated broker-dealer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the lack of separate legal representation for us and our General
    Partner and our Investment Manager and lack of arms&#146;-length
    negotiations regarding compensation payable to our General
    Partner and our Investment Manager;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we will pay fees to the General Partner, our Investment Manager
    and their affiliates including the selling agent, before
    distributions are paid to you and other partners even if we do
    not generate profits;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we rely on the employees of our General Partner, our Investment
    Manager and their affiliates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the resolution of conflicts will be undertaken by the investment
    committee of our Investment Manager;&#160;and
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our General Partner will act as our tax matters partner, and
    will negotiate with the Internal Revenue Service to settle tax
    disputes that would bind us and our other partners; those
    negotiations might not be in your best interest given your
    individual tax situation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner&#146;s, our Investment Manager&#146;s or their
    affiliates&#146; operating systems could be damaged or disrupted
    by events beyond their control, which could interfere with our
    ability to conduct our business and make us less attractive to
    customers as a source of equipment leases.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our ability to manage our operations and realize residual values
    from our leases of equipment and other investments depends on
    the operating systems of our General Partner, our Investment
    Manager and their affiliates. In particular, this includes our
    General Partner&#146;s, our Investment Manager&#146;s or their
    affiliates&#146; computer and telecommunications and related
    equipment, and their ability to protect those systems against
    damage or disruptions from such contingencies as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    power loss;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    acts of God, such as earthquakes, etc.;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    telecommunications failure;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    acts of terrorism;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    computer intrusions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    viruses and similar adverse events.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although our General Partner, our Investment Manager and their
    affiliates will implement security and protective measures,
    these systems could still be vulnerable. Any damage or
    disruption to these systems could make us less attractive to
    end-users as a source of equipment or other asset leases.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner and Investment Manager rely heavily on their
    respective key personnel to manage us, and the loss of such
    personnel could adversely affect us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our success will be dependent upon our utilizing sufficient and
    appropriately skilled resources and personnel to manage us and
    our business affairs. In managing and directing the
    <FONT style="white-space: nowrap">day-to-day</FONT>
    activities and affairs and our investment decisions, our General
    Partner and our Investment Manager rely heavily on their
    respective principals. As a result, if any of their key
    personnel were to leave or be unable to carry out his or her
    present responsibilities, our results of operations and
    financial condition may be harmed and we may not be able to meet
    our investment objectives.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    Investment Manager&#146;s investment committee is not
    independent.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any conflicts in determining and allocating investments between
    us and our General Partner, or between us and another program
    managed by our General Partner, our Investment Manager or their
    affiliates will be resolved by our Investment Manager&#146;s
    investment committee, which also will serve as the investment
    committee for other funds managed by our Investment Manager.
    Since all of the members of our Investment Manager&#146;s
    investment committee are officers of our General Partner, and
    are not independent, matters determined by the investment
    committee, including conflicts of interest between us and our
    General Partner, our Investment Manager and their affiliates
    involving investment opportunities, may not be as favorable to
    you and our other partners as they would be if independent
    members were on the committee. Generally, if an investment is
    appropriate for more than one program, our Investment Manager
    and its investment committee will allocate the investment to a
    program (which includes us) after taking into consideration at
    least the following factors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    which program has been seeking investments for the longest
    period of time;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the program has the cash required for the investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the amount of debt to be incurred with respect to the
    investment is acceptable for the program;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the effect the investment would have on the program&#146;s cash
    flow;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    25
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the investment would further diversify, or unduly
    concentrate, the program&#146;s investments in a particular
    lessee or borrower, class or type of equipment, location,
    industry, etc.;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the term of the investment is within the term of the
    program.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the foregoing, our Investment Manager and its
    investment committee may make exceptions to these general
    policies when, in our Investment Manager&#146;s judgment, other
    circumstances make application of these policies inequitable or
    uneconomic.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also, under our partnership agreement our General Partner, our
    Investment Manager and their affiliates may engage in equipment
    acquisitions, refinancing, leasing and releasing opportunities
    on their own behalf or on behalf of other partnerships, even if
    they compete with us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We,
    our General Partner, our Investment Manager and their affiliates
    do not have independent audit and compensation
    committees.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although our General Partner believes that the fees and other
    compensation we will pay to it, our Investment Manager and their
    affiliates are reasonable and competitive in the industry, they
    were established by our General Partner and were not determined
    by an independent compensation committee composed of persons who
    are not affiliates of our General Partner. Also, our General
    Partner and our Investment Manager, rather than an independent
    audit committee composed of persons who are not affiliates of
    either our General Partner or our Investment Manager, will
    select our independent registered public accounting firm and
    supervise the preparation of our audited financial statements
    included in our annual reports to you. See the &#147;Management
    Compensation&#148; and &#147;Reports to Limited Partners&#148;
    sections of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    internal controls over financial reporting may not be effective
    or our independent registered public accounting firm may not be
    able to certify as to their effectiveness, which could have a
    significant and adverse effect on our business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After our first full year of operations, our General Partner
    will be required to evaluate our internal controls over
    financial reporting in order to allow management to report on,
    and if and when required, our independent registered public
    accounting firm to attest to, our internal controls over
    financial reporting, as required by Section&#160;404 of the
    Sarbanes-Oxley Act of 2002, as amended, and the rules and
    regulations of the SEC hereunder, which we refer to as
    &#147;Section&#160;404.&#148; During the course of testing, our
    General Partner may identify deficiencies that it may not be
    able to remediate in time to meet the deadline imposed by the
    Sarbanes-Oxley Act for compliance with the requirements of
    Section&#160;404. In addition, if we fail to achieve and
    maintain the adequacy of our internal controls, as such
    standards are modified, supplemented or amended from time to
    time, we may not be able to ensure that we can conclude on an
    ongoing basis that we have effective internal controls over
    financial reporting in accordance with Section&#160;404. We
    cannot be certain as to the timing of completion of our
    evaluation, testing and any remediation actions or the impact of
    the same on our operations. If we are not able to implement the
    requirements of Section&#160;404 in a timely manner or with
    adequate compliance, we may be subject to sanctions or
    investigation by regulatory authorities, such as the SEC. As a
    result, our General Partner and its affiliates may be required
    to incur costs in improving our internal control system and the
    hiring of additional personnel.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    Investment Manager may have difficulty managing its growth,
    which may divert its resources and limit its ability to expand
    its operations successfully.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount of assets that our Investment Manager manages has
    grown substantially since our Investment Manager was formed in
    December 2007, and our Investment Manager intends to continue to
    sponsor funds similar to us, which may be concurrent with us,
    and our Investment Manager expects to experience further growth
    in their respective assets under management. Our Investment
    Manager&#146;s future success will depend on the ability of its
    officers and key employees to implement and improve its
    operational, financial and management controls, reporting
    systems and procedures, and manage a growing number of assets
    and investment funds. Our Investment Manager, however, may not
    implement improvements to its management information and control
    systems in an efficient or timely manner and may discover
    deficiencies in its existing
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    26
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    systems and controls. Thus, our Investment Manager&#146;s
    anticipated growth may place a strain on its administrative and
    operations infrastructure, which could increase its costs and
    reduce its efficiency and could negatively impact our operating
    results.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner, our Investment Manager and their affiliates may
    receive expense reimbursements and fees from us and those
    reimbursements and fees are likely to exceed the income portion
    of distributions made to you during our early
    years.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Before making any distributions to you and our other partners,
    we may reimburse our General Partner, our Investment Manager and
    their affiliates for expenses incurred on our behalf, and pay
    our General Partner, our Investment Manager and their affiliates
    fees for selling our units and acquiring, managing, and
    realizing our investments for us, regardless of whether we are
    profitable. The expense reimbursements and fees of our General
    Partner, our Investment Manager and their affiliates were
    established by our General Partner and, are not based on
    arm&#146;s-length negotiations, but are subject to the
    limitations set forth in our partnership agreement.
    Nevertheless, the amount of these expense reimbursements and
    fees is likely to exceed the income portion of distributions
    made to you in the early years of our term.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In general, expense reimbursements and fees will be paid without
    regard to the amount of our cash distributions to you and our
    other partners, and regardless of the success or profitability
    of our operations. For example, after we receive our minimum
    offering proceeds and begin operations, our General Partner, our
    Investment Manager and their affiliates may be entitled to
    certain fees and expense reimbursements. Some of those fees and
    expense reimbursements may be paid at the time of the Initial
    Closing in this offering or as we acquire our portfolio and we
    may pay other expenses, such as accounting and interest
    expenses, costs for supplies, etc., even though we may not yet
    have begun to receive revenues from our investments.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<A name='121'>
<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Associated With the Tax Treatment of Our Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    may be required to pay taxes on income from us, even if you do
    not receive commensurate cash distributions from
    us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, you will be required to pay federal income taxes, and
    probably state and local income taxes, on your share of our
    taxable income, regardless of whether or not you receive cash
    distributions from us. For example, your share of our taxable
    income could exceed the amount of cash that we distribute to you
    if we repay the principal of any debt we incur with our rental
    or interest income or net proceeds from the sale of our
    investments. This could happen because repaying the principal
    amount of a debt reduces the amount of cash available for
    distribution to you and our other partners, but is not tax
    deductible. Thus, your cash distributions from us may not equal
    your share of our taxable income or even equal your tax
    liability resulting from that income. See the &#147;Material
    U.S.&#160;Federal Income Tax Consequences&#160;&#151; Our Income
    Versus Our Distributions&#148; section of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will not apply for an advance ruling from the Internal Revenue
    Service as to any federal tax consequence of an investment in
    us, and if the Internal Revenue Service classifies us as a
    corporation you will lose tax benefits.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not apply for an advance ruling from the Internal
    Revenue Service (&#147;IRS&#148;) as to whether we will be
    treated as a partnership for federal tax purposes or with
    respect to any other tax consequence to you of an investment in
    us. Instead, we intend to rely on the opinion of our special tax
    counsel, Troutman Sanders LLP, that we will be classified as a
    partnership for federal income tax purposes. See the
    &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Opinion of Counsel&#148; section of
    this prospectus. If the IRS were to successfully contend that we
    should be treated as a &#147;publicly traded partnership,&#148;
    then we would be treated as a corporation for federal income tax
    purposes rather than a partnership. This would have the
    following principal consequences to you:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    tax losses realized by us would not pass through to you;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we would be taxed at income tax rates applicable to
    corporations, which would reduce our cash distributions to you
    and our other partners;&#160;and
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our distributions to you and our other partners would be taxable
    to you and our other limited partners as dividend income to the
    extent of our current and accumulated earnings and profits.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To reduce the possibility that the IRS could successfully
    contend that our units are &#147;publicly-traded,&#148;
    Section&#160;13.2 of our partnership agreement places
    substantial restrictions on your ability to transfer your units.
    With respect to our tax status as a partnership, see the
    &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Opinion of Counsel,&#148;
    &#147;&#151;&#160;Taxation of Limited Partnerships in
    General,&#148; and &#147;&#151;&#160;Publicly Traded
    Partnerships&#148; sections of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    could lose cost recovery or depreciation deductions if the IRS
    treats our operating leases as sales or
    financings.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to claim cost recovery or depreciation deductions on
    the equipment subject to our operating leases, but not the
    equipment subject to our full payout leases or other
    investments. In this regard, we anticipate that some portion of
    our leases will be operating leases and others will be full
    payout leases. In addition, our equipment and other assets may
    be financed for others under secured financings. If the IRS were
    to successfully contend that our operating leases were actually
    sales, including full payout leases or other investments, rather
    than operating leases, we would not be entitled to cost recovery
    or depreciation deductions with respect to the equipment covered
    by those leases. See the &#147;Investment Objectives and
    Strategies&#160;&#151; Equipment and Other Assets for Lease to
    End-Users&#148; section of this prospectus. The IRS could also
    challenge our method of calculating our cost recovery or
    depreciation deductions, or our other deductions, and the amount
    of our deductions could be reduced if we were audited. See the
    &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Tax Treatment of Leases,&#148;
    &#147;&#151;&#160;Cost Recovery,&#148; and
    &#147;&#151;&#160;Limitations on Cost Recovery Deductions&#148;
    sections of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    will need passive income in order to deduct any tax losses we
    may generate.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because our operations generally will be treated as passive
    activities by you and our other partners, your share of any tax
    losses we generate will likely be passive losses which you may
    use on your personal federal income tax returns only to offset
    passive income you receive from us or from other passive
    activities (other than publicly-traded partnerships) in which
    you invest, if any, in calculating your personal federal income
    tax liability. For example, you cannot use a passive loss from
    us to offset any &#147;active&#148; (i.e., non-passive) income,
    such as your salary, on your personal federal income tax
    returns. In addition, a portion of your share of our gross
    income might be treated for federal income tax purposes as
    portfolio income or gross income that is not from a passive
    activity, which cannot be offset by passive losses. See the
    &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Deductibility of Losses; Passive
    Activity Losses, Tax Basis and At &#147;Risk&#148;
    Limitation&#148; section of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    will likely be subject to state and local taxes as a result of
    purchasing our units.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You will likely be subject to state and local taxes imposed by
    the various jurisdictions in which we do business or own
    property. It is your responsibility to file all of your personal
    federal, state and local tax returns. Our special tax counsel
    has not given any opinion on the state or local tax consequences
    of an investment in us. We urge you to seek advice based on your
    particular circumstances from an independent tax advisor with
    respect to the state and local tax consequences of purchasing
    our units. See the &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; State and Local Taxation&#148; section
    of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">An IRS
    audit of our annual federal information tax return may result in
    adjustments to, or an audit of, your personal income tax
    returns.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate incurring tax losses during at least our early
    years due primarily to depreciation of equipment leased to
    others under our operating leases, and operating expenses. Also,
    we may be required to file disclosure reports with the IRS and
    its Office of Tax Shelter Analysis if the tax results of our
    intended activities cause us to be a &#147;reportable
    transaction&#148; under the Internal Revenue Code and the
    Treasury Regulations. Our anticipated tax losses and any
    reportable transaction reports to the IRS would increase the
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    risk of an IRS audit of our federal information income tax
    returns, and could result in an IRS audit of your personal
    federal income tax returns. Also, any adjustments to our returns
    required by the IRS could require you to make corresponding
    adjustments on your personal federal income tax returns. In
    addition, an IRS audit of your personal federal income tax
    return could include an examination by the IRS of your returns
    for prior years, and could cover items unrelated to your
    investment in us. See the &#147;Material U.S.&#160;Federal
    Income Tax Consequences&#160;&#151; Audit by the IRS&#148; and
    &#147;&#151;&#160;Registrations; Reportable Transactions,
    Interest and Penalties&#148; sections of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Your
    investment in us may cause you to pay alternative minimum
    tax.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You may have to pay alternative minimum tax as a result of your
    investment in us, because you will be allocated a share of our
    alternative minimum tax preference and adjustment items. For
    example, depreciation or cost recovery deductions of equipment
    subject to our operating leases generally are computed
    differently for regular federal income tax purposes than for
    alternative minimum tax purposes. This would increase your
    alternative minimum taxable income, as compared to your regular
    taxable income, during the early years of the applicable cost
    recovery or depreciation period of the equipment subject to our
    operating leases. See the &#147;Material U.S.&#160;Federal
    Income Tax Consequences&#160;&#151; Alternative Minimum
    Tax&#148; section of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">IRA&#146;s
    and tax-exempt organizations may have unrelated business taxable
    income from an investment in us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Tax-exempt organizations, such as pension plans, IRA&#146;s, and
    certain types of foreign entities or persons are potentially
    subject to tax on UBTI. Although rental and interest income
    generally are not included in UBTI, our General Partner
    anticipates that most of your income, if any, from an investment
    in us could constitute UBTI, because of a special rule in the
    Internal Revenue Code that treats such income as UBTI to the
    extent it is attributable to equipment leases. See the
    &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Taxation of Tax-Exempt
    Organizations&#148; section of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Foreign
    investors in us will be subject to U.S. Tax
    withholding.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We generally will be required to withhold federal income tax at
    the highest applicable rate under the Internal Revenue Code on
    the income, if any, we allocate to units owned by foreign
    investors, regardless of whether any corresponding cash
    distributions are made to them. If too much tax is withheld,
    foreign investors will have to file U.S.&#160;income tax returns
    to seek a refund. See the &#147;Material U.S.&#160;Federal
    Income Tax Consequences&#148; section of this prospectus.
</DIV>

<A name='122'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS AND ASSOCIATED RISKS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain statements within this prospectus, including statements
    contained in the sections entitled &#147;Prospectus
    Summary,&#148; &#147;Risk Factors,&#148; &#147;Investment
    Objectives and Strategies,&#148; and &#147;Management Discussion
    and Analysis of Financial Condition,&#148; contain
    forward-looking statements concerning our objectives, plans,
    intentions, strategies, expectations and predictions concerning
    our future investment activities, results of operations and
    other future events or conditions based on views and opinions of
    our General Partner and our Investment Manager. For this
    purpose, any statements contained herein that are not of
    historical fact may be deemed to be forward-looking statements.
    Without limiting the generality of the foregoing, words such as
    &#147;believes,&#148; &#147;may,&#148; &#147;will,&#148;
    &#147;could,&#148; &#147;intends,&#148; &#147;anticipates,&#148;
    &#147;estimates,&#148; &#147;expects&#148; or &#147;might,&#148;
    or the negative or other variations thereof or comparable
    terminology are intended to identify forward-looking statements.
    These forward-looking statements include such things as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    investment objectives;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    references to future operating results, credit availability and
    financial success;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    business strategy;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    estimated future capital expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    competitive strengths and goals;&#160;and
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other similar matters.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These statements are based on certain assumptions and analyses
    made by us, our General Partner and our Investment Manager in
    light of our experience and our perception of historical trends,
    current conditions, and expected future developments. However,
    whether actual results will conform with these expectations is
    subject to a number of risks and uncertainties, many of which
    are beyond our control. Such risks include, but are not limited
    to, those described under the &#147;Risk Factors&#148; section
    of this prospectus and the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in economic conditions, including fluctuations in demand
    for equipment or other assets, interest rates and inflation
    rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the quality of equipment and other assets we acquire and lease
    or finance;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the continuing strength of equipment and other manufacturers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing of our equipment and other asset purchases and our
    ability to forecast technological advances;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    technological and economic obsolescence of the equipment and
    other assets we acquire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    defaults by our lessees or other counterparties;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    increases in our expenses.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we believe the expectations reflected in such
    forward-looking statements are based upon reasonable
    assumptions, we cannot assure investors that our expectations
    will be attained or that any deviations will not be material.
    You are cautioned that forward-looking statements speak only as
    of the date they are made and that, except as required by law,
    we undertake no obligation to update these forward-looking
    statements to reflect any future events or circumstances. All
    subsequent written or oral forward-looking statements
    attributable to us or to individuals acting on our behalf are
    expressly qualified in their entirety by this paragraph.
</DIV>

<A name='123'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CONFLICTS
    OF INTEREST AND FIDUCIARY RESPONSIBILITIES</FONT></B>
</DIV>

</A>
<A name='124'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner and our Investment Manager may be subject to
    various conflicts of interest arising out of their relationship
    to us. Because of our General Partner&#146;s and our Investment
    Manager&#146;s organizational and operational control over us,
    these conflicts will not be resolved through arms&#146;-length
    negotiations but, rather, through the exercise of our General
    Partner&#146;s and Investment Manager&#146;s judgment consistent
    with their fiduciary responsibilities to you and us. Some
    provisions of our partnership agreement are designed to protect
    the interests of you and our other partners if conflicts arise.
    In this regard, you should read Article&#160;IX of our
    partnership agreement and, in particular, Section&#160;9.5.
    These sections do the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limit the actions our General Partner may take on our behalf;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limit the compensation and fees we will pay our General Partner,
    our Investment Manager and their affiliates;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limit the expenses for which we will reimburse our General
    Partner, our Investment Manager and their affiliates.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    However, our partnership agreement does not necessarily directly
    respond to each potential conflict, and there will be no
    established mechanism to resolve these conflicts. In these
    situations, our Investment Manager will rely solely on its
    judgment, subject to its fiduciary duties, to resolve the
    conflict. The potential conflicts include those set forth below.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    30
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='222'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner, Our Investment Manager and Their Affiliates
    Will Receive Fees and Other Substantial Compensation From
    Us</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay fees and other substantial compensation to our
    General Partner, our Investment Manager and their affiliates.
    Further, we may reimburse our General Partner, our Investment
    Manager and their affiliates for costs incurred by them in
    managing us and our portfolio.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to its fiduciary duties and the terms of our partnership
    agreement, our Investment Manager has sole discretion with
    respect to the terms and timing of our investments, although it
    is anticipated that those investments will be consistent with
    our investment objectives and policies. The agreements and
    arrangements, including those relating to compensation, between
    us and our General Partner, our Investment Manager and their
    affiliates are not the result of arms&#146;-length negotiations
    and may create conflicts between the interests of our General
    Partner, our Investment Manager and their affiliates on the one
    hand and us and our partners on the other. However, our General
    Partner believes that the compensation and fees provided for in
    our partnership agreement are consistent with practices in the
    industry and the NASAA Equipment Leasing Guidelines in effect as
    of on the date of this prospectus.
</DIV>

<A name='125'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Actions
    Taken by Our General Partner and Our Investment Manager Will
    Affect the Amount of Cash Available for Distribution to Limited
    Partners and Our General Partner&#146;s and Investment
    Manager&#146;s Compensation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount of cash we have available for distribution to you and
    our other partners will be affected by decisions of our General
    Partner and our Investment Manager regarding various matters,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the amount and timing of asset and equipment purchases and sales;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    cash expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    financing;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the creation, reduction or increase of reserves.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the &#147;Management Compensation&#148; section of this
    prospectus beginning on page&#160;10.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner will be liable for our obligations to the
    extent that they exceed our assets. As a result, our General
    Partner has the right to cause us to establish and maintain cash
    reserves that it believes are necessary to meet our obligations.
    Because our General Partner may be exposed to liability to our
    creditors if our reserves are insufficient to pay our contingent
    liabilities, our General Partner may have a conflict of interest
    in allocating our cash flow between distributions to you and our
    other partners or to our reserve accounts. To the extent that
    our General Partner increases the amount of cash it allocates to
    reserves, the amount of cash available for distributions to you
    and our other partners will decrease and our General
    Partner&#146;s exposure to our contingent liabilities may be
    lessened.
</DIV>

<A name='126'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner, Our Investment Manager and Their Affiliates
    Will Engage in Activities That Compete With Us</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement does not prohibit our General Partner,
    our Investment Manager or their affiliates from investing in,
    acquiring or leasing equipment or other assets, and they will
    continue to engage in equipment and other asset acquisitions,
    leasing and re-leasing opportunities on their own behalf or on
    behalf of other partnerships or entities. None of our General
    Partner, our Investment Manager or their affiliates may,
    however, publicly offer for sale interests in more than one
    direct participation program simultaneously unless the programs:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    have different investment objectives;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    are specified equipment programs, as defined under relevant
    securities regulations or state securities guidelines.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    31
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner, our Investment Manager and their affiliates
    have the right to take for their own accounts, or to recommend
    to any program they manage, any particular investment
    opportunity, subject to the limitations set forth in our
    partnership agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any conflicts in determining and allocating investments between
    us and our General Partner, our Investment Manager or their
    affiliates, or between us and another program managed by our
    General Partner, our Investment Manager or their affiliates,
    will be resolved by our Investment Manager&#146;s investment
    committee, which also serves as SQN I and SQN II&#146;s
    investment committee as discussed in the
    &#147;Management&#160;&#151; Investment Committee&#148; section
    of this prospectus beginning on page&#160;40. Generally, if an
    investment is appropriate for more than one program our
    Investment Manager&#146;s investment committee will allocate the
    investment to a program (which includes us) after taking into
    consideration at least the following factors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    which program has been seeking investments for the longest
    period of time;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the program has the cash required for the investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the amount of debt to be incurred with respect to the
    investment is acceptable for the program;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the effect the investment would have on the program&#146;s cash
    flow;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the investment would further diversify, or unduly
    concentrate, the program&#146;s investments in a particular
    lessee, class or type of equipment or other asset, location,
    industry, etc.;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the term of the investment is within the term of the
    program.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the foregoing, our Investment Manager&#146;s
    investment committee may make exceptions to these general
    policies when, in its judgment, other circumstances make
    application of these policies inequitable or uneconomic.
</DIV>

<A name='127'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We May
    Enter Into Joint Ventures With Affiliated Programs</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may invest in joint ventures with other programs that are
    sponsored by our General Partner, our Investment Manager or
    their affiliates. These investments may result in conflicts of
    interest resulting from the differing financial positions of the
    co-venturers. For example, it may be in the interest of one
    entity to sell jointly-held equipment while it may be in the
    interest of the other entity to continue holding the equipment.
    However, we will not participate in a joint venture unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we and the other program have substantially similar investment
    objectives;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we and the other program invest on substantially the same terms;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    there are no duplicate fees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our General Partner&#146;s compensation in us and the other
    program is substantially the same;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we have the right of first refusal to buy any investment the
    other program wants to sell;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the joint venture is entered into either for the purpose of
    effecting appropriate diversification for us and the other
    program, or for the purpose of relieving our General Partner or
    its affiliates from a commitment entered into for the purposes
    of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    facilitating our acquisition of equipment or other assets or
    investments;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    any other lawful purpose related to our business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding, there may be an impasse on joint venture
    decisions since neither we nor the other program will have
    complete control over the joint venture&#146;s equipment and,
    although we will have the right to buy the equipment from the
    other joint venturer in the event of a sale, we may not have the
    resources do so.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    32
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <A name='128'><B><FONT style="font-family: 'Times New Roman', Times">We
    Do Not Have Any Employees and Rely on the Employees of Our
    General Partner, Our Investment Manager and Their
    Affiliates</FONT></B></A>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not have any independent employees or officers, and will
    rely solely on our General Partner and Investment Manager to
    manage us and our operations. Our General Partner and our
    Investment Manager will provide us with those administrative
    services necessary for our prudent operation in accordance with
    the terms of our partnership agreement. Those employees are not
    required to spend all of their time on affairs which effect us
    and in fact may devote significant time to the affairs of our
    General Partner, our Investment Manager or their affiliates and
    will be compensated by our General Partner, our Investment
    Manager or their affiliates for those services. The availability
    or lack thereof of these employees to provide services to us may
    create significant conflicts between us and our General Partner,
    our Investment Manager and their affiliates.
</DIV>

<A name='129'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We May
    Reimburse Our General Partner, Our Investment Manager and Their
    Affiliates for Expenses</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may reimburse our General Partner, our Investment Manager and
    their affiliates for costs incurred by them in managing us and
    our portfolio, including specified costs incurred by them in
    providing corporate staff and support services properly
    allocable to us. See the &#147;Management Compensation&#148;
    section of this prospectus beginning on page&#160;10.
</DIV>

<A name='130'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We Have
    Not Retained Separate Counsel or Other Professionals</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Troutman Sanders LLP, the legal counsel that represents our
    General Partner, our Investment Manager and their affiliates,
    including the selling agent, also represents us. You and our
    other limited partners, as a group, have not been represented by
    legal counsel. Prospective investors should seek independent
    counsel if they so desire or if any legal matters discussed in
    this prospectus are unclear.
</DIV>

<A name='131'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Lack of
    Independent Underwriter and Due Diligence Investigation in This
    Offering</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No independent lead underwriter has been engaged for the
    distribution of our units. Therefore, we will not have the
    benefit of an independent &#147;due diligence&#148; review and
    investigation of the type normally performed by an unaffiliated,
    independent lead underwriter in connection with an offering of
    securities. Although the selling agent believes that its
    investigation of us, our General Partner and our Investment
    Manager for purposes of this offering of units has been as
    complete as would be the case in dealing with unaffiliated
    parties, there is no assurance that the due diligence has been
    performed in the same manner as that of an independent lead
    underwriter.
</DIV>

<A name='132'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Conflicts
    Regarding Redemption of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You and our other partners may present your units to us for
    redemption at any time. This creates the following conflicts of
    interest between you and our General Partner:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have no obligation to redeem your units at any time for any
    reason. Our General Partner may decline your redemption request
    in its sole discretion. For example, if our General Partner
    determines that we do not have the necessary cash flow, taking
    into account future distributions to our other partners and
    foreseeable investments, reinvestments, and operating expenses,
    your request may be declined. In addition, our General Partner
    may conclude that the requested redemption might cause our total
    unit transfers in the year to exceed 2% of our total capital or
    profits interests, which is not permitted under our partnership
    agreement. See Appendix&#160;A to this prospectus. All of these
    determinations will be made in our General Partner&#146;s sole
    discretion.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our General Partner also has determined the redemption price of
    our units. To the extent the redemption price, or the provisions
    for determining the redemption price in certain circumstances,
    includes any subjective decisions, they will fall within the
    discretion of our General Partner.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the &#147;Redemption of Units&#148; section of this
    prospectus beginning on page&#160;88.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    33
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='133'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner is Our Tax Matters Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner will serve as our tax matters partner and
    represent us before the IRS and all other taxing authorities. As
    tax matters partner, our General Partner will have broad
    authority to act on behalf of you and our other partners in any
    administrative or judicial proceeding involving the IRS or other
    tax agencies, and this authority may involve conflicts of
    interest. For example, a potential conflict would include
    whether to contest or settle a proposed adjustment by the IRS to
    the amount of our depreciation deductions under our operating
    leases, which are allocated 99% to you and our other partners,
    which would also affect your personal income tax returns. While
    our General Partner will take into account the interests of you
    and our other partners as a whole, there is no assurance that
    any settlement would be in the best interest of you or any other
    particular partner given your or his particular tax situation.
</DIV>

<A name='134'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner or Its Affiliates Will Purchase Units as
    Investors</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner or its affiliates currently intend to
    purchase 100&#160;units. These subscriptions will not be
    included in the minimum number of units required for us to begin
    operations. Thus these partners generally will:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    share in our income, losses and distributions on the same basis
    as you and our other partners as described in the &#147;Income,
    Losses and Distributions&#148; section of this prospectus
    beginning on page&#160;57;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    have the same voting rights, except that they are prohibited
    from voting on the removal of our General Partner as general
    partner and the appointment of a successor general partner.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The purchase of units by our General Partner, its officers,
    directors, or other affiliates as limited partners will dilute
    the voting rights of you and our other partners and there may be
    a conflict with respect to certain matters. See the
    &#147;Summary of Our Partnership Agreement&#160;&#151; Voting
    Rights of Limited Partners&#148; section of this prospectus
    beginning on page&#160;85.
</DIV>

<A name='135'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General
    Restrictions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To reduce, but not eliminate, certain conflicts of interest we
    will not:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    issue any units after this offering terminates or issue units in
    exchange for property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    make loans to our General Partner, our Investment Manager or
    their affiliates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    receive loans from our General Partner, our Investment Manager
    or their affiliates unless the loan has a term of 12&#160;months
    or less from the date on which it was made and any interest or
    other financing charges or fees we pay do not exceed the lower
    of the following:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    if our General Partner, our Investment Manager or an affiliate
    borrowed to make the loan, the rate of interest and other
    amounts paid or payable by our General Partner, our Investment
    Manager or the affiliate in connection with the
    borrowing;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    if our General Partner, our Investment Manager or an affiliate
    did not borrow to make the loan, the rate of interest and other
    amounts paid or payable in an arms&#146;-length borrowing that
    we could obtain, without reference to our General
    Partner&#146;s, our Investment Manager&#146;s or the
    affiliate&#146;s financial abilities or guarantees;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    invest in or underwrite the securities of other partnership
    programs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    operate in a manner that would cause us to be classified as an
    &#147;investment company&#148; for purposes of the Investment
    Company Act of 1940, as amended;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    grant our General Partner, our Investment Manager or any of
    their affiliates exclusive listing rights to sell our
    investments or other assets;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    34
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    permit our General Partner, our Investment Manager or any of
    their affiliates to receive a fee or commission in connection
    with the reinvestment of our cash from sales or operations, or
    the resale,
    <FONT style="white-space: nowrap">re-lease,</FONT>
    exchange or refinancing of equipment, except as permitted by our
    partnership agreement and in the &#147;Management
    Compensation&#148; section of this prospectus beginning on
    page&#160;10;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    grant our General Partner, our Investment Manager or any of
    their affiliates any rebates or
    <FONT style="white-space: nowrap">give-ups</FONT> or
    participate in any reciprocal business arrangements with them
    that would circumvent the restrictions in our partnership
    agreement, including the restrictions applicable to transactions
    with affiliates of our General Partner;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    permit our General Partner, directly or indirectly, to pay or
    award any commissions or other compensation to any person
    engaged by a potential investor for investment advice as an
    inducement to the advisor to advise the purchaser of our units;
    but this does not prohibit the normal sales commissions and
    other compensation payable to the selling agent as described in
    the &#147;Plan of Distribution&#148; section of this prospectus
    beginning on page&#160;92;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    purchase or lease any equipment or other asset from, or sell or
    lease equipment or other assets to our General Partner, our
    Investment Manager or their affiliates or any investment program
    in which they have an interest. However, if the conditions set
    forth below are met, we expect that we will acquire
    substantially all of our equipment and other assets from our
    Investment Manager or its affiliates (other than affiliated
    equipment leasing and finance programs), provided that they
    acquire the equipment or other assets on a temporary or interim
    basis in order to facilitate our acquisition of the equipment or
    other assets or our financing needs. The conditions referred to
    above are the following:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    our Investment Manager or its affiliates hold the equipment or
    other assets only on an interim basis, generally not longer than
    six months, for purposes of facilitating their acquisition by
    us, borrowing money or obtaining financing for us or for other
    purposes related to our business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    our Investment Manager determines that the acquisition of
    equipment or other assets is in our best interest;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="3%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#151;&#160;
</TD>
    <TD align="left">
    we acquire the equipment or other assets at a price no greater
    than the cost to our Investment Manager or its affiliates, as
    adjusted for intervening operations, plus compensation permitted
    under our partnership agreement and described in this prospectus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#151;&#160;
</TD>
    <TD align="left">
    there is no difference in the interest terms of any financing
    secured by the equipment or other assets at the time acquired by
    our Investment Manager or its affiliates, and the time acquired
    by us, although there may be different interest terms if the
    applicable financing is provided through a different credit
    facility or different lender;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#151;&#160;
</TD>
    <TD align="left">
    our Investment Manager or its affiliates do not benefit from the
    transaction apart from compensation permitted under our
    partnership agreement and described in this prospectus. See the
    &#147;&#151;&#160;We May Enter Into Joint Ventures With
    Affiliated Programs&#148; above and the &#147;Investment
    Objectives and Strategies&#160;&#151; Management, Origination
    and Servicing Agreement&#148; section of this prospectus
    beginning on page&#160;56.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also, except as permitted under the Management, Origination and
    Servicing Agreement and our partnership agreement, our General
    Partner may not enter into any other agreements, contracts or
    arrangements on our behalf with itself or any of its affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is likely that our Investment Manager will manage the
    investments of other equipment leasing funds in the future.
    Investment opportunities may arise which are suitable both for
    us and for those other equipment leasing funds. In those cases,
    when allocating investment opportunities between us and other
    equipment leasing funds it manages, our Investment Manager will
    take into consideration factors which include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    specified equipment programs will have first preference for
    investment opportunities which meet their investment guidelines;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    35
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the period of time in which the funds have been seeking
    investments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the size of the investment opportunity and the cash available to
    the funds to make such an investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the extent to which the investment will contribute to each fund
    meeting its investment objectives, including the objective of
    portfolio diversification;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the duration of the investment and the remaining duration of
    each fund;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the anticipated cash flow and performance effect of the
    investment on each fund.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These considerations will not restrict our Investment Manager or
    its affiliates or other funds managed by our Investment Manager
    or its affiliates from considering or accepting investment
    opportunities.
</DIV>

<A name='136'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Fiduciary
    Duty of Our General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner is accountable to us as a fiduciary. Under
    Delaware law, this generally means that our General Partner has
    duties of due care and fair dealing in acting for us and
    handling our affairs. Our partnership agreement does not excuse
    our General Partner from liability or provide it with any
    defenses for breach of its fiduciary duty. However, our
    partnership agreement permits our General Partner, our
    Investment Manager and their affiliates to have business
    interests or activities that may conflict with ours, and
    includes provisions to resolve conflicts in allocating
    investment opportunities among us and other programs that may be
    sponsored by our General Partner, our Investment Manager or
    their affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The fiduciary duty owed by a general partner is analogous to the
    fiduciary duty owed by directors to a corporation and its
    stockholders and is subject to the same rule, commonly referred
    to as the &#147;business judgment rule.&#148; Under this rule,
    directors are not liable for mistakes made in the good faith
    exercise of honest business judgment or for losses incurred in
    the good faith performance of their duties when performed with
    such care as an ordinarily prudent person would use. Under the
    terms of our partnership agreement our General Partner, our
    Investment Manager and their affiliates have limited their
    liability to us and to you and our other partners for any loss
    suffered by us or by you and our other partners that arises out
    of any action or inaction on their part if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they determined in good faith that the course of conduct was in
    our best interest;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they were acting on behalf of, or performing services for,
    us;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    their course of conduct did not constitute negligence or
    misconduct.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This is a rapidly developing and changing area of the law and if
    you have questions concerning the duties of our General Partner
    you should consult with your legal counsel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, as permitted by Delaware law and as discussed
    above, we will indemnify our General Partner, our Investment
    Manager and their affiliates against any loss of the kind
    described in the preceding sentences to the extent of our
    assets, but without any additional obligation on the part of you
    and our other partners. However, we will not indemnify our
    General Partner, our Investment Manager or their affiliates for
    any violation, or alleged violation, of federal or state
    securities laws unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    there has been a judgment on the merits in favor of our General
    Partner, our Investment Manager or their affiliates or the
    claims were dismissed on the merits by the court;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the court has been advised by us of the position of the SEC and
    applicable state securities law authorities on the issue of
    indemnification for securities law violations;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the court approves the indemnification of litigation
    <FONT style="white-space: nowrap">and/or</FONT>
    settlement costs.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The effect of the foregoing provisions may be to limit your
    recourse to our General Partner, our Investment Manager and
    their affiliates. However, you should be aware that, in the
    SEC&#146;s opinion, the indemnification for liabilities under
    the Securities Act of 1933, as amended, is contrary to public
    policy and therefore unenforceable.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    36
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Delaware Revised Uniform Limited Partnership Act provides
    that a limited partner may institute legal action (a
    &#147;derivative&#148; action) on a partnership&#146;s behalf to
    recover damages from a third-party when the general partner
    refuses to institute the action or where an effort to cause the
    general partner to do so is not likely to succeed. In addition,
    the statutory or case law may permit a limited partner to
    institute legal action on behalf of himself and all other
    similarly situated limited partners (a &#147;class action&#148;)
    to recover damages from a general partner for violations of its
    fiduciary duties to the limited partners. In addition, we will
    not incur the cost of that portion of any insurance that insures
    any party against any liability the indemnification of which is
    prohibited under our partnership agreement; <I>provided,
    however,</I> that with respect to public liability insurance
    obtained by us in connection with any of our equipment, other
    assets, leases or business operations, our General Partner is
    permitted to add itself and its affiliates as additional
    insureds thereunder so long as, and to the extent that, our
    General Partner or its affiliates pays for the resulting
    incremental premium costs. For this purpose, &#147;public
    liability insurance&#148; includes insurance that would cover
    damage to property or personal injury to non-affiliated persons
    incurred during the performance of services related to us and
    our operations.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    37
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='137'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT</FONT></B>
</DIV>

</A>
<A name='138'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner is SQN AIF III GP, LLC, a Delaware limited
    liability company with offices at 48&#160;Wall Street,
    24<SUP style="font-size: 85%; vertical-align: top">th</SUP>

    Floor, New York, New York 10005. Our General Partner was formed
    in March 2010. The sole member of our General Partner is SQN
    Capital Management, LLC, our Investment Manager. As of the date
    of this prospectus, the executive officers of our General
    Partner are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="52%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Neil A. Roberts
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    61
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Chairman
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Jeremiah J. Silkowski
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    35
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President and Chief Executive Officer
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David Charles Wright
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Financial Officer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Timothy R. Spring
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President&#160;&#151; Asset Management
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael C. Ponticello
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    31
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President and National Sales Manager
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Hugh Shelmerdine
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    58
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Credit Officer
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael Miroshnikov
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    27
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Biographical information regarding the officers and directors of
    our General Partner follows the table setting forth information
    regarding our Investment Manager&#146;s current managing
    directors and executive officers.
</DIV>

<A name='139'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Investment Manager</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager is SQN Capital Management, LLC, a
    Delaware limited liability company with offices at 48 Wall
    Street, 24th Floor, New York, New York 10005. Our Investment
    Manager was formed in December 2007 to act as the manager of
    direct participation programs and its managing directors and
    executive officers will be responsible for selecting, managing
    and disposing of our assets, equipment and leases. In this
    regard, after we receive the minimum offering proceeds and hold
    our initial closing, we intend to enter into the Management,
    Origination and Servicing Agreement under which our Investment
    Manager will originate leases and other investments for us, and
    our Investment Manager will service our portfolio of leases and
    other investments. Our Investment Manager had a Net Worth as of
    December&#160;31, 2009, its most recent fiscal year end, in
    excess of the NASAA Equipment Leasing Guidelines minimum of
    $1,000,000. Our Investment Manger is responsible for all aspects
    of the performance by its affiliates of services necessary to
    our operation and for the facilities, personnel, equipment,
    financial and other resources used by its affiliates in the
    performance of those services.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, the managing directors and
    executive officers of our Investment Manager are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="52%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Neil A. Roberts
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    61
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chairman, Managing Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Jeremiah J. Silkowski
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    35
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President, Chief Executive Officer and Managing Director
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David Charles Wright
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Financial Officer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Timothy R. Spring
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President&#160;&#151; Asset Management
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael C. Ponticello
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    31
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President and National Sales Manager
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Hugh Shelmerdine
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    58
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Credit Officer
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael Miroshnikov
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    27
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Neil A. Roberts </I>has served as Managing Director of our
    Investment Manager since December 2007 and Chairman since April
    2010 and has served as Chairman of our General Partner since
    March 2010. Mr.&#160;Roberts has been Managing Director of
    Summit Asset Management Limited, a premier London based asset
    finance company, since forming the company in 1992. From 1996 to
    1998, Mr.&#160;Roberts was Chairman of ICON Capital Corp., one
    of the largest privately held equipment leasing and asset based
    income fund managers in
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    38
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the United States. From 1988 to 1991, Mr.&#160;Roberts served as
    CEO of Parc Limited, a leading UK technology vendor finance
    company and under his leadership grew it threefold. From 1984 to
    1988, Mr.&#160;Roberts was a Managing Director of HSBC, where he
    was responsible for its UK and ultimately European asset finance
    operations. From 1972 to 1984, Mr.&#160;Roberts worked for
    Chemical Bank and its subsidiaries in various capacities,
    including Deputy General Manager of its Italian leasing
    subsidiary, Vice President and European Credit Manager and
    Managing Director of its UK asset finance subsidiary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Jeremiah J. Silkowski </I>has been President and Chief
    Executive Officer of SQN Capital Corporation, a company that
    provides asset-backed and lease-based financing to multiple
    under-served market sectors including the off-shore oilfield
    services industry, since its inception in January 2006.
    Mr.&#160;Silkowski has served as Managing Director of our
    Investment Manager since December 2007 and President and Chief
    Executive Officer since April 2010 and has served as President
    and Chief Executive Officer of our General Partner since
    March&#160;2010. Prior to forming SQN Capital Corporation,
    Mr.&#160;Silkowski spent 13&#160;years in various capacities
    with ICON Capital Corp., including Senior Vice President of
    Operations and head of Portfolio Management, Remarketing, Cash
    Management, Tax, Middle Market Acquisitions, and Structured
    Finance. Mr.&#160;Silkowski was responsible for the
    <FONT style="white-space: nowrap">day-to-day</FONT>
    management of over $1.0&#160;billion dollars of assets including
    two securitizations and eight public partnerships.
    Mr.&#160;Silkowski received his B.A. in Economics from New York
    University.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>David Charles Wright </I>has been the Chief Financial Officer
    of our Investment Manager since December 2007 and of our General
    Partner since March 2010. Mr.&#160;Wright is a Certified Public
    Accountant with more than 25&#160;years of accounting and audit
    experience with top level finance and leasing companies
    throughout the United States. Mr.&#160;Wright has held senior
    positions with both public and private reporting requirements.
    Mr.&#160;Wright has been an SEC Audit Manager and the Senior
    Vice President and Controller of three public reporting
    partnerships and three limited liability companies with more
    than 30,000 investors, approximately $921,000,000 of total
    assets under management and approximately $153,000,000 in total
    revenue. Mr.&#160;Wright is a member of the American Institute
    of Certified Public Accountants, the New York State Society of
    Certified Public Accountants, and the SEC Practice
    Section&#160;Committee of the New York State Society of
    Certified Public Accountants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Timothy R. Spring </I>has served as Senior Vice
    President&#160;&#151; Asset Management of our Investment Manager
    since April 2010, and of our General Partner since March 2010.
    Previously from December 2007 to March 2010, Mr. Spring served
    as Vice President&#160;&#151; Asset Management of our Investment
    Manager. Since 1993, Mr.&#160;Spring has served as Commercial
    Director of Summit Asset Management Limited, responsible for
    transaction finance and documentation, residual investment
    policy and asset management. From 1996 to 1998, Mr.&#160;Spring
    was a Director of ICON Capital Corp. From 1983 to 1989,
    Mr.&#160;Spring was Commercial Manager at HSBC&#146;s equipment
    leasing subsidiary and from 1989 to 1993, Commercial Manager and
    ultimately Commercial Director at Kleinwort Benson&#146;s IT
    leasing subsidiary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Michael C. Ponticello </I>has served as Vice President of SQN
    Capital Corporation since April 2007 and was responsible for the
    establishment and development of the equity-raising arm of the
    company through our Investment Manager. Mr.&#160;Ponticello has
    also served as Senior Vice President and National Sales Manager
    of our Investment Manager since December 2007, and of our
    General Partner since March 2010. From June 2001 until December
    2004, Mr.&#160;Ponticello served as a Management Associate of
    ICON Capital Corp., from December&#160;2004 to January 2006, he
    served as Regional Marketing Director of the Southwest for
    ICON&#160;Securities Corp. and from March 2006 to April 2007, he
    served as Assistant Vice President of Operations at ICON Capital
    Corp. responsible for the management and monitoring of
    eight-investment funds with assets in excess of
    $1.0&#160;billion. Mr.&#160;Ponticello received his B.B.A. from
    the Zicklin School of Business at Baruch College.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Hugh Shelmerdine </I>has served as Chief Credit Officer of
    our Investment Manager since October 2009 and of our General
    Partner since March 2010. From 1977 to 1985,
    Mr.&#160;Shelmerdine served as a Director of Chemco Equipment
    Finance Ltd., the asset finance subsidiary of Chemical Bank.
    From 1985 to 1995, Mr.&#160;Shelmerdine served as a Director of
    Concord Leasing, the asset finance subsidiary of HSBC, from 1996
    to 1997, served as Director Vendor Finance of Nikko Bank (UK)
    plc. From 1997 to 1999, Mr.&#160;Shelmerdine
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    39
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    served as Senior Account Manager of de Lage Landen Leasing, the
    leasing subsidiary of Rabobank. From 2000 until 2006,
    Mr.&#160;Shelmerdine served as a Business Adviser of Business
    Link for London. From 2006 to 2009, Mr.&#160;Shelmerdine served
    as a Director of The Business Development Experience Ltd. The
    last two appointments were providing coaching, mentoring and
    business advice to business owners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Michael Miroshnikov </I>has served as Vice President of our
    Investment Manager since April 2008 and of our General Partner
    since March 2010. Since March 2006, Mr.&#160;Miroshnikov also
    has served as Senior Analyst of SQN Capital Corporation. From
    October 2001 until May 2003, Mr.&#160;Miroshnikov was employed
    by ICON Capital Corp. where he served in an Operations
    Assistance capacity supporting its equipment leasing and income
    funds. Mr.&#160;Miroshnikov has developed a specific expertise
    in oil field services, energy and marine transportation
    companies and assets. Mr.&#160;Miroshnikov graduated Cum Laude
    with a B.B.A. in Investment Finance from the Zicklin School of
    Business at Baruch College and has received a Juris Doctorate
    degree from Brooklyn Law School. He also holds Series&#160;7,
    24, and 63 licenses.
</DIV>

<A name='140'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Committee</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager&#146;s investment committee will review
    all transactions involving us that, in their judgment, are
    significant as well as potential conflicts of interest regarding
    the acquisition of an investment by us and another affiliated
    program. The current members of the investment committee are
    Messrs.&#160;Roberts, Silkowski, Miroshnikov, Spring, and
    Shelmerdine. Mr.&#160;Silkowski and Mr.&#160;Roberts will
    maintain ultimate investment discretion and will have to be in
    agreement on the funding of any transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The members of the investment committee may change from time to
    time in the discretion of our Investment Manager. In addition,
    other executive officers of our Investment Manager may be called
    on by our Investment Manager to provide advice to the investment
    committee on an as needed basis. We will not pay fees to the
    members of our investment committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the &#147;Investment Objectives and Strategies&#148; section
    of this prospectus beginning on page 45 for a discussion of the
    various services the investment committee will provide on behalf
    of us and our General Partner.
</DIV>

<A name='141'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Code of
    Business Conduct and Ethics</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because we do not directly employ any persons, we rely on a Code
    of Business Conduct and Ethics adopted by our General Partner
    that applies to the principal executive officer, principal
    financial officer and principal accounting officer of our
    General Partner, as well as to persons performing services for
    us generally. You may request a copy of this code of ethics from
    our General Partner at SQN AIF III GP, LLC,
    48&#160;Wall&#160;Street, 24th Floor, New York, New York 10005.
</DIV>

<A name='142'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not pay the officers or directors of our General Partner,
    our Investment Manager or their affiliates any compensation.
    However, we will pay our General Partner, our Investment Manager
    and their affiliates fees and reimburse certain of their
    expenses incurred on our behalf as described in the
    &#147;Management Compensation&#148; section of this prospectus
    beginning on page 10. These expense reimbursements include
    reimbursing our General Partner, our Investment Manager and
    their affiliates for certain costs incurred on our behalf,
    including the cost of personnel, other than controlling persons
    of our General Partner, our Investment Manager and their
    affiliates, who will perform administration, accounting,
    secretarial, transfer and other services required by us. These
    individuals also will perform similar services for our General
    Partner, our Investment Manager or their affiliates and other
    affiliated investment programs, including our Investment
    Manager&#146;s prior equipment leasing and finance programs, as
    well as investment programs to be formed in the future by our
    General Partner and its affiliates. Our partnership agreement
    provides that expense reimbursements paid by us to our General
    Partner, our Investment Manager and their affiliates must be
    limited to the lesser of their actual cost or the cost of
    comparable services from third-parties. We expect that we will
    allocate the cost of compensation and benefits of our General
    Partner&#146;s officers, the officers and employees of
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    40
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    our Investment Manager, and the officers and employees of their
    affiliates, excluding expenses allocable to their controlling
    persons, based on the amount of their business time spent on our
    business.
</DIV>

<A name='143'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Change in
    Partnership Management</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner may withdraw as general partner, or be
    removed as general partner by our limited partners, under the
    circumstances described in the &#147;Summary of Our Partnership
    Agreement&#160;&#151; Withdrawal or Removal of Our General
    Partner&#148; section of this prospectus beginning on
    page&#160;83.
</DIV>

<A name='144'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Affiliated
    Company</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN Securities, LLC, the selling agent for this offering, is a
    Delaware limited liability company and a majority-owned
    subsidiary of SQN Capital Management, LLC, our Investment
    Manager. It anticipates that it will be registered as a
    broker-dealer with the SEC, and a member of Financial Industry
    Regulatory Authority (&#147;FINRA&#148;) and the Securities
    Investor Protection Corporation.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    41
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='145'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our capitalization, as of the date of this prospectus and as
    adjusted to reflect the issuance and sale of the units offered
    hereby assuming (i)&#160;that we receive the minimum offering
    amount of $1.2&#160;million, and (ii)&#160;that the maximum
    50,000&#160;units are sold at the public offering price of
    $1,000 per unit is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="62%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>March&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Minimum<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Maximum<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>$1.2 Million</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>$50.0&#160;million</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Units ($1,000 per unit)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less Estimated Organization and Offering Expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    24,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    998,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net Capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,176,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    49,002,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    42
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='146'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OTHER
    PROGRAMS MANAGED BY OUR INVESTMENT MANAGER OR ITS
    AFFILIATES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager and its affiliates previously sponsored
    two private equipment leasing and finance programs in the last
    10&#160;years. SQN Alternative Investment Fund&#160;I, LLC
    (&#147;SQN I&#148;) was created in December 2007 and our
    Investment Manager serves as its investment manager. SQN I had
    its final closing in March 2009, with total offering proceeds of
    approximately $7.0&#160;million from 84 investors. SQN
    Alternative Investment Fund&#160;II, LLC (&#147;SQN II&#148;)
    was created in April 2009 and our Investment Manager serves at
    its investment manager. SQN II anticipates that it will have its
    final closing in May 2010, with total offering proceeds of
    approximately $7.25&#160;million from 97 investors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    According to their respective offering materials these private
    programs, which are still in their respective operating periods,
    expect to sell or otherwise dispose of all of their respective
    assets on an orderly basis and liquidate during the time periods
    set forth below, which are not binding on the programs under
    their respective partnership agreements:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>SQN I&#160;&#151; </I>during a four-year liquidation period
    beginning on February&#160;12, 2011, and ending on
    February&#160;11, 2015;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>SQN II&#160;&#151; </I>during a four-year liquidation period
    beginning on April&#160;15, 2012, and ending on April&#160;14,
    2016.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Set forth below for SQN I and SQN II are charts of their
    respective equipment portfolios broken out by equipment type and
    by business type as of March&#160;31, 2010. These charts will
    vary from time to time in each of those programs as investments
    in the portfolio mature and reinvestments are made. The charts
    below combine operating leases, full payout leases and secured
    financings for summary purposes.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN I
    Portfolio by Equipment Type</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="y03348y0334801.gif" alt="(PIE CHART)">
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    43
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN I
    Portfolio by Business Type</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="y03348y0334802.gif" alt="(PIE CHART)">
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN II
    Portfolio by Equipment Type</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="y03348y0334803.gif" alt="(PIE CHART)">
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    44
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN II
    Portfolio by Business Type</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="y03348y0334804.gif" alt="(PIE CHART)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Further information concerning SQN I and SQN II and their
    respective results of operations can be found in Appendix&#160;B
    to this prospectus.
</DIV>

<A name='147'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    OBJECTIVES AND STRATEGIES</FONT></B>
</DIV>

</A>
<A name='148'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Principal
    Investment Objectives</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our principal objectives are to invest in business-essential,
    revenue-producing (or cost-saving) equipment and Other Physical
    Assets with substantial economic lives and, in many cases,
    associated revenue streams. Many of our investments will be
    structured as full payout or operating equipment leases. In
    addition, we intend to invest by way of participation agreements
    and residual sharing agreements where we would acquire an
    interest in a pool of equipment or other assets, or rights to
    that equipment or other assets, at a future date. We also may
    structure investments as project financings that are secured by,
    among other things, essential use equipment
    <FONT style="white-space: nowrap">and/or</FONT>
    assets. Finally, we may use other investment structures that our
    Investment Manager believes will provide us the appropriate
    level of security, collateralization, and flexibility to
    optimize our return on investment while protecting against
    downside risk. In most cases, the structure will include us
    holding title to or a priority position in the equipment or
    other asset.
</DIV>

<A name='149'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Principal
    Investment Strategies</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will focus our investments in business-essential,
    revenue-producing equipment and other assets with high in-place
    value and long (relative to the investment term) economic life.
    We will acquire investments (i)&#160;originated and warehoused
    by certain affiliates of our Investment Manager;
    (ii)&#160;originated directly by us; or (iii)&#160;originated
    from brokers or other leasing/investment companies or banks.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Originating an investment involves, among other things,
    identifying a lessee or other end-user, inspecting the equipment
    or other asset, undertaking a business, credit, and industry
    review, projecting the residual value of the equipment or other
    asset, pricing the investment, and documenting the transaction.
    When we acquire investments from an affiliate of our Investment
    Manager, such affiliate will likely perform all of these
    originating services and fund the transaction directly. In this
    situation, subject to the NASAA Equipment Leasing Guidelines, we
    will purchase the investment in the same way that the
    investments have been sold to third parties which have
    historically yielded investors an above average return.
    Additionally, the affiliate will take a first loss position as a
    co-investor to our benefit. When we originate a transaction, our
    Investment Manager will perform these originating services on
    our behalf and we will fund the transaction directly.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    45
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For equipment and other assets that have a minimum economic life
    of six to ten years, the typical investment term will be three
    to five years. Each investment will typically be a &#147;hell or
    high water,&#148; triple-net lease that requires the lessee or
    other counterparty to bear all tax, maintenance, insurance, and
    other costs related to the lease or the operation of the
    underlying equipment or other asset. The contract provisions
    governing the investment will require that the end-user carry
    insurance covering all insurable damage that could occur to the
    equipment or other assets, including total loss insurance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will concentrate on transaction sizes below
    $10.0&#160;million with a maximum equity investment of
    $3.0&#160;million, or 10% of the total proceeds raised in this
    offering, whichever is higher. By doing so, we will be operating
    in areas with limited competition. We have made the decision to
    limit our size, in terms of the maximum offering proceeds, to
    $50.0&#160;million so that we may be selective in choosing our
    investments. We will focus our investments on specific
    industries and asset types where the members or officers of our
    Investment Manager have extensive expertise and a deep and well
    developed sales and remarketing network. Our Investment Manager
    will focus on identifying equipment and other assets that are
    considered essential use or core to a business or operation in
    the agricultural, energy, environmental, medical, manufacturing,
    technology, and transportation industries. Our Investment
    Manager also may identify other assets or industries that meet
    our investment objectives such as modular accommodations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will invest in a combination of single investor and leveraged
    transactions in the United States, Canada and the European
    Union. We intend to invest in as much as $200.0&#160;million of
    original equipment or other asset cost. Single investor
    transactions will generally be leases in which we will pay 100%
    of the equipment or other asset cost. In a single investor
    lease, we receive 100% of the lease payments over the term of
    the lease. On leveraged transactions, we will use debt, by way
    of receivable sales, to finance a portion of the equipment or
    other asset cost. In such cases, we may pledge all or a portion
    of the contractual payments of the end-user to the lender to
    amortize the debt. At the end of the original term, the debt
    should be paid off in full and we should hold unencumbered title
    to the equipment or other assets. Using leverage of this nature
    allows us to invest in larger, higher-yielding transactions
    while minimizing our risks and increasing our investment
    diversification. In both single investor and leveraged
    transactions, it is our objective that the original term
    payments pay down all or substantially all of the original
    equipment or other asset cost and, in some cases, with a rate of
    return before the residual value is taken into account. The
    residual value is the projected market value of the equipment or
    other asset at the end of the original term.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At the end of the original term of most leases or other form of
    investment, the end-user will have three options:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;Extend the term for an agreed upon rental amount which
    may be for the same amount or a discounted amount. In some
    cases, such as in vessels or modular building transactions, the
    extension rate may be higher than the original rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;Purchase the equipment or other assets from us at an
    agreed price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;Return the equipment or other assets to us which
    includes, among other things, records, manuals, power cables,
    and all components. There are also certain usage standards that
    have to be met otherwise the end-user must pay a stipulated loss
    amount for the condition of the equipment or other assets. In
    many cases it is not economical for them to return the equipment
    or other assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some contracts will have pre-negotiated end term provisions
    setting the price for an extension or sale. Many contracts will
    be open-ended or have fair market value (&#147;FMV&#148;) end
    term provisions. In all cases, this is taken into account in
    pricing the investment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will realize the majority of our returns from the residual
    value of the equipment or other assets. Based on historical
    experience, our Investment Manager expects to begin to
    distribute returns on capital between years three and five and
    expects us to conclude within five to seven years from the first
    closing date of this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As discussed above, certain affiliates of our Investment Manager
    will regularly originate transactions and offer to sell all or
    part of such transactions to us either individually or as a
    portfolio depending upon, among
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    46
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    other things, the appropriateness of the proposed investment for
    us (as determined by our Investment Manager, in its sole
    discretion) and the amount available for investment by us at
    such time. During the Operating Period, we will have a right of
    first refusal, subject to the existing rights of SQN I and SQN
    II (which will be in different stages in their respective
    investment cycles), on all transactions originated by affiliates
    of our Investment Manager that meet our investment objectives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event an affiliate of our Investment Manager proposes to
    sell an asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) to us, we may
    purchase such asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) from our
    General Partner or any of its affiliates (but not including an
    affiliated program) if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our General Partner determines, in its sole discretion, that
    making the investment is in our best interests;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the investment is purchased by us a purchase price that does not
    exceed the sum of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the cost to our General Partner or its affiliate of acquiring
    and holding the investment (as determined under GAAP and as
    adjusted for any income received, capital or investment returned
    and reasonable and necessary expenses paid or incurred while
    holding the investment); plus
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    any compensation to which the General Partner and any affiliate
    of our General Partner is entitled to under our partnership
    agreement;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    there is no difference in the interest terms of any indebtedness
    secured by the investment at the time it is acquired by our
    General Partner or its affiliate and the time the investment is
    acquired by us, although there may be different interest terms
    if the applicable financing is provided through a different
    credit facility or different lender;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    neither our General Partner nor any affiliate of our General
    Partner receives any other benefit, other than compensation
    permitted by our partnership agreement, as a result of us
    purchasing the investment; and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at the time of transfer of the investment to us, our General
    Partner or its affiliate had held the investment on a temporary
    or interim basis (generally not longer than six&#160;months) for
    the purposes of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    facilitating the acquisition of the investment by us; or
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    any other lawful purpose related to our business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager intends to structure each of our
    investments at a price that it determines will provide a present
    value return to us, including the estimated residual value of
    the equipment which may or may not be fully realized by us.
    However, our Investment Manager may not be successful in
    achieving our investment objectives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We plan to make semi-annual distributions of cash to you and our
    other partners, if, in our Investment Manager&#146;s opinion,
    such distributions are in our best interests. We expect to begin
    distributions in the sixth month of the Operating Period and
    thereafter, every six months during the Operating Period.
    However, we cannot assure you of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that our distributions to you and our other limited partners
    will be in any specific amount;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    when our distributions to you and our other limited partners
    will be made.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also expect that during the early years of our operations our
    distributions to you and our other limited partners will be
    substantially tax-deferred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the &#147;Risk Factors,&#148; and &#147;Income, Losses and
    Distributions&#160;&#151; Timing of Distributions&#148; sections
    of this prospectus.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    47
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='150'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Equipment
    and Other Assets for Lease to End&#150;Users</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will purchase equipment and other assets for lease to
    end-users. We expect that the cost per unit of the equipment or
    other asset we purchase generally will range from $50,000 to
    $3.0&#160;million and the average per unit cost will be between
    $400,000 and $1.5&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to other investments, we will enter into both full
    payout leases and operating leases.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Full payout leases generally are leases under which the rent
    over the initial term of the lease will return our invested
    capital plus an appropriate return without consideration of the
    residual value, and where the lessee may acquire the equipment
    or other assets at the end of the lease term.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Operating leases generally are leases under which the aggregate
    noncancellable rental payments during the original term of the
    lease, on a net present value basis, are not sufficient to
    recover the purchase price of the equipment or other assets
    leased under the lease.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are not limited as to type of leases we may enter into and,
    as a result, either operating leases or full payout leases could
    possibly constitute most of our portfolio.
</DIV>

<A name='151'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Equipment
    and Other Assets Already Subject to Lease</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also may acquire portfolios of equipment or other assets
    subject to existing leases from our General Partner&#146;s or
    our Investment Manager&#146;s respective affiliates or
    independent third-parties. We anticipate that at the end of this
    offering our purchased portfolio of existing leases probably
    will not exceed 30% of our total investments. While the per unit
    cost range and average per unit cost for the equipment or other
    asset will depend on the existing portfolios of leases we may
    select for purchase, we anticipate that these costs may be less,
    and possibly materially less, than the cost of investments that
    we originate directly or through affiliates of our General
    Partner or our Investment Manager.
</DIV>

<A name='152'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Types of
    Equipment and Other Assets</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that we will focus on equipment and other assets to
    invest in that are essential for businesses to conduct their
    operations so that the end&#150;users will be highly motivated
    to make the required payments in order to keep the equipment or
    other assets in place during the initial term and afterward. We
    will particularly focus on business-essential equipment or other
    assets in the following areas:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="48%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Equipment/Asset Category</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Example Equipment/Asset</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Agricultural
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Intermediate bulk containers that are used to transport and
    store fluids and bulk materials
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Medical
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Magnetic resonance imaging machines
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Manufacturing
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Machine tools and production line facilities
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Technological
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    IT infrastructure
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Transportation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Marine vessels
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Energy
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Hydro-electric turbines
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Environmental
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Waste management equipment; Anaerobic digestion
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Other
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Modular accommodations
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<A name='153'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Market</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Equipment leasing and asset finance are methods by which
    companies access capital to sustain, grow, or improve their
    businesses and operations. Often, equipment leasing provides
    companies with the lowest cost means to acquire revenue
    generating or other business essential assets. Companies choose
    to lease or finance assets for a variety of different reasons
    including, but not limited to, cash flow management,
    preservation of working capital, off balance sheet treatment,
    the ability to pass the cost off to customers,
    <FONT style="white-space: nowrap">and/or</FONT>
    flexibility of capital equipment management.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    48
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='154'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Industry
    Participants and Segments</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We group domestic lease providers into the four major categories
    set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Banks &#151;&#160;</I>companies that are either majority
    owned by, or affiliated with, a bank.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Industrial &#151;&#160;</I>companies that are majority owned
    by an industrial or non-financial services parent company.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <I>&#149;&#160;</I>
</TD>
    <TD align="left">
    <I>Independent &#151;&#160;</I>public or privately owned and
    operated finance companies that offer leases or loans directly
    to businesses and are not affiliated with any particular
    manufacturer or dealer.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <I>&#149;&#160;</I>
</TD>
    <TD align="left">
    <I>Captive &#151;&#160;</I>companies that are primarily engaged
    in supporting the financing or leasing of a parent
    company&#146;s products.
</TD>
</TR>

</TABLE>

<A name='155'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Industry
    and Market Data</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The industry and market data contained in this prospectus are
    based on independent industry publications, reports by
    governmental agencies or market research firms or other
    published independent sources and, in each case, are believed by
    us to be reasonable estimates. However, industry and market data
    is subject to change and cannot always be verified with complete
    certainty due to limits on the availability and reliability of
    raw data, the voluntary nature of the data gathering process and
    other limitations and uncertainties inherent in any statistical
    survey. We have not independently verified market and industry
    data from third-party sources. In addition, consumption patterns
    and customer preferences can and do change. As a result, you
    should be aware that market share, ranking and other similar
    data set forth herein, and estimates and beliefs based on that
    data, may not be verifiable or reliable. The industry and market
    data sources are publicly available and were not prepared for
    our benefit or paid for by us, nor were they paid by or prepared
    for the benefit of our General Partner&#146;s or our Investment
    Manager&#146;s affiliates.
</DIV>

<A name='156'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Equipment
    Leasing Figures</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following figures provide an overview of features of the
    equipment leasing industry:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Annual world leasing volume is in excess of
    $760&#160;billion.<SUP style="font-size: 85%; vertical-align: top">1&#160;&#160;</SUP>

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    North America comprises approximately 38.0% of annual world
    leasing volume, Europe 41.1% and Asia
    14.7%.<SUP style="font-size: 85%; vertical-align: top">1</SUP>

</TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 1%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The top 15 countries, measured by way of annual leasing volume
    (in parentheses), are as follows: U.S.($188&#160;billion),
    Germany ($80&#160;billion), Japan ($63&#160;billion), Italy
    ($45&#160;billion), France ($45&#160;billion), Russia
    ($34&#160;billion), Spain ($30&#160;billion), Brazil
    ($29&#160;billion), Canada ($25&#160;billion), United Kingdom
    ($25&#160;billion), Poland ($16&#160;billion), Sweden
    ($12&#160;billion), Netherlands ($12&#160;billion), Switzerland
    ($12&#160;billion) and Australia ($11&#160;billion).
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Since 1988, the global aggregate annual leasing volume has grown
    from $194&#160;billion to
    $760&#160;billion.<SUP style="font-size: 85%; vertical-align: top">1</SUP>

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    In 2008, U.S.&#160;business investment in equipment and software
    has grown to an estimated $1.159 trillion, $657&#160;billion of
    which was leasing
    volume.<SUP style="font-size: 85%; vertical-align: top">2</SUP>

</TD>
</TR>

</TABLE>

<DIV style="font-size: 12pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <SUP style="font-size: 85%; vertical-align: top">1</SUP>&#160;&#160;Source:

    World Leasing Yearbook 2009, Euromoney Yearbooks, as of 2007.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <SUP style="font-size: 85%; vertical-align: top">2</SUP>&#160;&#160;Source:

    Equipment Leasing and Finance Association 2009 Annual Report.
</DIV>

<A name='157'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Competitive
    Conditions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our investment strategy is based on the fundamental principles
    of asset-backed finance. Our competitive advantage lies in our
    approach to equipment leasing and asset finance. Other companies
    have one of two investment strategies depending on their cost of
    capital. Companies such as GE, CIT, and major banks make lease
    investments based on low risk credit score models on specific
    equipment only. These companies earn low margins but do
    tremendous standardized volume and are often tax driven. Private
    leasing companies with higher costs of capital purchase leases
    in the secondary market from banks and other institutions when
    their
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    49
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    tax advantages have run their course to the original lessor.
    Leasing companies with a higher cost of capital generate profits
    through their expertise in residual pricing by buying these
    leases based on different assumptions of the residual value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We approach leasing as an innovative financing vehicle to
    provide growth capital to strong management teams with solid
    business models in need of revenue producing assets. We take the
    time to understand the underlying business in addition to having
    an existing expertise in the specific equipment being financed.
    We are not restricted to formulaic, cookie-cutter leases. We
    take a private equity-like approach to investing in businesses
    and therefore target private equity-like yields.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By maintaining a small fund size and working with the equipment
    expertise of our affiliates, we will be investing in
    opportunities not sufficiently served by other leasing companies
    and banks simply because the detail-specific nature of the
    investments and the amount of capital the other companies need
    to put to work does not make it an efficient market for them to
    invest in.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our strategy is effective in all market conditions. When access
    to the inexpensive capital is limited, leasing provides a less
    capital intensive way for business owners to acquire equipment.
    When business cycles are strong, equipment leasing increases
    with the growth of businesses.
</DIV>

<A name='158'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Leasing
    and Financing Strategies</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe the key factors in establishing and maintaining our
    portfolio of equipment, other assets and leases are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Origination&#160;&#151; </I>We expect our Investment Manager
    (directly and through its affiliates) and possibly independent
    third-parties, will originate all of our investments. See
    &#147;Management, Origination and Servicing Agreement,&#148;
    below. Through an internal sales force, our Investment Manager
    and its affiliates will originate transactions through an
    established network of end-users that include small private
    businesses, publicly listed entities, international
    organizations, colleges and universities, hospitals,
    governments, municipalities, banks, investor groups, other
    leasing and finance companies and individuals. An increasing
    portion of new business will be generated from vendors and
    manufacturers with which our affiliates have established, are
    establishing, or will establish proprietary relationships as a
    funding source. We also will originate transactions from the
    existing customers of our affiliates and by referral.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Underwriting&#160;&#151; </I>Our Investment Manager along
    with other affiliates of our General Partner will service all of
    our investments. Primary underwriting on all foreign investments
    and secondary underwriting on certain U.S.&#160;transactions
    will be conducted by Summit Asset Management Ltd., an affiliate
    of our Investment Manager and General Partner located in the
    United Kingdom.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Overview
    of our underwriting policies and procedures</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager will be underwriting transactions from a
    diverse number of sources to a wide range of end-users
    attracting a premium return that reflects the nature of the
    underlying risks as well as the complexity of the transactions.
    The investment committee of our Investment Manager will assess
    risk with the intention that transactions are underwritten for
    the benefit of the portfolio within the specification and
    characteristics of the portfolio and with the intention of
    achieving our stated investment objectives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investments will be made in equipment and equipment leases but
    also may be made in other equipment and other physical asset
    related transactions that allow for the direct or indirect
    participation in the benefits and risks of ownership or usage.
    Such transactions may include but are not limited to equipment
    trading, residual sharing agreements, forward purchase
    agreements, investments in companies which lease equipment,
    participation agreements, equipment purchase options, and other
    transactions involving physical assets and equipment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The key elements of risk will be identified and mitigation of
    those risks will be sought to secure an acceptable risk reward
    ratio as determined by the investment committee of our
    Investment Manager.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    50
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The policy and procedures identifies the ways that we will seek
    to minimize the risk from each transaction while enabling us to
    meet our strategic objectives.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Summary
    of Policy</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is the intention of the policy to ensure that there is a mix
    of risk that will not create an imbalance of exposure for us in
    any industry, asset, or credit. Individual credit exposure to a
    single legal body shall not exceed 10% of our total equity
    raised or $3.0&#160;million whichever is the greater. There
    shall be no greater than 35% of total equity raised invested in
    a single industry. The normal investment period is expected to
    be between 36 and 60&#160;months but in no event shall exceed
    84&#160;months.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All transactions must be clearly summarized enabling the
    investment committee of our Investment Manager to understand:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the structure of the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the source of the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the documentation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the equipment or other assets being financed and the security
    they represent;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how the equipment or other assets are to be acquired;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the amount of residual risk within the transaction and the
    expected exit route or how the residual will be recovered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the return that we anticipate from the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how the counterparty expects to benefit from the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the risks that are inherent within the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how the counterparty expects to be able to repay all monies due
    under the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any additional security that is being made available to support
    the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any third party security interests that may affect the equipment
    or other assets being financed;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    all other relevant information.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Financial
    Information</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The investment committee of our Investment Manager must have
    sufficient financial information on the lessee, guarantor or any
    other participant or counterparty within the transaction to
    enable it to make an informed decision on the ability of the
    parties to be able to perform their obligations required within
    the transaction. The investment committee of our Investment
    Manager typically requires the following financial information:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if available, audited financial statements for the last two
    years;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    unaudited financial statements for the latest completed quarter;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    budget or forecast for the latest fiscal year;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    confirmation that current customers are up to date with their
    payments or proposals clearly demonstrating how arrears will be
    brought up to date;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    details of current levels of exposure within existing
    transactions aggregated with the new proposal;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    details of existing credit facilities, the remaining
    availability and any financial covenants affecting the
    counterparty, lessee, guarantor, or other parties.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    51
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">General
    Information</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additional information must also be provided, when relevant, to
    assist in our Investment Manager&#146;s assessment of the
    potential creditworthiness of a lessee or other counterparty
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    its structure;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    its management structure and an overview of the experience of
    the key members of the management team;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an up to date business plan;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    its marketing plan and any intelligence on its market share,
    market penetration and major competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an analysis of its strengths, weaknesses, opportunities, and
    threats;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an overview of its customer base;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    details of any recent press or internet coverage.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Summary
    of Procedure</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="18%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="80%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Proposal&#160;Format</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    A proposal for all transactions should be presented for credit
    underwriting in a standard and consistent format containing all
    relevant information and a supporting summary advocating the
    transaction.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Searches</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Searches will be undertaken for all companies other than for
    widely followed listed companies. Similarly, key directors will
    be checked and verified. This process should also be applied to
    equipment suppliers. In the event of any cash payments being
    made within the structure of the transaction, full compliance
    with the Money Laundering Regulations must be undertaken and the
    identities of any counterparty must be established and
    documented.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Approval</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    All transactions must be approved by vote of the investment
    committee of our Investment Manager. Jeremiah Silkowski and Neil
    Roberts will maintain ultimate investment discretion and will
    have to be in agreement on all transactions.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Site Inspection</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    All customers should be visited, at least once, at their
    premises either prior to the first drawdown or by way of asset
    inspection before funding.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Reviews</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    After the first anniversary of the funding of a transaction or
    the production of the final accounts of the company whichever is
    the later, a review of its or any guarantor&#146;s
    creditworthiness will be undertaken. For transactions of three
    years or less one such review will be undertaken and for
    transactions of a longer duration a review will be undertaken on
    the second anniversary. The review summary shall recommend if
    any further reviews should be undertaken. Transactions that
    become delinquent in their payment of rentals to us for more
    than 30&#160;days will be subjected to a formal review. Reviews
    not withstanding, all customers and credits will be continuously
    monitored by way of press tracking and industry intelligence.
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Residual realization&#160;&#151; </I>One of the main tenants
    of our investment strategy is to write original term contracts
    for a period less than the economic useful life of the equipment
    or other asset. The result of this approach leads to a high
    probability that the equipment or other asset will stay in place
    at the end of the initial term. The equipment or other asset is
    said to have &#147;high in-place value.&#148; As part of the
    same strategy, when possible, we set original terms against
    other factors of the end-user&#146;s business. For example, we
    would write a 36&#160;month IT infrastructure lease for
    equipment that has a 48&#160;month software contract attached,
    thereby assuring a high probability that we will receive a
    minimum one year lease extension. Another example, we may write
    a 48&#160;month contract to finance furniture and fixtures
</TD>
</TR>

</TABLE>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    52
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    against an underlying landlord/tenant lease of our end-user of
    60&#160;months. Some of the ways that we realize residual value
    are:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    <I>Automatic billing extension&#160;&#151; </I>Our lease
    documentation will require the lessee to provide notice before
    the lease matures in order to arrange for disposition of the
    equipment or other asset. If the lessee does not provide this
    notice, then they will automatically be billed for continued use
    until proper notice is delivered.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    <I>Re-leasing to lessee&#160;&#151; </I>We anticipate that a
    significant amount of our equipment and other assets will be
    re-leased to the current lessee at the end of the initial lease
    term.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    <I>Sold in place to lessee&#160;&#151; </I>We anticipate that we
    will sell the majority of our equipment and other assets in
    place to the original lessee at the end of its lease, re-lease
    or automatic billing extension period.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    <I>Resale market&#160;&#151; </I>On a limited basis, we may sell
    equipment and other assets that are not sold in place to the
    lessee at the end of its lease, re-lease or automatic billing
    extension period either to the original vendor or to a variety
    of used equipment dealers or other end-users.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe successful realization of residuals at the end of a
    lease term depends on an accurate residual value assessment at
    the beginning of a lease. Our Investment Manager, as servicer of
    our leases, will make residual value assessments on our behalf
    using information from a number of sources, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    secondary market publications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    interviews with manufacturers and used equipment dealers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    auction sales guides;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    historical sales data;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    industry organizations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    valuation companies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    ongoing communications with the end-users;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the prior experience of our Investment Manager&#146;s management
    as to propensity to re-lease or be sold in place.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Based on its analysis of this information, our Investment
    Manager will establish a residual value for the end of each term
    for each type of equipment or other asset. However, as to any
    particular piece of equipment or other asset, our Investment
    Manager may not be able to re-lease or sell the equipment or
    other asset on our behalf at the end of the original lease term
    at a rate or price that will provide us the residual value our
    Investment Manager estimated on that equipment or other asset.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Investment Manager&#146;s collections policy is designed to
    identify payment problems early enough to permit it to address
    delinquencies in our leases quickly and, when necessary, to act
    on our behalf to preserve our interest in the equipment or other
    assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Lease provisions.</I>&#160;&#160;The terms and provisions of
    each lease will vary depending on a number of factors, including:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the type and intended use of the equipment or other assets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the business, operations and financial condition of the lessee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    any regulatory considerations;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the tax consequences and accounting treatment of the lease
    transaction.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    53
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain terms and provisions, however, generally will be
    included in all of our leases. For example, we anticipate that
    each lease will hold the lessee responsible for:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    paying rent without deduction or offset of any kind;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    bearing the risk of equipment or other asset loss and
    maintaining both casualty and liability insurance on the
    equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    paying sales, use or similar taxes relating to the lease or
    other use of the equipment or other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    paying all miscellaneous charges such as documentation fees,
    late charges, charges for returned checks and similar fees and
    costs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    indemnifying us against any liability resulting from any act or
    omission of the lessee or its agents related to the equipment or
    other asset;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    maintaining the equipment or other asset in good working order
    and condition during the term of the lease;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    notifying us and obtaining our approval for moving the equipment
    or other asset;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    requiring our prior written consent before assigning or
    subleasing the equipment or other asset.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Similar provisions will be included in our other investment
    documentation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our investments will usually have terms ranging from 36 to
    60&#160;months. We anticipate that the average term over our
    aggregate portfolio will range from 42 to 54&#160;months. We
    also anticipate that most of our investments will not be
    cancelable during their initial terms. However, we may agree to
    allow cancellation of a lease if the lessee pays us sufficient
    compensation so that the cancellation will not prevent us from
    achieving our objectives. At the end of each lease term, the
    lessee may have the option to buy the equipment or other assets,
    or renew the lease, either at set prices or at prices tied to
    current fair market value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Portfolio acquisition strategies.</I>&#160;&#160;We may
    purchase portfolios of equipment and other assets subject to
    existing leases. We anticipate that the principal sources for
    these portfolios will be:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    international banks and investment banks;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    other leasing companies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    regional and national commercial banks;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    captive finance companies of large manufacturers.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In evaluating a portfolio acquisition, we expect to consider the
    following factors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the business objectives of the seller in selling the portfolio;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the amount of the equipment and other assets and the number of
    leases in the portfolio;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    how the leases were originated, whether directly with the
    end-user or through vendors or brokers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the portfolio characteristics, including geographic and lessee
    <FONT style="white-space: nowrap">and/or</FONT>
    borrower concentrations, equipment and other asset cost range,
    types of leases and the original and remaining terms of the
    leases;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the seller&#146;s credit decision process;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the seller&#146;s lease documentation and any material
    variations from industry practices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the seller&#146;s servicing policies;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the portfolio&#146;s aging, performance and default history,
    including the default history of other portfolios sold by the
    seller.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also will consider other elements such as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    who the seller is and its overall industry reputation;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    54
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the performance of other portfolios we may have acquired from
    the seller;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the effect of the acquisition on our own portfolio;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    credit enhancements available from the seller, such as
    guarantees or additional security.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we then decide to pursue the portfolio acquisition, our
    Investment Manager will do a credit analysis of the entire
    portfolio, or financial analysis or other appropriate
    procedures. The results of our Investment Manager&#146;s
    analysis will be presented to our Investment Manager&#146;s
    investment committee which will decide which portfolios, if any,
    we will make an offer to acquire and the terms of our offer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In acquiring portfolios of equipment or other assets subject to
    existing leases, we will seek portfolios that will be consistent
    with the types of credits, industries and equipment we will
    focus on in our direct equipment leasing and financing
    activities. However, because a portfolio is often sold only in
    its entirety, it is possible that a material portion of the
    equipment, other assets and the related leases in a portfolio
    offered to us will not conform to these criteria. We will
    consider a portfolio for acquisition only when:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    at least two-thirds of the equipment leases, by book value,
    conform to our equipment type and market criteria;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    our Investment Manager&#146;s investment committee believes that
    the lessees are creditworthy and that such acquisition is
    strategically beneficial to meet our investment objectives.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Once we acquire a portfolio of equipment or other assets subject
    to existing leases, it will become part of our overall portfolio
    and subject to our Investment Manager&#146;s normal
    administrative processes and procedures as the servicer of our
    leases.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Transaction approval policies.</I>&#160;&#160;From time to
    time, our Investment Manager&#146;s investment committee, will
    set and if necessary revise standards and procedures for the
    review and approval of our equipment and other asset
    acquisitions, leases, participation and residual sharing
    agreements and other investments. The investment committee will,
    among other things:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    determine whether to approve transactions and portfolio
    purchases;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    determine whether to approve transactions that vary from
    standard credit criteria and policies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    resolve conflicts, if any, that may arise in the allocation of
    investments between us and our General Partner or among us and
    other programs managed by our General Partner or its affiliates
    as described in the &#147;Conflicts of Interest and Fiduciary
    Responsibilities&#160;&#151; Our General Partner, Our Investment
    Manager and Their Affiliates Will Engage in Activities That
    Compete With Us&#148; section of this prospectus;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    advise our General Partner and our Investment Manager with
    respect to any other matters submitted to the investment
    committee of our Investment Manager for its evaluation, as
    determined in the discretion of our Investment Manager.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The current members of the investment committee are
    Messrs.&#160;Roberts, Silkowski, Miroshnikov, Spring, and
    Shelmerdine. Messrs.&#160;Silkowski and Roberts will maintain
    ultimate investment discretion and will have to be in agreement
    on the funding of any transactions.
</DIV>

<A name='159'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sales of
    Revenue Streams</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    55
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='160'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Management,
    Origination and Servicing Agreement</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After we receive our minimum offering proceeds and begin
    operations, we will enter into a Management, Origination and
    Servicing Agreement with our Investment Manager, and we may
    enter into agreements with other affiliates of our General
    Partner and our Investment Manager. Under these agreements, in
    order to facilitate our acquisition of equipment, other assets
    and leases, our General Partner, our Investment Manager or their
    affiliates may:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    temporarily acquire equipment and other assets from
    third-parties on our behalf;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    originate leases with third-parties on our behalf, including
    equipment and other assets directly leased to end-users and
    equipment and other assets already subject to leases;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    negotiate and arrange portfolio acquisitions, participatory
    interests in assets or equipment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    negotiate and arrange vendor programs and residual sharing
    agreements;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    purchase existing portfolios of equipment leases.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to purchase equipment and other assets from affiliates
    of our Investment Manager which will regularly originate
    transactions and offer to sell all or part of such transactions
    to us either individually or as a portfolio depending upon,
    among other things, the appropriateness of the proposed
    investment for us (as determined by our Investment Manager, in
    its sole discretion) and the amount available for investment by
    us at such time. During the Operating Period, we will have a
    right of first refusal, subject to the existing rights of SQN I
    and SQN II (which will be in different stages in their
    respective investment cycles), on all transactions originated by
    our affiliates that meet our investment objectives. We will
    acquire the equipment or other assets at a price no greater than
    the cost to the affiliates of our Investment Manager, as
    adjusted for intervening operations, plus compensation permitted
    under our partnership agreement and described in this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event an affiliate of our Investment Manager proposes to
    sell an asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) to us, it
    will do so under a structure that creates and maintains an
    alignment of interest between us and the affiliate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We further expect that our Investment Manager will service all
    of our equipment, other assets and other investments under the
    Management, Origination and Servicing Agreement, including but
    not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    underwriting;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    receivables management;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    re-leasing or selling the equipment or other assets after the
    termination of a lease or other contract;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    marketing our services.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The compensation to our Investment Manager, for providing these
    services will be from the fees and reimbursements described in
    the &#147;Management Compensation&#148; section of this
    prospectus. The form of Management, Origination and Servicing
    Agreement is included as an exhibit to the registration
    statement of which this prospectus is a part. See the
    &#147;Where You Can Find More Information&#148; section of this
    prospectus. We also may use independent third-parties to
    originate or service a portion of our equipment, other assets
    and other investments at competitive rates.
</DIV>

<A name='161'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Changes
    in Investment Objectives and Policies</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You and our other partners will have no right to vote on the
    establishment or implementation of our investment objectives and
    policies, all of which are the responsibility of our General
    Partner. However, our General Partner cannot make any material
    changes in our investment objectives and policies without the
    consent of partners owning a majority of the total outstanding
    units entitled to vote. Any material change proposed by our
    General Partner, or any non-material change made by our General
    Partner without the vote of a majority of units held by you and
    our other partners, will be subject to our General
    Partner&#146;s duty to act in our best interests. In proposing a
    material change, our General Partner will consider whether the
    proposed
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    56
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    change will be beneficial to our ability to preserve, protect
    and return your capital or make regular distributions to you and
    our other partners.
</DIV>

<A name='162'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INCOME,
    LOSSES AND DISTRIBUTIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our taxable income, taxable loss and cash distributions will be
    allocated 99% to you and our other partners, as a group, and 1%
    to our General Partner until you and our other partners have
    received total Distributions equal to your and their capital
    contributions plus an 8% per annum, compounded annually,
    cumulative return on your and their capital contributions. After
    such time, all distributed Cash Available for Distribution and
    distributed Net Disposition Proceeds will be allocated 80% to
    you and our other partners as a group and 20% to our General
    Partner.
</DIV>

<A name='163'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Allocations
    of Net Income, Net Loss and Distributions Among
    Investors</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For any fiscal period, we will apportion net income, net loss
    and cash distributions allocable to you and our other investors,
    as a group, including our General Partner and its affiliates to
    the extent they purchase units, in the ratio that the number of
    units held by each investor, multiplied by the number of days
    during the period the investor owned the units, bears to the
    amount obtained by totaling the number of units outstanding on
    each day during that period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not make distributions in kind, that is, of our non-cash
    assets, except possibly on our liquidation, and then only to a
    liquidating trust.
</DIV>

<A name='164'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Timing of
    Distributions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, we intend to make cash distributions on a semi-annual
    basis during the Operating Period. Since cash distributions are
    subject to the availability of funds, any anticipated
    distributions may not be made.
</DIV>

<A name='165'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reinvestments
    in Additional Equipment, Other Assets, Leases and Other
    Investments During the Operating Period</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have the right to invest our Net Disposition Proceeds during
    the Operating Period. Before we can reinvest our Net Disposition
    Proceeds, however, we must, at a minimum, distribute to you and
    our other partners an amount which satisfies the following
    requirement:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the amount distributed must include an amount of net proceeds
    from sales and refinancing of our equipment and other asset
    investments, if any, sufficient for you and our other partners
    to pay your federal, state and local income taxes, if any,
    resulting from those sales, based on our assumption that you and
    our other investors are in a 30% tax bracket.
</TD>
</TR>

</TABLE>

<A name='166'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Return of
    Unused Capital</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will return to you and our other partners, without interest,
    any of your net subscription proceeds that we do not commit to
    investment within 24&#160;months after the beginning of this
    offering or that are not required as reserves.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>&#147;Net subscription proceeds&#148; </I>means your original
    subscription amount minus the organization and Offering Expense
    Allowance and distribution expenses paid on the sale of your
    units to you.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subscription proceeds will be considered committed for
    investment, and need not be returned, to the extent we have
    written agreements in principle, commitment letters, letters of
    intent, option agreements or similar contracts for the use of
    your net subscription proceeds in our investments. However, we
    must complete our investments under those agreements within an
    additional period of 12&#160;months or return the uninvested
    funds to you and our other partners, except that the additional
    period for investments under those agreements using funds from
    Ohio investors will only be three months.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    57
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='167'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reserve
    Account and Sources of Funds for Distributions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement requires us to establish an initial
    cash reserve for general working capital purposes of 1.0% of our
    offering proceeds. Any cash reserves used need not be restored,
    but if they are restored they may be restored from our operating
    revenues. We may distribute to you and our other partners any
    cash reserves that our General Partner determines are no longer
    required for our operations. However, our General Partner
    intends to make distributions primarily out of our:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    cash from operations;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    cash from sales or refinancings.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not borrow for the purpose of making distributions.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    58
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='168'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MATERIAL
    U.S. FEDERAL INCOME TAX CONSEQUENCES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following discussion is a general summary of the material
    U.S.&#160;federal income tax consequences of acquiring, holding
    and disposing of our units for an individual investor who is a
    U.S.&#160;citizen or resident. It is based upon the Internal
    Revenue Code of 1986, as amended (the &#147;Code&#148;), the
    U.S.&#160;Treasury regulations (&#147;Treasury
    Regulations&#148;) promulgated thereunder, published positions
    of the Internal Revenue Service (the &#147;IRS&#148;), judicial
    decisions and other applicable authorities, all as in effect on
    the date hereof and all of which are subject to change or
    different interpretations (possibly with retroactive effect).
    This summary does not purport to deal with all of the federal
    income tax consequences applicable to the Fund or to all
    categories of investors, some of whom may be subject to special
    rules (including, without limitation, dealers in securities or
    currencies, holders of units held as part of a
    &#147;straddle,&#148; &#147;hedge,&#148; &#147;constructive
    sale&#148; or &#147;conversion transaction&#148; with other
    investments, U.S.&#160;persons whose &#147;functional
    currency&#148; is not the U.S.&#160;dollar, persons who have
    elected &#147;mark to market&#148; accounting, persons who have
    not acquired their units upon their original issuance, persons
    who hold their unit through a partnership or other entity which
    is a pass-through entity for federal income tax purposes, or
    persons for whom an unit is not a capital asset). The tax
    treatment for other investors, such as trusts, corporations,
    tax-exempt organizations and employee benefit plans, and foreign
    investors, are likely to differ significantly from the principal
    tax consequences outlined in this section.</I> See
    <I>&#147;&#151;&#160;Tax Treatment of Certain Trusts and
    Estates,&#148; &#147;&#151;&#160;Taxation of Tax-Exempt
    Organizations&#148; and &#145;&#145;&#151;&#160;Corporate
    Investors.&#148; State and local tax consequences may differ
    from the federal income tax consequences described below. See
    &#147;&#151;&#160;State and Local Taxation.&#148; The tax
    consequences of an investment in the Fund will depend not only
    on the nature of our operations and the then applicable federal
    tax principles, but also on certain factual determinations that
    cannot be made at this time, and upon a particular Limited
    Partner&#146;s individual circumstances. No advance rulings have
    been or will be sought from the IRS regarding any matter
    discussed in this prospectus.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Each prospective investor is urged to consult its own tax
    advisor with respect to the U.S. federal, state, local and
    foreign tax consequences of the purchase, ownership and
    disposition of our units.</I></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Opinion
    of Counsel</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Troutman Sanders LLP has acted as our counsel in this offering.
    In that capacity, we have received a tax opinion from Troutman
    Sanders LLP to the effect that, under the existing provisions of
    the Code, the Treasury Regulations promulgated thereunder and
    judicial decisions related thereto, we will be treated as a
    partnership, and not an association taxable as a corporation,
    for federal income tax purposes. No ruling has been or will be
    requested from the IRS, and no assurance can be given that the
    IRS will concur with the foregoing opinion. Counsel&#146;s
    opinion is based upon the facts described in this prospectus and
    upon additional facts that we provided to counsel about our
    operations and, among other things, our representations that:
    (1)&#160;our business will be conducted as described in this
    prospectus and (2)&#160;we will not elect to be classified as an
    association taxable as a corporation. Any alteration of our
    activities from the description we provided counsel may render
    the opinion unreliable. Furthermore, the opinion of counsel is
    based upon existing law, which is subject to change either
    prospectively or retroactively. The discussion below assumes
    that we will be treated as a partnership for federal income tax
    purposes
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Troutman Sanders LLP will not prepare or review our income tax
    information returns, which will be prepared by or on behalf of
    our General Partner and our independent registered public
    accounting firm. Our General Partner will make a number of
    decisions on such tax matters as the expensing or capitalizing
    of particular items, the proper period over which capital costs
    may be depreciated or amortized and many similar matters. Such
    matters are usually handled by a limited partnership&#146;s
    general partner, often with the advice of independent
    accountants, and are usually not reviewed with counsel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With regard to the tax consequences to you of an investment in
    our units, your use of our counsel&#146;s tax opinion letter is
    subject to the limitations of the Code and proposed Treasury
    Regulations set forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to any material federal tax issue on which our
    counsel has issued a &#147;more likely than not&#148; or more
    favorable opinion, its opinion may not be sufficient for you to
    use for the purpose of avoiding penalties relating to any
    substantial understatement of income tax under
    Section&#160;6662(d) of the Code.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    59
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because we have entered into a compensation arrangement with
    Troutman Sanders LLP to provide certain legal services to us,
    including its tax opinion letter, such tax opinion letter was
    not written and cannot be used by you for the purpose of
    avoiding penalties relating to any reportable transaction
    understatement of income tax under Section&#160;6662A of the
    Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The limitations set forth above on your use of our
    counsel&#146;s tax opinion letter apply only for federal tax
    purposes. They do not apply to your right to rely on our
    counsel&#146;s tax opinion letter and the discussion in the
    &#147;Material U.S.&#160;Federal Income Tax Consequences&#148;
    section of this prospectus under the federal securities laws.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Limited Partnerships in General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Multi-owner business organizations generally are treated either
    as corporations or partnerships for tax purposes. For income tax
    purposes, an unincorporated entity that is not subject to a
    specific classification provision and that does not elect to be
    taxed as a corporation is treated as a partnership and, thus, a
    pass through entity, which is generally a tax reporting entity
    and not a taxpaying entity. This means that the individual
    owners, i.e., the partners, and not the entity, i.e., the
    limited partnership, pay tax on the entity&#146;s income and
    deduct the entity&#146;s losses. As a limited partner, you will
    report your share of our income, deductions, capital gains and
    losses on your federal income tax return. You also will pay
    taxes on your share of any taxable income or gains earned by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    One tax advantage of being taxed as a partnership is that the
    federal government taxes our earnings only once. The limited
    partnership files an informational return with the IRS, but has
    no federal income tax liability. Because it pays no federal
    income taxes, the limited partnership has more cash to
    distribute to its investors. By contrast, the federal government
    effectively taxes a corporation&#146;s earnings twice. The
    corporation itself must pay taxes on its taxable income,
    reducing the amount available to distribute in dividends to its
    shareholders and the shareholders are then required to pay
    income taxes on the dividends they receive. Another tax
    advantage of partnerships is that, subject to the limitations
    discussed in this section, investors often can deduct their
    share of any losses the limited partnership incurs, whereas a
    corporation does not pass through deductible losses to its
    investors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that your most substantial tax risk from this
    investment would be for the IRS to treat us as a corporation for
    tax purposes, by classifying us as a &#147;publicly traded
    partnership,&#148; under Code Section&#160;7704(b). Were that to
    happen, we would have to pay tax on our income, reducing the
    amount of cash available for distribution to you; and you would
    not be able to deduct your share of any of our losses. Such a
    classification would adversely affect your after-tax return,
    especially if the classification were to occur retroactively.
    Furthermore, a change in our tax status would be treated as an
    exchange by the IRS, which could give rise to additional tax
    liabilities. See &#147;&#151;&#160;Publicly Traded
    Partnerships.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your ability to deduct our losses is limited to the amounts that
    you have at risk in this investment. This is generally the
    amount of your investment, plus any profit allocations and minus
    any loss allocations and distributions. Additionally, your
    ability to deduct losses attributable to passive activities is
    restricted. Because our operations predominantly will constitute
    passive activities to an individual investor, you may only use
    our losses to offset passive income in calculating your tax
    liability. For example, passive losses may not be used to offset
    portfolio income, including interest income from our lending
    activities. See &#147;&#151;&#160;Deductibility of Losses;
    Passive Activity Losses, Tax Basis and &#147;At-Risk&#148;
    Limitation.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Leasing activities will generate a significant portion of our
    income. We expect that, for federal income tax purposes, our
    operating and leveraged leases will be treated as true leases
    and we will be considered the owner and lessor of the asset. The
    IRS may challenge the leases, however, and instead assert that
    they are sales or financings. This would result in the loss of
    your share of our cost recovery or depreciation deductions. See
    &#147;&#151;&#160;Tax Treatment of Leases.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also plan to generate income by loaning money to acquirers of
    assets. We may be in the trade or business of making loans due
    to the manner in which we conduct our lending activities.
    However, our lending activities may not rise to the level of
    being in a trade or business, or the IRS could assert that was
    the case
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    60
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    even if we believed that our lending activities did constitute a
    trade or business of making loans. Finally, we may generate our
    remaining income through the buying and selling of financial
    instruments. This type of activity is governed by many specific
    tax rules. See &#147;&#151;&#160;Tax Treatment of Lending
    Activities.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Publicly
    Traded Partnerships</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Code classifies some partnerships as &#147;publicly traded
    partnerships&#148; for tax purposes (&#147;PTPs&#148;). If we
    are classified as a PTP, we will be taxed as a corporation, the
    treatment of which is described above. A PTP is a partnership in
    which interests are traded on an established securities market
    or are readily tradable on either a secondary market or the
    substantial equivalent of a secondary market. The Code contains
    an exception, however, from being taxed as a corporation if the
    PTP derives 90% or more of its gross income from sources such as
    interest and dividends, rents from real property and gains from
    the sale of real property. Because of our leasing activities, we
    do not expect to qualify for this exception.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The legislative history of Code Section&#160;7704 provides that
    a secondary market for interests in a partnership or the
    substantial equivalent thereof exists if investors are readily
    able to buy, sell or exchange their partnership interests in a
    manner that is comparable, economically, to trading on
    established securities markets. A secondary market is generally
    indicated by the existence of a person standing ready to make a
    market in the interests. The substantial equivalent of a
    secondary market will be deemed to exist if (i)&#160;interests
    in the partnership are regularly quoted by any person, such as a
    broker or dealer, making a market in the interests;
    (ii)&#160;any person regularly makes available to the public
    (including customers and subscribers) bid or offer quotes with
    respect to interests in the partnership and stands ready to
    effect buy or sell transactions at the quoted prices for itself
    or on behalf of others; (iii)&#160;if the holders of interests
    in the partnership have a readily available, regular and ongoing
    opportunity to sell or exchange their interests through a public
    means of obtaining or providing information of offers to buy,
    sell, or exchange interests; or (iv)&#160;buyers and sellers
    have the opportunity to buy, sell, or exchange interests in the
    partnership in a time frame that a market-maker would provide
    and prospective buyers have similar opportunities to acquire
    such interests. The legislative history of Code
    Section&#160;7704 also indicates that a regular plan of
    redemptions or repurchases by a partnership may constitute
    public trading where holders of interests have readily
    available, regular and ongoing opportunities to dispose of their
    interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not intend to list our units on any market. Our units also
    will not be readily tradable on a secondary market, nor do we
    expect them to be in the future. Therefore, we will be a PTP
    only if our units become readily tradable on the substantial
    equivalent of a secondary market. Our units will not become
    readily tradable merely because we provide information to our
    partners regarding other partners&#146; desires to buy or sell
    units to each other, or occasionally arrange transfers between
    partners. Moreover, our units will not become readily tradable
    if we create a qualified matching program, because transfers
    made through a qualified matching service are also not counted.
    A matching service qualifies for this exclusion if it satisfies
    all seven of the following conditions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;it consists of a system that lists customers&#146; bid
    and ask quotes in order to match sellers and buyers;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;deals occur either by matching the list of interested
    buyers to interested sellers or by bidding on listed interests;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;sellers cannot enter into a binding agreement to sell
    their interest until at least 15&#160;days after information
    regarding their offering is made available to potential buyers;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;the closing of the sale does not occur until at least
    45&#160;days after information about the offering is made
    available;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;the matching service only displays quotes that express
    interest in trading but do not represent firm commitments to buy
    or sell at the quoted price;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    61
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (6)&#160;the seller&#146;s information is removed from the
    matching service within 120&#160;days after the posting and, if
    removed for any reason other than a sale, no offer to sell from
    that seller is entered into the matching service for at least
    60&#160;days;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (7)&#160;the percentage of interests in the capital or profits
    transferred during the tax year (other than through private
    transfers) does not exceed 10% of the total interests in
    partnership capital or profits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The IRS should not treat us as a PTP. This conclusion is based
    in part on our representation to counsel that our units will not
    be listed on any securities exchange and that, in accordance
    with Section&#160;13.2 of our Partnership Agreement, our General
    Partner will refuse to recognize or give effect to any
    assignment of our units for any purpose (including recognizing
    any right of the transferee, such as the right of the transferee
    to receive directly or indirectly our distributions or to
    acquire an interest in our capital or profits) that it knows or
    has reason to know occurred on an established securities market
    or a secondary market (or the substantial equivalent thereof),
    within the meaning of Section&#160;7704 of the Code and the
    Treasury Regulations and published notices promulgated
    thereunder, or to permit, recognize or give effect to any
    assignment of units that would result in the transfer of more
    than 2% of our units in any year other than those that our
    General Partner determines in good faith fall within certain
    safe harbor provisions under Treasury Regulation
    <FONT style="white-space: nowrap">Section&#160;1.7704-1.</FONT>
    See &#147;Transfer of Our Units/Withdrawal&#160;&#151;
    Restrictions on the Transfer of Our Units and Withdrawal.&#148;
    This is pursuant to a &#147;safe harbor&#148; under Treasury
    <FONT style="white-space: nowrap">Regulation&#160;Section&#160;1.7704-1</FONT>
    that provides that a secondary market or its equivalent will not
    exist if the sum of the interests in partnership capital or
    profits attributable to those partnership interests that are
    sold, redeemed, or otherwise disposed of during the
    partnership&#146;s taxable year and do not fall within other
    &#147;safe harbor&#148; provisions does not exceed 2% of the
    total interests in partnership capital or profits. In
    determining whether we satisfy the 2% safe harbor, redemptions
    of our units pursuant to Section&#160;13.5 of our partnership
    agreement will be counted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While we will use our best efforts to limit the type and number
    of transfers of units to those that will allow us to remain
    within the 2% safe harbor, we do not warrant that we will
    satisfy this safe harbor during each of our taxable years. It is
    conceivable that transfers of units could occur that would cause
    us to fall outside the safe harbor. In this regard, Treasury
    <FONT style="white-space: nowrap">Regulation&#160;Section&#160;1.7704-1(c)(3)</FONT>
    states that failure to meet any of the safe harbors will not
    create a presumption that a secondary market or its equivalent
    exists for units. No assurances can be offered, however, that,
    if the amount and type of trading in our units were to fall
    outside the safe harbor, the IRS would not assert PTP status
    with respect to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we are classified as a PTP, we would be treated for federal
    income tax purposes as a corporation unless, as noted above, 90%
    or more of our income were to come from certain &#147;qualified
    sources.&#148; A significant portion of our business will be the
    leasing of personal (but not real) property, and income from
    this source is not &#147;qualified.&#148; Thus, if we were a
    PTP, we would be taxed as a corporation. As described above, the
    major consequences of corporate tax treatment would be that, in
    addition to being taxed when distributed to you, our income
    would be subject to corporate income tax and our losses would
    not be passed through to you. If we are taxed as a corporation,
    and particularly if the PTP classification is made
    retroactively, corporate taxation would have a substantial
    adverse effect on your after-tax return on your investment.
    Furthermore, the IRS would treat a change in tax status from a
    partnership to a PTP taxable as a corporation as an exchange
    that would give rise to tax liabilities for our limited partners
    if our debt exceeded the tax basis of our assets at the time of
    the change in tax status&#160;&#151; even though limited
    partners likely would not receive cash distributions from us to
    cover such tax liabilities. See &#147;&#151;&#160;Classification
    as a Partnership&#148; and &#147;&#151;&#160;Sale or Other
    Disposition of Units.&#148; In addition, our distributions would
    be classified as portfolio income (dividends) rather than
    passive activity income, and thus, would not be eligible to be
    offset by passive activity losses attributable to us or other
    activities giving rise to passive activity losses. See
    &#147;&#151;&#160;Deductibility of Losses; Passive Activity
    Losses, Tax Basis and &#147;At-Risk&#148; Limitation.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Current Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As long as we are classified as a partnership for federal income
    tax purposes, we will not be subject to federal income tax.
    Rather, you will be required to report on your federal income
    tax return, and pay taxes with respect to, your share of our
    annual income, gains, losses, deductions and credits. You must
    pay tax on
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    62
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    your distributive share of our income regardless of the amount
    of distributions you receive. See &#147;&#151;&#160;Our Income
    Versus Our Distributions.&#148; Our tax returns (information
    returns) will be prepared using the accrual method of
    accounting. Under the accrual method, we will recognize as
    income items such as rentals and interest as and when earned by
    us, even if the proceeds are not received until a subsequent tax
    year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will furnish you with all information about us necessary to
    prepare your federal income tax return not later than
    75&#160;days after the end of each fiscal year. We also will
    file an annual information return with the IRS and will report
    our finances on an accrual basis using a December 31 fiscal
    year. Our income and loss for the taxable year will be allocated
    among our partners to take into account the varying interests of
    our partners during the year using any method permissible under
    Code Section&#160;706 that our General Partner may select. If
    any partners hold their units for less than the entire year,
    they will be allocated income and loss using such method as
    selected by our General Partner that reflects such part-year
    ownership as is permissible under Code Section&#160;706. For
    purposes of allocating income or loss among our partners, we
    will treat our operations as occurring ratably over each fiscal
    year&#160;&#151; in other words, we will assume that income and
    loss are spread evenly over the fiscal year. Thus, if some
    limited partners are admitted after others, those limited
    partners admitted later may receive a smaller portion of each
    item of our net profits and net losses than the limited partners
    who were admitted earlier. Nevertheless, those limited partners
    still will be obligated to make the same capital contributions
    to us for their interests as the limited partners who were
    admitted previously. In addition, where a limited partner
    transfers units during a taxable year, a limited partner may be
    allocated net profits for a period for which such limited
    partner will not receive a corresponding cash distribution.
    Moreover, depreciation or other cost recovery with respect to
    our assets may create a deferral of tax liability during your
    ownership of our units. Larger cost recovery deductions in the
    early years may reduce or eliminate our taxable income in the
    initial years of our operations. This deferral, however, will be
    offset in later years, when smaller depreciation and cost
    recovery deductions will offset less of our income, while an
    increasing portion of our revenue must be applied to reduce debt
    principal. In later years, it is possible that taxable income
    will exceed cash distributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With the exception noted below, you will not be required to pay
    income tax on cash distributions that exceed your share of our
    taxable income; however, the excess will reduce your tax basis
    for your units. Your tax basis also will increase or decrease
    annually based on your allocable share of our income or loss for
    the year. Any cash distributions you receive that exceed your
    tax basis (after adjustment for your allocated share of our
    income or loss) will be taxable to you, generally as capital
    gains, provided the units are held by you as capital assets. Any
    reduction in your share of non-recourse liabilities, such as
    might arise as a result of a reduction of your percentage
    interest in us upon issuance of additional units to new or
    existing partners, will be treated as a distribution of cash to
    you. A portion of any distribution in excess of your tax basis,
    however, will be recharacterized as ordinary income in the same
    percentage that ordinary income would be realized upon a sale by
    us of all our assets, for example, because of depreciation
    recapture. In addition, to the extent that a distribution would
    cause the amount you are considered to have &#147;at risk&#148;
    with respect to assets placed in service in a given year to
    become negative, you will have to include such amount in your
    gross income up to the amount of losses previously taken with
    respect to such assets. Further, a non-pro rata distribution of
    money or property, such as might arise as a result of a
    reduction of your share of our liabilities upon the admission of
    additional partners, may result in ordinary income to you,
    regardless of your tax basis in your units, if the distribution
    reduces your share of our &#147;unrealized receivables,&#148;
    including depreciation recapture, or substantially appreciated
    &#147;inventory items.&#148; These terms are defined in
    Section&#160;751 of the Code, and are known as
    &#147;Section&#160;751 assets.&#148; To that extent, you will be
    treated as having been distributed your proportionate share of
    our Section&#160;751 assets and having exchanged those assets
    with us in return for the non-pro rata portion of the actual
    distribution made to you. This last deemed exchange generally
    will result in your realization of ordinary income under
    Section&#160;751(b) of the Code. That ordinary income will equal
    the excess of (i)&#160;the non-pro rata portion of that
    distribution over (ii)&#160;your tax basis for your share of
    Section&#160;751 assets deemed relinquished in the exchange.
    Similarly, upon our redemption of your units, it is possible
    that you could recognize both ordinary income and a capital loss.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    63
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each limited partner is responsible for keeping its own records
    for determining such limited partner&#146;s tax basis in its
    units and calculating and reporting any gain or loss resulting
    from a Fund distribution or disposition of a unit.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Income Versus Our Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The taxable income we report to you each year will not equal the
    cash distributions that you receive during that year. The
    difference between reported income and cash distributions arises
    primarily from six facts: (i)&#160;depreciation and other cost
    recovery deductions reduce our taxable income, but not our cash
    available for distribution; (ii)&#160;our revenues or gain on
    sale that we reinvest or use to repay debt principal will
    generally constitute income even though using revenues for those
    purposes reduces the cash distributed to you. See
    &#147;&#151;&#160;Cost Recovery&#148;; (iii)&#160;we will
    determine our income using the accrual method of accounting,
    which includes rental income as it accrues, even if not yet
    received; (iv)&#160;our financial assets may be subject to
    specific tax rules governing the timing of any inclusions of
    income and loss irrespective of any cash generated by our
    assets; (v)&#160;certain rules, such as the &#147;at-risk&#148;
    rules and the tax-exempt leasing rules, may prevent losses
    attributable to some of our investments in assets from being
    used to offset income attributable to our other investments in
    assets, with the result that our taxable income (and your share
    thereof) may be greater than our overall income (and your share
    thereof). Moreover, allowable &#147;at-risk&#148; losses may not
    offset our income from our lending activities under the passive
    loss rules; and (vi)&#160;we may need to disproportionately
    allocate our income on a per unit basis to equalize the limited
    partners&#146; capital accounts (as adjusted by certain items)
    on a per unit basis. Therefore, the cash distributions that we
    make to you may be greater or less than your share of our
    taxable income in any given year.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Allocations
    of Profits and Losses</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your share of any item of our income, gain, loss, deduction or
    credit is determined by our partnership agreement. As a general
    rule, we will allocate 99% of our profits among our limited
    partners (including our General Partner to the extent it owns
    units), and 1% to our General Partner. This allocation will
    continue until the excess of the cumulative profits allocated to
    our limited partners, in the aggregate, over the cumulative
    losses allocated to our limited partners, in the aggregate (not
    taking into account certain items that are specially allocated,
    such as non-recourse deductions and minimum gain chargebacks)
    would, if distributed currently to the extent not previously
    distributed, provide our limited partners in the aggregate with
    an 8% cumulative annual return, compounded annually. Thereafter
    our profits will be allocated 80% among our limited partners
    (including our General Partner to the extent it owns units) and
    20% to our General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a general rule, 1% of our losses will be allocated to our
    General Partner and 99% will be allocated among our limited
    partners (including our General Partner to the extent it owns
    units). However, losses will be allocated 20% to our General
    Partner and 80% to our limited partners to reverse profits that
    were allocated in such 20%/80% ratio, described above.
    Non-recourse deductions (deductions generally attributable to
    our debt financed property) will be allocated 1% to our General
    Partner and 99% among our limited partners (including our
    General Partner to the extent it owns units<B>).</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The IRS respects a partnership&#146;s allocation of income,
    gain, loss, deductions or credits if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;the allocation has economic effect and is
    substantial,&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;the partners can show that the allocation accords with
    each partner&#146;s respective interest in us,&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;in the case of either (a)&#160;or (b), the allocation
    complies with special rules requiring that partners receiving
    allocations of losses or deductions generated by purchasing
    assets with borrowed money be charged back income and gain as
    those funds are repaid.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    64
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Treasury Regulations generally provide that, for an allocation
    to have economic effect, the following conditions must be true:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the allocation must be reflected by an increase or decrease in
    the relevant partner&#146;s capital account, as those accounts
    are maintained under the applicable Treasury Regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    liquidation proceeds must be distributed in accordance with the
    partner&#146;s positive capital account balances;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the partnership agreement must provide that if a partner will
    have a deficit balance in his or her capital account upon
    liquidation of the partnership, the partner must be required to
    restore the deficit amount to the partnership, so that amount
    may be distributed to other partners with positive capital
    account balances. However, the Treasury Regulations provide that
    in the absence of an obligation to restore the deficit, the
    partnership agreement must contain a qualified income offset
    provision. A qualified income offset provision mandates that
    when a partner receives a distribution from the partnership that
    causes a deficit in the partner&#146;s capital account or
    increases a preexisting deficit, that partner must be allocated
    income and gains as quickly as possible to eliminate any deficit
    balance in his or her capital account that is greater than any
    amount that he or she is obligated to restore.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The economic effect of an allocation is substantial if there is
    a reasonable possibility that it will substantially affect the
    amount to be received by our partners from us, independent of
    tax consequences. In addition, an economic effect is not
    substantial if, at the time the allocation becomes part of our
    partnership agreement: (1)&#160;at least one partner&#146;s
    after-tax return may, in present value terms, be enhanced
    compared to his or her return if the allocation were not
    contained in our partnership agreement; and (2)&#160;there is a
    strong likelihood that no partner&#146;s after-tax return will,
    in present value terms, be substantially diminished compared to
    his or her return if the allocation were not contained in our
    partnership agreement. The Treasury Regulations on this issue
    state that, in determining after-tax return, a partner&#146;s
    entire tax situation, including aspects unrelated to the
    partnership, will be taken into account.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement contains several provisions designed
    to ensure that allocations have a substantial economic effect,
    including.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;It requires that all allocations of income, gains,
    losses, deductions and distributions are reflected by an
    increase or decrease in the relevant partners&#146; capital
    accounts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;All partners who are allocated losses and deductions
    generated by assets acquired with borrowed money will be charged
    back income and gains generated by those assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;Although no partner (other than our General
    Partner&#146;s limited commitment) having a deficit balance in
    his or her capital account after the final liquidating
    distribution will be required to make a cash contribution to us
    to eliminate the deficit, our partnership agreement contains a
    provision for a qualified income offset and requires that, upon
    liquidation, our assets generally will be distributed to our
    partners first to the extent of any unreturned capital
    contributions and thereafter in the same manner as current
    distributions (which should correspond with such partners&#146;
    positive capital accounts.)
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Based on the foregoing, the allocations provided in our
    partnership agreement should be respected for tax purposes.
    However, depending on when a limited partner acquired a unit and
    for what price, it is possible that the allocations set forth in
    our partnership agreement have the effect of providing deferral
    for that partner. If, for example, the partner obtaining
    deferral is an individual in the highest tax bracket while the
    partner currently allocated income is tax-exempt, the
    allocations in our partnership agreement could be insubstantial.
    Nevertheless, because of the large number of expected partners,
    we do not believe there is a strong likelihood of this
    occurring. If upon audit the IRS were to take the position that
    any of our allocations of profits and losses should not be
    recognized, and if the IRS&#146;s position were sustained by the
    courts, you could be taxed on a portion of the income allocated
    to our General Partner or to another limited partner, and part
    of the deductions allocated to you could be disallowed.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    65
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Estimated
    Tax Payments</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You may be required to make estimated tax payments due to your
    liability for paying the taxes on your distributive share of our
    taxable income. See &#147;&#151;&#160;Taxation of Limited
    Partnerships in General.&#148; We do not anticipate withholding
    or making payments to any taxing authority on behalf of our
    partners. Nevertheless, there may be some circumstances under
    which we are required to withhold on behalf of a partner. For
    example, under certain circumstances we are required to withhold
    a foreign partner&#146;s share of our income effectively
    connected with the conduct of a U.S.&#160;trade or business. If
    we do withhold or make a payment to a governmental authority on
    your behalf, we will treat any excess of that amount over your
    next entitled distribution as a demand loan carrying an interest
    rate of 12% per year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For further information regarding the tax consequences of our
    right or obligation to withhold or make a payment on your
    behalf, please consult your tax advisor.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Retroactive
    Allocations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under Code Section&#160;706(d), &#147;retroactive
    allocations&#148;&#160;&#151; i.e., allocations of items to
    partners before they become partners&#160;&#151; are prohibited,
    and Code Section&#160;706(d) and the Treasury Regulations
    thereunder effect this prohibition by providing that if there is
    a change of a partner&#146;s interest in a partnership in any
    taxable year, each partner&#146;s distributive share of
    partnership tax items is to be determined by any method
    prescribed in the Treasury Regulations that takes into account
    the varying interests of the partners in the partnership during
    that year. Our partnership agreement provides that our items
    will, to the extent necessary in order to comply with Code
    Section&#160;706(d), be allocated on a daily, monthly or other
    basis as determined by our General Partner using any permissible
    method under Code Section&#160;706(d) and the Treasury
    Regulations promulgated thereunder. If, as a result, an amount
    of profit or loss allocated to a partner is limited compared to
    what would otherwise have been the case with respect to the
    general rules regarding the allocation of profits and losses,
    such excess will be allocated to the other partners in relation
    to the amounts otherwise allocated to them. As a result, if some
    limited partners are admitted after others, they may receive a
    smaller portion of our profits and losses even though they are
    required to contribute the same amount as those limited partners
    who were admitted earlier. As stated above, some of this
    disparity results from a timing issue that will resolve itself
    over the life of the fund due to our allocation provisions
    beginning in our first fiscal year. However, a portion of this
    disparity may result from the receipt of additional cash
    distributions by those partners who invested earlier.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Deductibility
    of Losses; Passive Activity Losses, Tax Basis and
    &#147;At-Risk&#148; Limitation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Passive Activity Losses.</I>&#160;&#160;The passive activity
    loss rules generally allow taxpayers to deduct their passive
    activity losses only against their passive activity income.
    Passive activity income does not include portfolio income like
    interest, dividends and royalties, or ordinary income from
    salary and other types of compensation for personal services.
    Therefore, taxpayers generally will be required to segregate
    income and loss into three categories: active trade or business
    income or loss; passive activity income or loss; and portfolio
    income or loss. The passive activity rules apply to individuals,
    estates, trusts, personal service corporations and some closely
    held corporations (including S&#160;corporations).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A passive activity is one that involves the conduct of a trade
    or business in which the taxpayer does not materially
    participate. The IRS generally considers rental activities
    passive, whether or not a taxpayer materially participates.
    Furthermore, the IRS generally considers the status of limited
    partners to be passive with respect to a limited
    partnership&#146;s activities. Accordingly, we expect that you
    should treat your share of our rental income or loss as passive
    activity income or loss. We expect our lending activities to
    consist of the origination of loans to buy assets and secured by
    such assets and the buying and selling of existing loans secured
    by assets. In addition, regardless of whether we are in the
    trade or business of making secured financings, we expect that
    our interest income will not be considered from a passive
    activity and, therefore, may not be offset by any of your
    passive activity losses due to our expectation that our lending
    activity will be equity-financed (that is financed primarily
    with our equity capital rather than with funds we have
    borrowed). However, the treatment of gains and losses from our
    lending activities will depend on whether we are in the
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    66
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    trade or business of lending. If we are in the trade or business
    of lending, then our lending activities may generate passive
    activity gains or passive activity losses during the time you
    hold your units. Moreover, any interest you incur on debt used
    to acquire or maintain our units attributable to our leasing
    activities will be treated as a passive activity deduction.
    Regardless of whether we are in the trade or business of
    lending, the portion of any interest you incur on debt that is
    attributable to our lending activities will be attributable to
    our portfolio income (including our interest income from our
    lending activities), if any, and deduction of such amounts will
    be limited by the same principles as those applicable to losses
    passed through to you by us. We also will generate portfolio
    income or loss from our financial transactions, including
    interest on our funds pending their investment in assets.
    Finally, interest expense of a limited partner attributable to
    such portfolio income may be subject to other limitations on its
    deductibility. See &#147;&#151;&#160;Interest Expense.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You can deduct passive activity losses against passive activity
    income to reduce your overall income tax liability, but you
    cannot offset ordinary or portfolio income with passive activity
    losses. Accordingly, your tax deduction for passive activity
    losses will be limited by the amount of your passive activity
    income in any given tax year. If your share of our passive
    activity losses is greater than your passive activity income,
    you will have a suspended loss, meaning that you cannot deduct
    the loss in the year you incurred it. You can, however, carry
    the suspended loss forward indefinitely to offset any passive
    activity income you derive in future years, whether from us or
    another passive activity. Additionally, any suspended losses
    generally may be deducted against non-passive income when you
    recognize a gain or loss from the sale of your entire interest
    in us. Finally, passive activity income from us can be used to
    absorb losses from other passive activities, subject to special
    rules regarding PTPs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Losses from a PTP are treated as passive activity losses that
    may only be used to offset income subsequently generated by the
    same PTP that is taxed as a partnership. The IRS generally
    treats income from a PTP as portfolio income, unless it is used
    to offset previous losses from the same PTP. We have been
    structured to avoid being classified as a PTP; however, these
    rules mean that our income or losses may not be used to offset
    any losses or income you may derive from another limited
    liability company or partnership that is classified as a PTP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Tax Basis.</I>&#160;&#160;Your initial tax basis in your
    units will be the price you paid for your units. Your tax basis
    will then be increased by your share of our income, by your
    share of our non-recourse indebtedness (that is, indebtedness
    for which none of the partners are personally liable) and any
    liabilities we have to you. Your basis will be reduced by the
    amount of any cash distributions you receive from us, your share
    of any of our losses, any reductions in your share of our
    non-recourse indebtedness, and any reduction in any liabilities
    we have to you. You may deduct your share of our losses, if any,
    only to the extent of the tax basis in your unit. Any losses
    allocated to you in excess of your tax basis in your unit are
    rolled over to your subsequent tax years until the earlier of
    (1)&#160;your ability to use the loss due to having sufficient
    tax basis in your unit or (2)&#160;the disposition of your unit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;At-Risk&#148; Limitation.</I>&#160;&#160;Generally,
    taxpayers may not deduct partnership losses they incur that
    exceed the total amount they have at risk in the partnership at
    the end of a partnership&#146;s tax year. For the most part, the
    amount a taxpayer has at risk equals the money and the adjusted
    basis of other property contributed to the partnership. At-risk
    is determined on an activity, and not an entity, basis. Thus, a
    single entity, like us, will have multiple at-risk activities,
    each of which will be subject to a separate at-risk limitation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You will not be at risk, and will not be entitled to increase
    the at-risk basis of your unit, with respect to our recourse
    liabilities, such as trade payables. Nor will you be at risk
    with respect to non-recourse liabilities incurred by us, such as
    amounts borrowed to finance asset purchases, even though our
    non-recourse liabilities (and, under certain circumstances, our
    recourse liabilities) may increase the tax basis of your unit.
    Thus, your initial amount at risk will be the amount of your
    investment, i.e., the price you paid for your units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A limited partner&#146;s amount at risk will be reduced by
    (i)&#160;net losses that are allowed as a deduction to the
    limited partner under the &#147;at-risk&#148; rules and
    (ii)&#160;cash distributions received by a limited partner with
    respect to the limited partner&#146;s units, and increased by
    that limited partner&#146;s distributive share of our net
    profits. Investors should note that net losses that may be
    allowable as a deduction under the at-risk rules may be
    disallowed currently under the passive activity loss limitations.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    67
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a limited partner&#146;s at-risk amount is reduced below zero
    (due to a cash distribution to a limited partner), the limited
    partner must recognize income to the extent of the deficit at
    risk amount, up to the amount of loss the limited partner
    previously recognized that reduced his or her at-risk amount.
    Our losses that have been disallowed as a deduction in any year
    because of the at-risk rules will be allowable, subject to other
    limitations, as a deduction to the limited partner in subsequent
    years to the extent that the limited partner&#146;s amount
    at-risk has been increased. It is not anticipated that, on an
    aggregate basis, we will incur losses. For purposes of the
    &#147;at risk&#148; rules, however, the Code will not allow us
    to aggregate our equipment leasing and lending businesses.
    Moreover, we can only aggregate our equipment leasing activities
    with respect to assets placed in service during the same taxable
    year. Therefore, the &#147;at risk&#148; rules will be applied
    separately to the net taxable income or loss resulting from
    leasing assets that were placed in service during separate
    taxable years. This could result in a limited partner&#146;s
    deduction for losses with respect to certain items of assets
    being limited by the &#147;at risk&#148; rules, even though he
    or she must recognize income with respect to other assets. It
    also will require a limited partner to allocate his or her
    at-risk basis over the different activities described above,
    specifically, the different years&#146; assets and our lending
    activities. In such circumstances, the application of the
    &#147;at risk&#148; rules could compel a limited partner to
    recognize more taxable income in a year than that limited
    partner&#146;s share of our aggregate income because of a
    limitation imposed by such rules on the ability to set off
    losses attributable to assets placed in service in one year
    against income attributable to assets placed in service in
    another year or against income from our lending activities.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The sum of the amounts for which a limited partner will be
    considered &#147;at-risk&#148; for purposes of Section&#160;465
    of the Code, in any taxable year with respect to assets placed
    in service in that taxable year and in each prior year (treating
    all assets placed in service in the same year as a single
    activity separate from the activities represented by assets
    placed in service in other years) will be equal to (i)&#160;the
    capital contributions (as such term is defined in our
    partnership agreement) of such limited partner (provided that
    funds for such capital contributions are not from borrowed
    amounts other than amounts: (A)&#160;for which the limited
    partner is personally liable for repayment, or (B)&#160;for
    which property other than units are pledged as security for such
    borrowed amounts, but only to the extent of the fair market
    value of such pledged property and provided further that such
    capital contributions are invested in assets or otherwise
    expended in connection with our organization or leasing
    activities (or are subject to the rights of our creditors for
    amounts incurred by it with respect to same)), less
    (ii)&#160;the sum determined on a cumulative basis of
    (A)&#160;the total net losses with respect to such assets that
    have been allowed as deductions to the limited partner under the
    at risk rules and (B)&#160;cash distributions received by the
    limited partner with respect to the aforementioned assets, plus
    (iii)&#160;the limited partner&#146;s distributive share,
    determined on a cumulative basis, of total net profits with
    respect to our assets. We expect that your at-risk basis will be
    less than your investment in us due to fees and the amount of
    your investment allocable to our lending activities.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Deductions
    for Organizational and Offering Expenses;
    <FONT style="white-space: nowrap">Start-Up</FONT>
    Costs</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The costs of our organization and the sale of our units, as well
    as other
    <FONT style="white-space: nowrap">start-up</FONT>
    costs, generally may not be deducted in the year they are
    incurred; rather, they must be capitalized. Organizational
    expenses and
    <FONT style="white-space: nowrap">start-up</FONT>
    costs may be currently deducted on a limited basis (up to
    $5,000) in the year incurred. However, this $5,000 amount is
    reduced (but not below zero) by the amount by which the
    cumulative cost of such expenditures exceeds $50,000. The
    remainder of the
    <FONT style="white-space: nowrap">start-up</FONT>
    costs can be amortized over a period of 180&#160;months.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Syndication expenses, which are the costs incurred to promote or
    effect the sale of our units are non-deductible, must reduce
    partners&#146; capital accounts when incurred and give rise to a
    tax offset, if at all, only upon our liquidation, and then, in
    most cases, only as a capital loss. Syndication expenses include
    brokerage fees (such as the distribution expenses provided for
    in our partnership agreement); registration and filing fees with
    the Securities and Exchange Commission and each State in which
    our units are sold; our legal fees for securities advice and
    advice concerning the adequacy of tax disclosures in the
    offering materials; accounting fees for the preparation of
    information to be included in the offering materials; printing
    and reproduction costs; and other selling or promotional
    expenses.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    68
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will endeavor to treat our organizational,
    <FONT style="white-space: nowrap">start-up</FONT> and
    syndication costs in accordance with the foregoing rules. There
    is uncertainty, however, about the distinction between trade or
    business expenses that may be currently deducted, and
    organizational,
    <FONT style="white-space: nowrap">start-up</FONT> and
    syndication costs that must be capitalized or deferred. Because
    of this uncertainty, the IRS could challenge the current
    deduction of some of our expenses on the grounds that the
    expenses are not deductible in the year incurred. Under our
    partnership agreement, distribution expenses are specially
    allocated to those limited partners with respect to whose
    purchase of units such commissions and fees were paid. Other
    syndication expenses will be allocated, to the extent possible,
    in equal amounts per unit. If such equality is not possible, our
    General Partner may make compensating allocations of items of
    income or loss to achieve the same effect on capital accounts.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Treatment of Leases</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your depreciation and cost recovery deductions with respect to
    any item of our leased assets depends, in part, on the tax
    classification of the agreement under which such asset is
    leased. These deductions are only available if the agreement is
    a true lease of an asset for income tax purposes, which means we
    retain ownership of the asset. Depreciation and cost recovery
    deductions are not available if the transaction is classified as
    a sale, or as a financing or refinancing arrangement where, for
    tax purposes, the nominal lessee is treated as the owner of the
    asset.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Whether we are the owner of any particular asset, and whether a
    lease is a true lease for federal income tax purposes, depends
    upon both factual and legal considerations. The IRS has
    published guidelines on the tax treatment of leveraged leases.
    These guidelines do not purport to be substantive rules of law
    and are not supposed to be applied in audit contexts, although
    they have been in a number of instances.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Whether any lease will meet the relevant requirements to be
    characterized as a true lease, and whether we will be treated
    for tax purposes as the owner of each asset acquired by us, will
    depend upon the specific facts in each case. Because these facts
    cannot now be determined with regard to leases that will be
    entered into in the future, our counsel cannot render an opinion
    on this issue.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Cost
    Recovery</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, a significant portion of the assets that we plan to
    acquire and lease generally will be as
    <FONT style="white-space: nowrap">3-year,</FONT>
    <FONT style="white-space: nowrap">5-year</FONT> or
    <FONT style="white-space: nowrap">7-year</FONT>
    property and may be written off for federal income tax purposes,
    through cost recovery or depreciation deductions, over our
    respective recovery period. The amount deductible in each year
    generally may be calculated using the 200&#160;percent
    declining-balance depreciation method, switching to the
    straight-line method at a time that maximizes the deduction. A
    taxpayer may, however, choose to use a straight-line method of
    depreciation for the entire recovery period.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In some circumstances, a taxpayer will be required to recover
    the cost of an asset over a longer period of time than described
    above. These circumstances include the use of assets
    predominantly outside the United States and the use of assets by
    a tax-exempt entity. See &#147;&#151;&#160;Limitations on Cost
    Recovery Deductions.&#148;
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitations
    on Cost Recovery Deductions</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Property Used Predominantly Outside the United
    States.</I>&#160;&#160;We may own and lease assets that are used
    predominantly outside the United States. The cost of these
    assets must be written off for federal income tax purposes using
    the straight-line method of depreciation over a period
    corresponding to the asset&#146;s ADR Class&#160;Life, which
    generally is longer than the
    <FONT style="white-space: nowrap">3-year,</FONT>
    <FONT style="white-space: nowrap">5-year</FONT> or
    <FONT style="white-space: nowrap">7-year</FONT>
    periods permitted for other property. If the asset does not have
    an ADR Class&#160;Life, a
    <FONT style="white-space: nowrap">12-year</FONT>
    period must be used. Certain types of property used
    predominantly outside the United States nevertheless qualify for
    the normal rules discussed above, that is, a shorter depreciable
    life should be allowable. The exceptions include the following:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;aircraft registered in the United States that are
    operated to and from the United States;
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;some railroad rolling stock used within and without the
    United States;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    69
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;vessels documented under the laws of the United States
    that are operated in the foreign or domestic commerce of the
    United States;&#160;and
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;containers owned by a United States taxpayer that are
    used in the transportation of property to and from the United
    States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Tax-Exempt Leasing.</I>&#160;&#160;We may lease assets to
    tax-exempt entities. Property leased to tax-exempt entities,
    called tax-exempt use property, must be written off for federal
    income tax purposes using the straight-line method of
    depreciation. The depreciation period is the longer of
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the asset&#146;s ADR Class&#160;Life, which generally is longer
    than the
    <FONT style="white-space: nowrap">3-year,</FONT>
    <FONT style="white-space: nowrap">5-year</FONT> or
    <FONT style="white-space: nowrap">7-year</FONT>
    periods permitted for property not leased to tax-exempt
    entities;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    125% of the term of the lease, including all options to renew as
    well as some successor leases for the asset.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The definition of a tax-exempt entity includes governmental
    bodies and tax-exempt governmental instrumentalities, tax-exempt
    organizations, some foreign persons and entities and some
    international organizations. The term also generally includes
    organizations that were tax-exempt at any time during the
    five-year period before the organization first uses the property
    involved. Foreign persons or entities are treated as tax-exempt
    entities with respect to property if less than 50% of the income
    derived from the leased property is subject to U.S.&#160;income
    tax.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The term tax-exempt use property does not include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;property that is used predominantly by a tax-exempt
    entity in an unrelated trade or business, if the entity pays
    unrelated business income tax on the income from the trade or
    business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;property leased to a tax-exempt entity under a
    short-term lease, meaning a lease that has a term of either less
    than one year, or less than 30% of the property&#146;s ADR
    Class&#160;Life as long as that is less than three
    years;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;certain high-technology equipment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, under Code Section&#160;470, enacted as part of the
    American Jobs Creation Act of 2004 (the &#147;2004 Tax
    Act&#148;), losses attributable to the leasing of tax-exempt use
    property (including property described in items (2)&#160;and
    (3)&#160;of the immediately preceding paragraph) cannot be
    deducted currently, but must be deferred until there is income
    derived from such property or when the interest therein is
    completely disposed of, unless the lease complies with certain
    requirements. Because these facts depend upon leases that will
    be acquired or entered into in the future, no conclusion can be
    expressed now regarding the possible application of Code
    Section&#160;470 to leases of property to tax-exempt entities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Consequences of Rules&#160;Regarding Depreciation of Assets
    Predominantly Used Outside the U.S.&#160;and Tax-Exempt
    Leasing.</I>&#160;&#160;To the extent that our assets are
    subject to the depreciation rules regarding property used
    outside the United States or regarding tax-exempt use property,
    and to the extent that the loss suspension rules under Code
    Section&#160;470 apply because we have losses attributable to
    tax-exempt use property, a partner will generally have to
    recognize taxable income and may have to pay income tax in
    greater amounts in the early stages of our existence than would
    otherwise have been the case, for at least two reasons. First,
    the longer depreciation periods for assets used predominantly
    outside the United States and tax-exempt use property means that
    the annual depreciation deduction for such property will be
    smaller than otherwise would have been the case, but continue
    longer, thereby increasing net income (or reducing net loss)
    with respect to such property, in the early years, but reducing
    net income (or increasing net loss) in the later years. Second,
    if losses are suspended pursuant to Code Section&#160;470,
    taxable net income is greater (or net loss is less) during the
    period that such loss is suspended than otherwise would have
    been the case, but such taxable net income would be less (or net
    loss would be greater) in later years, when the property to
    which the loss is attributable either produces income or is
    disposed of and the loss can then be taken.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    70
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Deferred
    Payment Leases</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Section&#160;467 of the Code requires both the lessor and lessee
    in certain lease agreements to annually accrue the rent and
    interest on any rental payments that will be paid in the future.
    A Section&#160;467&#160;rental agreement is any rental agreement
    for the use of tangible property that involves total payments in
    excess of $250,000 and either provides for increasing (or
    decreasing) rental payments, or provides that some rent for the
    use of property in a calendar year is payable after the close of
    the following calendar year. In general, the amount of rent that
    must be allocated to a tax year will be determined by the terms
    of the lease. In some circumstances, however, rent will be
    required to be allocated to a year prior to the year in which it
    will be paid, with the exact amount determined based upon
    present-value principles and, in the case of certain rental
    agreements, on a constant, level rate; the present-value amount
    would accrue interest until paid. We may enter into transactions
    that meet the definition of a Section&#160;467 lease agreement,
    which could result in the acceleration of income recognition by
    us prior to receipt of the corresponding cash flow. Another
    consequence would be the conversion of some of our income from
    rental income (passive) to interest income (portfolio) due to
    the deemed time value of money rules.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale or
    Other Disposition of Our Property</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of the different individual tax rates for capital gains
    and ordinary income, the tax code provides various rules
    classifying income as ordinary income or capital gains, and for
    distinguishing between long-term and short-term gains and
    losses. The distinction between ordinary income and capital
    gains is relevant for other purposes as well. For example, there
    are limits on the amount of capital losses that an individual
    may offset against ordinary income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon a sale or other disposition of our assets, we will realize
    gain or loss equal to the difference between the tax basis of
    the asset at the time of disposition and the price received for
    such asset upon disposition. Any foreclosure of a security
    interest in an asset will be considered a taxable disposition,
    and we will realize gain if the face amount of the debt being
    discharged were greater than the tax basis of the asset, even
    though we will not receive cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because our assets are tangible personal property, upon the
    disposition of such assets, all of the depreciation and cost
    recovery deductions taken by us will be subject to recapture to
    the extent of any realized gain. Recapture means that the
    depreciation previously deducted is reversed by recognizing the
    depreciated amounts as ordinary income in the year of the sale
    or other disposition. Recapture cannot be avoided by holding the
    assets for any specified period of time. If we were to sell
    assets on an installment basis, all depreciation recapture
    income would be recognized at the time of sale, even though the
    payments are received in later taxable years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain gains and losses are grouped together to determine their
    tax treatment. The gains on the sale or exchange of certain
    assets, including assets used in a trade or business such as
    that to be owned by us and held for more than one year, are
    added to the gains from some compulsory or involuntary
    conversions. If these gains exceed the losses from such sales,
    exchanges and conversions, the excess gains will be taxed as
    capital gains (subject to the general rules of depreciation
    recapture described above and a special recapture rule described
    below). If the losses exceed the gains, however, the excess
    losses will be treated as ordinary losses. Under a special
    recapture provision, any net gain under this aggregation rule
    will be treated as ordinary income rather than capital gain if
    the taxpayer has non-recaptured net losses, which are net losses
    under this aggregation rule from the five preceding taxable
    years that have not yet been offset against net gains in those
    years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of the nature of our property, we expect that
    substantially all, if not all, of any gain we realize on the
    sale or other disposition of our assets will be treated as
    ordinary income for income tax purposes rather than capital gain.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    71
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Treatment of Lending Activities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Until we have conducted operations for a while, we will not know
    whether our lending activities constitute a trade or business of
    originating, buying, and selling loans. It could be that we will
    not be in the business of originating, buying, and selling
    loans, especially if our loan originations are a small part of
    our lending activity. The Code contains many special rules
    regarding the proper recognition of income, gain, loss,
    deduction and credits. For example, there are specific rules
    concerning the tax treatment of hedging transactions,
    constructive sales treatment for appreciated financial
    positions, and original issue discount. Also, management fees
    incurred for investment activities are not considered trade or
    business expenses. Instead, they are considered investment
    expenses and their deductibility is limited. Thus, if our
    lending activity (or other activity in which we engage) is not a
    trade or business, a portion of the Management Fees and other
    costs incurred by you may be considered investment expenses, the
    deductibility of which is subject to various limitations. In
    addition, your tax treatment of any losses we incur on our loans
    may depend on whether we are in the trade or business of making
    loans. For example, if loans we acquire are not considered to
    have been acquired and held by us in connection with our trade
    or business of lending money, any loss we might incur if a
    borrower or borrowers defaulted on such loans would be a capital
    loss rather than an ordinary loss. With very limited exceptions,
    capital losses can be deducted only against capital gains and
    not against ordinary income. Because the proper tax treatment
    will depend on the specific terms and conditions of the loans we
    originate, buy, and sell, our counsel cannot render an opinion
    on this issue.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale or
    Other Disposition of Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The gain or loss you realize on the sale of our units includes
    the cash or other consideration you receive from the purchaser,
    as well as your share of our non-recourse indebtedness. This
    gain or loss will, except as noted below, be taxed as long-term
    or short-term capital gain or loss, depending on how long you
    hold your units, assuming that your units qualify as capital
    assets in your hands.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The portion of your gain attributable to ordinary income assets
    held by us, which includes inventory and unrealized receivables,
    would be treated as ordinary income. Ordinary income assets
    include assets that are subject to recapture of recovery or
    depreciation deductions, determined as if your proportionate
    share of our assets is sold at the time you sell your units.
    Ordinary income assets also include certain income from
    &#147;market discount bonds&#148; or short-term obligations that
    we may acquire at a discount. Thus, it is likely that most of
    any gain upon the sale of your units will be treated as ordinary
    income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You must promptly notify us of any transfer of your units,
    whether by sale, gift or otherwise. Once we are notified, we are
    required to inform the IRS, the buyer and you of the fair market
    value of the allocable share of unrealized receivables and
    appreciated inventory attributable to the units you sold or
    exchanged. This report must be made on or before January 31
    following the calendar year of sale. There are penalties for
    failure to inform the IRS, and if you fail to notify us of the
    transfer of your units, you will be penalized $50&#160;per
    failure.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Treatment
    of Cash Distributions Upon Redemption or Repurchase</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The redemption or repurchase by us of all or a portion of your
    units will be treated as a sale or exchange of the units for
    income tax purposes and may generate taxable income or loss to
    you. The amount you realize in such redemption or repurchase
    will equal the sum of the cash you receive plus your share of
    our non-recourse liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Simultaneously with your receipt of a cash distribution from us
    in connection with a redemption or repurchase, your share of our
    ordinary income assets will be reduced. You will be treated as
    if you have received the cash, or a portion of the cash, in
    exchange for your share of ordinary income assets. If the
    distribution that is deemed a payment for the ordinary income
    assets exceeds your share of the adjusted basis of the ordinary
    income assets, you must recognize the excess as ordinary income.
    The remainder of the distribution, if any, will be treated in
    the same manner as a distribution (that is, you will recognize
    income only to the extent that the cash distributions exceed
    your adjusted basis in your units). See
    &#147;&#151;&#160;Taxation of
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    72
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Current Distributions.&#148; Thus, our redemption of your units
    may cause you to realize ordinary income and a capital loss.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Gifts of
    Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, no gain or loss is recognized upon the gift of
    property. A gift of units, however, including a charitable
    contribution, may be treated partially as a sale, to the extent
    of your share of our non-recourse liabilities. You may be
    required to recognize gain in an amount equal to the difference
    between your share of non-recourse indebtedness and, in the case
    of a charitable contribution, the portion of the basis in the
    units allocable to that deemed sale transaction. In the event of
    a non-charitable gift, the amount of your share of the
    non-recourse indebtedness is offset by your entire basis in the
    units. Charitable contribution deductions for the fair market
    value of the units will be reduced by the amounts involved in
    such a partial sale and, in any event, may be subject to
    reduction in certain cases by the amount of gain that would be
    taxed as ordinary income on a sale of your units.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequence
    of No Section&#160;754 Election</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of the complexities of the tax accounting required, we
    do not presently intend to file an election under
    Section&#160;754 of the tax code to adjust the basis of our
    assets in the case of transfers of units. As a consequence, a
    person who obtains units from another partner may be subject to
    tax upon the portion of the proceeds of sales of our assets that
    represents a return of capital to that person. This may
    adversely affect the price that potential purchasers would be
    willing to pay for our units. Even if we do not make a
    Section&#160;754 election, however, the Code requires mandatory
    basis adjustments for transfers of interests in partnerships
    with substantial built-in loss (where the adjusted basis of our
    property exceeds the property&#146;s market value by more than
    $250,000). In such instances, the adjusted tax basis of our
    assets will be reduced to their fair market value with respect
    to the transferee partner. Similarly, we will not make any
    adjustments upon redeeming a partner, unless required to under
    the Code.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Treatment of Our Termination Pursuant to Our Partnership
    Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When we terminate pursuant to our partnership agreement, we are
    required to dispose of our assets, apply the proceeds and other
    funds to repayment of our liabilities and generally distribute
    any remaining funds to our partners first to the extent of any
    unreturned capital contributions and thereafter in the same
    manner as current distributions. Provided that such termination
    does not occur very early during our existence, we expect that
    the distributions to our limited partners (including our General
    Partner to the extent it owns units) upon such termination will
    be proportionate based on the number of units owned by each
    limited partner as of the liquidation date because of the manner
    in which Profits and Losses are allocated among our limited
    partners during our early fiscal years. Sales and other
    dispositions of our assets would have the tax consequences
    described in &#147;&#151;&#160;Sale or Other Disposition of Our
    Property.&#148; Cash distributions made at liquidation that
    exceed the tax basis of your interest in us generally would be
    taxable as capital gain, provided your units constitute capital
    assets in your hands. Cash distributions in amounts less than
    your basis may result in a loss, generally a capital loss, which
    would be subject to the general limitations on deductibility of
    capital losses.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Audit by
    the IRS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No tax rulings have been sought by us from the IRS. While we
    (and any joint ventures in which we participate) intend to claim
    only those deductions and assert only those tax positions for
    which there is at least substantial authority, the IRS may audit
    our returns or any joint venture we are involved in, and it may
    not agree with some or all of the tax positions our General
    Partner takes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An audit of our information return may result in an increase in
    our income, the disallowance of deductions, or the reallocation
    of income and deductions among our partners. In addition, an
    audit of our information return may lead to an audit of your
    personal income tax return, which could lead to adjustments of
    items unrelated to this investment.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    73
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You must report your share of our income, gains, losses,
    deductions and credits on your individual return in a manner
    consistent with our return, even if the
    <FONT style="white-space: nowrap">Schedule&#160;K-1</FONT>
    we send to you reports the item differently unless you file a
    statement with the IRS identifying the inconsistency, or unless
    you can prove your return is in accordance with information
    provided by us. Failure to comply with this requirement will
    subject you to penalties and may result in an extended time
    period for the IRS to challenge your return.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In most circumstances, the federal tax treatment of the income,
    gains, losses, deductions and credits of a partnership will be
    determined at the limited partnership level in a unified
    partnership proceeding, rather than in separate proceedings with
    its partners. In any audit of a partnership, the IRS will deal
    with the partnership&#146;s &#147;tax matters partner.&#148; Our
    General Partner is designated as our tax matters partner in our
    partnership agreement. Only limited partners having at least a
    1% interest in us will be entitled to receive a separate notice
    from the IRS of any audit of our return and of the results of
    the audit. Limited partners who have an interest of less than 1%
    will not be entitled to notice from the IRS; however, groups of
    limited partners who together own a 5% or greater interest in us
    may, by notification to the IRS, become a &#147;notice
    group&#148; and designate a limited partner of their group to
    receive IRS notices. All limited partners have the right to
    participate in any audit of us. We are required to keep you
    informed of any administrative and judicial proceedings
    involving our tax matters. Also, we will keep you advised of any
    significant audit activities with respect to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As the tax matters partner, our General Partner is authorized to
    enter into settlement agreements with the IRS that are binding
    upon limited partners with less than a 1% interest, except for
    those who belong to a notice group or who have filed a statement
    with the IRS that we do not have authority to enter into
    settlement agreements that are binding upon them. You are
    entitled to have any favorable settlement agreement reached
    between the IRS and another limited partner with respect to our
    item applied to you. Our tax matters partner also may extend the
    statute of limitations period with respect to our tax matters.
    Note that the statute of limitations for the IRS to adjust your
    partnership items is generally the longer of your personal
    statute of limitations or the partnership&#146;s statute of
    limitations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement empowers our General Partner to
    conduct, on behalf of us and our limited partners, all
    examinations by tax authorities relating to us at our expense.
    See &#147;Summary of Our Partnership Agreement.&#148; A tax
    controversy could result in substantial legal and accounting
    expenses being charged to us, even if the outcome is favorable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Alternative
    Minimum Tax</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some taxpayers must pay an alternative minimum tax
    (&#147;AMT&#148;) if the AMT exceeds the taxpayer&#146;s regular
    federal income tax liability for the year. For non-corporate
    taxpayers, the AMT is imposed on alternative minimum taxable
    income (&#147;AMTI&#148;) that is above an exemption amount. The
    AMTI is based on a different computation of taxable income,
    which is increased by tax preference items, and other
    adjustments to taxable income are made. The principal adjustment
    associated with an investment in our units relates to
    depreciation or cost recovery deductions. In this case
    depreciation deductions are limited to those that do not exceed
    those calculated using the 150% declining balance method.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not anticipate that any significant tax preference items
    will be generated by us. You should be aware, however, that, for
    purposes of computing AMTI, interest you pay to acquire or
    maintain an ownership interest in a passive activity (such as
    our units) is deductible only to the extent that the interest
    payments, when added to your passive activity income or loss and
    computed with the appropriate alternative minimum tax
    adjustments and tax preferences, does not result in a passive
    activity loss. Accordingly, if you borrow money and incur
    interest expense in connection with your purchase of our units,
    you may only be allowed a limited deduction for that interest in
    calculating AMTI.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, if our lending activity is characterized as an
    investment activity rather than as a trade or business, a
    portion of our Management Fees and other costs you incur could
    be considered investment expenses and not trade or business
    expenses. Investment expenses are not deductible for AMTI
    purposes.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    74
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rules relating to the alternative minimum tax for
    corporations are different than those just described.
    Corporations contemplating purchase of our units should consult
    their tax advisors as to the possible AMT consequences of
    investing in our units.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Interest
    Expense</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In general, interest paid in connection with investment
    activities is deductible only against investment income.
    Interest paid in connection with investments in passive
    activities, such as in an investment in our units, may only be
    deducted in accordance with the rules for losses derived from
    passive activities, except to the extent allocable to portfolio
    income. As stated above, our activities will include both
    passive activities and non-passive activities. Thus, any
    interest expense you incur may need to be bifurcated between our
    passive activities and our non-passive activities when
    determining its deductibility on your personal return. See
    &#147;&#151;&#160;Deductibility of Losses; Passive Activity
    Losses, Tax Basis and &#147;At-Risk&#148; Limitation.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Interest paid by us will be allocated among our leasing
    activities, reserves and lending activities according to IRS
    rules that (subject to certain presumptions) look to how we used
    the money we borrowed. To the extent allocated to the assets
    that we lease, such interest will likely be treated as passive
    activity interest. Interest allocable to our reserves or to
    loans we make will likely be treated as investment expense and
    deductible only to the extent of investment income. Interest on
    money you borrow in order to purchase a unit will have to be
    allocated among these same categories. However, because we will
    enter into net leases, the IRS might also argue that the portion
    of interest expense we incur or that is incurred by you on
    monies borrowed to purchase our units attributable to such
    leases might be investment interest expense and deductible only
    to the extent of investment income. We may enter into
    transactions involving the prepayment of interest or the payment
    of points, commitment fees and loan origination or brokerage
    fees. In general, prepaid interest, points and similar costs may
    not be deducted currently; they usually have to be capitalized
    and expensed over the life of the related loan.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Self-Employment
    Tax</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under Code Section&#160;1402(a)(13), limited partners in limited
    partnerships are not subject to self-employment tax with respect
    to their distributive share of income or loss of a limited
    partnership other than with respect to guaranteed payments to a
    partner for services actually rendered to or on behalf of the
    partnership. Thus, an individual limited partner&#146;s
    distributive share of our income, gain, loss, deduction, or
    credit is not included in the individual&#146;s net earnings
    from self-employment for purposes of calculating the
    self-employment tax.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limited
    Deductions for Activities Not Engaged in for Profit</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ability to take deductions for activities not engaged in for
    profit is limited. The law presumes that an activity is engaged
    in for profit if the gross income from the activity exceeds the
    deductions from the activity in at least three out of five
    consecutive years, ending with the tax year at issue. We intend
    to operate for the purpose of providing an economic profit and
    anticipate that we will have sufficient income to entitle us to
    the benefit of the presumption that we operate for profit. If
    the IRS were to treat our activities as not being engaged in for
    profit, any deductions of ours in excess of our income might be
    permanently disallowed.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Foreign-Source
    Taxable Income</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Rental income and interest received by us from sources in
    foreign countries could be subject to withholding
    <FONT style="white-space: nowrap">and/or</FONT>
    income taxes imposed by those countries. In addition, gains on
    the sale of our assets also may be subject to taxes in foreign
    countries where we sell assets. Tax treaties between some
    countries and the United States may reduce or eliminate such
    taxes. Our foreign activities, however, may require you to file
    tax returns in foreign countries. We cannot predict what tax
    rate our income will be subject to in other countries, since the
    amount and type of our investments in various countries is not
    known.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will inform you of your proportionate share of any foreign
    income and the foreign taxes, if any, paid by us. You will then
    be required to include these items on your tax return. At your
    option, you generally will
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    75
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    be entitled to claim either a credit (subject to the limitations
    discussed below) or, if you itemize your deductions, a deduction
    (subject to the limitations generally applicable to deductions)
    for your share of foreign taxes in computing your federal income
    taxes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, a credit for foreign taxes may not exceed the federal
    tax liability attributable to your total foreign-source taxable
    income. Your share of our rental and interest income
    attributable to assets used outside the United States or loans
    made to foreign persons generally will qualify as foreign-source
    income, and the source of income from the sale of assets will
    usually be attributed to the location of the asset. Several
    limits apply to the foreign tax credit. The credit is applied
    separately to different types of foreign-source income,
    including foreign-source passive income like interest income,
    and special limits also apply to income from the sale of capital
    assets. Furthermore, in calculating the foreign tax credit
    limitation, the amount of your foreign-source income is reduced
    by various deductions that are allocated
    <FONT style="white-space: nowrap">and/or</FONT>
    apportioned to the foreign-source income. One such deduction is
    interest expense, a portion of which will generally reduce the
    foreign-source income of any limited partner who owns foreign
    assets, either directly or indirectly. For these purposes,
    foreign assets owned by us will be treated as owned by our
    limited partners, and indebtedness incurred by us will be
    treated as incurred by limited partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of these limits, you may be unable to claim credit for
    the full amount of your proportionate share of the foreign taxes
    attributable to our income. In addition, any foreign losses
    generated by us could reduce the tax credits available to you
    from foreign-source income unrelated to us. The foregoing is
    only a general description of the foreign tax credit under
    current law. Since the availability of a credit or deduction
    depends on your particular circumstances, we advise you to
    consult your own tax advisor.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Registration,
    Reportable Transactions, Interest and Penalties</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Tax Shelter Registration and Reportable
    Transactions.</I>&#160;&#160;The Code imposes disclosure and
    list maintenance obligations for persons that participate in
    listed and reportable transactions. In general, listed and
    reportable transactions are those that the IRS views as having
    substantial potential for tax avoidance or evasion. By category,
    reportable transactions include listed transactions,
    confidential transactions, transactions with contractual
    protection, transactions that result in substantial losses, and
    transactions of interest. The Treasury Regulations define
    &#147;transaction&#148; as including &#147;all of the factual
    elements relevant to the expected tax treatment of any
    investment, entity, plan, or arrangement, and includes any
    series of steps carried out as part of a plan.&#148; Of the
    various reportable transaction categories that could apply to
    us, it is possible that the threshold of the gross
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    losses contemplated by the loss transaction reportable
    transaction category may be experienced by us or our partners
    (including the $2,000,000 in any one year, or $4,000,000 over
    any combination of years thresholds for a partnership that does
    not have only &#147;C&#148; corporations as partners). If an
    investment in our units or our investment in a specific asset or
    group of assets were considered to be a reportable transaction,
    then our partners would be required to adequately disclose such
    transactions on their income tax return and we would be required
    to disclose such transactions on our information return. We do
    not expect that, under current regulations, an investment in our
    units or our investments in assets will constitute reportable
    transactions, because it is expected that the requisite
    magnitude of losses, if any, will not be incurred, and the
    disclosure and list maintenance requirements for such
    transactions are therefore not applicable. It is possible,
    however, that we may lease a asset or group of assets that
    experience losses that meet the threshold or we may incur losses
    exceeding the threshold in a lending transaction subject to
    these rules. Nevertheless, because we have not yet made any
    investments, we do not know whether any of our transactions
    would be reportable transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Interest on Underpayments.</I>&#160;&#160;The interest that
    taxpayers must pay for underpayment of federal taxes is the
    federal short-term rate plus three percentage points, compounded
    daily. The federal short-term rate is set quarterly by the
    Treasury Department based on the yield of U.S.&#160;obligations
    with maturities of three years or less.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Penalty for Substantial Understatements or Understatements
    Attributable to Reportable Transactions.</I>&#160;&#160;The tax
    code also contains a penalty for substantial understatement of
    federal income tax liability equal to 20% of the amount of the
    understatement; and a penalty on the understatement of tax
    attributable to a
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    76
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    reportable transaction equal to 20% of the understatement (30%
    if the transaction is not disclosed) whether or not the
    taxpayer&#146;s total understatement is substantial. An
    understatement occurs if the correct tax for the year (as
    finally determined after all administrative and judicial
    proceedings) exceeds the tax liability actually shown on the
    taxpayer&#146;s returns for the year. An understatement on an
    individual&#146;s return will be considered substantial for
    purposes of the penalty if it exceeds both (a)&#160;10% of the
    correct tax and (b)&#160;$5,000. The imposition of this penalty
    may be avoided however if, in the case of any item that is not
    attributable to a reportable transaction, (a)&#160;there was
    substantial authority for the taxpayer&#146;s treatment of the
    item, or (b)&#160;the relevant facts affecting the item&#146;s
    tax treatment were adequately disclosed in the taxpayer&#146;s
    return, provided that the taxpayer had a &#147;reasonable
    basis&#148; for the tax treatment of such item. In the case of
    an item that is attributable to a reportable transaction, the
    penalty may be avoided if (a)&#160;all the relevant facts
    affecting the tax treatment of the item are adequately disclosed
    on the foregoing return, (b)&#160;there was substantial
    authority for the taxpayer&#146;s treatment of the item and
    (c)&#160;the taxpayer reasonably believed that his treatment of
    the item on the return was more likely than not the proper
    treatment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any of our transactions constitute reportable transactions,
    you may receive from us a copy of Form&#160;8886, which is used
    to disclose such transactions to the IRS. You should consult
    with your own tax advisor as to the reporting on your own tax
    returns of that form and the information that it contains.
    Failure of a limited partner to report such information may
    result in a penalty for that limited partner.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">State and
    Local Taxation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the federal income tax consequences described
    above, you should consider potential State and local tax
    consequences of this investment. Your share of our taxable
    income or loss generally will be included in determining
    reportable income for State or local tax purposes in the
    jurisdiction where you reside. In addition, other states in
    which we own assets or do business may require you to file State
    income tax returns and may impose taxes on your pro rata share
    of our income derived from that State. Any tax losses generated
    by our operations in such States may not be available to offset
    income from other sources in other States. To the extent that
    you pay tax to a State by virtue of our operations within that
    State, you may be entitled to a deduction or credit against tax
    owed to your State of residence with respect to the same income.
    If you itemize deductions for federal income tax purposes, your
    payment of State and local taxes will constitute a deduction for
    federal income tax purposes. We advise you to consult your own
    tax advisor to determine the effect of State and local taxes,
    including gift and death taxes as well as income taxes, which
    may be payable in connection with this investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Treatment of Certain Trusts and Estates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tax treatment of trusts and estates can differ from the tax
    treatment of individuals. Investors who are trusts and estates
    should consult with their tax advisors regarding the
    applicability of the tax rules discussed in this section.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Tax-Exempt Organizations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Charitable and other tax-exempt organizations, including
    qualified pension plans and individual retirement accounts, are
    subject to the unrelated business income tax. Under the Code, a
    charitable remainder trust that has unrelated business taxable
    income is subject to an excise tax equal to 100% of such income.
    Tax-exempt investors will be deemed to be engaged in the
    business carried on by us and will be subject to the unrelated
    business income tax. Income from our leasing activities will
    constitute UBTI. In addition, to the extent that we are
    considered to have financed our lending activities with borrowed
    funds, our income from such activities also will constitute
    UBTI. We do not expect to finance our lending activities with
    borrowed funds; however, the test linking a partnership&#146;s
    debt with an activity is broad and is subject to a facts and
    circumstances test. For example, the IRS has taken the position
    that a partnership that has invested all of its cash and then
    needs to finance its working capital has debt-financed income
    for purposes of the UBTI rules. Thus, even though we do not
    intend to borrow to finance our lending activities, future
    operations could give rise to an IRS challenge that we have
    generated debt-financed income. Further, to the extent that the
    IRS could successfully assert that a portion of the money we
    borrowed to finance our leasing activities should instead be
    attributed to our
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    77
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    lending activities, the portion of our income that constitutes
    UBTI would be increased. This is because rental income, such as
    the income we derive from the leasing of personal property,
    constitutes UBTI whether we finance it from our capital or from
    borrowings. However, interest income we derive from our lending
    activities constitutes UBTI only if we generate it using
    borrowed funds. Thus, our UBTI increases proportionately with
    the amount of any increase to the amount of our debt allocated
    to our lending activities. Because the proper tax treatment will
    depend upon the specific terms and conditions of our future
    borrowings and the uses of the cash from borrowings, our counsel
    cannot render an opinion on this issue. Such investors should
    consult with their tax advisors regarding the tax consequences
    to them of investing in our units. In addition, exempt investors
    that are required to distribute a certain portion of their
    assets every year, such as IRAs and 401(k) plans subject to the
    mandatory distribution requirements, should consider the fact
    that there will not be any market for our units when determining
    their ability to satisfy such mandatory distribution
    requirements.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Corporate
    Investors</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The federal income tax consequences to investors that are
    corporations may differ materially from the tax consequences
    discussed in this section, particularly as they relate to the
    alternative minimum tax. Such investors should consult with
    their tax advisors as to the tax consequences to them of this
    investment.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    THE U.S.&#160;FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
    INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
    DEPENDING UPON A PROSPECTIVE INVESTOR&#146;S PARTICULAR
    SITUATION. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX
    ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
    OWNERSHIP AND DISPOSITION OF THE UNITS, INCLUDING THE TAX
    CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    78
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='169'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    BY QUALIFIED PLANS AND IRAS</FONT></B>
</DIV>

</A>
<A name='170'>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Fiduciaries
    under ERISA</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the federal law commonly known as ERISA, fiduciaries of
    certain employee benefit plans (generally tax qualified plans)
    must act solely for the benefit of the plan&#146;s participants
    and beneficiaries. A fiduciary must:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    perform its duties with the skill, prudence and diligence of a
    prudent person;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    diversify the plan&#146;s investments so as to minimize the risk
    of large losses;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    act in accordance with the plan&#146;s governing documents.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fiduciaries include anyone who exercises any control over the
    management of the Funds or other property of the plan. In
    addition, a plan participant who exercises control over his or
    her individual account in the qualified plan under a
    self-directed investment arrangement will generally be held
    responsible for the consequences of his or her investment
    decisions. Although IRAs generally are not subject to
    ERISA&#146;s fiduciary duty rules, they, as well as IRAs and
    self-directed accounts, are subject to the IRS&#146;s prohibited
    transaction rules, which are discussed below.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>We urge each fiduciary of an IRA or a qualified plan to
    consider these rules in the context of the particular
    circumstances of the IRA or the qualified plan before purchasing
    our units.</I>
</DIV>

<A name='171'>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Prohibited
    Transactions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    ERISA and the Code prohibit qualified plans and IRAs from
    engaging in certain transactions involving their assets, which
    are referred to as &#147;prohibited transactions,&#148; with
    certain parties, which are referred to as &#147;parties in
    interest&#148; or &#147;disqualified persons,&#148;
    respectively. For purposes of this discussion, such persons will
    be referred to as &#147;disqualified persons&#148; only.
    Disqualified persons generally include:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fiduciaries or other service providers of the qualified plan or
    IRA;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an employer whose employees are covered by the Plan&#146;s IRA;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    certain employers, officers, directors, certain shareholders and
    other owners of the company sponsoring the qualified
    plan;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    persons and legal entities sharing certain family or ownership
    relationships with other disqualified persons.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the beneficiary of an IRA is generally considered
    to be a disqualified person for purposes of the prohibited
    transaction rules. Types of prohibited transactions include; for
    example:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sale, exchange or leasing of property between a plan and a
    disqualified individual;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    direct or indirect transfers of a qualified plan&#146;s or IRAs
    assets to, or use by or for the benefit of, a disqualified
    person;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the use of a qualified plan&#146;s or IRAs assets by a fiduciary
    for his or her personal benefit;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a fiduciary receiving cash or other consideration for his or her
    own benefit from a third-party in connection with a transaction
    involving the assets of the qualified plan or the IRA.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under ERISA, a fiduciary person that engages in a prohibited
    transaction must return any profits to the plan and pay back any
    losses to the plan. Also, the Code imposes excise taxes on a
    disqualified person that engages in a prohibited transaction.
    These prohibited transactions generally must be undone by the
    disqualified person to avoid additional penalties. In addition,
    if a taxpayer engages in a prohibited transaction with an IRA in
    which he or she is a beneficiary, the IRA will cease being an
    IRA and all of its assets will be treated as if they had been
    distributed to the taxpayer in the year in which the prohibited
    transaction occurred, which may result in additional penalties
    to the taxpayer.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    79
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to the rules discussed below, in order to avoid a
    prohibited transaction under the Code or ERISA, our units may
    not be purchased by a qualified plan or an IRA with funds or
    other assets for which we or any of our affiliates are
    fiduciaries or other disqualified persons.
</DIV>

<A name='172'>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Plan
    Assets</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In some circumstances, ERISA applies a look-through rule under
    which the assets of an entity in which a qualified plan or IRA
    has invested are deemed to be the assets of the qualified plan
    or the IRA itself. If our assets were determined to be plan
    assets, then fiduciaries of the qualified plans and IRA&#146;s
    that purchase our units might be subject to liability for
    actions that we take. In addition, some of the transactions
    described in this prospectus in which we might engage, including
    transactions with our affiliates, may be prohibited
    transactions. Moreover, fiduciaries of qualified plans or
    IRA&#146;s subject to ERISA&#146;s fiduciary duty rules that
    purchase our units might be deemed to have improperly delegated
    their fiduciary responsibilities to us. ERISA, however, exempts
    certain investments from the look-through rule. Under the
    Department of Labor&#146;s current regulations, our assets will
    not be treated as plan assets of a qualified plan or IRA limited
    partner if:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our units are publicly offered, which means that among other
    things our units must be &#147;freely transferable&#148; and
    part of a class of units that is &#147;widely held&#148; as
    those terms are defined by ERISA;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    less than 25% of the value of any class of our units are owned
    by qualified plans, IRA&#146;s, and certain other employee
    benefit investors;&#160;or
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we are an operating company.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot be certain that our units will be deemed to be freely
    transferable or that they will be widely held under the
    regulation, or that we will be deemed to be an operating
    company, because those issues involve factual determinations.
    Therefore, we will rely on the &#147;less than 25%&#148;
    ownership exemption, and we will ensure that qualified plans,
    IRA&#146;s, and certain other employee benefit plan investors at
    all times own less than 25% of the total value of each class of
    our outstanding units. In making this determination, we will, as
    provided in the Department of Labor&#146;s regulations,
    disregard the value of any units held by (i)&#160;our General
    Partner or our Investment Manager or other person (other than a
    benefit plan investor), who has discretionary authority or
    control with respect to our assets, (ii)&#160;any person who
    provides investment advice for a fee with respect to our assets,
    and (iii)&#160;any affiliate of those persons.
</DIV>

<A name='173'>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Other
    ERISA Considerations</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the considerations described above in connection
    with the &#147;plan asset&#148; issue, a fiduciary&#146;s
    decision to cause a qualified plan or IRA to purchase our units
    should involve, among other factors, considerations that include
    whether:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the purchase is prudent in light of the illiquid nature of our
    units and potential minimum required distributions from the plan
    or IRA;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the investment will provide sufficient cash distributions in
    light of required benefit payments and other needs for liquidity;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the evaluation of the investment has properly taken into account
    the potential costs of determining and paying any amounts of
    federal income tax that may be owed on unrelated business
    taxable income derived from us;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the fair market value of our units will be sufficiently
    ascertainable, and with sufficient frequency, to enable the
    qualified plan or IRA to value its assets in accordance with the
    rules and policies applicable to the qualified plan or IRA.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    80
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='174'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT&#146;S
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will depend on our offering proceeds to carry on our proposed
    activities. We intend to use the offering proceeds, after paying
    the fees and expenses associated with our organization and this
    offering and to fund a capital reserve, to invest in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as full payout or operating
    leases. In addition, we intend to invest by way of participation
    agreements and residual sharing agreements where we would
    acquire an interest in a pool of equipment or other assets, or
    rights to those equipment or other assets, at a future date. We
    also may structure investments as project financings that are
    secured by, among other things, essential use equipment
    <FONT style="white-space: nowrap">and/or</FONT>
    assets. Finally, we may use other investment structures that our
    Investment Manager believes will provide us the appropriate
    level of security, collateralization, and flexibility to
    optimize our return on investment while protecting against
    downside risk. In most cases, the structure will include us
    holding title to or a priority position in the equipment or
    other asset.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Initially, we intend to establish working capital reserves of
    approximately 1.0% of our offering proceeds, which we believe
    will be sufficient to satisfy our liquidity requirements.
    However, our operating costs will adversely affect our liquidity
    and to the extent that our working capital reserves are
    insufficient to satisfy our cash requirements, we will increase
    our reserve requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fluctuations in prevailing interest rates will affect us,
    because the cost of capital as reflected in interest rates is a
    significant factor in determining the market rate for our
    leases. Higher interest rates will:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce our yield on leveraged investments;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the amount of financing we may be able to obtain because
    of a reduction in value of our fixed-rate leases and secured
    financings.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Interest rate changes generally will result in corresponding
    changes in rates on new leases as well as variable rate
    financing or new financing. Except as discussed above, interest
    rate fluctuations would generally have little or no effect on
    amounts payable under existing leases as their rates would
    generally be fixed.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    81
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='175'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SUMMARY
    OF OUR PARTNERSHIP AGREEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following is a brief summary of the material provisions
    of our partnership agreement that are not covered elsewhere in
    this prospectus. The partnership agreement sets out the terms
    and conditions on which we will conduct our business and
    affairs, including the rights and obligations of you and our
    other limited partners. A copy of our partnership agreement is
    included as Appendix&#160;A to this prospectus. You should read
    the entire partnership agreement carefully before purchasing our
    units.</I>
</DIV>

<A name='176'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a Delaware limited partnership formed with SQN AIF III
    GP, LLC as our General Partner. Our registered office in
    Delaware is
    <FONT style="white-space: nowrap">c/o&#160;The</FONT>
    Company Corporation, 2711 Centerville Road, Suite&#160;400,
    Wilmington, Delaware 19998. We may change our registered office
    place of business by written notice to you. Our General
    Partner&#146;s offices are located at 48 Wall Street,
    24th&#160;Floor, New York, New York 10005.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our term began when we filed a certificate of limited
    partnership with the Delaware Secretary of State on
    March&#160;10, 2010. Under our partnership agreement, we will
    terminate at midnight on December&#160;31, 2034, or earlier if a
    dissolution event occurs as described in &#147;&#151; Events
    Causing Dissolution,&#148; below. However, our General Partner
    anticipates that our actual term before we cease operations as a
    limited partnership and liquidate our assets will be much
    shorter, approximately seven years after the date of this
    prospectus.
</DIV>

<A name='177'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Capital
    Contributions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner contributed $100 in cash as its capital
    contribution to us in exchange for a 1% interest in our income,
    losses and cash distributions. Each limited partner and our
    General Partner and its affiliates will contribute $1,000 to our
    capital for each unit purchased. You and our other limited
    partners are not obligated to make additional capital
    contributions to us, except as described below under
    &#147;&#151; Limited Liability of Limited Partners.&#148;
</DIV>

<A name='178'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Powers of
    our General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as otherwise specifically provided in our partnership
    agreement, our General Partner will have complete and exclusive
    discretion in the management of our business. You will not be
    permitted to participate in our management. Except to the extent
    limited by Delaware law, our General Partner may delegate any or
    all of its duties under the partnership agreement to another
    person, including any of its affiliates or independent
    third-parties. The partnership agreement designates our General
    Partner as our tax matters partner and directs it to represent
    us and you and our other limited partners in all examinations
    and proceedings of our affairs by tax authorities, and to expend
    our funds in doing so.
</DIV>

<A name='179'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liability
    of Our General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner will be liable for all of our general
    obligations to the extent we do not pay them. However, our
    General Partner will not have any personal liability for:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obligations that are specifically nonrecourse to us;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the repayment of your capital contribution.
</TD>
</TR>

</TABLE>

<A name='180'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limited
    Liability of Limited Partners</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units are not assessable, and you will not have any personal
    liability for any of our obligations or liabilities. You will
    only be liable for our obligations and liabilities to the extent
    of your capital contribution and your pro rata share of our
    undistributed profits and other assets. However, if you
    participate in the management or control of our affairs, you may
    be deemed under Delaware law to be acting as a general partner
    and you may lose your limited liability as against third-parties
    who reasonably believe, in doing business with us, that you are
    a general partner. In addition, Delaware law provides that you
    may be liable to
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    82
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    us for a distribution we make to you if, after giving effect to
    the distribution, our liabilities exceed the fair value of our
    assets.
</DIV>

<A name='181'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Withdrawal
    or Removal of Our General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner may not voluntarily withdraw as our General
    Partner without:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    60&#160;days&#146; advance written notice to you and our other
    limited partners;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtaining an opinion of counsel that the withdrawal will not
    cause our termination as a limited partnership or materially and
    adversely affect our federal tax status as a
    partnership;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the selection of a substitute general partner by limited
    partners owning a majority of our units.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner may be removed by limited partners owning a
    majority of our units. Neither our General Partner nor any of
    its affiliates may participate in any vote by our limited
    partners to remove our General Partner as general partner or
    appoint a substitute general partner.
</DIV>

<A name='182'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Withdrawal or Removal of Our General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On the withdrawal or removal of our General Partner, we must pay
    our General Partner the fair market value of its partnership
    interest, plus or minus, as the case may be, accrued but unpaid
    fees owed to our General Partner by us and the difference
    between any other amounts owed to our General Partner by us and
    any amounts owed to us by our General Partner. The method of
    payment must be fair and protect our solvency and liquidity. The
    method of payment is deemed fair if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in a voluntary withdrawal, it provides for a non-interest
    bearing unsecured promissory note with principal payable only
    from distributions from us that our General Partner otherwise
    would have received;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in an involuntary removal, it provides for a rate of interest
    equal to the lesser of the rate we would obtain from an
    unrelated bank lender for an unsecured
    <FONT style="white-space: nowrap">60-month</FONT>
    loan or the &#147;Prime Rate&#148; of interest published in the
    Money Rates section of the Wall Street Journal, plus 4%, and
    provides for payment of principal and interest in 60 equal
    monthly installments.
</TD>
</TR>

</TABLE>

<A name='183'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liability
    of Withdrawn or Removed General Partner</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After the withdrawal or removal of our General Partner as our
    General Partner, it will remain liable for all obligations and
    liabilities incurred by it or by us while it was acting as our
    General Partner and for which it was liable as our General
    Partner. Our General Partner will be free of any obligation or
    liability arising from our activities after the time its
    withdrawal or removal becomes effective.
</DIV>

<A name='184'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There is no public or secondary market for our units, and we do
    not expect that a market will develop. Generally, you may
    transfer or assign your units to any person, whom we call an
    assignee, only if you satisfy the following conditions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you and the assignee sign a document that our General Partner
    reasonably determines satisfies the following:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    states your intention that the assignee is to become a
    substitute limited partner, if that is the case;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    shows that there is a legal transfer and binds the assignee to
    all of the terms and provisions of our partnership agreement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    includes a representation by both you and the assignee that the
    assignment or transfer complies with all applicable laws,
    including the applicable minimum investment and investor
    suitability requirements under state securities laws;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the assignee pays us a fee that will not exceed $150 for our
    expenses.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    83
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also, unless our General Partner consents, no units may be
    assigned:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to a minor or incompetent unless a guardian, custodian or
    conservator has been appointed for the person;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to any person if, in our counsel&#146;s opinion, the assignment
    would terminate our taxable year or adversely affect our status
    as a limited partnership for federal income tax purposes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to any person if, in our counsel&#146;s opinion, the assignment
    would affect our existence or qualification as a limited
    partnership under Delaware law or the laws of any other
    jurisdiction in which we conduct business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to any person not permitted, in our counsel&#146;s opinion, to
    be an assignee under applicable law, including federal and state
    securities laws;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the assignment is for less than 25&#160;units unless the
    assignment is for all of your units;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the assignment would result in your keeping a portion of your
    units that is less than the greater of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    25&#160;units;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#150;&#160;
</TD>
    <TD align="left">
    the minimum number of units required to be purchased under the
    minimum investment standards applicable under the state
    securities laws to your initial purchase of units;&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if, in our counsel&#146;s opinion, the effect of the assignment
    would be to cause the equity participation in us by certain
    benefit plan and IRA investors to equal or exceed 25% of the
    value of any class of our total outstanding units at any time.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any attempt to assign or transfer units in violation of our
    partnership agreement or applicable law will be ineffective. We
    will recognize assignments of units as of the last day of the
    month in which all conditions to the assignment have been
    satisfied, and we will amend our partnership agreement at least
    quarterly to effect the substitution of substitute limited
    partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, our partnership agreement provides that so long as
    there are adverse federal income tax consequences from being
    treated as a publicly traded partnership, in our counsel&#146;s
    opinion, we will not permit any interest in a unit to be
    assigned or sold which does not meet at least one of the
    &#147;secondary market&#148; safe harbors set forth in the
    Treasury Regulations. Under these rules, for example, any
    transfer that would cause the total of all unit transfers or
    assignments in a taxable year (including any redemptions of
    units by us) to exceed 2% of our total capital or profits
    interests, excluding exempted private transfers, would be
    prohibited. We anticipate that the &#147;private transfers&#148;
    and the 2% &#147;lack of actual trading&#148; safe harbors will
    be the only safe harbors potentially available to you and our
    other limited partners. For a more detailed summary of these
    safe harbors, see the &#147;Material U.S.&#160;Federal Income
    Tax Consequences&#160;&#151; Publicly Traded Partnership&#148;
    section of this prospectus. If we determine that a purported
    transfer or assignment of a unit was effected on a secondary
    market, we have the right to refuse to recognize the proposed
    transfer or assignment and take any action we deem necessary or
    appropriate so that the proposed transfer or assignment is not
    in fact recognized. Also, you must provide us with all
    information with regard to any transfer or assignment of your
    units (or any proposed transfer or assignment of your units)
    that we deem necessary to determine whether it occurred or will
    occur on a secondary market.
</DIV>

<A name='185'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Redemption
    of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are permitted by the partnership agreement to redeem your
    units on your request at any time. However, any redemption of
    units is in our General Partner&#146;s sole discretion. For a
    more complete discussion of the redemption of units, you should
    read the &#147;Redemption of Units&#148; section of this
    prospectus.
</DIV>

<A name='186'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Books and
    Records</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will maintain our books and records at our General
    Partner&#146;s principal office. You or your representative will
    have the right, on written request, subject to reasonable notice
    and at your own expense, to inspect and copy, at our General
    Partner&#146;s principal office, any partnership books and
    records that we
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    84
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    maintain. You also will have the right to have a copy of a list
    of our limited partners (the &#147;Participant List&#148;
    described below) mailed to you for a reasonable copying charge.
    However, you must first certify that the list will not be:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reproduced and sold to another party;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    used for any commercial purpose unrelated to your interest in
    partnership matters;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    used for an unlawful purpose.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Participant List is an alphabetical list of the names,
    addresses, and business telephone numbers of our limited
    partners along with the number of units held by each of them.
    The Participant List is maintained as part of our books and
    records, and will be updated at least quarterly to reflect
    changes in the information it contains.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we or our General Partner neglect or refuse to exhibit,
    produce, or mail a copy of the Participant List as requested,
    our General Partner will be liable to any limited partner
    requesting the list for the costs, including attorneys&#146;
    fees, incurred by that limited partner for compelling the
    production of the Participant List, and for actual damages
    suffered by any limited partner by reason of such refusal or
    neglect. It is a defense that the actual purpose and reason for
    the request for inspection or for a copy of the Participant List
    is to secure the Participant List or other information for the
    purpose of selling the list or copies of the list, or using the
    list or other information for a commercial purpose other than in
    the interest of the applicant as a limited partner relative to
    our affairs. Thus, our General Partner will require the limited
    partner requesting the Participant List to first represent that
    the list is not being requested for a commercial purpose
    unrelated to the limited partner&#146;s interest in us. The
    remedies provided to our limited partners requesting copies of
    the Participant List are in addition to, and do not in any way
    limit, other remedies available to our limited partners under
    federal law or the laws of any state.
</DIV>

<A name='187'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Meetings
    of Limited Partners</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There will be no annual or other periodic meetings of the
    limited partners. However, a meeting of our limited partners
    must be called by our General Partner following its receipt of
    written request(s), either in person or by registered mail, for
    a meeting on any matter on which our limited partners may vote
    from limited partners holding 10% or more of the then
    outstanding units. Every request by our limited partners for a
    meeting must state with reasonable specificity the purpose(s)
    for which the meeting is to be held and the text of any matter,
    resolution or action proposed to be voted on by our limited
    partners at the meeting. Within 10&#160;days following the
    receipt of the request, our General Partner will give notice to
    all limited partners of the meeting, and the time and place of
    the meeting in the manner specified in our partnership
    agreement. In addition, our General Partner may, and if so
    requested by our limited partners in the manner described above,
    must, submit the proposed matter, resolution or action for
    action by consent of our limited partners, in lieu of a meeting.
    Also, our General Partner may call meetings of our limited
    partners at any time. However, in lieu of a meeting, any matter
    that could be voted on at a meeting of our limited partners may
    be submitted by our General Partner for action by consent of our
    limited partners.
</DIV>

<A name='188'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Voting
    Rights of Limited Partners</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Limited partners owning a majority of our units may take action
    on any of the following matters without our General
    Partner&#146;s concurrence:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an amendment of our partnership agreement, subject to certain
    limitations discussed in &#147;&#151; Amendment by Limited
    Partners Without Our General Partner&#146;s Concurrence,&#148;
    below;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our dissolution;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the removal of our General Partner and the election of one or
    more substitute general partners;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the sale of all or substantially all of our assets, except in
    connection with securitization financings or sales in the
    ordinary course of liquidating our investments after the
    Operating Period;&#160;and
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    85
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cancellation of any contract for services to us with our
    General Partner or its affiliates, subject to certain
    exceptions, such as the Management, Origination and Servicing
    Agreement, without penalty on 60&#160;days notice.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner and its affiliates may not vote or consent
    on matters submitted to our limited partners regarding the
    removal of our General Partner and the election of a substitute
    general partner or regarding any transaction between us and our
    General Partner or any of its affiliates. In determining the
    requisite percentage of units necessary to approve a matter on
    which our General Partner or its affiliates may not vote or
    consent, any units owned by our General Partner or its
    affiliates cannot be included in either the numerator or the
    denominator.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Limited partners who dissent from any matter approved by limited
    partners owning a majority of our units are bound by the vote
    and do not have a right to appraisal or automatic repurchase of
    their units.
</DIV>

<A name='189'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Amendment
    by Limited Partners Without Our General Partner&#146;s
    Concurrence</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Amendments of our partnership agreement by our limited partners
    without our General Partner&#146;s concurrence may not allow our
    limited partners to take part in the control or management of us
    or our business, or contract away our General Partner&#146;s
    fiduciary duties to our limited partners. In addition, any
    proposed amendment of the partnership agreement that would:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    change how our partnership agreement can be amended, will
    require the consent of all of our limited partners;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    alter the rights, powers, duties or obligations of our General
    Partner, will require our General Partner&#146;s consent;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    adversely affect any partner&#146;s share of our cash
    distributions will require the consent of each partner affected
    by the change.
</TD>
</TR>

</TABLE>

<A name='190'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Amendment
    by Our General Partner Without the Consent of the Limited
    Partners</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner may, without the consent of you and our
    other limited partners, amend our partnership agreement for the
    benefit or protection of you and our other limited partners,
    including any one or more of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    adding to our General Partner&#146;s duties or obligations, or
    surrendering any of its rights or powers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    curing any ambiguity in, or correcting or supplementing any
    provision of, our partnership agreement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    preserving our status as a limited partnership for federal
    income tax purposes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    deleting or adding any provision that the SEC or any other
    regulatory body or official requires to be deleted or
    added;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changing our name or the location of our principal office.
</TD>
</TR>

</TABLE>

<A name='191'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Events
    Causing Dissolution</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will dissolve when any of the following events occurs:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    withdrawal or removal of our General Partner if a substitute
    general partner has not been admitted;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our dissolution is approved on a vote of limited partners owning
    a majority of our units;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the sale of all or substantially all of our assets other than in
    connection with a financing transaction, such as a
    securitization;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the expiration of our term;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other event which would cause us to dissolve under Delaware
    law.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    86
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='192'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liquidation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When a dissolution event occurs, we will liquidate our
    investments and other assets and distribute the proceeds, after
    we pay our debts and expenses, to our partners in accordance
    with their percentage ownership in us. Our existence will
    terminate once we have paid all our debts and expenses and made
    final distributions to our partners. You are not guaranteed the
    return of, or a return on, your investment in us as a result of
    any of these distributions.
</DIV>

<A name='193'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times"><FONT style="white-space: nowrap">Roll-Up</FONT>
    Transactions</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may enter into a
    <FONT style="white-space: nowrap">&#147;roll-up&#148;</FONT>
    transaction only on the vote or consent of limited partners
    owning a majority of our units and on satisfaction of certain
    other conditions described below. A
    <FONT style="white-space: nowrap">&#147;roll-up&#148;</FONT>
    transaction generally is a transaction involving the
    acquisition, merger, conversion or consolidation of us, as a
    partnership, with an entity created by, or surviving, the
    transaction (the
    <FONT style="white-space: nowrap">&#147;roll-up</FONT>
    entity&#148;), and the issuance of securities by the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity. The term
    <FONT style="white-space: nowrap">&#147;roll-up&#148;</FONT>
    does not cover specified transactions, including our conversion
    into a different legal form, if there will be no significant
    adverse change in unit voting rights, our term, the compensation
    we pay our General Partner and its affiliates, our investment
    objectives or the federal income tax consequences of owning a
    unit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    In order for us to enter into a proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction, the additional conditions set forth below must be
    met. All of our assets must be appraised by a competent,
    independent expert, which our partnership agreement defines as a
    person with no material current or prior business or personal
    relationship with our General Partner or its affiliates who is
    engaged to a substantial extent in the business of rendering
    appraisals and who is qualified to perform the work. If the
    appraisal will be included in a prospectus used to offer the
    securities of a
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity, the appraisal must be filed with the SEC and the states
    as an exhibit to the registration statement for the offering.
    Our assets must be appraised on a consistent basis, and the
    appraisal must be based on an evaluation of all relevant
    information and indicate the value of our assets as of a date
    immediately prior to the announcement of the proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction. The appraisal must assume an orderly liquidation of
    our assets over a 12&#160;month period. The terms of the
    engagement of the independent expert must clearly state that the
    engagement is for the benefit of us and our limited partners. A
    summary of the independent appraisal, indicating all material
    assumptions underlying the appraisal, must be included in a
    report to our limited partners in connection with the proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The sponsor of the proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction must offer to our limited partners who vote
    &#147;no&#148; on the proposal the option of either:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    accepting the
    <FONT style="white-space: nowrap">roll-up</FONT>
    securities;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    one of the following:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="2%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    remaining as limited partners in us on the same terms and
    conditions as existed previously;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    receiving cash equal to the limited partner&#146;s pro rata
    share of the appraised value of our net assets.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We may not participate in any proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction that would result in our limited partners having
    voting rights that are less than those provided for under our
    partnership agreement. If the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity is a limited partnership, the voting rights of our
    limited partners must correspond to the voting rights provided
    for in our partnership agreement to the greatest extent possible.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We may not participate in any proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction that includes provisions that would operate to
    materially impede or frustrate the accumulation of units by any
    purchaser of the securities of the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity (except to the minimum extent necessary to preserve the
    tax status of the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity). We may not participate in any proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction that would limit the ability of a limited partner to
    exercise the voting rights of that limited partner&#146;s units
    of the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity on the basis of the number of our units held by that
    limited partner.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    87
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We may not participate in any proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction in which our limited partners&#146; rights of access
    to the records of the
    <FONT style="white-space: nowrap">roll-up</FONT>
    entity would be less than those provided for under our
    partnership agreement.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We may not participate in any proposed
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction in which any of the costs of the transaction would
    be borne by us if the
    <FONT style="white-space: nowrap">roll-up</FONT>
    transaction is not approved by our limited partners.
</TD>
</TR>

</TABLE>

<A name='194'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REDEMPTION&#160;OF
    UNITS</FONT></B>
</DIV>

</A>
<A name='195'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Redemption&#160;Price
    of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your units are illiquid and can be redeemed by us only if the
    redemption provisions in our partnership agreement, which are
    summarized below, are met. If we do redeem your units, which may
    include a reasonable administrative fee charged to you and is in
    our General Partner&#146;s sole discretion, the redemption price
    for your units will depend on when you present your units for
    redemption. If you present your units for redemption:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    during the Offering Period and Operating Period, the redemption
    price will equal not less than $850 per unit, less distributions
    previously paid to you;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    during the Liquidation Period, the redemption price will equal
    the equity for one unit as set forth on our balance sheet in our
    most recent periodic report filed with the SEC before your
    redemption request, less distributions paid to you since the
    date of the balance sheet.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not establish any specific reserves for the redemption
    of units. Redemptions may be made from our operating income,
    general reserves, additional limited partner capital
    contributions or any other sources not prohibited by our
    partnership agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The redemption price for your units is unlikely to reflect the
    fair market value of your units at the time of redemption,
    particularly during the Liquidation Period. You may realize a
    greater return by holding on to your units for the duration of
    our term.
</DIV>

<A name='196'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Procedure
    for Redemption of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To redeem your units, you must send us a written request in a
    form satisfactory to us. The request must be signed by all of
    the owners of the units. We will consider redemption requests to
    have been made on the earlier of the date the request is
    personally delivered with receipt acknowledged, or mailed by
    certified mail, return receipt requested, postage prepaid, at
    our General Partner&#146;s address set forth in this prospectus.
    We will accept or deny redemption requests quarterly.
</DIV>

<A name='197'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Restrictions
    on Redemption of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have no obligation to redeem your units, and will do so only
    in our General Partner&#146;s sole discretion. Beginning when
    you are admitted as a limited partner and at any time
    thereafter, you may request that we redeem your units. In any
    calendar year, we will not redeem any units that, in the
    aggregate, together with all other transfers of units made to
    date during the calendar year, subject to certain exceptions,
    exceed 2% of our total capital or profits interests, or that we
    reasonably believe might exceed 2% of our total capital or
    profits interests, as of the last day of the calendar year. This
    limitation is required so that we will not be treated as a
    publicly traded partnership for tax purposes. If we believe that
    the 2% limitation may be reached before year-end, we may redeem
    only a portion, or none, of the units for which redemption is
    sought, and we may decide to allocate, at the date of request or
    later in the year, redemption capacity based on the financial
    hardship of the limited partners requesting redemption.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we will not redeem units if, in our General
    Partner&#146; s sole discretion, we do not have sufficient cash
    on hand. We intend to reinvest a substantial portion of our
    revenues during the Operating Period, which begins with the
    initial closing date in this offering and ends three years
    later. Also, we will not redeem units if the redemption would
    impair our capital or our operations, which our General Partner
    will
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    88
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    decide in its sole discretion. Cash used to redeem units will
    reduce our cash available for making investments, reinvestments
    and distributions to our remaining limited partners. If we
    receive requests to redeem more units than there are funds
    available to redeem, we expect to give priority:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    first, to hardship redemptions (e.g., requests arising from
    death, major medical expense, family emergency, disability, a
    material loss of family income, etc.);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    second, to provide liquidity for IRA&#146;s or qualified plans
    to meet required distributions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    third, to all other redemption requests.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, we will not redeem any units that would result in
    25% or more of the value of any of the remaining units of any
    class being held be qualified plans, IRAs or other benefit plan
    investors (as defined for purposes of ERISA).
</DIV>

<A name='198'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Redemption of Units</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we redeem all of your units, then you will no longer be a
    limited partner and you will have no interest in us. However, a
    redemption of all of your units will not release you from
    liability to us to the extent of any distributions, including
    any return of or on your investment, made to you in violation of
    Delaware law. Also, any gain realized by you on the redemption
    of your units, if you held them as a capital asset and held them
    for more than one year, generally will be a capital gain, but
    your gain may be treated as ordinary income to the extent of
    your share of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    recapture of your cost recovery deductions on our equipment and
    other assets leased to others under operating leases;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our substantially appreciated inventory items;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our unrealized receivables.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the &#147;Material U.S.&#160;Federal Income Tax
    Consequences&#160;&#151; Sale or Other Disposition of
    Units&#148; section of this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You are urged to seek advice based on your particular
    circumstances from an independent tax advisor with respect to
    the tax consequences to you of a redemption of your units.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    89
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='199'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REPORTS
    TO LIMITED PARTNERS</FONT></B>
</DIV>

</A>
<A name='200'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Reports</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As soon as practicable each year we will send you a statement on
    <FONT style="white-space: nowrap">Form&#160;K-1</FONT>
    of your share of our income, gains, losses, deductions and other
    tax items for the previous calendar year just ended to enable
    you to prepare your income tax returns.
</DIV>

<A name='201'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Annual
    Reports</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Within 90&#160;days after the end of each year, we will send you
    an annual report that will include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our audited financial statements for the fiscal year prepared in
    accordance with GAAP, including a balance sheet and related
    statements of operations, cash flows and changes in
    partners&#146; equity, accompanied by an auditor&#146;s report
    containing an opinion of our independent accountants.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A breakdown, by source, of distributions made during the year to
    you and to our General Partner.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A status report with respect to each item of equipment and other
    assets that individually represent at least 10% of the aggregate
    purchase price of our investments at the end of the year, if
    any, including information relevant to the condition and use of
    the equipment and other assets.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A detailed statement of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the services rendered and compensation paid or reimbursed to our
    General Partner and its affiliates;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    a summary of the terms and conditions of any contract with our
    General Partner or its affiliates that was not filed as an
    exhibit to the registration statement of which this prospectus
    forms a part.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our General Partner&#146;s allocation of costs and expenses
    reimbursed by us to our General Partner and its affiliates will
    be included within the scope of our annual audit by our
    independent public accountants.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Information regarding investments made by us during the fiscal
    year, until all of the capital contributions to us by you and
    our other limited partners have been invested, reinvested or
    committed to investment and reserves, used to pay permitted fees
    or returned to you and our other limited partners in accordance
    with our partnership agreement.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A customer account statement.
</TD>
</TR>

</TABLE>

<A name='202'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Quarterly
    Reports</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Within 45&#160;days after the end of each of the first three
    quarters in each year, we will send you an interim report for
    the quarter that will include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our unaudited financial statements for the quarter, including a
    balance sheet and related statements of operations, cash flows
    and changes in partners&#146; equity; or if our units are
    registered under Section&#160;12(g) of the Securities Exchange
    Act of 1934, which we anticipate, a copy of our Quarterly Report
    on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    filed by us with the SEC.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    A detailed statement of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    the services rendered and compensation paid, and any expenses
    reimbursed, to our General Partner or its affiliates,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    -&#160;
</TD>
    <TD align="left">
    a summary of the terms and conditions of any contract with our
    General Partner or its affiliates that was not filed as an
    exhibit to the registration statement of which this prospectus
    forms a part.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Information regarding investments made by us during the quarter,
    until all of the capital contributions to us by you and our
    other limited partners have been invested, reinvested or
    committed to investment
</TD>
</TR>

</TABLE>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    90
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    and reserves, used to pay permitted fees or returned to you and
    our other limited partners in accordance with our partnership
    agreement.
</TD>
</TR>

</TABLE>

<A name='203'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reports
    to State Securities Laws Administrators</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner will submit to all state securities law
    administrators, including Arizona, California and Ohio, any
    information concerning us that the administrators require,
    including, but not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reports and statements required by our partnership agreement to
    be distributed to you and our other limited partners;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reports required to be filed with the administrators under the
    applicable state securities laws, regulations or policies, which
    may include copies of our SEC filings under the Securities
    Exchange Act of 1934, as amended.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    91
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='204'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our units will be offered on a &#147;best efforts&#148; basis by
    SQN Securities, LLC, an affiliate of our General Partner and our
    Investment Manager, acting as the exclusive selling agent of
    this offering. SQN Securities, LLC was formed for the purpose of
    serving as the selling agent of partnerships sponsored by its
    affiliates and became a FINRA member firm
    in&#160;&#160;&#160;&#160;&#160; 2010. Best efforts generally
    means that the selling agent will not guarantee that a certain
    number of units will be sold in this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The offering is made on a minimum/maximum basis. We must receive
    a minimum of $1.2&#160;million in offering proceeds before we
    will admit subscribers as limited partners. Persons who
    subscribe for units prior to the time that we admit limited
    partners will deposit their funds in an escrow account held
    by&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; .
    If the amount of proceeds raised by January&#160;1, 2011 are
    insufficient to constitute the minimum offering, all
    subscription proceeds deposited by the subscribers into the
    escrow account will be returned, together with any interest
    earned thereon and without deduction for fees, commissions, or
    expenses, to those subscribers.
</DIV>

<A name='205'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    of the Selling Agent</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay Distribution Expenses of 2.0% of the gross offering
    proceeds to the selling agent. The offering price of each unit
    is $1,000. We will not pay distribution expenses for units sold
    to our General Partners or its affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maximum amount of compensation that we may pay to the
    selling agent in this offering is $998,000, assuming our General
    Partner or its affiliates purchase 100&#160;units at a purchase
    price of $1,000 per unit and all other units are sold by the
    selling agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This offering will be made in compliance with FINRA Conduct
    Rule&#160;2310, and all compensation paid to the selling agent,
    including diligence expenses, will be limited to 2.0% of our
    gross offering proceeds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Total organization and offering expenses, which include the
    Distribution Expense, selling commissions, due diligence
    reimbursements and the organization and offering expense
    allowance payable to our General Partner and its affiliates will
    not exceed 4.0% of the gross offering proceeds. See the
    &#147;Management Compensation&#148; section of this prospectus
    beginning on page&#160;10.
</DIV>

<A name='206'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Indemnification</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling agent is an underwriter as that term is defined in
    the Securities Act of 1933, as amended and the distribution
    expenses will be deemed underwriting compensation. Our General
    Partner and the selling agent will agree to indemnify each other
    against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    92
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='207'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    OFFERING</FONT></B>
</DIV>

</A>
<A name='208'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Terms of
    this Offering and the Offering Period</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The minimum amount of offering proceeds that we must receive in
    order to break escrow and hold the Initial Closing is
    $1.2&#160;million (1,200&#160;units), and the maximum amount of
    offering proceeds that we can accept in this offering is
    $50.0&#160;million (50,000&#160;units). The amount of our
    minimum required offering proceeds excludes units subscribed for
    by Pennsylvania residents and units subscribed for by our
    General Partner and its affiliates, as discussed in &#147;-
    Escrow Arrangements,&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your minimum subscription amount is 25&#160;units ($25,000).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Your subscription to purchase our units will be effective only
    when it is accepted by our General Partner, which reserves the
    right to reject your subscription in whole or in part, without
    liability to you. The subscription agreement provided to you for
    execution must be accompanied by a copy of this prospectus. You
    have the right to cancel your subscription before it has been
    accepted by our General Partner by giving written notice of your
    intent to cancel, in a form that is satisfactory to us and is
    signed by you and every other person who signed your
    subscription agreement as an investor, if any, to SQN AIF III
    GP, LLC, Investor Relations, 48 Wall Street, 24th Floor, New
    York, New York 10005. We will not complete a sale of units to
    you until at least five business days after the date you receive
    a final prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This offering will end not later than two years from the date of
    this prospectus. Some states or jurisdictions may require
    renewal, requalification or other consents in order for us to
    continue this offering after the end of one year from the date
    of this prospectus. In addition, we may end this offering at any
    time. If we do not receive and accept subscriptions for a
    minimum of $1.2&#160;million (1,200&#160;units) before
    January&#160;1, 2011, we will promptly return all of the
    subscription proceeds we have received together with any
    interest earned on them and without deduction for any fees.
</DIV>

<A name='209'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Escrow
    Arrangements</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Until we receive subscriptions for the minimum offering proceeds
    of $1.2&#160;million (1,200&#160;units) and admit the initial
    subscribers as limited partners, the subscription proceeds will
    be held in an escrow account
    at&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;.
    Subscription proceeds held in the escrow account will be
    invested in interest-bearing savings or bank money market
    accounts so long as they are not mutual funds. Subscribers may
    not withdraw their subscription proceeds from the escrow
    account. On the earlier of the termination of this offering or
    the satisfaction of the escrow condition and the initial closing
    in this offering, any interest that accrues on the funds held in
    escrow will be distributed to the subscribers whose funds were
    held in escrow and allocated among them based on the amounts of
    their respective subscriptions and the number of days that those
    amounts were on deposit in the escrow account.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Pennsylvania Investors.</I>&#160;&#160;Because the minimum
    closing amount is less than $20&#160;million, you are cautioned
    to carefully evaluate our ability to fully accomplish our stated
    objectives and to inquire as to the current dollar volume of
    Fund subscriptions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subscriptions received from residents of Pennsylvania will be
    placed in a separate escrow account and will not be counted
    toward satisfaction of our minimum offering proceeds of
    $1.2&#160;million (1,200&#160;units). Instead, if you are a
    Pennsylvania or Iowa resident, we must hold your subscription
    proceeds in escrow until we receive and accept subscriptions for
    at least $7,500,000&#160;units ($7,500&#160;million) including
    your subscription. In addition, we must offer you the
    opportunity to rescind your subscription if we have not received
    subscriptions for 7,500&#160;units within 120&#160;days of the
    date the escrow agent receives your subscription proceeds.
    Subsequently, we must repeat this offer to you every
    120&#160;days during the Offering Period until we have received
    and accepted subscriptions for 7,500&#160;units. On the earlier
    of the termination of this offering or the satisfaction of the
    escrow condition, any interest that accrues on the funds held in
    the escrow account or the subscription account will be
    distributed to the subscribers whose funds were held in the
    escrow account and allocated among them based on the amounts of
    their respective subscriptions and the number of days that those
    amounts were on deposit in the escrow account.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    93
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Offering proceeds will be transferred to us from escrow any time
    after we receive and accept the minimum offering proceeds of
    $1.2&#160;million (1,200&#160;units), other than subscriptions
    from Pennsylvania residents and subscriptions from our General
    Partner and its affiliates. Subject to the foregoing,
    subscribers whose subscription proceeds have been held in the
    escrow account will be admitted as limited partners in the
    initial closing in this offering within 15&#160;days after we
    have received the minimum offering proceeds of $1.2&#160;million
    and broken escrow. Subsequent subscriptions will be held in a
    separate interest-bearing subscription account pending our
    General Partner&#146;s acceptance or rejection of the
    subscriptions, and no interest will be paid to those subscribers
    on their subscription amounts if our General Partner accepts
    their subscriptions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our General Partner will accept or reject subsequent
    subscriptions within 60&#160;days after receipt. Investors whose
    subscriptions are accepted by our General Partner will be
    admitted as limited partners promptly after their subscriptions
    are accepted, but in any event no later than the last day of the
    month following the date the subscription was accepted. We will
    promptly return rejected subscription proceeds together with any
    interest earned and without deduction for any fees. If our
    General Partner accepts your subscription, either we or an agent
    of ours will give you prompt written confirmation of your
    admission as one of our limited partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our offering proceeds from each closing will be kept in our
    partnership account and will not be commingled with the funds of
    any other person or entity. Our General Partner will have
    fiduciary responsibility for the safekeeping and use of all of
    our funds and assets, whether or not in its immediate possession
    or control. Also, our General Partner will not employ, nor
    permit any other person to employ, our funds or assets in any
    manner except for our exclusive benefit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The escrow agent&#146;s sole role in this offering is that of
    escrow holder. As the escrow agent, it has not reviewed any of
    our offering materials and it makes no representations
    whatsoever as to the nature of this offering or the compliance
    of this offering with any applicable state or federal laws,
    rules or regulations. The escrow agent neither endorses,
    recommends nor guarantees the purchase, value, repayment or any
    other aspect of an investment in us. The escrow agent does not
    represent the interests of you or the other potential investors.
    Its duties are limited as expressly set forth in the escrow
    agreement. Interested persons may request a copy of the escrow
    agreement from our General Partner.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    94
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='210'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">HOW TO
    SUBSCRIBE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If you are investing in us as a natural person, and not as a
    business or investment entity, you must complete and personally
    sign the subscription agreement included in Appendix&#160;C to
    this prospectus and deliver it, together with a check for your
    subscription amount, to a registered representative of the
    selling agent. Except as discussed below, your minimum
    investment amount is 25&#160;units ($25,000). In the case of an
    IRA or qualified plan, both the owner and the plan fiduciary, if
    any, must sign the subscription agreement. In the case of donor
    trusts or other trusts in which the donor is the fiduciary, the
    donor must sign the subscription agreement in the donor&#146;s
    fiduciary capacity (e.g. trustee), or both the donor and the
    fiduciary must sign the subscription agreement. In the case of
    other fiduciary accounts in which the donor neither exercises
    control over the account nor is a fiduciary of the account, the
    plan fiduciary alone may sign the subscription agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Until we receive and accept offering proceeds of
    $1.2&#160;million (1,200&#160;units), excluding units subscribed
    for by our General Partner and its affiliates and by residents
    of Pennsylvania, checks for the purchase of units should be made
    payable to
    &#147;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    .&#148; After the initial closing date in this offering, checks
    for the purchase of units should be made payable to &#147;SQN
    Alternative Investment Fund&#160;III, L.P. Subscription
    Account.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling agent must forward these subscription checks to the
    escrow agent promptly. Our General Partner will promptly review
    each subscription and either will accept or decline your
    subscription as a limited partner.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    95
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='211'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SUPPLEMENTAL
    SALES LITERATURE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to this prospectus, our General Partner intends to
    use the following sales material with the offering of our units:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a brochure entitled &#147;SQN Alternative Investment
    Fund&#160;III, L.P.;&#148;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a slide show presentation and script entitled &#147;SQN
    Alternative Investment Fund&#160;III, L.P.;&#148;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    possibly other supplementary materials.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate that the supplemental materials will include
    information relating to this offering and our General Partner
    and its affiliates. Our supplemental materials also may include
    audio visual materials and taped presentations highlighting and
    explaining various features of this offering. We also may
    respond to specific questions from the selling agent and
    prospective investors. We may send business reply cards,
    introductory letters and seminar invitations to the selling
    agent for customer use, and other materials relating to this
    offering may be made available to them for their internal use.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as described above, our General Partner has not
    authorized the use of any other sales material and the offering
    of our units is made only by means of this prospectus. All sales
    materials authorized by us for use in this offering are subject
    to the following conditions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they must be preceded or accompanied by this prospectus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they do not include all of the information set forth in this
    prospectus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they will not contain any material information that is not also
    set forth in this prospectus;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    they should not be considered a part of, or incorporated into,
    this prospectus or the registration statement of which this
    prospectus is a part.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, supplementary materials, including prepared
    presentations for group meetings, must be submitted by us to the
    administrators of applicable state securities laws before they
    are used, and their use must be preceded or accompanied by this
    prospectus. Also, all advertisements of, and oral or written
    invitations to, &#147;seminars&#148; or other group meetings at
    which our units are to be described, offered, or sold will
    clearly indicate the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that the purpose of the meeting is to offer our units for sale;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the minimum purchase price of our units;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the name of the selling agent selling our units.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also, no cash, merchandise, or other items of value may be
    offered as an inducement to you or any other prospective
    investor to attend the meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>You should rely only on the information contained in this
    prospectus in making your investment decision. No one is
    authorized to provide you with information that is
    different.</I></B>
</DIV>

<A name='212'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The legality of the units has been passed upon and the
    statements under the caption &#147;Material U.S.&#160;Federal
    Income Tax Consequences&#148; as they relate to federal income
    tax matters have been reviewed and passed upon by Troutman
    Sanders LLP, Atlanta, Georgia.
</DIV>

<A name='213'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The balance sheet of SQN Alternative Investment Fund&#160;III,
    L.P. as of March&#160;31, 2010 included in the registration
    statement and this prospectus has been so included in reliance
    upon the report of Holtz Rubenstein Reminick LLP, an independent
    registered public accounting firm upon the authority of said
    firm as experts in accounting and auditing in giving such report.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    96
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The balance sheet of SQN AIF III GP, LLC as of and for the year
    ended December&#160;31, 2010 included in the registration
    statement and this prospectus has been so included in reliance
    upon the report of Holtz Rubenstein Reminick LLP, an independent
    registered public accounting firm upon the authority of said
    firm as experts in accounting and auditing in giving such report.
</DIV>

<A name='214'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FORECASTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The use of forecasts in this offering is prohibited. Any
    representations to the contrary and any predictions, written or
    oral, as to the amount or certainty of any present or future
    cash benefit or tax consequence that you may receive from the
    purchase of our units is not permitted.
</DIV>

<A name='215'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    under the Securities Act of 1933, as amended, with respect to
    the units offered in this prospectus. This prospectus, filed as
    part of the registration statement, does not contain all of the
    information set forth in the registration statement and its
    exhibits and schedules, portions of which have been omitted as
    permitted by the rules and regulations of the SEC. For further
    information about us and our units, we refer you to the
    registration statement and to its exhibits and schedules.
    Statements in this prospectus about the contents of any
    contract, agreement or other document are not necessarily
    complete and, in each instance, we refer you to the copy of the
    contract, agreement or document filed as an exhibit to the
    registration statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Anyone may inspect the registration statement and its exhibits
    and schedules without charge at the public reference facilities
    the SEC maintains at 100&#160;F&#160;Street, N.E.,
    Washington,&#160;D.C. 20549. You may obtain copies of all or any
    part of these materials from the SEC upon the payment of certain
    fees prescribed by the SEC. You may obtain further information
    about the operation of the SEC&#146;s Public Reference Room by
    calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    You also may inspect these reports and other information without
    charge at the website maintained by the SEC. The address of this
    website is
    <FONT style="white-space: nowrap">http://www.sec.gov.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon effectiveness of the registration statement, we will become
    subject to the informational requirements of the Exchange Act
    and will be required to file reports and other information with
    the SEC. You will be able to inspect and copy these reports and
    other information at the public reference facilities maintained
    by the SEC at the address noted above. You also will be able to
    obtain copies of this material from the Public Reference Room as
    described above or inspect them without charge at the SEC&#146;s
    website.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    97
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='216'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">GLOSSARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following terms used in this prospectus shall generally have
    the following respective meanings as set forth in
    Section&#160;1.1 of our partnership agreement, which is attached
    as Appendix&#160;A to this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;<I>&#147;Acquisition Expenses&#148;</I> means expenses
    (other than Acquisition Fees) incurred and paid to any Person
    which are attributable to the selection and acquisition of
    Investments, whether or not acquired, including, but not limited
    to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;legal fees and expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;travel and communication expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;costs of credit reports, appraisals and reference
    materials used to evaluate transactions;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;non-refundable option payments on Investments not
    acquired;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;accounting fees and expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;insurance costs;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;initial direct costs, as that term is defined under
    United States generally accepted accounting principles
    (&#147;GAAP&#148;), which includes any origination fees paid by
    our Investment Manager or its Affiliates to any Person,
    including its or its Affiliates&#146; employees, with respect to
    acquiring and holding Investments on a temporary basis before
    they are purchased from our Investment Manager or its Affiliates
    by us;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (viii)&#160;miscellaneous other expenses, however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;<I>&#147;Acquisition Fees&#148;</I> means all fees and
    commissions paid by any party in connection with the initial
    purchase or funding of any Investment, including fees payable to
    finders and brokers that are not Affiliates of our General
    Partner. Also, included in the computation of such fees or
    commissions shall be any commission, selection fee, financing
    fee, non-recurring management fee, or any fee of a similar
    nature, however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;<I>&#147;Administrator&#148;</I> means the official or
    agency administering the securities laws of a state or other
    political subdivision of the United States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;<I>&#147;Affiliate&#148;</I> means, with respect to any
    Person:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any other Person directly or indirectly controlling,
    controlled by or under common control with such Person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any other Person owning or controlling 10% or more of
    the outstanding voting securities of such Person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any officer, director or partner of such
    Person;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;if such Person is an officer, director or partner, any
    other Person for which such Person acts in such capacity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;<I>&#147;Affiliated Program&#148;</I> means any Program
    formed by our General Partner or any Affiliate of our General
    Partner or in which our General Partner or any of its Affiliates
    has an interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (6)&#160;<I>&#147;Capital Contribution&#148;</I> means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;as to our General Partner, its initial $100
    contribution to the capital of us plus any additional amounts as
    may be contributed to the capital of us by our General
    Partner;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;as to any Limited Partner, including Affiliated
    Limited Partners, the gross amount of investment in us actually
    paid by the Limited Partner, i.e. the Unit Price, without
    deduction for Front-End Fees (whether payable by us or not);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    but excluding Net Disposition Proceeds reinvested in additional
    Investments under Section&#160;9.1(b)(xxv) of our partnership
    agreement.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    98
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (7)&#160;<I>&#147;Cash Flow&#148;</I> means our Gross Revenues,
    without deduction for depreciation, but after deducting the our
    cash funds used to pay all our other expenses, debt payments,
    capital improvements and replacements (other than cash funds
    withdrawn from Reserves).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (8)&#160;<I>&#147;Code&#148;</I> means the Internal Revenue Code
    of 1986, as amended, or corresponding provisions of subsequent
    laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (9)&#160;<I>&#147;Cumulative Return&#148;</I> means, as to any
    Limited Partner, an amount equal to an 8% annual cumulative
    return, compounded annually, on the Limited Partner&#146;s
    Capital Contribution calculated from a date not later than the
    last day of the calendar quarter in which the Capital
    Contribution of the Limited Partner as to which the Cumulative
    Return is being calculated was made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (10)&#160;<I>&#147;Distribution Expenses&#148;</I> means the
    fees payable to the Selling Agent in an amount equal to 2% of
    the Unit Price per Unit sold, in the aggregate, in the Offering
    (excluding any Units sold to our General Partner or its
    Affiliates).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (11)&#160;<I>&#147;Distributable Cash&#148;</I> means Cash Flow
    plus any amounts released from Reserves by our General Partner,
    less amounts allocated to Reserves by our General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (12)&#160;<I>&#147;Effective Date&#148;</I> means the date the
    Registration Statement is declared effective by the Commission.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (13)&#160;<I>&#147;Equipment&#148;</I> means any new, used or
    reconditioned equipment or revenue stream associated therewith
    acquired by us, or in which we have acquired a direct or
    indirect interest (including, but not limited to, residual
    interests), and shall also be deemed to include such equipment
    which at any time is subject to, or serves as the collateral
    for, a Lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (14)&#160;<I>&#147;Final Closing Date&#148;</I> means the last
    closing date in the Offering on which a limited partner (other
    than a substitute limited partner) is admitted to us, which
    shall be as soon as practicable following the Offering
    Termination Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (15)&#160;<I>&#147;Financing Transaction&#148;</I> means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any extension of credit or loan of money to us or our
    subsidiaries that is secured by a security interest in our
    Investments or our other tangible or intangible personal
    property or any Lease of any such property;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any notes issued in connection with a securitization
    of Investments, or receivables therefrom;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any transaction in which our Investments are sold to
    a Person for purposes of securitization and with customary
    retained rights or interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (16)&#160;<I>&#147;Front-End Fees&#148;</I> means fees and
    expenses paid by any Person for any services rendered during our
    organizational and offering or acquisition phases, including
    Distribution Expenses, Organization and Offering Expense
    Allowances, Leasing or Financing Fees, Acquisition Fees and
    Acquisition Expenses (other than any Acquisition Fees or
    Acquisition Expenses paid by a manufacturer of equipment to any
    of its employees unless such Persons are Affiliates of our
    General Partner) and all other similar fees however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (17)&#160;<I>&#147;Full Payout Lease&#148;</I> means any lease
    under which the aggregate noncancellable rental payments due
    during the initial term of the lease, on a net present value
    basis, are at least sufficient to permit us to recover the
    entire purchase price of the Equipment subject to the lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (18)&#160;<I>&#147;Gross Revenues&#148;</I> means our gross cash
    receipts from whatever source (including our share of Gross
    Revenues from our indirect Investments), excluding capital
    contributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (19)&#160;<I>&#147;Initial Closing Date&#148;</I> means the
    first closing date for us on which limited partners with units
    equal to, or greater than, the Minimum Offering are admitted to
    us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (20)&#160;<I>&#147;Investment in Equipment&#148;</I> means the
    aggregate amount of capital contributions and Financial
    Transactions actually paid or allocated to the purchase,
    manufacture or renovation of Investments acquired by
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    99
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    us, together with other cash payments such as interest, taxes
    and Reserves allocable thereto (to the extent that Reserves do
    not exceed 3% of Capital Contributions), but excluding Front-End
    Fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (21)&#160;<I>&#147;Investments&#148;</I> means our portfolio,
    from time to time, of Equipment, Other Physical Assets and
    Leases, whether we own the portfolio directly or indirectly.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (22)&#160;<I>&#147;Lease&#148;</I> means any Full Payout Lease,
    any Operating Lease and any residual value interest therein or
    any other agreement directly or indirectly collateralized by
    Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (23)&#160;<I>&#147;Liquidation Period&#148;</I> means the period
    commencing on the first day following the end of the Operating
    Period and continuing for the period deemed necessary by our
    General Partner for the orderly termination of our operations
    and affairs and the liquidation or disposition of our
    Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (24)&#160;<I>&#147;Management, Origination and Servicing
    Agreement&#148;</I> means the agreement entered into between us
    and our Investment Manager, substantially in the form of the
    Management, Origination and Servicing Agreement filed as an
    exhibit to the Registration Statement, as amended and
    supplemented from time to time as permitted by its terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (25)&#160;<I>&#147;Maximum Offering&#148;</I> means the receipt
    and acceptance by us of subscriptions for not more than 50,000
    Units ($50,000,000), excluding the 1&#160;unit subscribed for by
    the Original Limited Partner, on or before the Final Closing
    Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (26)&#160;<I>&#147;Minimum Offering&#148;</I> means the receipt
    and acceptance by us of subscriptions for not less than 1,200
    Units ($1,200,000), excluding the 1&#160;unit subscribed for by
    the Original Limited Partner and any units subscribed for by our
    General Partner or its officers, directors, employees or other
    Affiliates, or Pennsylvania subscribers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (27)&#160;<I>&#147;Net Disposition Proceeds&#148;</I> means the
    proceeds realized by us from the sale, refinancing or other
    disposition of our Investments, including insurance proceeds or
    lessee or borrower indemnity payments arising from the loss or
    destruction of the Equipment, less all our liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (28)&#160;<I>&#147;Net Offering Proceeds&#148;</I> means the
    Gross Offering Proceeds minus the Distribution Expenses and the
    Organization and Offering Expense Allowance payable by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (29)&#160;<I>&#147;Net Worth&#148;</I> means, for any Person
    subscribing for units, the excess of total assets over total
    liabilities as determined by GAAP, but excluding home, home
    furnishings and automobiles. Provided, however, that with
    respect to our General Partner, &#147;Net Worth&#148; means the
    excess of total assets over total liabilities as determined by
    GAAP. However, if any of our General Partner&#146;s assets have
    been depreciated, then the amount of depreciation relative to
    any particular asset may be added to the depreciated cost of the
    asset to compute our General Partner&#146;s total assets, but
    only o the extent that does not exceed the fair market value of
    the asset.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (30)&#160;<I>&#147;Offering&#148;</I> means the offering of
    units pursuant to this prosepctus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (31)&#160;<I>&#147;Offering Period&#148;</I> means the period
    from the Effective Date to the Offering Termination Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (32)&#160;<I>&#147;Offering Termination Date&#148;</I> means the
    earliest of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the date on which the Maximum Offering has been sold;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;two years after the Effective Date (subject to the
    renewal, requalification or consent of each Administrator
    requiring the renewal, requalification or consent of the
    Offering with respect to the extension of the Offering Period
    beyond one year following the Effective Date in the
    Administrator&#146;s jurisdiction);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any earlier date after the Effective Date as may be
    determined by our General Partner in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (33)&#160;<I>&#147;Operating Lease&#148;</I> means a lease under
    which the aggregate noncancellable rental payments during the
    original term of the lease, on a net present value basis, are
    not sufficient to recover the entire Purchase Price of the
    Equipment subject to the lease.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    100
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (34)&#160;<I>&#147;Operating Period&#148;</I> means the period
    commencing on the Initial Closing Date and ending three years
    after the Initial Closing Date, unless extended by our General
    Partner, in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (35)&#160;<I>&#147;Organization and Offering Expense
    Allowance&#148;</I> means an amount equal to 2% of the our Gross
    Offering Proceeds, to reimburse our General Partner
    <FONT style="white-space: nowrap">and/or</FONT> its
    Affiliates for Organizational and Offering Expenses incurred by
    it <FONT style="white-space: nowrap">and/or</FONT>
    its Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (36)&#160;<I>&#147;Organization and Offering Expense&#148;</I>
    means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;all costs and expenses incurred in connection with, and
    in preparing us for, qualification under federal and state
    securities laws and the securities laws of any other
    jurisdiction in which units may be offered or sold and
    subsequently offering and distributing the units to the public
    (except Distribution Expenses) including, without limitation:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;printing costs;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;registration and filing fees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;attorneys&#146;, accountants&#146; and other
    professional fees;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the direct costs of salaries to, and expenses
    (including costs of travel) of, officers and directors of our
    General Partner or any Affiliate of our General Partner while
    engaged in organizing us and registering, offering and selling
    the units, but shall not include amounts that are included
    within the 10% underwriting compensation limit as defined in
    FINRA Conduct Rule&#160;2810(4)(b)(i).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (37)&#160;<I>&#147;Other Physical Assets&#148;</I> means any
    new, used or reconditioned physical asset or revenue stream
    associated therewith acquired by us, or in which we have
    acquired a direct or indirect interest (including, but not
    limited to, residual interests), and shall also be deemed to
    include such physical asset which at any time is subject to, or
    serves as the collateral for, a Lease or other agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (38)&#160;<I>&#147;Person&#148;</I> means any natural person,
    partnership, trust, corporation, limited liability company,
    association or other legal entity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (39)&#160;<I>&#147;Promotional Interest&#148;</I> means the
    allocable share of all Distributable Cash payable to our General
    Partner pursuant to Sections&#160;11.1(b)(i) and 11.1(b)(ii) of
    our partnership agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (40)&#160;<I>&#147;Purchase Price&#148;</I> means, with respect
    to any Investment, the price paid by, or on behalf of, us for or
    in connection with the purchase, acquisition or funding of the
    Investment, including the amount of the related:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;Acquisition Fees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;Acquisition Expenses;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;all liens and encumbrances on the Investment, but
    excluding points and prepaid interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;Purchase Price&#148; also includes, with respect to
    options to acquire an Investment, the sum of the exercise price
    and the price paid to acquire the option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (41)&#160;<I>&#147;Reserves&#148;</I> means reserves established
    and maintained by us for working capital, contingent liabilities
    and the acquisition of Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (42)&#160;<I>&#147;Sponsor Fee Limit&#148;</I> means the limit
    on the payment of Front-End Fees, Management Fees and
    Promotional Interest calculated pursuant to Section&#160;9.4(e)
    of our partnership agreement.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    101
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <A name='217'><B><FONT style="font-family: 'Times New Roman', Times">INDEX
    TO FINANCIAL STATEMENTS</FONT></B></A>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="96%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>SQN AIF III GP, LLC</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#300'>Report of Independent Registered Public
    Accounting Firm</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#301'>Balance Sheet</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#302'>Notes to Balance Sheet</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'><B>SQN ALTERNATIVE INVESTMENT FUND&#160;III,
    L.P.</B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#303'>Report of Independent Registered Public
    Accounting Firm</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#304'>Balance Sheet</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#305'>Notes to Balance Sheet</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-8
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='300'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Report of
    Independent Registered Public Accounting Firm</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the Members<BR>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN AIF III GP, LLC
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have audited the accompanying balance sheet of SQN AIF III
    GP, LLC as of March&#160;31, 2010. SQN AIF III GP, LLC&#146;s
    management is responsible for this financial statement. Our
    responsibility is to express an opinion on this financial
    statement based on our audit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We conducted our audit in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company is not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audit included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company&#146;s internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statement and assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audit provides a reasonable basis for our opinion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In our opinion, the balance sheet referred to above presents
    fairly, in all material respects, the financial position of SQN
    AIF III GP, LLC as of March&#160;31, 2010, in conformity with
    accounting principles generally accepted in the United States of
    America.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Holtz
    Rubenstein Reminick LLP</DIV>
</DIV>

<DIV style="font-size: 2pt; margin-left: 49%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holtz Rubenstein Reminick LLP
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    New York, New York
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    April&#160;20, 2010
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <B><FONT style="font-family: 'Times New Roman', Times">SQN AIF
    GP III, LLC<BR>
    <A name='301'> <!-- XBRL,bs --> <BR>
    Balance Sheet<BR>
    </FONT></B><I><FONT style="font-family: 'Times New Roman', Times">March&#160;31,
    2010</FONT></I>
</DIV>
<!-- XBRL,body -->
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="94%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>ASSETS</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Investment in Limited Partnership
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD colspan="5">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>LIABILITIES AND MEMBER&#146;S EQUITY</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Liabilities and Member&#146;s Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- /XBRL,bs -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL,ns -->
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN AIF
    III GP, LLC</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

    <A name='302'><B>Notes to Balance Sheet</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    </A><I>March 31, 2010</I>
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">1.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Organization
    and Nature of Operations</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN AIF III GP, LLC (the &#147;Company&#148;) is a wholly-owned
    subsidiary of SQN Capital Management LLC, a Delaware limited
    liability company (&#147;Capital&#148; or &#147;Parent&#148;).
    The primary activity of the Company is to sponsor, manage and
    act as the general partner of SQN Alternative Investment
    Fund&#160;III L.P. (the &#147;Managed Fund&#148;), a publicly
    registered equipment leasing and finance fund in the United
    States of America.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company was formed on March&#160;8, 2010 as a Delaware
    limited liability company. The Company, through the Parent,
    manages and controls the business affairs of the Managed Fund.
    The Managed Fund is in the process of filing a registration
    statement
    <FONT style="white-space: nowrap">(Form&#160;S-1)</FONT>
    with the Securities Exchange Commission and will operate as a
    publicly registered equipment leasing and finance fund for the
    purpose of investing in a diverse pool of business-essential
    equipment and physical assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company will be entitled to 1% of the Managed Fund&#146;s
    profits, losses, cash distributions and liquidation proceeds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company&#146;s fiscal year ends on December&#160;31.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">2.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    of Significant Accounting Policies</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Basis of presentation</I>&#160;&#151; The accompanying
    balance sheet of the Company has been prepared in accordance
    with U.S.&#160;generally accepted accounting principles
    (&#147;US GAAP&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Cash and cash equivalents</I>&#160;&#151; Cash and cash
    equivalents include cash maintained in checking and savings
    accounts at financial institutions and highly liquid investments
    with original maturity dates of three months or less.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Revenue recognition</I>&#160;&#151; The Company&#146;s only
    source of revenue is expected to be from its investment in the
    Managed Fund. The Company is entitled to 1% of the Managed
    Fund&#146;s profits, losses, cash distributions and liquidation
    proceeds. In addition, the Company and its affiliates may be
    reimbursed for administrative expenses incurred based upon an
    allocation of the time its and their affiliate&#146;s employees
    spend working on the Managed Fund&#146;s operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Income taxes</I>&#160;&#151; The Company is taxed as a
    partnership for federal and state income tax purposes. No
    provision for income taxes has been recorded since the liability
    for such taxes is that of each of the members rather than the
    Company. The Company&#146;s income tax returns are subject to
    examination by the federal and state taxing authorities, and
    changes, if any, could adjust the individual income tax of the
    members.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Uncertain tax positions</I>&#160;&#151; The Company follows
    the provisions of Accounting for Uncertainty in Income Taxes
    (&#147;Uncertain Tax Position&#148;). Uncertain Tax Position
    prescribes recognition thresholds that must be met before a tax
    position is recognized in the financial statements and provides
    guidance on de-recognition, classification, interest and
    penalties, accounting in interim periods, disclosure, and
    transition. Under Uncertain Tax Position, an entity may only
    recognize or continue to recognize tax positions that meet a
    &#147;more likely than not&#148; threshold. The Company has
    evaluated its tax position at March&#160;31, 2010, and does not
    expect a material adjustment to be made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Use of estimates</I>&#160;&#151; The preparation of financial
    statements in conformity with US GAAP requires the Company to
    make estimates and assumptions that affect the reported amounts
    of assets and liabilities and the disclosure of contingent
    assets and liabilities as of the date of the balance sheet.
    Actual results could differ from those estimates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subsequent events</I>&#160;&#151; The Company has evaluated
    events and transactions that occurred between April&#160;1, 2010
    and April&#160;20, 2010, which is the date the financial
    statement was issued, for possible disclosure and
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL -->
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN AIF
    III GP, LLC</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Notes to Balance Sheet&#160;&#151; (Continued)</B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    recognition in the financial statement. No events or
    transactions were identified during this period that required
    disclosure or recognition.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">3.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Capital
    Contribution Agreement with the Parent</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Parent has entered into a Capital Contribution Agreement
    with the Company pursuant to which the Parent has agreed to
    contribute, from time to time, an aggregate amount of up to
    $1,000,000 to the capital of the Company. There are no
    restrictions or covenants associated with this agreement that
    would preclude the Company from receiving any or all of the
    aggregate amount of capital contributions provided for in the
    agreement, except that the Parent is under no obligation to
    provide any additional funding to the Company once it has
    contributed $1,000,000 to the capital of the Company.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">4.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Transactions
    with Related Parties</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As discussed in Note&#160;2, the Company may be reimbursed for
    expenses incurred on behalf of the Managed Fund for the
    organization and offering of the Managed Fund, and is entitled
    to 1% of the Managed Fund&#146;s profits, losses, cash
    distributions and liquidation proceeds and reimbursement for
    administrative expenses incurred in relation to the Managed
    Fund&#146;s operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company entered into an agreement with the Parent pursuant
    to which the Parent has agreed to contribute up to $1,000,000 of
    additional capital to the Company (See Note&#160;3).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At March&#160;31, 2010, the Company has a $100 investment in
    limited partnership, which represents the general partnership
    interest the Company owns in the Managed Fund (See Note&#160;1).
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='303'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Report of
    Independent Registered Public Accounting Firm</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the Members
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN Alternative Investment Fund&#160;III, LP
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have audited the accompanying balance sheet of SQN
    Alternative Investment Fund&#160;III, LP as of March&#160;31,
    2010. SQN Alternative Investment Fund&#160;III, LP&#146;s
    management is responsible for this financial statement. Our
    responsibility is to express an opinion on this financial
    statement based on our audit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audits to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company is not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audit included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company&#146;s internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statement and assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audit provides a reasonable basis for our opinion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In our opinion, the financial statements referred to above
    presents fairly, in all material respects, the financial
    position of SQN Alternative Investment Fund&#160;III, LP as of
    March&#160;31, 2010, in conformity with accounting principles
    generally accepted in the United States of America.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Holtz
    Rubenstein Reminick LLP</DIV>
</DIV>

<DIV style="font-size: 2pt; margin-left: 49%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holtz Rubenstein Reminick LLP
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    New York, New York
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    April&#160;20, 2010
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <B><FONT style="font-family: 'Times New Roman', Times">SQN
    ALTERNATIVE INVESTMENT FUND&#160;III, L.P.<BR>
    <A name='304'> <!-- XBRL,bs --> <BR>
    Balance Sheet<BR>
    </FONT></B><I><FONT style="font-family: 'Times New Roman', Times">March&#160;31,
    2010</FONT></I>
</DIV>
<!-- XBRL,body -->
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="92%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>ASSETS</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD colspan="5">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>LIABILITIES AND PARTNERS&#146; EQUITY</B>
</DIV>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity&#160;&#151; General Partner
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity&#160;&#151; Limited Partner
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less: Subscriptions Receivable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Liabilities and Partners&#146; Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- /XBRL,bs -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL,NS -->
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN
    ALTERNATIVE INVESTMENT FUND&#160;III, L.P.<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <A name='305'><B><FONT style="font-family: 'Times New Roman', Times">Notes
    to Balance Sheet<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">March&#160;31,
    2010</FONT></I></A>
</DIV>
</A>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 05 -->

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">1.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Organization
    and Nature of Operations</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Nature of business</I>&#160;&#151; SQN Alternative Investment
    Fund&#160;III, L.P. (the &#147;Partnership&#148;) was formed on
    March&#160;10, 2010 as a Delaware limited partnership. The
    initial capitalization of the Partnership was $100. The
    Partnership is offering limited partnership interests on a
    &#147;best efforts&#148; basis with the intention of raising up
    to $50,000,000 of capital, consisting of 50,000 limited
    partnership units. Upon raising a minimum of $1,200,000 in
    capital, limited partners will be admitted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With the proceeds from the sale of limited partnership units,
    the Partnership intends to invest in equipment leases, acquire
    diversified portfolios of equipment, other equipment
    related-investments, and establish a cash reserve. The general
    partner of the Partnership is SQN AIF III GP, LLC (the
    &#147;General Partner&#148;), a Delaware limited liability
    company. The Investment Manager will make investments on behalf
    of and manage the business of the Partnership. The Partnership
    will generate income through the collection of lease rentals and
    other revenues and through the sale of leased equipment and
    other portfolio investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Partnership&#146;s fiscal year ends on December&#160;31.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 05 -->

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">2.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    of Significant Accounting Policies</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Basis of presentation</I>&#160;&#151; The accompanying
    balance sheet of the Partnership has been prepared in accordance
    with U.S.&#160;generally accepted accounting principles
    (&#147;US GAAP&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Cash and cash equivalents</I>&#160;&#151; Cash and cash
    equivalents include cash maintained in checking and savings
    accounts at financial institutions and highly liquid investments
    with original maturity dates of three months or less.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Deferred charges</I>&#160;&#151; Pursuant to the terms of the
    partnership agreement of the Partnership, the costs of
    organizing the Partnership and offering the limited partnership
    units are capitalized by the Partnership and amortized over the
    estimated offering period, generally two years from the
    effective date of the registration statement. Following the
    commencement of operations, the unamortized balance of these
    costs will be reflected in the balance sheet as deferred charges.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Income taxes</I>&#160;&#151; The Partnership is taxed as a
    partnership for federal and state income tax purposes. No
    provision for income taxes has been recorded since the liability
    for such taxes is that of each of the members rather than the
    Partnership. The Partnership&#146;s income tax returns are
    subject to examination by the federal and state taxing
    authorities, and changes, if any, could adjust the individual
    income tax of the members.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Uncertain tax positions</I>&#160;&#151; The Partnership
    follows the provisions of Accounting for Uncertainty in Income
    Taxes (&#147;Uncertain Tax Position&#148;). Uncertain Tax
    Position prescribes recognition thresholds that must be met
    before a tax position is recognized in the financial statements
    and provides guidance on de-recognition, classification,
    interest and penalties, accounting in interim periods,
    disclosure, and transition. Under Uncertain Tax Position, an
    entity may only recognize or continue to recognize tax positions
    that meet a &#147;more likely than not&#148; threshold. The
    Partnership has evaluated its tax position at March&#160;31,
    2010, and does not expect a material adjustment to be made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Use of estimates</I>&#160;&#151; The preparation of financial
    statements in conformity with US GAAP requires the Partnership
    to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and the disclosure of
    contingent assets and liabilities as of the date of the balance
    sheet. Actual results could differ from those estimates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subsequent events</I>&#160;&#151; The Partnership has
    evaluated events and transactions that occurred between
    April&#160;1, 2010 and April&#160;20, 2010, which is the date
    the financial statement was issued, for possible disclosure and
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL -->
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN
    ALTERNATIVE INVESTMENT FUND&#160;III, L.P.<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Notes to
    Balance Sheet&#160;&#151;&#160;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    recognition in the financial statement. No events or
    transactions were identified during this period that required
    disclosure or recognition.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 05 -->

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">3.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Capital
    Contributions</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The General Partner has made an initial capital contribution of
    $100 to the Partnership. In addition, an initial limited partner
    has subscribed to a capital contribution of $1,000 to the
    Partnership. The initial limited partner is SQN Capital
    Management, LLC a Delaware limited liability company and the
    investment manager of the Partnership (the &#147;Investment
    Manager&#148;) and parent of the General Partner.
</DIV>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 05 -->

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">4.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Transactions
    with Related Parties</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Partnership has entered into certain agreements with the
    General Partner, the Investment Manager and SQN Securities LLC,
    an affiliate of the General Partner that is acting as exclusive
    sales agent for the offering of the Partnership&#146;s limited
    partnership units, whereby the Partnership pays certain fees and
    reimbursements to these parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the terms of the partnership agreement of the
    Partnership, the General Partner is entitled to 1% of the
    Partnership&#146;s profits, losses, cash distributions and
    liquidation proceeds. In addition, the General Partner and its
    affiliates will be reimbursed for organizational and offering
    expenses incurred in connection with the Partnership&#146;s
    organization and offering of limited partnership units and
    certain administrative expenses incurred in connection with the
    Partnership&#146;s operations.
</DIV>
<!-- /XBRL,NS -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">APPENDIX&#160;A</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">AMENDED
    AND RESTATED AGREEMENT OF<BR>
    LIMITED PARTNERSHIP<BR>
    OF<BR>
    SQN ALTERNATIVE INVESTMENT FUND&#160;III, L.P.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="11%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="84%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;I&#160;&#151; DEFINITIONS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    1.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Defined Terms
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;II&#160;&#151; FORMATION OF PARTNERSHIP
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    2.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Formation of Partnership
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;III&#160;&#151; NAME
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    3.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Name
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;IV&#160;&#151; PLACES OF BUSINESS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    4.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Principal Place of Business
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    4.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Other Places of Business
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    4.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Registered Office and Registered Agent
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;V&#160;&#151; NAMES AND ADDRESSES OF PARTNERS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    5.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Names and Addresses of Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;VI&#160;&#151; PURPOSES AND OBJECTIVES
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    6.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Purposes
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    6.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Investment Objectives
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;VII&#160;&#151; TERM
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    7.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Term
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;VIII&#160;&#151; PARTNERS AND CAPITAL
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    General Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Original Limited Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limited Partners and Maximum Offering
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Subscription Documents and Suitability
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Payment of Subscription Price of Units
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.6
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Minimum Subscription Amount
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.7
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Subscriptions for Units by General Partner and its Affiliates
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.8
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Partnership Closings
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.9
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Acceptance of Units
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.10
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Admission to Partnership as Limited Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.11
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Escrow Account and Subscription Account
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.12
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Separate Escrow Account for Residents of Pennsylvania
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.13
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Partnership Capital
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.14
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Capital Accounts
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.15
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limitations on Additional Capital Contributions
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    8.16
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Loans by Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;IX&#160;&#151; POWERS, RIGHTS AND DUTIES OF GENERAL
    PARTNER
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Extent of Powers and Duties
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limitations on the Exercise of Powers of General Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-19
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limitation on Liability of General Partner and its Affiliates;
    Indemnification
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-22
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Compensation of General Partner and its Affiliates
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Other Interests of the General Partner and its Affiliates
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    9.6
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Minimum Requirement for Investments/Maximum Front-End Fees
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;X&#160;&#151; OWNERS AND LIABILITIES OF LIMITED
    PARTNERS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    10.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Absence of Control Over Partnership Business
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    10.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Limited Liability
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="11%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="84%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XI&#160;&#151; DISTRIBUTIONS AND ALLOCATIONS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Distribution of Distributable Cash
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Allocations of Income and Loss
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Distributions and Allocations Among the Limited Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Tax Allocations: Code Section&#160;704(c); Revaluations
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Return of Uninvested Capital Contribution
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.6
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    No Distributions in Kind
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    11.7
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Partnership Entitled to Withhold Taxes
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XII&#160;&#151; WITHDRAWAL OF GENERAL PARTNER
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    12.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Voluntary Withdrawal
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    12.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Involuntary Withdrawal
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    12.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Consequences of Withdrawal
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-31
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    12.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Liability of Withdrawn General Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    12.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Notice of Withdrawal; Admission of Substitute General Partner;
    Dissolution if No Substitute General Partner Approved
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XIII&#160;&#151; TRANSFER OF UNITS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    13.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Withdrawal of a Limited Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    13.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Assignment
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    13.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Substitution
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    13.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Status of an Assigning Limited Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    13.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limited Right of Presentment for Redemption of Units
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XIV&#160;&#151; DISSOLUTION AND
    <FONT style="white-space: nowrap">WINDING-UP</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-36
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    14.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Events Causing Dissolution
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-36
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    14.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Winding Up of the Partnership; Capital Contribution by the
    General Partner On Dissolution
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-36
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    14.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Application of Liquidation Proceeds On Dissolution
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    14.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    No Recourse Against Other Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XV&#160;&#151; FISCAL MATTERS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Title to Property and Bank Accounts
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Maintenance of and Access to Basic Partnership Documents
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Financial Books and Accounting
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-39
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Fiscal Year
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-39
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Reports
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-39
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.6
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Tax Returns and Tax Information
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.7
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Accounting Decisions
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.8
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Federal Tax Elections
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    15.9
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Tax Matters Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-42
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XVI&#160;&#151; MEETINGS AND VOTING RIGHTS OF THE
    LIMITED PARTNERS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-43
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    16.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Meetings of the Limited Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-43
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    16.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Voting Rights of the Limited Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-44
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    16.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Limitations on Action by the Limited Partners
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XVII&#160;&#151; AMENDMENTS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    17.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Amendments by the General Partner
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-45
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XVIII&#160;&#151; POWER OF ATTORNEY
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-46
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    18.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Appointment of
    <FONT style="white-space: nowrap">Attorney-in-Fact</FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-46
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    18.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Amendments to Agreement and Certificate of Limited Partnership
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-46
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-ii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="11%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="84%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    18.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Power Coupled With an Interest
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-46
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    ARTICLE&#160;XIX&#160;&#151; GENERAL PROVISIONS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Notices, Approvals and Consents
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Further Assurances
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Captions
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.4
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Binding Effect
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.5
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Severability
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.6
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Integration
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.7
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Applicable Law
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.8
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Counterparts
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-47
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.9
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Creditors
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.10
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Successors and Assigns
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-48
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    19.11
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Waiver of Action for Partition
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    A-48
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-iii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">AMENDED
    AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP<BR>
    OF<BR>
    SQN ALTERNATIVE INVESTMENT FUND&#160;III, L.P.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Amended and Restated Agreement of Limited Partnership is
    made and entered into by and among SQN AIF III GP, LLC, a
    Delaware limited liability company, as the General Partner, SQN
    Capital Management, LLC, a Delaware limited liability company,
    as the &#147;Original Limited Partner,&#148; and such other
    persons who may be admitted to the Partnership from time to time
    as Limited Partners.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;I&#160;&#151;
    DEFINITIONS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    1.1&#160;<I>Defined Terms.</I>&#160;&#160;Defined terms used in
    this Agreement shall have the meanings specified below. Certain
    additional defined terms are set forth elsewhere in this
    Agreement. Unless the context otherwise requires, the singular
    shall include the plural and the masculine gender shall include
    the feminine and neuter, and vice versa, and &#147;Article&#148;
    and &#147;Section&#148; references are references to the
    Articles and Sections of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;<I>&#147;Accountants&#148; </I>means any firm of
    independent certified public accountants that may be engaged
    from time to time by the General Partner on behalf of the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;<I>&#147;Acquisition Expenses&#148; </I>means expenses
    (other than Acquisition Fees) incurred and paid to any Person
    which are attributable to the selection and acquisition of
    Investments, whether or not acquired, including, but not limited
    to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;legal fees and expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;travel and communication expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;costs of credit reports, appraisals and reference
    materials used to evaluate transactions;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;non-refundable option payments on Investments not
    acquired;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;accounting fees and expenses;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;insurance costs;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;initial direct costs, as that term is defined under
    United States generally accepted accounting principles
    (&#147;GAAP&#148;), which includes any origination fees paid by
    the Investment Manager or its Affiliates to any Person,
    including its or its Affiliates&#146; employees, with respect to
    acquiring and holding Investments on a temporary basis before
    they are purchased from the Investment Manager or its Affiliates
    by the Partnership;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (viii)&#160;miscellaneous other expenses, however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;<I>&#147;Acquisition Fees&#148; </I>means all fees and
    commissions paid by any party in connection with the initial
    purchase or funding of any Investment, including fees payable to
    finders and brokers that are not Affiliates of the General
    Partner. Also, included in the computation of such fees or
    commissions shall be any commission, selection fee, financing
    fee, non-recurring management fee, or any fee of a similar
    nature, however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;<I>&#147;Adjusted Capital Account Deficit&#148;
    </I>means with respect to any Capital Account as of the end of
    any taxable year, the amount by which the balance in the Capital
    Account is less than zero. For this purpose, a Partner&#146;s
    Capital Account balance shall be:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;reduced for any items described in Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(ii)(d)(4),</FONT>
    (5), and (6);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;increased for any amount which the Partner is
    obligated to restore, because of a promissory note to the
    Partnership or otherwise, or is deemed obligated to restore
    pursuant to the penultimate sentence in each of Regulations
    <FONT style="white-space: nowrap">Sections&#160;1.704-2(g)(1)(ii)</FONT>
    and 1.704-2(i)(5) (relating to Partnership Minimum Gain and
    Partner Nonrecourse Debt Minimum Gain, respectively).
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;<I>&#147;Adjusted Capital Contribution&#148;</I> means,
    as to any Limited Partner, as determined from time to time, the
    Limited Partner&#146;s Capital Contribution reduced, but not
    below zero, by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;all distributions previously made to the Limited
    Partner by the Partnership which are deemed by the General
    Partner to reduce the Limited Partner&#146;s Capital
    Contribution under Section&#160;11.3(d)(ii);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;all payments previously made to the Limited Partner in
    Redemption of a portion or all of the Limited Partner&#146;s
    Units under Section&#160;13.5.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (6)&#160;<I>&#147;Administrator&#148;</I> means the official or
    agency administering the securities laws of a state or other
    political subdivision of the United States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (7)&#160;<I>&#147;Affiliate&#148;</I> means, with respect to any
    Person:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any other Person directly or indirectly controlling,
    controlled by or under common control with such Person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any other Person owning or controlling 10% or more of
    the outstanding voting securities of such Person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any officer, director or partner of such
    Person;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;if such Person is an officer, director or partner, any
    other Person for which such Person acts in such capacity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (8)&#160;<I>&#147;Affiliated Limited Partner&#148;</I> means any
    of the following Persons who purchase Units and are admitted to
    the Partnership as Limited Partners:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner and its Affiliates;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Selling Agent and any registered representative or
    principal of the Selling Agent;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;registered investment advisors and their
    clients;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;investors who buy Units through the officers and
    directors of the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (9)&#160;<I>&#147;Affiliated Program&#148;</I> means any Program
    formed by the General Partner or any Affiliate of the General
    Partner or in which the General Partner or any of its Affiliates
    has an interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (10)&#160;<I>&#147;Agreement&#148;</I> means this Amended and
    Restated Agreement of Limited Partnership, as it may hereafter
    be amended, supplemented or restated from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (11)&#160;<I>&#147;Assessments&#148;</I> means additional
    amounts of capital which may be mandatorily required of, or paid
    at the option of, a Limited Partner beyond his subscription
    commitment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (12)&#160;<I>&#147;Assignee&#148;</I> means any Person to whom
    any Unit or Partnership Interest, or part thereof, has been
    Assigned, in whole or in part, in a manner permitted by
    Section&#160;13.2.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (13)&#160;<I>&#147;Assignment&#148;</I> means, with respect to
    any Unit or Partnership Interest, or any part thereof, the sale,
    assignment, transfer, gift or other disposition of such Unit or
    Partnership Interest, whether voluntarily or by operation of
    law, except that in the case of a bona fide pledge or other
    hypothecation, no Assignment shall be deemed to have occurred
    unless and until the secured party has exercised his right of
    foreclosure with respect thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (14)&#160;<I>&#147;Capital Account&#148;</I> means the capital
    account maintained for each Partner under Section&#160;8.14.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (15)&#160;<I>&#147;Capital Contribution&#148;</I> means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;as to the General Partner, its initial $100
    contribution to the capital of the Partnership plus any
    additional amounts as may be contributed to the capital of the
    Partnership by the General Partner;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;as to any Limited Partner, including Affiliated
    Limited Partners, the gross amount of investment in the
    Partnership actually paid by the Limited Partner, i.e. the Unit
    Price, without deduction for Front-End Fees (whether payable by
    the Partnership or not);
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    but excluding Net Disposition Proceeds reinvested in additional
    Investments under Section&#160;9.1(b)(xxv).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (16)&#160;<I>&#147;Cash Flow&#148;</I> means the
    Partnership&#146;s Gross Revenues, without deduction for
    depreciation, but after deducting the Partnership&#146;s cash
    funds used to pay all other Partnership expenses, debt payments,
    capital improvements and replacements (other than cash funds
    withdrawn from Reserves).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (17)&#160;<I>&#147;Closing&#148;</I> means the admission of
    Limited Partners to the Partnership in accordance with
    Section&#160;8.3.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (18)&#160;<I>&#147;Closing Date&#148;</I> means any date on
    which any Limited Partner is admitted to the Partnership, and
    includes the Initial Closing Date, any subsequent Closing Date
    and the Final Closing Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (19)&#160;<I>&#147;Code&#148;</I> means the Internal Revenue
    Code of 1986, as amended, or corresponding provisions of
    subsequent laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (20)&#160;<I>&#147;Commission&#148;</I> means the Securities and
    Exchange Commission.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (21)&#160;<I>&#147;Consent&#148;</I> means, as the context may
    require:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;consent given by vote at a meeting called and held in
    accordance with the provisions of Section&#160;16.1;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the written consent without a meeting of any Person to
    do the act or thing for which the consent is solicited;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the act of granting the consent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (22)&#160;<I>&#147;Controlling Person&#148;</I> means, with
    respect to the General Partner or any Affiliate of the General
    Partner, any of the following Persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;its chairmen, directors, presidents, or other executive
    or senior officers;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any holder of a 5% or greater equity interest in the
    General Partner or its Affiliate;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any Person having the power to direct or cause the
    direction of the General Partner or its Affiliate, whether
    through the ownership of voting securities, by contract or
    otherwise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (23)&#160;<I>&#147;Counsel&#148;</I> means any law firm that may
    be engaged from time to time by the General Partner on behalf of
    the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (24)&#160;<I>&#147;Cumulative Return&#148;</I> means, as to any
    Limited Partner, an amount equal to an 8% annual cumulative
    return, compounded annually, on the Limited Partner&#146;s
    Capital Contribution calculated from a date not later than the
    last day of the calendar quarter in which the Capital
    Contribution of the Limited Partner as to which the Cumulative
    Return is being calculated was made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (25)&#160;<I>&#147;Distribution Expenses&#148;</I> means the
    fees payable to the Selling Agent in an amount equal to 2% of
    the Unit Price per Unit sold, in the aggregate, in the Offering
    (excluding any Units sold to the General Partner or its
    Affiliates).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (26)&#160;<I>&#147;Delaware Act&#148;</I> means the Delaware
    Revised Uniform Limited Partnership Act, as amended, and any
    successor thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (27)&#160;<I>&#147;Distributable Cash&#148;</I> means Cash Flow
    plus any amounts released from Reserves by the General Partner,
    less amounts allocated to Reserves by the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (28)&#160;<I>&#147;Effective Date&#148;</I> means the date the
    Registration Statement is declared effective by the Commission.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (29)&#160;<I>&#147;Equipment&#148;</I> means any new, used or
    reconditioned equipment or revenue stream associated therewith
    acquired by the Partnership, or in which the Partnership has
    acquired a direct or indirect interest (including, but not
    limited to, residual interests), and shall also be deemed to
    include such equipment which at any time is subject to, or
    serves as the collateral for, a Lease.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (30)&#160;<I>&#147;Escrow Account&#148;</I> means an
    interest-bearing account established and maintained by the
    Partnership, the General Partner and the Selling Agent with the
    Escrow Agent in accordance with the terms of the Escrow
    Agreement for the purpose of holding, pending the distribution
    thereof in accordance with the terms of the Escrow Agreement and
    this Agreement, any subscription funds received from Persons who
    may be admitted to the Partnership as Limited Partners on the
    Initial Closing Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (31)&#160;<I>&#147;Escrow Agent&#148;</I> means a United States
    banking institution with at least $50&#160;million in assets,
    which shall be selected by the General Partner to serve in such
    capacity pursuant to the Escrow Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (32)&#160;<I>&#147;Escrow Agreement&#148;</I> means the Escrow
    Agreement among the Partnership, the General Partner, the
    Selling Agent and the Escrow Agent, substantially in the form of
    the Escrow Agreement filed as an exhibit to the Registration
    Statement, as amended and supplemented from time to time as
    permitted by its terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (33)&#160;<I>&#147;Final Closing Date&#148;</I> means the last
    Closing Date in the Offering on which a Limited Partner (other
    than a Substitute Limited Partner) is admitted to the
    Partnership, which shall be as soon as practicable following the
    Offering Termination Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (34)&#160;<I>&#147;Financing Transaction&#148;</I> means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any extension of credit or loan of money to the
    Partnership or its subsidiaries that is secured by a security
    interest in the Partnership&#146;s Investments or other tangible
    or intangible personal property of the Partnership or any Lease
    of any such property;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any notes issued in connection with a securitization
    of Investments, or receivables therefrom; or
</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any transaction in which the Partnership&#146;s
    Investments are sold to a Person for purposes of securitization
    and with customary retained rights or interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (35)&#160;<I>&#147;FINRA&#148;</I> means the Financial Industry
    Regulatory Authority, Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (36)&#160;<I>&#147;Fiscal Period&#148;</I> means any interim
    accounting period within a Fiscal Year established by the
    General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (37)&#160;<I>&#147;Fiscal Quarter&#148;</I> means, for each
    Fiscal Year, the 3-calendar-month period which commences on the
    first day of such Fiscal Year and each additional
    3-calendar-month period commencing on the first day of the first
    month following the end of the preceding such period within such
    Fiscal Year (or such shorter period ending on the last day of a
    Fiscal Year).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (38)&#160;<I>&#147;Fiscal Year&#148;</I> means the
    Partnership&#146;s annual accounting period established pursuant
    to Section&#160;15.4.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (39)&#160;<I>&#147;Front-End Fees&#148;</I> means fees and
    expenses paid by any Person for any services rendered during the
    Partnership&#146;s organizational and offering or acquisition
    phases, including Distribution Expenses, Organization and
    Offering Expense Allowances, Leasing or Financing Fees,
    Acquisition Fees and Acquisition Expenses (other than any
    Acquisition Fees or Acquisition Expenses paid by a manufacturer
    of equipment to any of its employees unless such Persons are
    Affiliates of the General Partner) and all other similar fees
    however designated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (40)&#160;<I>&#147;Full Payout Lease&#148;</I> means any lease
    under which the aggregate noncancellable rental payments due
    during the initial term of the lease, on a net present value
    basis, are at least sufficient to permit the Partnership to
    recover the entire Purchase Price of the Equipment subject to
    the lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (41)&#160;<I>&#147;GAAP&#148;</I> means United States generally
    accepted accounting principles.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (42)&#160;<I>&#147;General Partner&#148;</I> means SQN AIF III
    GP, LLC, and its successors or permitted assigns, as general
    partner of the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (43)&#160;<I>&#147;Gross Asset Value&#148;</I> means, with
    respect to any asset of the Partnership, the asset&#146;s
    adjusted tax basis, except that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the initial Gross Asset Value of any asset contributed
    by a Partner to the Partnership shall be the gross fair market
    value of such asset at the time of such contribution;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Gross Asset Values of all Partnership assets shall
    be adjusted to equal their respective gross fair market values
    at the time specified in Treas. Reg. Section
    1.704-1(b)(2)(iv)(f)(5) if the Partnership so elects;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the Gross Asset Value of any Partnership asset
    distributed to any Partner shall be the gross fair market value
    of such asset on the date of distribution;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;to the extent not otherwise reflected in the
    Partners&#146; Capital Accounts, the Gross Asset Values of
    Partnership assets shall be increased (or decreased) to
    appropriately reflect any adjustments to the adjusted basis of
    such assets pursuant to Code Section&#160;734(b) or Code
    Section&#160;743(b);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;if on the date of contribution of an asset or a
    revaluation of an asset in accordance with clauses&#160;(ii)
    through (iv), above, the adjusted tax basis of such asset
    differs from its fair market value, the Gross Asset Value of
    such asset shall thereafter be adjusted by reference to the
    depreciation method described in Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)(g)(3).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (44)&#160;<I>&#147;Gross Offering Proceeds&#148;</I> means the
    gross amount of Capital Contributions, before deduction of
    Front-End Fees, of all Limited Partners admitted to the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (45)&#160;<I>&#147;Gross Revenues&#148;</I> means gross cash
    receipts of the Partnership from whatever source (including its
    share of Gross Revenues from its indirect Investments),
    excluding Capital Contributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (46)&#160;<I>&#147;Unit Price&#148;</I> means $1,000 per Unit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (47)&#160;<I>&#147;Income&#148;</I> or <I>&#147;Loss&#148;</I>
    means, for any Fiscal Year, the Partnership&#146;s taxable
    income or loss for such Fiscal Year, determined in accordance
    with Code Section&#160;703(a) (for this purpose, all items of
    income, gain, loss or deduction required to be stated separately
    pursuant to Code Section&#160;703(a)(1) shall be included in
    taxable income or loss), with the following adjustments:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any income of the Partnership that is exempt from
    federal income tax and not otherwise taken into account in
    computing Income or Loss shall be applied to increase such
    taxable income or reduce such loss;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any expenditure of the Partnership described in Code
    Section&#160;705(a)(2)(B), or treated as such pursuant to Treas.
    Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)(i)</FONT>
    and not otherwise taken into account in computing Income or
    Loss, shall be applied to reduce such taxable income or increase
    such loss;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;gain or loss resulting from a taxable disposition of
    any asset of the Partnership shall be computed by reference to
    the Gross Asset Value of such asset and the special depreciation
    calculations described in Treas. Reg. Section
    1.704-1(b)(2)(iv)(g), notwithstanding that the adjusted tax
    basis of such asset may differ from its Gross Asset Value;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;in lieu of the depreciation, amortization, and other
    cost recovery deductions taken into account in computing such
    taxable income or loss for such Fiscal Year, there shall be
    taken into account depreciation, amortization or other cost
    recovery deductions determined pursuant to the method described
    in Treas. Reg. Section 1.704-1(b)(2)(iv)(g)(3);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;in the event the Gross Asset Value of any Partnership
    asset is adjusted pursuant to clause&#160;(ii) of
    Section&#160;1.1(43), the amount of such adjustment shall be
    taken into account as gain or loss from the disposition of such
    asset for purposes of computing Income or Loss;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;any items which are specially allocated pursuant to
    Section&#160;11.2(b), (c), (d), (e), (f), (g)&#160;or
    (h)&#160;shall not be taken into account in computing Income or
    Loss.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (48)&#160;<I>&#147;Indebtedness&#148;</I> means, with respect to
    any Person as of any date, all obligations (other than capital,
    surplus, deferred income taxes and, to the extent not
    constituting obligations, other deferred credits and reserves)
    that could be classified as liabilities (exclusive of accrued
    expenses and trade accounts payable incurred with respect to
    property purchased in the ordinary course of business that are
    not overdue or are being contested in good faith by appropriate
    proceedings and are not required to be classified as debt on a
    balance sheet of the Person that is prepared in accordance with
    GAAP as of that date).
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (49)&#160;<I>&#147;Independent Expert&#148;</I> means a Person
    with no material current or prior business or personal
    relationship with the General Partner or its Affiliates, who is
    engaged to a substantial extent in the business of rendering
    appraisals regarding the value of assets of the type held by the
    Partnership and who is qualified to perform the work.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (50)&#160;<I>&#147;Initial Closing Date&#148;</I> means the
    first Closing Date for the Partnership on which Limited Partners
    with Units equal to, or greater than, the Minimum Offering are
    admitted to the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (51)&#160;<I>&#147;Investment in Equipment&#148;</I> means the
    aggregate amount of Capital Contributions and Financial
    Transactions actually paid or allocated to the purchase,
    manufacture or renovation of Investments acquired by the
    Partnership, together with other cash payments such as interest,
    taxes and Reserves allocable thereto (to the extent that
    Reserves do not exceed 3% of Capital Contributions), but
    excluding Front-End Fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (52)&#160;<I>&#147;Investment Committee&#148;</I> means a
    committee of certain of the General Partner&#146;s or its
    Affiliates&#146; officers
    <FONT style="white-space: nowrap">and/or</FONT>
    directors, as determined in the sole discretion of the General
    Partner, that shall do the following on behalf of the
    Partnership:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;approve significant transactions and transactions which
    differ from the standards and procedures the Investment
    Committee has established;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;pursuant to Section&#160;9.5, resolve conflicts in
    allocating Investments among Affiliated Programs;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;consider any other matter submitted to the Investment
    Committee for its review by the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (53)&#160;<I>&#147;Investment Manager&#148;</I> means SQN
    Capital Management, LLC, an Affiliate of the General Partner, or
    its successor pursuant to the Management, Origination and
    Servicing Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (54)&#160;<I>&#147;Investments&#148;</I> means the
    Partnership&#146;s portfolio, from time to time, of Equipment,
    Other Physical Assets and Leases, whether the Partnership owns
    the portfolio directly or indirectly.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (55)&#160;<I>&#147;IRA&#148;</I> means an Individual Retirement
    Account.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (56)&#160;<I>&#147;IRS&#148;</I> means the Internal Revenue
    Service or any successor agency thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (57)&#160;<I>&#147;Lease&#148;</I> means any Full Payout Lease,
    any Operating Lease and any residual value interest therein or
    any other agreement directly or indirectly collateralized by
    Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (58)&#160;<I>&#147;Leasing or Financing Fee&#148;</I> means the
    total of all fees and commissions paid by any Person in
    connection with the initial lease or initial financing of
    Equipment and Other Physical Assets acquired by the Partnership
    or an Affiliated Program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (59)&#160;<I>&#147;Lender&#148;</I> means any Person that lends
    cash or cash equivalents to the Partnership or its subsidiaries,
    including any Person that acquires by purchase, assignment, or
    otherwise, an interest in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the future amounts payable under any Lease and in the
    related Equipment or Other Physical Assets;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;payments due under any Financing Transaction and in
    any property securing the Financing Transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (60)&#160;<I>&#147;Lessee&#148;</I> means a lessee under a Lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (61)&#160;<I>&#147;Limited Partner&#148;</I> means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any Person who owns at least a portion of a Unit and
    who has been admitted to the Partnership as a Limited Partner,
    including Affiliated Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any Person who becomes a Substitute Limited Partner in
    accordance with this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    including the General Partner and its Affiliates to the extent
    they purchase Units.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (62)&#160;<I>&#147;Liquidation Period&#148;</I> means the period
    commencing on the first day following the end of the Operating
    Period and continuing for the period deemed necessary by the
    General Partner for the orderly termination of the
    Partnership&#146;s operations and affairs and the liquidation or
    disposition of the Partnership&#146;s Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (63)&#160;<I>&#147;Majority&#148;</I> or <I>&#147;Majority
    Interest&#148;</I> means Limited Partners owning more than 50%
    of the aggregate outstanding Units from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (64)&#160;<I>&#147;Management Fees&#148;</I> means, for any
    month, an amount equal to the greater of (i)&#160;1.975% per
    annum of the Gross Offering Proceeds or (ii)&#160;$60,000, which
    shall be payable monthly to the Investment Manager, or an
    Affiliate designated by the Investment Manager.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (65)&#160;<I>&#147;Management, Origination and Servicing
    Agreement&#148;</I> means the agreement entered into between the
    Partnership and the Investment Manager, substantially in the
    form of the Management, Origination and Servicing Agreement
    filed as an exhibit to the Registration Statement, as amended
    and supplemented from time to time as permitted by its terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (66)&#160;<I>&#147;Maximum Offering&#148;</I> means the receipt
    and acceptance by the Partnership of subscriptions for not more
    than 50,000 Units ($50,000,000), excluding the 1 Unit subscribed
    for by the Original Limited Partner, on or before the Final
    Closing Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (67)&#160;<I>&#147;Minimum Offering&#148;</I> means the receipt
    and acceptance by the Partnership of subscriptions for not less
    than 1,200 Units ($1,200,000), excluding the 1 Unit subscribed
    for by the Original Limited Partner and any Units subscribed for
    by the General Partner or its officers, directors, employees or
    other Affiliates, or Pennsylvania subscribers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (68)&#160;<I>&#147;NASAA Guidelines&#148;</I> means the North
    American Securities Administrators Association, Inc. Statement
    of Policy concerning Equipment Programs, as amended through
    May&#160;7, 2007, as in effect as of the initial effective date
    of the Partnership&#146;s public offering of its Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (69)&#160;<I>&#147;Net Disposition Proceeds&#148;</I> means the
    proceeds realized by the Partnership from the sale, refinancing
    or other disposition of Partnership Investments, including
    insurance proceeds or lessee or borrower indemnity payments
    arising from the loss or destruction of the Equipment, less all
    Partnership liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (70)&#160;<I>&#147;Net Lease Provisions&#148;</I> means
    contractual arrangements under which the lessee assumes
    responsibility for, and bears the cost of, insurance, taxes,
    maintenance, repair and operation of the leased asset and where
    the non-cancellable rental payments under the lease are net to
    the lessor. Notwithstanding, a lease may be deemed to contain
    net lease provisions even if some minor costs or
    responsibilities remain with the lessor or if the lessor retains
    the option to require and pay for a higher standard of care or a
    greater level of maintenance or insurance than would be imposed
    on the lessee under the terms of the lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (71)&#160;<I>&#147;Net Offering Proceeds&#148;</I> means the
    Gross Offering Proceeds minus the Distribution Expenses and the
    Organization and Offering Expense Allowance payable by the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (72)&#160;<I>&#147;Net Worth&#148;</I> means, for any Person
    subscribing for Units, the excess of total assets over total
    liabilities as determined by generally accepted accounting
    principles, but excluding home, home furnishings and
    automobiles. Provided, however, that with respect to the General
    Partner, &#147;Net Worth&#148; means the excess of total assets
    over total liabilities as determined by GAAP. However, if any of
    the General Partner&#146;s assets have been depreciated, then
    the amount of depreciation relative to any particular asset may
    be added to the depreciated cost of the asset to compute the
    General Partner&#146;s total assets, but only to the extent that
    does not exceed the fair market value of the asset.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (73)&#160;<I>&#147;Notice&#148;</I> means a writing containing
    the information required by this Agreement to be communicated to
    any Person and delivered as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;personally delivered to the Person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;sent by registered, certified or regular mail, postage
    prepaid or by a national recognized courier to such Person at
    the last known address of the Person;&#160;or
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;sent by facsimile, with receipt confirmed by
    telephone during normal business hours.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (74)&#160;<I>&#147;Offering&#148;</I> means the offering of
    Units pursuant to the Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (75)&#160;<I>&#147;Offering Period&#148;</I> means the period
    from the Effective Date to the Offering Termination Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (76)&#160;<I>&#147;Offering Termination Date&#148;</I> means the
    earliest of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the date on which the Maximum Offering has been sold;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;two years after the Effective Date (subject to the
    renewal, requalification or consent of each Administrator
    requiring the renewal, requalification or consent of the
    Offering with respect to the extension of the Offering Period
    beyond one year following the Effective Date in the
    Administrator&#146;s jurisdiction);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any earlier date after the Effective Date as may be
    determined by the General Partner in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (77)&#160;<I>&#147;Operating Lease&#148;</I> means a lease under
    which the aggregate noncancellable rental payments during the
    original term of the lease, on a net present value basis, are
    not sufficient to recover the entire Purchase Price of the
    Equipment subject to the lease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (78)&#160;<I>&#147;Operations&#148;</I> means all operations and
    activities of the Partnership except Sales.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (79)&#160;<I>&#147;Operating Period&#148;</I> means the period
    commencing on the Initial Closing Date and ending three years
    after the Initial Closing Date, unless extended by the General
    Partner, in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (80)&#160;<I>&#147;Organization and Offering Expense
    Allowance&#148;</I> means an amount equal to 2% of the
    Partnership&#146;s Gross Offering Proceeds, to reimburse the
    General Partner
    <FONT style="white-space: nowrap">and/or</FONT> its
    Affiliates for Organizational and Offering Expenses incurred by
    it <FONT style="white-space: nowrap">and/or</FONT>
    its Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (81)&#160;<I>&#147;Organization and Offering Expense&#148;</I>
    means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;all costs and expenses incurred in connection with, and
    in preparing the Partnership for, qualification under federal
    and state securities laws and the securities laws of any other
    jurisdiction in which Units may be offered or sold and
    subsequently offering and distributing the Units to the public
    (except Distribution Expenses) including, without limitation:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;printing costs;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;registration and filing fees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;attorneys&#146;, accountants&#146; and other
    professional fees;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the direct costs of salaries to, and expenses
    (including costs of travel) of, officers and directors of the
    General Partner or any Affiliate of the General Partner while
    engaged in organizing the Partnership and registering, offering
    and selling the Units, but shall not include amounts that are
    included within the 10% underwriting compensation limit as
    defined in FINRA Conduct Rule&#160;2810(4)(b)(i).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (82)&#160;<I>&#147;Other Physical Assets&#148;</I> means any
    new, used or reconditioned physical asset or revenue stream
    associated therewith acquired by the Partnership, or in which
    the Partnership has acquired a direct or indirect interest
    (including, but not limited to, residual interests), and shall
    also be deemed to include such physical asset which at any time
    is subject to, or serves as the collateral for, a Lease or other
    agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (83)&#160;<I>&#147;Participant&#148;</I> means the holder of a
    Unit or Partnership Interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (84)&#160;<I>&#147;Participant List&#148;</I> means a list, in
    alphabetical order by name, setting forth the name, address and
    business or home telephone number of, and number of Units held
    by, each Limited Partner. The list shall be printed on white
    paper in a readily readable type size (in no event smaller than
    10-point type) and shall be updated at least quarterly to
    reflect any changes in its information.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (85)&#160;<I>&#147;Partner&#148;</I> means the General Partner
    (including any Substitute General Partner) and any Limited
    Partner or Affiliated Limited Partner (including the Original
    Limited Partner and any Substitute Limited Partner).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (86)&#160;<I>&#147;Partner Nonrecourse Debt&#148;</I> means any
    Partnership nonrecourse liability for which any Partner bears
    the economic risk of loss within the meaning of Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-2(b)(4).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (87)&#160;<I>&#147;Partner Nonrecourse Debt Minimum
    Gain&#148;</I> has the meaning specified in Treas. Reg.
    Section&#160;1.704-2(i)(3), and such additional amount as shall
    be treated as Partner Nonrecourse Minimum Gain pursuant to
    Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-2(j)(1)(iii).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (88)&#160;<I>&#147;Partner Nonrecourse Deductions&#148;</I>
    consist of those deductions and in those amounts specified in
    Treas. Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-2(i)(2)</FONT>
    and (j).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (89)&#160;<I>&#147;Partnership&#148;</I> means SQN Alternative
    Investment Fund&#160;III, L.P.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (90)&#160;<I>&#147;Partnership Interest&#148;</I> means the
    Units owned by a Limited Partner or the percentage interest in
    the Partnership held by the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (91)&#160;<I>&#147;Partnership Loan&#148;</I> means any loan
    made to the Partnership by the General Partner or any Affiliate
    of the General Partner in accordance with Section&#160;9.2(c).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>(92)&#160;&#147;Partnership Minimum Gain&#148;</I> has the
    meaning specified in Treas. Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-2(b)(2)</FONT>
    and (d)&#160;and such additional amount as shall be treated as
    Partnership Minimum Gain pursuant to Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-</FONT>
    2(j)(1)(iii).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (93)&#160;<I>&#147;Partnership Nonrecourse Deductions&#148;</I>
    consist of those deductions and in those amounts specified in
    Treas. Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-2(c)</FONT>
    and (j).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (94)&#160;<I>&#147;Payout&#148;</I> means the time when the
    aggregate amount of cash distributions to a Limited Partner
    pursuant to this Agreement equals the sum of the amount of the
    Limited Partner&#146;s Capital Contribution plus the Cumulative
    Return from a date not later than the last day of the calendar
    quarter in which the Limited Partner was admitted to the
    Partnership as a Limited Partner, and includes an amount of
    Distributable Cash resulting from Sales and refinancings of the
    Partnership&#146;s Investments, if any, sufficient for the
    Limited Partners to pay their federal, state and local income
    taxes resulting from those Sales assuming the Limited Partners
    are in a 30% tax bracket.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (95)&#160;<I>&#147;Person&#148;</I> means any natural person,
    partnership, trust, corporation, limited liability company,
    association or other legal entity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (96)&#160;<I>&#147;Program&#148;</I> means a limited or general
    partnership, joint venture, unincorporated association or
    similar unincorporated organization formed and operated for the
    primary purpose of investment in, and the operation of, or gain
    from, an interest in equipment, leases or related instruments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (97)&#160;<I>&#147;Promotional Interest&#148;</I> means the
    allocable share of all Distributable Cash payable to the General
    Partner pursuant to Sections&#160;11.1(b)(i) and 11.1(b)(ii).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (98)&#160;<I>&#147;Prospectus&#148;</I> means the prospectus
    included as part of the Registration Statement, as supplemented
    or amended.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (99)&#160;<I>&#147;Purchase Price&#148;</I> means, with respect
    to any Investment, the price paid by, or on behalf of, the
    Partnership for or in connection with the purchase, acquisition
    or funding of the Investment, including the amount of the
    related:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;Acquisition Fees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;Acquisition Expenses;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;all liens and encumbrances on the Investment, but
    excluding points and prepaid interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;Purchase Price&#148; also includes, with respect to
    options to acquire an Investment, the sum of the exercise price
    and the price paid to acquire the option.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (100)&#160;<I>&#147;Qualified Plan&#148;</I> means a pension,
    profit-sharing or stock bonus plan, including Keogh Plans,
    meeting the requirements of Sections&#160;401 et seq. of the
    Code, and its related trust.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (101)&#160;<I>&#147;Redemption&#148;</I> means the purchase of a
    portion or all of any Limited Partner&#146;s Units by the
    Partnership under Section&#160;13.5.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (102)&#160;<I>&#147;Registration Statement&#148;</I> means the
    Registration Statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    filed by the Partnership with the Commission under the
    Securities Act in the form in which the Registration Statement
    is declared to be effective for the offer and sale of the
    Partnership&#146;s Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (103)&#160;<I>&#147;Reserves&#148;</I> means reserves
    established and maintained by the Partnership for working
    capital, contingent liabilities and the acquisition of
    Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (104)&#160;<I><FONT style="white-space: nowrap">&#147;Roll-Up&#148;</FONT></I>
    means any transaction involving the acquisition, merger,
    conversion or consolidation, either directly or indirectly, of
    the Partnership with, and the issuance of securities of, a
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity. The term does not include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;a transaction involving securities of the Partnership
    if they have been listed on a national securities exchange or
    traded through the NASDAQ Stock Market (National Market System)
    for at least 12&#160;months;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;a transaction involving only the conversion of the
    Partnership to corporate, trust or association form if, as a
    consequence of the transaction, there will be no significant
    adverse change in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;Limited Partners&#146; voting rights;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the term of existence of the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;the compensation of the General Partner or its
    Affiliates from the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (D)&#160;the Partnership&#146;s investment objectives;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (E)&#160;the income taxation of the Partnership or the Limited
    Partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (105)&#160;<I><FONT style="white-space: nowrap">&#147;Roll-Up</FONT>
    Entity&#148;</I> means any partnership, corporation, trust, or
    other entity that is created by, or surviving after, the
    successful completion of a proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (106)&#160;<I>&#147;Sale&#148;</I> means the sale, exchange,
    involuntary conversion, foreclosure, condemnation, taking,
    casualty (other than a casualty followed by refurbishing or
    replacement), or other disposition of an Investment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (107)&#160;<I>&#147;Securities Act&#148;</I> means the
    Securities Act of 1933, as amended.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (108)&#160;<I>&#147;Selling Agent&#148;</I> means SQN
    Securities, LLC, an Affiliate of the General Partner, the
    selling agent which will conduct the offer and sale of the Units
    in all states and other jurisdictions in the Offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (109)&#160;<I>&#147;Selling Agent Agreement&#148;</I> means the
    agreement entered into between the General Partner, the
    Partnership and the Selling Agent, substantially in the form of
    the Selling Agent Agreement filed as an exhibit to the
    Registration Statement, as amended and supplemented from time to
    time as permitted by its terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (110)&#160;<I>&#147;Specified Equipment Program&#148;</I> means
    a Program where, at the time a securities registration is
    ordered effective, at least 75% of the net proceeds from the
    sale of program interests are allocable to the purchase or
    renovation of identified equipment or one specified type of
    identified equipment. Reserves shall not be included in the 75%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (111)&#160;<I>&#147;Sponsor&#148;</I> means any person directly
    or indirectly instrumental in organizing, wholly or in part, a
    program or any person who will manage or participate in the
    management of a program, and any affiliate of any such person.
    Sponsor does not include a person whose only relation with the
    program is that of an independent equipment manager and whose
    only compensation is as such. Sponsor does not include wholly
    independent third parties such as attorneys, accountants, and
    underwriters whose only compensation is for professional
    services rendered in connection with the offering of program
    interests.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (112)&#160;<I>&#147;Sponsor Fee Limit&#148;</I> means the limit
    on the payment of Front-End Fees, Management Fees and
    Promotional Interest calculated pursuant to Section&#160;9.4(e)
    of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (113)&#160;<I>&#147;SQN I&#148;</I> means SQN Alternative
    Investment Fund&#160;I, LLC, an Affiliated Program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (114)&#160;<I>&#147;SQN II&#148;</I> means SQN Alternative
    Investment Fund&#160;II, LLC, an Affiliated Program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (115)&#160;<I>&#147;Subscription Account&#148;</I> means the
    interest-bearing account established and maintained by the
    Partnership for the purpose of holding subscription funds
    received from Persons who may be admitted to the Partnership as
    Limited Partners on any Closing Date subsequent to the Initial
    Closing Date, pending the acceptance or rejection of their
    subscriptions by the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (116)&#160;<I>&#147;Subscription Agreement&#148;</I> means the
    subscription agreement substantially in the form filed as an
    exhibit to the Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (117)&#160;<I>&#147;Substitute General Partner&#148;</I> means
    any Assignee of, or successor to, the General Partner admitted
    to the Partnership in accordance with Section&#160;12.5.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (118)&#160;<I>&#147;Substitute Limited Partner&#148;</I> means
    any Assignee of Units who is admitted to the Partnership as a
    Limited Partner under Section&#160;13.3.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (119)&#160;<I>&#147;Treasury Regulation&#148; or &#147;Treas.
    Reg.&#148;</I> means final or temporary regulations issued by
    the United States Treasury Department pursuant to the Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (120)&#160;<I>&#147;Unit&#148; or &#147;Partnership Interest of
    a Limited Partner&#148;</I> means a unit of Limited Partner
    interest in the Partnership held by any Limited Partner,
    including rights to profits, losses, income, gain, credits,
    deductions, cash distributions, returns of capital, voting
    rights and other attributes of the Units all as provided by, and
    subject to the terms and provisions of, this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (121)&#160;<I>&#147;Unpaid Cumulative Return&#148;</I> means, as
    to any Limited Partner, the unpaid amount of the Limited
    Partner&#146;s Cumulative Return calculated through the date as
    of which the Unpaid Cumulative Return is being calculated,
    reduced (but not below zero) by the aggregate distributions
    previously made to the Limited Partner by the Partnership that
    are deemed by the General Partner to be a reduction of the
    Limited Partner&#146;s Unpaid Cumulative Return under
    Section&#160;11.3(d)(i).
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;II&#160;&#151;
    FORMATION OF PARTNERSHIP
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2.1&#160;<I>Formation of Partnership.</I>&#160;&#160;The General
    Partner and the Original Limited Partner have previously formed
    the Partnership as a limited partnership under the Delaware Act.
    The General Partner and the Original Limited Partner hereby
    amend and restate in its entirety the original Agreement of
    Limited Partnership of the Partnership and agree that this
    Amended and Restated Agreement of Limited Partnership shall
    govern the rights and liabilities of the Partners, except as
    otherwise expressly provided in this Agreement.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;III&#160;&#151;
    NAME
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    3.1&#160;<I>Name.</I>&#160;&#160;The business of the Partnership
    shall be conducted under the name &#147;SQN Alternative
    Investment Fund&#160;III, L.P.&#148; or such other name as the
    General Partner shall hereafter designate in writing to the
    Limited Partners.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;IV&#160;&#151;
    PLACES OF BUSINESS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    4.1&#160;<I>Principal Place of Business.</I>&#160;&#160;The
    principal office and place of business of the Partnership is
    <FONT style="white-space: nowrap">c/o&#160;SQN</FONT>
    AIF III GP, LLC, 48 Wall Street, 24th&#160;Floor, New York, New
    York 10005. The General Partner may from time to time change the
    Partnership&#146;s principal place of business and, in that
    event, the General Partner shall notify the Limited Partners of
    the change in writing no later than 60&#160;days following the
    effective date of the change.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-11
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    4.2&#160;<I>Other Places of Business.</I>&#160;&#160;The
    Partnership may maintain other offices and places of business
    within or outside the State of Delaware as the General Partner
    deems advisable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    4.3&#160;<I>Registered Office and Registered
    Agent.</I>&#160;&#160;The registered office of the Partnership
    shall be at 2711 Centerville Road, Suite&#160;400, Wilmington
    (New Castle County), Delaware 19808. The name of its registered
    agent at such address shall be The Company Corporation. The
    General Partner may from time to time change the registered
    office and the registered agent of the Partnership, and, in that
    event, the General Partner shall notify the Limited Partners of
    the change in writing no later than 60&#160;days following the
    effective date of the change.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;V&#160;&#151;
    NAMES AND ADDRESSES OF PARTNERS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    5.1&#160;<I>Names and Addresses of Partners.</I>&#160;&#160;The
    name and address of the General Partner shall be as set forth in
    Section&#160;19.1, and the names and addresses of the Limited
    Partners shall be as set forth in their respective Subscription
    Agreements, as supplemented or amended from time to time. Any
    Partner may change the Partner&#146;s place of business or
    residence, as the case may be, by giving Notice of the change to
    the Partnership (and, in the case of the General Partner, by
    also giving Notice of the change to all Limited Partners. The
    Notice shall become effective on receipt by the Partnership, or
    the date the Notice is given by the General Partner.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;VI&#160;&#151;
    PURPOSES AND OBJECTIVES
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    6.1&#160;<I>Purposes.</I>&#160;&#160;The purposes and business
    of the Partnership are to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;acquire, invest in, purchase, own, hold, lease,
    re-lease, finance, refinance, loan, borrow, manage, maintain,
    operate, improve, upgrade, modify, exchange, assign, encumber,
    create or receive security interests in, pledge, sell, transfer
    or otherwise dispose of, and in all respects otherwise deal in
    or with, Investments of all kinds;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;engage in any and all businesses and to do any and all
    things permitted to a limited partnership under the Delaware Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    6.2&#160;<I>Investment Objectives.</I>&#160;&#160;The investment
    objectives of the Partnership shall be those set forth in the
    Prospectus.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;VII&#160;&#151;
    TERM
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    7.1&#160;<I>Term.</I>&#160;&#160;The term of the Partnership
    began with the filing of its Certificate of Limited Partnership
    with the Secretary of State of the State of Delaware on
    March&#160;10, 2010 and will end at midnight on
    December&#160;31, 2034, unless sooner dissolved or terminated as
    provided in Article&#160;XIV of this Agreement.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;VIII&#160;&#151;
    PARTNERS AND CAPITAL
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.1&#160;<I>General Partner.</I>&#160;&#160;The General Partner
    has contributed $100 in cash as its Capital Contribution to the
    Partnership as consideration for its Partnership Interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.2&#160;<I>Original Limited Partner.</I>&#160;&#160;The
    Original Limited Partner has made a capital contribution of
    $1,000 to the Partnership as consideration for 1 Unit purchased
    by it. By its execution of this Agreement, the Original Limited
    Partner agrees to withdraw as Original Limited Partner, and the
    parties agree to return its capital contribution, retire its
    original 1 Unit and restore its original 1 Unit to the Maximum
    Offering on the Initial Closing Date when additional Limited
    Partners are admitted to the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.3&#160;<I>Limited Partners and Maximum
    Offering.</I>&#160;&#160;From and after the Initial Closing Date
    there shall be one class of Limited Partners, which includes
    Affiliated Limited Partners. The General Partner is hereby
    authorized to obtain capital for the Partnership through the
    offer and sale of up to 50,000 Units ($50,000,000) to the
    Limited Partners.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.4&#160;<I>Subscription Documents and
    Suitability.</I>&#160;&#160;Any Person desiring to become a
    Limited Partner shall execute and deliver to the General Partner
    a Subscription Agreement and all other documents as the General
    Partner reasonably requests. These documents shall be in form
    and substance reasonably satisfactory to the General Partner.
    Among other things, each Person shall, subject to acceptance of
    his subscription by the General Partner, agree to be bound by
    all of the terms, provisions and conditions of this Agreement.
    Units shall be sold only to Persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;who represent that they have either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;an annual gross income of at least $70,000 and a Net
    Worth of at least $70,000;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;a Net Worth of at least $250,000;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;who satisfy the suitability standards applicable in
    the state or other jurisdiction of their residence or domicile
    as set forth in the Prospectus if those standards are more
    stringent than the standards described in clause&#160;(i) above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.5&#160;<I>Payment of Subscription Price of
    Units.</I>&#160;&#160;At the time of subscribing each Limited
    Partner, including Affiliated Limited Partners, shall make a
    Capital Contribution, in cash, in an amount equal to the Unit
    Price for each Unit, or portion of a Unit, purchased.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.6&#160;<I>Minimum Subscription Amount.</I>&#160;&#160;Each
    Limited Partner must purchase a minimum of 25 Units ($25,000)
    unless a greater minimum number of Units is required by the
    Administrator of the Limited Partner&#146;s state or other
    jurisdiction of residence. Notwithstanding the foregoing, the
    General Partner, in its sole discretion, may accept
    subscriptions for fewer than 25 Units, except as may be required
    by the Administrator of the subscriber&#146;s state or other
    jurisdiction of residence.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.7&#160;<I>Subscriptions for Units by General Partner and its
    Affiliates.</I>&#160;&#160;The General Partner and its
    Affiliates shall subscribe for an aggregate of 100 Units at the
    Unit Price, in the aggregate, for their own account for
    investment purposes only.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.8&#160;<I>Partnership Closings.</I>&#160;&#160;No subscribers
    shall be admitted to the Partnership unless and until the
    Minimum Offering shall be achieved. After the General Partner
    has determined that the Minimum Offering has been achieved, it
    shall set the Initial Closing Date. Following the Initial
    Closing Date, Closings will be held on such dates as determined
    by the General Partner in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.9&#160;<I>Acceptance of Units.</I>&#160;&#160;Subscriptions
    for Units shall promptly be accepted or rejected by the General
    Partner after their receipt by the Partnership (but in any event
    not later than 30&#160;days thereafter) and a confirmation of
    acceptance shall be sent by the General Partner to each
    subscriber admitted to the Partnership as a Limited Partner. The
    General Partner shall have the unconditional right to refuse to
    admit any subscriber as a Limited Partner, without liability.
    Also, each subscriber shall have the right to cancel his or her
    subscription before it has been accepted by the General Partner
    by providing written notice to the General Partner, signed by
    each Person who signed the subscriber&#146;s Subscription
    Agreement, of their intent to cancel their subscription, in a
    form satisfactory to the General Partner. The Partnership may
    not complete a sale of Units to subscriber for Units until at
    least five business days after the date the subscriber received
    a final Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.10&#160;<I>Admission to Partnership as Limited
    Partners.</I>&#160;&#160;Each Person whose subscription is
    accepted by the General Partner shall be admitted to the
    Partnership as a Limited Partner and shall for all purposes of
    this Agreement be treated as a Limited Partner not later than
    15&#160;days after the Initial Closing Date or, if the
    Person&#146;s subscription is accepted after the Initial Closing
    Date, the last day of the calendar month following the date the
    subscription was accepted by the Partnership. The amount of each
    Limited Partner&#146;s Capital Contribution shall be set forth
    on the Partnership&#146;s books and records, which shall be
    supplemented or amended from time to time promptly following
    each Closing Date, to reflect the name, address and Capital
    Contribution of each Limited Partner admitted to the Partnership
    as a result of the Closing; provided that any failure so to
    attend to the books and records following any Closing Date shall
    not in any way affect the admission of any Limited Partner to
    the Partnership for all purposes of this Agreement if the
    Limited Partner was admitted to the Partnership at that Closing.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.11&#160;<I>Escrow Account and Subscription
    Account.</I>&#160;&#160;The General Partner shall establish the
    Escrow Account and the Subscription Account. From the date to,
    but not including, the Initial Closing Date, all subscription
    funds shall be deposited in the Escrow Account. From and after
    the Initial Closing Date, except as provided in
    Section&#160;8.12, all subscription funds shall be held by the
    Partnership in the Subscription Account until the General
    Partner either accepts or rejects the subscription as described
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On the Initial Closing Date and any subsequent Closing Date, all
    Gross Offering Proceeds then held in the Escrow Account or
    Subscription Account with respect to Units purchased by any
    Person admitted to the Partnership on the Initial Closing Date
    or such subsequent Closing Date, together with interest earned,
    if any, shall be released to the Partnership. With respect to
    Limited Partners admitted to the Partnership on the Initial
    Closing Date, the Partnership shall pay the foregoing interest,
    if any, to such Limited Partners based on the amounts of their
    respective subscriptions and the number of days that those
    amounts were held in the Escrow Account within at least
    60&#160;days after the Initial Closing Date. With respect to
    Limited Partners admitted to the Partnership on any subsequent
    Closing Date, the Partnership shall retain the foregoing
    interest, if any, and not pay the interest to such Limited
    Partners, except to the extent provided in Section&#160;8.12.
    Subscription funds deposited by any Person whose subscription is
    rejected by the General Partner shall be promptly returned to
    that Person, together with interest earned, if any, and without
    deduction for any fees. In no event shall any Gross Offering
    Proceeds be held in the Escrow Account or the Subscription
    Account beyond the Offering Termination Date before either being
    released to the Partnership at a Closing or, if the Minimum
    Offering has not been achieved or the subscriber has been
    rejected as a Limited Partner by the General Partner, returned
    to the subscriber with interest earned, if any, and without
    deduction for any fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.12&#160;<I>Separate Escrow Account for Residents of
    Pennsylvania.</I>&#160;&#160;Notwithstanding any provision to
    the contrary in this Agreement, subscription funds received from
    residents of Pennsylvania shall be held in a separate escrow
    account by the Escrow Agent on the terms set forth in the Escrow
    Agreement, and shall not be used in computing the Minimum
    Offering. If subscriptions for 7,500 Units ($7,500,000) have
    been received and accepted by the Partnership, including the
    subscription funds of Pennsylvania residents whose subscriptions
    have been accepted by the General Partner, the subscription
    funds of the Pennsylvania residents whose subscriptions have
    been accepted shall be released from such escrow account to the
    Partnership, together with interest earned, if any, and those
    Pennsylvania residents shall be admitted to the Partnership as
    Limited Partners. The Partnership shall pay the interest to the
    Pennsylvania Limited Partners based on the amounts of their
    respective subscriptions and the number of days that those
    amounts were held in such escrow account within at least
    60&#160;days after the applicable Closing Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.13&#160;<I>Partnership Capital</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>No Interest Paid on Capital
    Contributions.</I>&#160;&#160;No Person shall be paid interest
    on the Person&#146;s Capital Contribution, except interest
    earned on subscription funds deposited in the Escrow Account
    prior to the Initial Closing Date as provided in
    Section&#160;8.11 and interest earned on subscription funds
    deposited in the escrow account established for residents of
    Pennsylvania as provided in Section&#160;8.12.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>No Limited Partner Right to
    Withdraw.</I>&#160;&#160;In addition to the redemption of the
    Original Limited Partner&#146;s Units, the Partnership may
    Redeem Units presented by Limited Partners for Redemption
    pursuant to Section&#160;13.5 in the General Partner&#146;s sole
    discretion. No Limited Partner shall have the right to otherwise
    withdraw or receive any return of the Limited Partner&#146;s
    Capital Contribution except as specifically provided in this
    Agreement, and no Capital Contribution shall be returned by the
    Partnership to any Limited Partner in the form of any property
    other than cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>No Limited Partner Priority.</I>&#160;&#160;Except
    as otherwise specifically provided in this Agreement, no Limited
    Partner shall have priority over any other Limited Partner as to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the return of the Limited Partner&#146;s Capital
    Contribution or Capital Account;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Limited Partner&#146;s share of Income or Loss or
    items thereof or any amounts required to be specially
    allocated;&#160;or
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the Limited Partner&#146;s share of Distributable
    Cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>No General Partner Personal Liability for
    Repayment.</I>&#160;&#160;The General Partner and its Affiliates
    shall not have any personal liability for the repayment of the
    Capital Contribution of any Limited Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.14&#160;<I>Capital Accounts</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Separate Capital Account.</I>&#160;&#160;A separate
    Capital Account shall be established and maintained for the
    General Partner and for each Limited Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>General Partner&#146;s Initial Capital
    Account.</I>&#160;&#160;The Capital Account of the General
    Partner initially shall be $100.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>Limited Partner&#146;s Initial Capital
    Account.</I>&#160;&#160;The Capital Account of each Limited
    Partner, including Affiliated Limited Partners, initially shall
    be the Limited Partner&#146;s Capital Contribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>Increases to Capital Account.</I>&#160;&#160;The
    Capital Account of each Partner shall be increased by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the amount of any additional money contributed by the
    Partner to the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the fair market value of any property contributed by
    the Partner to the Partnership (net of liabilities secured by
    the contributed property that the Partnership is considered to
    assume under Code Section&#160;752);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;allocations to the Partner of Income (or items
    thereof), including, but not limited to, items of income and
    gain specially allocated pursuant to Section&#160;11.2(b), (c),
    (d), (e), (f), (g)&#160;or (h).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)&#160;<I>Decreases to Capital Account.</I>&#160;&#160;The
    Capital Account of each Partner shall be decreased by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the amount of money distributed to or on behalf of the
    Partner by the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the fair market value of any property distributed to
    or on behalf of the Partner by the Partnership (net of
    liabilities secured by the distributed property that the Partner
    is considered to assume under Code Section&#160;752);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;allocations to the Partner of Loss (or items
    thereof), including but not limited to items of loss and
    deduction specially allocated pursuant to Section&#160;11.2(b),
    (c), (d), (e), (f), (g)&#160;or (h).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)&#160;<I>General Partner&#146;s Limited Partner Capital
    Account.</I>&#160;&#160;For purposes of this Agreement, a
    General Partner who also owns Units as a Limited Partner will be
    treated as a limited partner with respect to the purchased
    Interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (g)&#160;<I>Succession to Capital Account.</I>&#160;&#160;If the
    Partnership Interest of a General Partner or a Unit is sold or
    otherwise transferred, the Capital Account of the transferor
    with respect to the Partnership Interest or the Unit transferred
    shall carry over to the transferee in accordance with Treas.
    Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)(l).</FONT>
    However, if the transfer causes a termination of the Partnership
    under Code Section&#160;708(b)(1)(B), the Capital Account that
    carries over to the transferee shall be adjusted in accordance
    with the constructive contribution and liquidation rules under
    Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.708-1.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (h)&#160;<I>Section&#160;754 Election.</I>&#160;&#160;For any
    taxable year in which the Partnership has a Code
    Section&#160;754 election in effect, the Capital Accounts shall
    be maintained in accordance with Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)(m).</FONT>
    The Partnership shall not be required to make any elections
    pursuant to Code Section&#160;754.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;<I>Revaluation.</I>&#160;&#160;Upon the occurrence of
    the events specified in Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)(f),</FONT>
    the Partners&#146; Capital Accounts shall be adjusted and
    thereafter maintained to reflect the revaluation of Partnership
    assets on the books of the Partnership in accordance with Treas.
    Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-1(b)(2)(iv)(f)</FONT>
    through (h).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (j)&#160;<I>Capital Accounts Maintained in Accordance with
    Treasury Regulations.</I>&#160;&#160;Notwithstanding anything in
    this Agreement to the contrary, the Partners&#146; Capital
    Accounts shall at all times be maintained in the manner required
    by Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv),</FONT>
    and any questions or ambiguities arising under this
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Agreement shall be resolved by reference to those Treasury
    Regulations. Further, those Treasury Regulations shall govern
    the maintenance of the Capital Accounts to the extent this
    Agreement does not provide for the treatment of a particular
    item. If Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(iv)</FONT>
    does not provide for a particular item, the Capital Account
    adjustments shall be made in a manner that is consistent with
    the underlying economic arrangement of the Partners based,
    wherever practicable, on federal tax accounting principles.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.15&#160;<I>Limitations on Additional Capital
    Contributions</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Additional Capital Contributions of General
    Partner.</I>&#160;&#160;The General Partner shall not be
    required to make any Capital Contribution in addition to its
    initial Capital Contribution except pursuant to, and in
    accordance with, Section&#160;8.7 and Section&#160;14.2(c)(ii).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Additional Capital Contributions of Limited
    Partners.</I>&#160;&#160;No Limited Partner shall be required to
    make any Capital Contribution in addition to the Capital
    Contribution required under Section&#160;8.3.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.16&#160;<I>Loans by Partners.</I>&#160;&#160;Except as
    provided otherwise in Section&#160;14.2(c)(ii), no loan by any
    Partner or any Affiliate of any Partner to the Partnership
    (including, without limitation, any Partnership Loan) shall
    constitute a Capital Contribution to the Partnership or increase
    the Capital Account balance of any Partner, but shall be
    treated, for all purposes, as Indebtedness of the Partnership
    payable or collectible only out of the assets of the Partnership
    in accordance with the terms and conditions on which the loan
    was made.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;IX&#160;&#151;
    POWERS, RIGHTS AND DUTIES OF GENERAL PARTNER
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.1&#160;<I>Extent of Powers and Duties</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>General.</I>&#160;&#160;Except as expressly limited
    by the provisions of this Agreement, the General Partner shall
    have complete and exclusive discretion to manage and control the
    affairs and business of the Partnership and may employ all
    powers necessary, convenient or appropriate to carry out the
    purposes, conduct the business and exercise the powers of the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The General Partner shall have fiduciary responsibility for the
    safekeeping and use of all funds and assets of the Partnership,
    whether or not in the General Partner&#146;s immediate
    possession or control.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Powers and Duties.</I>&#160;&#160;Pursuant to the
    authority granted in this Section&#160;9.1, and subject only to
    the limitations otherwise provided in this Agreement, the
    General Partner&#146;s powers and duties shall include, but not
    be limited to, the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;to acquire, invest in (directly or indirectly),
    purchase, own, hold, lease, re-lease, finance, refinance,
    borrow, loan, manage, maintain, operate, improve, upgrade,
    modify, exchange, assign, encumber, create and receive security
    interests in, pledge, sell, transfer or otherwise dispose of,
    and in all respects otherwise deal in or with, Investments and
    other tangible or intangible property (including securities,
    debt instruments, contract rights, lease rights, equity
    interests and, to the extent permitted by
    Section&#160;9.1(b)(xviii), joint ventures), and to contract
    with others to do the same on behalf of the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;to select and supervise the activities of any
    Equipment and Other Physical Asset management agents for the
    Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;to assure the proper application of revenues of the
    Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;to maintain proper books of account for the
    Partnership and to prepare reports of operations and tax returns
    required to be furnished to the Partners pursuant to this
    Agreement or to taxing bodies or other governmental agencies,
    including Administrators, in accordance with applicable laws and
    regulations;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;to enter into the Selling Agent Agreement with the
    Selling Agent to provide for the offer and sale of Units;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;to enter into the Management, Origination and
    Servicing Agreement with the Investment Manager to provide for
    the services described therein;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;to invest any and all funds held by the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (viii)&#160;to designate depositories of the Partnership&#146;s
    funds, and establish the terms and conditions of the deposits
    and drawings on the deposits;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ix)&#160;without the Consent of a Majority Interest under
    Section&#160;9.2(i), to enter into Financing Transactions and
    otherwise to borrow money or procure extensions of credit for
    the Partnership (except that neither the Partnership nor the
    General Partner shall borrow money solely for the purpose of
    making Cash Distributions during the Operating Period that the
    Partnership would otherwise be unable to make) and, in
    connection therewith, to execute, seal, acknowledge and deliver
    agreements, promissory notes, guarantees and other written
    documents evidencing Financing Transactions or constituting
    obligations or evidences of Indebtedness and to pledge,
    hypothecate, mortgage, assign, transfer or convey mortgages or
    security interests in Investments or any other assets of the
    Partnership as security for Financing Transactions;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (x)&#160;to hold all or any portion of the Investments and other
    assets of the Partnership in the name of one or more trustees,
    nominees, or other entities or agents of or for the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xi)&#160;to acquire and enter into any contract that the
    General Partner deems necessary or appropriate for the
    protection of the Partnership and (subject to
    Sections&#160;9.2(b), 9.2(c) and 9.2(g)) the General Partner,
    for the conservation of Partnership assets, or for any other
    purpose convenient or beneficial to the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xii)&#160;to employ agents, employees, managers, accountants,
    attorneys, consultants and other persons in the operation and
    management of the business of the Partnership including, but not
    limited to, Affiliates of the General Partner, supervisory
    managing agents, management agents, and lease, loan or
    securities brokers, on terms and for compensation as the General
    Partner shall determine, provided, however, that, with respect
    to services provided by the General Partner or its Affiliates,
    compensation for those services shall be limited as specifically
    set forth in this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xiii)&#160;to cause the Partnership to make or revoke any of
    the elections referred to in Sections&#160;108, 732, 754 and
    1017 of the Code or any similar provisions enacted in lieu of
    those elections;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xiv)&#160;to select as the accounting year for the Partnership
    the calendar year or any other fiscal year as may be permitted
    under the Code or Treasury Regulations or approved by the IRS;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xv)&#160;to determine the accounting method or methods to be
    used by the Partnership (the Partnership intends, at least
    initially to use the accrual method of accounting in maintaining
    its books and records) in accordance with the Code or Treasury
    Regulations;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xvi)&#160;to require in all Partnership obligations to any
    Person other than a Limited Partner, acting as a Limited
    Partner, that the General Partner shall not have any personal
    liability on those obligations, and that the person or entity
    contracting with the Partnership must look solely to the
    Partnership and its assets for satisfaction;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xvii)&#160;to invest the Gross Offering Proceeds and Net
    Offering Proceeds temporarily in short term, highly liquid
    investments where there is appropriate safety of principal,
    before the funds are used to make or acquire Investments;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xviii)&#160;to execute or sign, individually or jointly, a
    check or certificate on behalf of the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xix)&#160;to cause the Partnership to invest in a joint venture
    to own one or more Investments with any one or more Affiliated
    Programs if the General Partner determines, in its sole
    discretion, that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;doing so would be in the best interest of the
    Partnership and the Affiliated Program;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the Partnership and the Affiliated Program would have
    substantially identical investment objectives;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;there would be no duplicate fees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (D)&#160;the compensation of the sponsor of the Affiliated
    Program would be substantially identical to the compensation of
    the General Partner from the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (E)&#160;the Partnership would have the right of first refusal
    to purchase any Investment jointly owned with the Affiliated
    Program that the Affiliated Program wishes to sell;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (F)&#160;the respective investments in the Investment by the
    Partnership and the Affiliated Program would be on substantially
    the same terms and conditions;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (G)&#160;the joint venture would be entered into either for the
    purpose of effecting appropriate diversification for the
    Partnership and the Affiliated Program, or for the purpose of
    relieving the General Partner or its Affiliates from a
    commitment entered into pursuant to Section&#160;9.2(b);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xx)&#160;to pay, extend, renew, modify, adjust, submit to
    arbitration, prosecute, defend or compromise, on any terms as it
    may determine and on any evidence as it deems sufficient, any
    obligation, suit, liability, cause of action or claim, including
    those relating to federal, state or local taxation, either in
    favor of or against the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxi)&#160;to establish and maintain Reserves, and to increase
    or reduce the amounts of the Reserves, as it deems appropriate
    from time to time, but initially the Partnership&#146;s Reserves
    shall not be less than an amount equal to approximately 1% of
    the Gross Offering Proceeds;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxii)&#160;subject to Section&#160;8.3, to do all things
    necessary or advisable, in its sole discretion, to effect the
    admission of the Limited Partners, including, but not limited
    to, registering the Units under the Securities Act and effecting
    the qualification of, or obtaining exemptions from the
    qualification of, the Units for sale with Administrators, and
    determining that the purchase of Units is a suitable and
    appropriate investment for each Limited Partner, based on
    information provided by each Limited Partner regarding his
    financial situation and investment objectives;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxiii)&#160;to enter into the Escrow Agreement on behalf of the
    Partnership and provide for compensation to the Escrow Agent
    that the General Partner deems reasonable under the
    circumstances;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxiv)&#160;to cause the Partnership to Redeem, or not Redeem,
    Units, in its sole discretion, if a Limited Partner requests the
    Partnership to Redeem a portion or all of the Limited
    Partner&#146;s Units as provided in Section&#160;13.5;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxv)&#160;to cause the Partnership to obtain and pay the
    premiums with respect to insurance policies covering all risks
    the General Partner deems reasonably necessary to protect the
    interests of the Partnership; provided that the General Partner,
    its Affiliates and their respective employees and agents may be
    named as additional insured parties under the insurance policies
    only if doing so does not increase the cost of premiums payable
    by the Partnership or if the additional cost, if any, is paid by
    the General Partner and its Affiliates; and provided further,
    that the Partnership shall not incur or assume the cost of any
    portion of any insurance which insures any party against any
    liability the indemnification of which is prohibited by
    Section&#160;9.3(b);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxvi)&#160;subject to the limitations and requirements of
    Section&#160;11.1(b), (A)&#160;to reinvest all or a substantial
    portion of the Net Disposition Proceeds in additional
    Investments during the Operating Period, and (B)&#160;to
    reinvest Net Disposition Proceeds in additional Investments
    during the Liquidation Period if, in the Investment
    Manager&#146;s sole discretion, such reinvestment would be in
    the best interests of the Limited Partners;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxvii)&#160;to manage and supervise all marketing and investor
    relations matters;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxviii)&#160;subject to Section&#160;9.2(m), to enter into on
    behalf of the Partnership arrangements with itself or its
    Affiliates to provide services for the Partnership, if
    necessary, in addition to those provided for
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    under this Agreement or the Management, Origination and
    Servicing Agreement, which additional arrangements must meet the
    following criteria:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;the compensation, price or fee charged for providing
    the services must be comparable and competitive with the
    compensation, price or fee of any other Person who is rendering
    comparable services or selling or leasing comparable goods and
    materials which could reasonably be made available to the
    Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the fees and other terms of the contract shall be fully
    disclosed to the Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;the General Partner or its Affiliate providing the
    services must be independently engaged in the business of
    providing those services to Persons other than Affiliates of the
    General Partner;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (xxix)&#160;to take all actions and execute all documents and
    other instruments as the General Partner may deem necessary,
    convenient or advisable to accomplish or further the purposes or
    objectives of the Partnership or to protect and preserve
    Partnership assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>Delegation of Powers.</I>&#160;&#160;Except as
    otherwise provided under this Agreement or by law, the General
    Partner may, in its sole discretion, delegate all or any of its
    duties under this Agreement to, and may elect, employ, contract
    or deal with, any Person, including any Affiliate of the General
    Partner, provided, however, the delegation shall not relieve the
    General Partner of responsibility for any of its obligations or
    duties under this Agreement. The General Partner shall have the
    authority to enter into, on behalf of the Partnership, the
    Management, Origination and Servicing Agreement, pursuant to
    which the Investment Manager will, on behalf of the Partnership,
    originate Investments, temporarily make Investments, service the
    Investments, including, but not limited to, performing credit
    analysis and underwriting, receivables management, portfolio
    management, accounting and financial and tax reporting,
    remarketing and marketing services.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>Reliance by Third-Parties.</I>&#160;&#160;No Person
    dealing with the Partnership or its Investments or other assets,
    whether as assignee, lessee, purchaser, borrower, mortgagee,
    grantee or otherwise, shall be required to investigate the
    authority of the General Partner in selling, assigning, leasing,
    mortgaging, conveying or otherwise dealing with a portion or all
    of any Investments or other assets, nor shall any assignee,
    lessee, purchaser, mortgagee, grantee or other Person entering
    into a contract with the Partnership be required to inquire as
    to whether the approval of the Partners for the assignment,
    lease, sale, mortgage, transfer or other transaction has been
    first obtained. Any Person dealing with the Partnership shall be
    conclusively protected in relying on a certificate of authority
    or of any other material fact signed by the General Partner, or
    in accepting any instrument signed by the General Partner in the
    name and on behalf of the Partnership or the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.2&#160;<I>Limitations on the Exercise of Powers of General
    Partner.</I>&#160;&#160;The General Partner shall have no power
    to take any action prohibited by this Agreement or by the
    Delaware Act. Furthermore, the General Partner shall be subject
    to Sections&#160;9.2(a) through 9.2(m) in the administration of
    the Partnership&#146;s business and affairs:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Investment Company Status.</I>&#160;&#160;The
    General Partner shall use its best efforts to assure that the
    Partnership is not deemed to be an &#147;investment
    company&#148; within the meaning of the Investment Company Act
    of 1940, as amended.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Sales and Leases of Investments from or to the
    General Partner and its Affiliates.</I>&#160;&#160;The
    Partnership shall neither purchase nor lease Investments from,
    nor sell or lease Investments to, the General Partner, any
    Affiliate of the General Partner or any Affiliated Program
    (including any Investment in which the General Partner or any of
    its Affiliates has an interest) except as provided in this
    Section&#160;9.2(b). Notwithstanding the foregoing, the
    Partnership may purchase Investments from the General Partner or
    any of its Affiliates (but not including an Affiliated Program)
    if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner determines, in its sole discretion,
    that making the Investment is in the best interests of the
    Partnership;
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Investment is purchased by the Partnership at a
    Purchase Price that does not exceed the sum of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;the cost to the General Partner or the Affiliate of
    acquiring and holding the Investment (as determined under GAAP
    and as adjusted for any income received, capital or investment
    returned and reasonable and necessary expenses paid or incurred
    while holding the Investment); plus
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;any compensation to which the General Partner and any
    Affiliate of the General Partner is entitled to under this
    Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;there is no difference in the interest terms of any
    Indebtedness secured by the Investment at the time it is
    acquired by the General Partner or its Affiliate and the time
    the Investment is acquired by the Partnership, although there
    may be different interest terms if the applicable financing is
    provided through a different credit facility or different lender;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;neither the General Partner nor any Affiliate of the
    General Partner receives any other benefit, other than
    compensation permitted by this Agreement, as a result of the
    Partnership purchasing the Investment;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;at the time of transfer of the Investment to the
    Partnership, the General Partner or its Affiliate had held the
    Investment on a temporary or interim basis (generally not longer
    than 6&#160;months) for the purposes of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;facilitating the acquisition of the Investment by the
    Partnership;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;any other lawful purpose related to the business of the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>(c)&#160;Loans to or from the General Partner and its
    Affiliates.</I>&#160;&#160;No loans may be made by the
    Partnership to the General Partner or any Affiliate of the
    General Partner. The General Partner or any Affiliate of the
    General Partner may loan or advance funds to the Partnership
    provided that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;any interest or other financing charges or fees payable
    by the Partnership in connection with the loan shall not exceed
    the lesser of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;the rate of interest and other amounts paid or payable
    by the General Partner or the Affiliate in connection with the
    loan (if the General Partner or the Affiliate borrowed money for
    the specific purpose of making the loan);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the rate of interest and other amounts that would be
    charged to the Partnership (without reference to the General
    Partner&#146;s or the Affiliate&#146;s financial abilities or
    guarantees) by unrelated lending institutions on a comparable
    loan for the same purpose in the same geographic area (if
    neither the General Partner nor the Affiliate borrowed money to
    make the loan);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;all payments of principal and interest on the loan
    must be due and payable within 12&#160;months after the date on
    which the loan is made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the General Partner or any Affiliate of the General Partner
    purchases an Investment in its own name and with its own funds
    in order to facilitate the ultimate purchase of the Investment
    by the Partnership, the General Partner or the Affiliate, as the
    case may be, shall be deemed to have made a loan to the
    Partnership in the amount of the Purchase Price and shall be
    entitled to receive interest on that amount in accordance with
    clause&#160;(i) above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    However, any advances made by the General Partner or any
    Affiliate of the General Partner for the purpose of paying
    Organization and Offering Expenses shall not constitute a loan
    to the Partnership. Instead, those advances shall be reimbursed
    to the General Partner or the Affiliate (to the extent possible)
    from the General Partner&#146;s Organization and Offering
    Expense Allowance, without interest, in accordance with, and to
    the extent provided in, Section&#160;9.4(c).
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>No Exchange of Partnership Units for
    Investments.</I>&#160;&#160;The Partnership shall not acquire
    any Investments in exchange for Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)&#160;<I><FONT style="white-space: nowrap">Roll-Ups.</FONT></I>&#160;&#160;Any
    proposal that the Partnership enter into a
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    shall require the Consent of a Majority Interest. Any proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    shall also be subject to the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;An appraisal of all Partnership assets shall be
    obtained from a competent Independent Expert. If the appraisal
    will be included in a prospectus used to offer the securities of
    a <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity, the appraisal shall be filed with the Commission and
    applicable Administrators as an exhibit to the registration
    statement for the offering. Partnership assets shall be
    appraised on a consistent basis. The appraisal shall be based on
    an evaluation of all relevant information, and shall indicate
    the value of the Partnership&#146;s assets as of a date
    immediately prior to the announcement of the proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction. The appraisal shall assume an orderly liquidation
    of Partnership assets over a
    <FONT style="white-space: nowrap">12-month</FONT>
    period. The terms of the engagement of the Independent Expert
    shall clearly state that the engagement is for the benefit of
    the Partnership and its Limited Partners. A summary of the
    independent appraisal, indicating all material assumptions
    underlying the appraisal, shall be included in a report to the
    Limited Partners in connection with a proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;The Person sponsoring the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction shall offer to Limited Partners who vote
    &#147;no&#148; on the proposal the choice of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;accepting the securities offered in the proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;one of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;remaining as Limited Partners, and preserving their
    Units in the Partnership on the same terms and conditions as
    existed previously;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;receiving cash in an amount equal to the Limited
    Partners&#146; pro-rata share of the appraised value of the net
    assets of the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;The Partnership shall not participate in any proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction that would result in Limited Partners having voting
    rights which are less than those provided for under this
    Agreement. If the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity is a limited partnership, the voting rights of Limited
    Partners shall correspond to the voting rights provided for in
    this Agreement to the greatest extent possible. If the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity is a corporation, then the democracy rights of Limited
    Partners shall correspond to the democracy rights provided for
    in this Agreement to the greatest extent possible.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;The Partnership shall not participate in any proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction that includes provisions which would operate to
    materially impede or frustrate the accumulation of shares by any
    purchaser of the securities of the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity (except to the minimum extent necessary to preserve the
    tax status of the entity). The Partnership shall not participate
    in any proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction that would limit the ability of a Limited Partner to
    exercise the voting rights of the securities of the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity on the basis of the number of Units held by that Limited
    Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;The Partnership shall not participate in any proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    transaction in which Limited Partners&#146; rights of access to
    the records of the
    <FONT style="white-space: nowrap">Roll-Up</FONT>
    Entity will be less than those provided for under this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;The Partnership shall not reimburse the sponsor of a
    proposed
    <FONT style="white-space: nowrap">Roll-Up</FONT> for
    the costs of its proxy contest, nor bear any other costs of the
    transaction if the
    <FONT style="white-space: nowrap">Roll-Up</FONT> is
    not approved by a Majority Interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)&#160;<I>No Exclusive Listings.</I>&#160;&#160;No exclusive
    listing for the sale of Investments, or of any other Partnership
    assets, shall be granted to the General Partner or any Affiliate
    of the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (g)&#160;<I>Other Transactions Involving the General Partner and
    its Affiliates.</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;Except as specifically permitted by this Agreement and
    the Management, Origination and Servicing Agreement, the
    Partnership shall not enter into any agreements, contracts or
    arrangements with
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the General Partner, any Affiliate of the General Partner or any
    Affiliated Program not otherwise discussed in this Agreement or
    the Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;Except as permitted by Section&#160;9.4, the General
    Partner and its Affiliates shall not receive, directly or
    indirectly, a commission or fee in connection with the
    reinvestment of Net Disposition Proceeds in new Investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;Neither the General Partner nor any of its Affiliates
    may receive any rebates or
    <FONT style="white-space: nowrap">&#147;give-ups,&#148;</FONT>
    nor may the General Partner or any of its Affiliates participate
    in any reciprocal business arrangements that could have the
    effect of circumventing any of the provisions of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (h)&#160;<I>Payments to Investor
    Advisors.</I>&#160;&#160;Neither the General Partner nor any
    Affiliate of the General Partner shall, directly or indirectly,
    pay or award any commissions or other compensation to any Person
    engaged by a potential investor as an investment advisor as an
    inducement to such Person to advise the potential investor
    concerning the Units. Provided, however, this
    Section&#160;9.2(h) shall not prohibit the payment to any such
    Person of the Distribution Expenses in accordance with the terms
    of this Agreement and the Selling Agent Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;<I>Sale of All or Substantially All Assets;
    Dissolution.</I>&#160;&#160;During the Operating Period, the
    General Partner may not dissolve the Partnership or sell or
    otherwise dispose of all or substantially all of the assets of
    the Partnership without the Consent of a Majority Interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (j)&#160;<I>No Investments in or Underwriting of Interests of
    Other Programs.</I>&#160;&#160;The Partnership shall not invest
    in or underwrite the equity interests of any other Program;
    provided, however, that nothing in this Agreement shall preclude
    the Partnership from making investments in joint ventures to the
    extent and in the manner provided in Section&#160;9.1(b)(xviii).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (k)&#160;<I>Use of Partnership&#146;s Assets.</I>&#160;&#160;The
    General Partner shall not employ, nor permit any other Person to
    employ, the Partnership&#146;s funds or assets in any manner
    except for the exclusive benefit of the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (l)&#160;<I>Fiduciary Duty to Limited
    Partners.</I>&#160;&#160;Neither the General Partner nor any
    Affiliate shall permit a Limited Partner to contract away the
    fiduciary duty owed to the Limited Partner by the General
    Partner or its Affiliates under Delaware law and, to the extent
    applicable, common law.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (m)&#160;<I>Contracts for Goods and Services.</I>&#160;&#160;All
    services or goods for which the General Partner or any of its
    Affiliates are to receive compensation that are not otherwise
    described or specifically authorized in this Agreement or the
    Management, Origination and Servicing Agreement shall be subject
    to the following provisions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;a written contract shall precisely describe the
    services to be rendered and all compensation to be paid;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the contract may be modified only by a Majority vote
    of the Limited Partners, and the contract shall contain a clause
    allowing its termination without penalty by a Majority vote of
    the Limited Partners on 60&#160;days&#146; notice to the General
    Partner or its Affiliates, as the case may be;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the compensation, price or fee charged for providing
    the services must be comparable and competitive with the
    compensation, price or fee of any other Person who is rendering
    comparable services or selling or leasing comparable goods and
    materials which could reasonably be made available to the
    Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;the fees and other terms of the contract shall be
    fully disclosed to the Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;the General Partner or its Affiliate must be
    independently engaged in the business of providing the services
    to Persons other than Affiliates of the General Partner and at
    least 75% of its gross revenue from providing the services must
    be derived from Persons other than the General Partner or its
    Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.3&#160;<I>Limitation on Liability of General Partner and its
    Affiliates; Indemnification.</I>&#160;&#160;Any amounts payable
    pursuant to this Section&#160;9.3 shall be recoverable solely
    out of the assets of the Partnership and not from the Limited
    Partners.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Limitation on General Partner&#146;s
    Liability.</I>&#160;&#160;Neither the General Partner nor any
    Affiliate of the General Partner shall have any liability to the
    Partnership or to any Limited Partner for any loss suffered by
    the Partnership or the Limited Partners that arises out of any
    action or inaction of the General Partner or its Affiliates if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner and its Affiliates determined in
    good faith that the course of conduct was in the best interest
    of the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the General Partner and its Affiliates were acting
    within the scope of authority on behalf of, or performing
    services for, the Partnership;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the course of conduct did not constitute negligence
    or misconduct of the General Partner or its Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Indemnification of General
    Partner.</I>&#160;&#160;The General Partner and its Affiliates
    shall be indemnified by the Partnership against any losses,
    judgments, liabilities, expenses, and amounts paid in settlement
    of any claims sustained by them in connection with the
    Partnership, provided that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner and its Affiliates determined in
    good faith that the course of conduct that caused the loss or
    liability was in the best interest of the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the General Partner and its Affiliates were acting
    within the scope of authority on behalf of, or performing
    services for, the Partnership;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the course of conduct was not the result of
    negligence or misconduct of the General Partner or its
    Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>Securities Act
    Liability.</I>&#160;&#160;Notwithstanding the above, the General
    Partner and its Affiliates, including the Selling Agent, and any
    Person acting as a broker/dealer, shall not be indemnified by
    the Partnership for any losses, liabilities or expenses arising
    from or out of an alleged violation of federal or state
    securities laws unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;there has been a successful adjudication on the merits
    of each count involving securities law violations as to the
    particular indemnitee and a court of competent jurisdiction has
    approved indemnification of the litigation costs;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the claims have been dismissed with prejudice on the
    merits by a court of competent jurisdiction as to the particular
    indemnitee and a court of competent jurisdiction has approved
    indemnification of the litigation costs;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;a court of competent jurisdiction approves a
    settlement of the claims against a particular indemnitee and a
    court of competent jurisdiction has found that indemnification
    of the settlement and related costs should be made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In any claim for indemnification for federal or state securities
    law violations, the party seeking indemnification shall apprise
    the court of the position of the Commission and, if a position
    be taken by it, the Administrator in any jurisdiction in which
    Units have been sold, with respect to the issue of
    indemnification for securities law violations before seeking the
    court&#146;s approval for the indemnification.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>Insurance.</I>&#160;&#160;The Partnership shall not
    incur the cost of that portion of any insurance which insures
    any party against any liability the indemnification of which is
    prohibited in this Agreement; provided, however, that with
    respect to public liability insurance obtained by the
    Partnership in connection with any Investment or operations of
    the Partnership, the General Partner shall be permitted to add
    itself and its Affiliates as an additional insured thereunder so
    long as and to the extent that the General Partner pays for any
    incremental premium costs resulting from their being added as an
    additional insured.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of this Section&#160;9.3, &#147;public liability
    insurance&#148; shall include insurance that would cover damage
    to property or personal injury to non-affiliated Persons
    incurred during the performance of services related to the
    Partnership and its operations.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.4&#160;<I>Compensation of General Partner and its
    Affiliates.</I>&#160;&#160;Neither the General Partner nor any
    of its Affiliates shall receive any compensation except in
    accordance with this Section&#160;9.4, Section&#160;9.1(b),
    Section&#160;9.2(m), Section&#160;14.2, and Section&#160;15.9.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Allocations and Distributions.</I>&#160;&#160;The
    General Partner shall be entitled to receive the allocations and
    distributions provided in Article&#160;XI and Article&#160;XIV
    with respect to its Partnership Interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Distribution Expenses.</I>&#160;&#160;Distribution
    Expenses shall be paid by the Partnership to the Selling Agent
    for each Unit sold, but no Distribution Expenses shall be
    payable by the Partnership for any Units sold to the General
    Partner or its Affiliates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>Organization and Offering Expense
    Allowance.</I>&#160;&#160;The Partnership shall pay to the
    General Partner and its Affiliates, immediately following each
    Closing Date, the Organization and Offering Expenses actually
    incurred by the General Partner and its Affiliates without
    deduction for Distribution Expenses payable by the Partnership,
    up to an aggregate amount of all Organization and Offering
    Expenses paid by the Partnership equal to the Organization and
    Offering Expense Allowance. The General Partner shall bear any
    Organization and Offering Expenses incurred by the General
    Partner or its Affiliates (including, without limitation, the
    Selling Agent) in excess of the Organization and Offering
    Expense Allowance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>Management Fees.</I>&#160;&#160;For management
    services rendered, the Partnership shall pay the Management Fees
    to the Investment Manager or its designated Affiliate each month
    in advance following the Initial Closing Date. The amount of the
    Management Fee payable in any year will be reduced for that year
    to the extent that it, together with the Promotional Interest,
    would otherwise exceed the Sponsor Fee Limit, as provided in
    Section&#160;9.4(e). Any such reduction in the Management Fee
    would be deferred until any subsequent period during which it
    could be paid without exceeding the Sponsor Fee Limit, as
    provided in Section&#160;9.4(e).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)&#160;<I>Sponsor Fee Limit.</I>&#160;&#160;The Sponsor Fee
    Limit will be calculated each year during the Partnership&#146;s
    term by calculating the maximum amount of fees that would be
    payable to the General Partner, the Investment Manager and their
    Affiliates from the Initial Closing through the end of the year
    in question under Article&#160;IV, Sections&#160;C through G of
    the NASAA Guidelines. For purposes of the application of the
    NASAA Guidelines, all Investments will be deemed
    &#147;Equipment&#148; as defined in the NASAA Guidelines. To the
    extent that the total amount paid to the General Partner, the
    Investment Manager and their Affiliates through the end of such
    year as Front-End Fees, Management Fees and Promotional Interest
    would cause the total compensation to exceed the aggregate
    amount of fees that would have been payable as calculated under
    the NASAA Guidelines through the end of that year, the
    Management Fee
    <FONT style="white-space: nowrap">and/or</FONT> the
    Promotional Interest, as determined by the General Partner, in
    its sole discretion, for that year will be reduced to equal the
    maximum aggregate fees that would have been payable under the
    NASAA Guidelines. To the extent any such fees are reduced, the
    amount of such reduction will be accrued and deferred, and such
    accrued and deferred compensation would be paid to the
    Investment Manager, the General Partner, or their Affiliates, as
    the case may be, in a subsequent period, but only to the extent
    that the deferred compensation would be within the Sponsor Fee
    Limit as calculated through that later period. The limitations
    set forth in this Section&#160;9.4(e) will be subject to
    adjustment pursuant to the limitations imposed under
    Section&#160;9.6 relating to the Minimum Investment in
    Equipment. Under Section&#160;9.6, a separate calculation will
    be performed upon completion of the offering of Units, final
    commitment of Net Offering Proceeds to acquisition of
    Investments and establishment of final levels of permanent
    portfolio debt encumbering such Investments, and applied to the
    then current and all prior years, and then such calculation will
    be performed annually as of the end of each fiscal year
    thereafter and applied to the immediately preceding fiscal year.
    To the extent required under the provisions of Section&#160;9.6,
    the maximum amount of fees payable under the NASAA Guidelines
    will be adjusted as provided therein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)&#160;<I>Partnership Expenses.</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;Except as otherwise provided in this
    Section&#160;9.4(f), Partnership expenses (including Acquisition
    Expenses) other than those reimbursed in accordance with
    Sections&#160;9.4(b) through (d)&#160;of this Section&#160;9.4
    shall be billed directly to and paid by the Partnership.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;Subject to clause (iv), the General Partner and its
    Affiliates may be reimbursed for the actual cost of goods,
    materials and services used for or by the Partnership and
    obtained by it or them from non-Affiliates of the General
    Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;Subject to clause (iv), the General Partner and its
    Affiliates may be reimbursed for the administrative services
    reasonably necessary, convenient or advisable, in the discretion
    of the General Partner
    <FONT style="white-space: nowrap">and/or</FONT> the
    Investment Manager, to the prudent operation of the Partnership
    (including, without limitation, legal, accounting, remarketing
    and agency expenses) provided that the reimbursement shall not
    exceed the lesser of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;its or their actual cost;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the amount the Partnership would be required to pay to
    non-Affiliates for comparable administrative services in the
    same geographic location;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    provided, further, that there shall be no reimbursement for
    their services if the General Partner or its Affiliates are
    entitled to compensation in the form of a separate fee pursuant
    to other provisions of this Section&#160;9.4.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;The General Partner and its Affiliates shall not be
    reimbursed by the Partnership for amounts expended by them with
    respect to the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;salaries, fringe benefits, travel expenses or other
    administrative items incurred by or allocated to any Controlling
    Person of the General Partner or its Affiliates;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;rent, depreciation, utilities, capital equipment or,
    subject to clause (iii), other administrative items.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.5&#160;<I>Other Interests of the General Partner and its
    Affiliates</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>General Partner&#146;s Right to Pursue Other
    Activities.</I>&#160;&#160;The General Partner shall be required
    to devote only such time to the affairs of the Partnership as
    the General Partner, in its sole discretion, determines in good
    faith to be necessary for the business and operations of the
    Partnership. The General Partner and its Affiliates may engage
    in, or possess an interest in, business ventures (other than the
    Partnership) of every kind and description, independently or
    with others, including, but not limited to, serving as sponsor
    or general partner of other Programs and participating in the
    equipment leasing or financing business, whether or not those
    business ventures are competitive with the business or
    Investments of the Partnership; provided, however, that the
    General Partner and its Affiliates may not offer for sale
    interests in another Program before the Offering Termination
    Date unless the other Programs have investment objectives that
    are different from the Partnership&#146;s or the other Programs
    are Specified Equipment Programs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Partnership and the Limited Partners shall have no rights in
    or to the General Partner&#146;s and its Affiliates&#146;
    independent ventures or the related income or profits resulting
    from them.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as set forth in the Prospectus, the General Partner and
    its Affiliates shall not be obligated to present any particular
    investment opportunity to the Partnership. The General Partner
    and its Affiliates shall have the right to invest in equipment,
    portfolios of equipment subject to existing equipment leases,
    equipment financing, and in leasing and re-leasing opportunities
    on its or their own behalf or on behalf of other Programs. The
    General Partner and its Affiliates shall have the right, subject
    only to the provisions of Section&#160;9.5(b), to take for their
    own account (individually or otherwise), or to recommend to any
    Affiliated Program, any particular investment opportunity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Resolving Conflicts.</I>&#160;&#160;Any conflicts in
    determining and allocating Investments between the General
    Partner and its Affiliated Programs, on the one hand, and the
    Partnership, on the other hand, shall be resolved by the
    Investment Committee, which will evaluate the suitability of all
    prospective Investments. If the Investments available from time
    to time to the Partnership and to other Affiliated Programs are
    less than the aggregate amount of the Investments then sought by
    them, an available Investment shall be allocated by the
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-25
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    General Partner to an Affiliated Program (including the
    Partnership) after taking into consideration at least the
    following factors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;which Affiliated Program has been seeking Investments
    or reinvesting Cash Flow from its Investments for the longest
    period of time;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;whether the Affiliated Program has the cash required
    for the Investment;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;whether the amount of debt to be incurred with
    respect to the Investment is acceptable for the Affiliated
    Program;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;the effect the Investment would have on the Affiliated
    Program&#146;s cash flow;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;whether the Investment would further diversify, or
    unduly concentrate, the Affiliated Program&#146;s Investments in
    a particular lessee, class or type of equipment, location,
    industry, etc.;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;whether the term of the Investment is within the term
    of the Affiliated Program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If conflicts arise between the Partnership and one or more
    Affiliated Program, which may be seeking to realize on
    investments in similar Investments at the same time, the first
    opportunity to realize on such investments or Investments shall
    generally be allocated by the General Partner or its Affiliates
    to the Affiliated Program (including the Partnership) whose
    investments are closer to maturity and, in the case of
    investments with the same maturity, the oldest investment.
    However, the General Partner or its Affiliates, in their
    discretion, may make exceptions to this general policy where an
    Investment is subject to remarketing commitments which provide
    otherwise or in cases in which, in the General Partner&#146;s
    judgment, other circumstances make the application of such
    policy inequitable or not economically feasible for a particular
    Affiliated Program (including the Partnership). If the financing
    available from time to time to two or more Affiliated Programs
    (including the Partnership) is less than the aggregate amount
    then sought by them, the available financing generally shall be
    allocated to the Affiliated Program (including the Partnership)
    that has been seeking financing for the longest period of time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.6&#160;<I>Minimum Requirement for Investments/Maximum
    Front-End Fees.</I>&#160;&#160;Under the NASAA Guidelines, the
    Partnership is required to commit a minimum percentage of the
    Gross Offerings Proceeds to Investment in Equipment, which shall
    be deemed to be Investments for the purposes of this Agreement,
    calculated as the greater of: (i)&#160;80% of the Gross
    Offerings Proceeds reduced by 0.0625% for each 1% of
    indebtedness encumbering the Partnership&#146;s Investments; or
    (ii)&#160;75% of such Gross Offerings Proceeds. The maximum
    amounts to be paid under the terms of this Agreement are subject
    to the application of the Sponsor Fee Limit provided in
    Section&#160;9.4(e), which limits the annual amount payable to
    the General Partner, the Investment Manager and their Affiliates
    as the Management Fee and the Promotional Interest to an
    aggregate not to exceed the maximum amount of fees that would be
    payable to the General Partner, the Investment Manager and their
    Affiliates under specified provisions of the NASAA Guidelines.
    Upon completion of the offering of Units, final commitment of
    Net Offering Proceeds to acquisition of Investments and
    establishment of final levels of permanent portfolio debt
    encumbering such Investments, the General Partner shall
    calculate the maximum front-end fees, carried interest and
    promotional interest payable to the General Partner, the
    Investment Manager and their Affiliates under the NASAA
    Guidelines and compare such total permitted fees to the total of
    the Management Fee and Promotional Interest to be paid pursuant
    to this Agreement. If and to the extent that the fees exceed the
    Sponsor Fee Limit provided in Section&#160;9.4(e), the fees
    payable to the General Partner and the Investment Manager shall
    be reduced as described herein. In such event,
    Section&#160;9.4(e) of this Agreement shall be amended
    immediately to reduce the amounts calculated as the Promotional
    Interest by an amount sufficient to cause the total of such
    compensation to comply with the limitations in the NASAA
    Guidelines on the aggregate of promotional interests and carried
    interests. A comparison of the Front-End Fees, Management Fees
    and Promotional Interest actually paid by the Partnership to the
    General Partner, the Investment Manager and their Affiliates and
    the NASAA Guideline maximums shall be repeated, and any required
    adjustments shall be made, at least annually thereafter.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-26
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;X&#160;&#151;
    OWNERS AND LIABILITIES OF LIMITED PARTNERS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    10.1&#160;<I>Absence of Control Over Partnership
    Business.</I>&#160;&#160;The Limited Partners hereby consent to
    the exercise by the General Partner of the powers conferred on
    the General Partner by this Agreement. No Limited Partner shall
    have any of the following rights:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the right to participate in or have any control over
    the Partnership&#146;s business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the right or authority to act for, or to bind or
    otherwise obligate, the Partnership (except if the Limited
    Partner also is a General Partner, and then only in its capacity
    as a General Partner);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the right to have the Partnership dissolved and
    liquidated, except as provided in Section&#160;16.2 through the
    Consent or vote of the Majority Interest of the Limited
    Partners;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;the right to have all or any part of the Limited
    Partner&#146;s Capital Contribution or Capital Account returned,
    except as provided in this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    10.2&#160;<I>Limited Liability.</I>&#160;&#160;The liability of
    each Limited Partner, in his capacity as a Limited Partner,
    shall be limited to the amount of the Limited Partner&#146;s
    Capital Contribution and pro rata share of any undistributed
    Income, Cash Flow and other assets of the Partnership. Except as
    may otherwise be required by law or by this Agreement, after a
    Limited Partner pays his entire Capital Contribution to the
    Partnership as set forth on his Subscription Agreement for the
    purchase of his Units, the Limited Partner shall not:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;have any further obligations to the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;be subject to any additional Assessment;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;be required to make any additional Capital
    Contribution to, or to loan any funds to, the Partnership.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XI&#160;&#151;
    DISTRIBUTIONS AND ALLOCATIONS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.1&#160;<I>Distribution of Distributable Cash</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Distributions Prior to the Admission of Limited
    Partners.</I>&#160;&#160;Prior to the admission to the
    Partnership of any Limited Partners, distributions of
    Distributable Cash shall be made 1% to the General Partner and
    99% to the Original Limited Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Distributions After the Admission of Limited
    Partners.</I>&#160;&#160;Subject to 9.4(b), beginning with the
    admission to the Partnership of any Limited Partner on the
    Initial Closing Date, provided that sufficient Distributable
    Cash is available and subject to the General Partner&#146;s
    right to reinvest all or any portion of Net Disposition Proceeds
    pursuant to Section&#160;9.1(b)(xxv), the General Partner shall,
    in its sole discretion, distribute Distributable Cash to the
    Partners in the following order of priority:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;first, prior to Payout, 1% to the General Partner and
    99% to the Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;thereafter, 20% to the General Partner and 80% to the
    Limited Partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to this Section&#160;11.1(b), distributions of
    Distributable Cash, if any, shall be made to the Partners at
    such times and in such amounts as determined by the General
    Partner, in its sole discretion, based on the amount of the
    Partnership&#146;s then available Distributable Cash and other
    funds of the Partnership and the General Partner&#146;s estimate
    of the Partnership&#146;s total Distributable Cash for the
    Fiscal Year. During the Operating Period, the General Partner
    intends, but is not required, to make distributions
    semi-annually in aggregate amounts equal to 6% per annum of the
    Capital Contributions of the Partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.2&#160;<I>Allocations of Income and Loss</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Income and Loss.</I>&#160;&#160;Except as otherwise
    provided herein, Income, Loss and, to the extent necessary,
    individual items of income, gain, loss or deduction of the
    Partnership shall be allocated among the Capital Accounts of the
    Partners in a manner that as closely as possible gives economic
    effect to the provisions of Articles&#160;IX, XI, XIV and the
    other relevant provisions of this Agreement.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Special Allocations.</I>&#160;&#160;The following
    special allocations shall, except as otherwise provided, be made
    prior to allocations in Sections&#160;11.2(a) in the following
    order:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;<I>Minimum Gain
    Charge-Back.</I>&#160;&#160;Notwithstanding any other provision
    of this Article XI, if there is a net decrease in Partnership
    Minimum Gain or in any Partner Nonrecourse Debt Minimum Gain
    during any Fiscal Period, before any other allocation under this
    Article&#160;XI each Partner shall be specially allocated items
    of Partnership Income and gain for the Fiscal Period (and, if
    necessary, subsequent Fiscal Periods) in an amount and manner
    required by Treas. Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-2(f)</FONT>
    and 1.704-2(i)(4) or any successor provisions. The items to be
    so allocated shall be determined in accordance with Treas. Reg.
    Section 1.704-2(j)(2) or any successor provision.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;<I>Partnership Nonrecourse
    Deductions.</I>&#160;&#160;Partnership Nonrecourse Deductions
    for any Fiscal Period shall be allocated 99% to the Limited
    Partners and 1% to the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;<I>Partner Nonrecourse
    Deductions.</I>&#160;&#160;Partner Nonrecourse Deductions for
    any Fiscal Period shall be allocated to the Partner who made or
    guaranteed or is otherwise liable with respect to the loan to
    which the Partner Nonrecourse Deductions are attributable in
    accordance with the principles of Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-2(i)</FONT>
    or any successor provision.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;<I>Qualified Income Offset.</I>&#160;&#160;If in any
    Fiscal Period, any Partner has an Adjusted Capital Account
    Deficit, whether resulting from an unexpected adjustment,
    allocation or distribution described in Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(ii)(d)(4),</FONT>
    (5)&#160;or (6)&#160;or otherwise, the Partner shall be
    allocated items of Partnership Income (consisting of a pro rata
    portion of each item of Partnership Income for the Fiscal
    Period, including gross income and gain for such Fiscal Period)
    sufficient to eliminate the Adjusted Capital Account Deficit as
    quickly as possible, to the extent required by Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(ii)(d).</FONT>
    It is the intention of the parties that this allocation
    provision constitute a &#147;qualified income offset&#148;
    within the meaning of Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(2)(ii)(d).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;<I>Curative Allocations.</I>&#160;&#160;The special
    allocations provided for in Section&#160;11.2(e) and in
    Sections&#160;11.2(b)(i) through (iv)&#160;are intended to
    comply with Treas. Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-1</FONT>
    and 1.704- 2. To the extent that any of those special
    allocations have been made, subsequent allocations of Income,
    Loss and items thereof (&#147;curative allocations&#148;) shall
    be made as soon as possible and in a manner so as to cause, to
    the extent possible without violating the requirements of Treas.
    Reg.
    <FONT style="white-space: nowrap">Sections&#160;1.704-1</FONT>
    and 1.704-2, the Partners&#146; Capital Account balances to be
    as nearly as possible in the same proportions in which they
    would have been had the special allocations not occurred. In
    making these curative allocations, due regard shall be given to
    the character of the Income and Loss and items thereof that were
    originally allocated under the provisions of
    Section&#160;11.2(a) and Sections&#160;11.2(b)(i) through
    (iv)&#160;in order to put the Partners as nearly as possible in
    the positions in which they would have been had those special
    allocations not occurred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;<I>Misallocated Items.</I>&#160;&#160;If the General
    Partner determines, after consultation with Counsel, that the
    allocation of any item of Income or Loss is not specified in
    this Article&#160;XI (an &#147;unallocated item&#148;), or that
    the allocation of any item of Income or Loss under this
    Article&#160;XI is clearly inconsistent with the Partners&#146;
    economic interests in the Partnership determined by reference to
    this Agreement, the general principles of Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)</FONT>
    and the factors set forth in Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-1(b)(3)(ii)</FONT>
    (a &#147;misallocated item&#148;), then the General Partner may
    allocate the unallocated items, and reallocate the misallocated
    items, to reflect the Partners&#146; economic interests in the
    Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;<I>Special Allocation of State, Local and Foreign
    Taxes.</I>&#160;&#160;Any state, local or foreign taxes imposed
    on the Partnership by reason of a Partner being a citizen,
    resident or national of a state, locality or foreign
    jurisdiction, including any item(s) of Income or Loss resulting
    therefrom, shall be specially allocated to that Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)&#160;<I>Transactions with Partnership.</I>&#160;&#160;If,
    and to the extent that, any Partner is deemed to recognize any
    item of Income or Loss as a result of any transaction between
    the Partner and the Partnership pursuant to Code
    Sections&#160;482, 483,
    <FONT style="white-space: nowrap">1272-1274,</FONT>
    7872 or any similar provision of the Code now or hereafter in
    effect, any
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    corresponding Income or Loss or items thereof shall be allocated
    to the Partner who was charged with that item.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)&#160;<I>Fees and Commissions Paid to General
    Partner.</I>&#160;&#160;It is the intent of the Partnership that
    any amount paid or deemed paid to the General Partner or
    Affiliates as a fee or other payment described in
    Section&#160;9.4 shall be treated as a &#147;guaranteed
    payment&#148; or a payment to a partner not acting in his
    capacity as a partner pursuant to Section&#160;707(c) of the
    Code to the extent possible. If a fee or payment is deemed to be
    a distribution to the General Partner, and not a guaranteed
    payment or a payment to a partner not acting in his capacity as
    a partner, the General Partner shall be allocated an amount of
    Partnership gross ordinary income equal to the payment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (g)&#160;<I>Distribution Expenses, Acquisition Fees and
    Organization and Offering Expense
    Allowance.</I>&#160;&#160;Distribution Expenses, Acquisition
    Fees and the Organization and Offering Expense Allowance shall
    be allocated 100% to the Limited Partners. Organization and
    Offering Expenses in excess of the Organization and Offering
    Expense Allowance shall be allocated 100% to the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (h)&#160;<I>Tax-Exempt Entities.</I>&#160;&#160;Notwithstanding
    any other provision of this Agreement, if it is determined that
    the tax-exempt use property rules of Section&#160;168(h)(6) of
    the Code apply to the Partnership, because any Limited Partner
    is a tax-exempt entity (as defined by the Code
    Section&#160;168(h)(2)), so that any portion of the
    Partnership&#146;s depreciation or cost recovery deductions is
    reduced, suspended or otherwise adversely affected, the
    resulting depreciation adjustments shall be specially allocated
    100% to (i.e., borne by) such tax-exempt entity Limited Partners
    and shall be shared among such Limited Partners in proportion to
    their respective number of Units unless otherwise allocated
    among them by this Agreement or the Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.3&#160;<I>Distributions and Allocations Among the Limited
    Partners</I>&#160;&#160;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>In General.</I>&#160;&#160;Except to the extent
    otherwise provided in this Agreement, all distributions of
    Distributable Cash and all allocations of Income and Loss and
    items thereof for any Fiscal Year or Fiscal Period shall be
    distributed or allocated, as the case may be, among the Limited
    Partners in proportion to their respective numbers of Units.
    Each distribution of Distributable Cash shall be made to the
    Limited Partners (or their respective assignees) of record as of
    the last day of the month next preceding the date on which the
    distribution is made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;Initial Year of Admission.</I>&#160;&#160;All
    distributions of Distributable Cash and all allocations of
    Income and Loss or items thereof for any Fiscal Year in which
    any Limited Partners are admitted to the Partnership shall be
    allocated among the Limited Partners as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;first, the Operations and Sales of the Partnership
    shall be deemed to have occurred ratably over the Fiscal Year,
    irrespective of the actual results of Operations or Sales of the
    Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;second, all Income and Loss for the Fiscal Year shall
    be allocated among the Limited Partners in the ratio that the
    number of Units held by each Limited Partner multiplied by the
    number of days in the Fiscal Year that the Units were held by
    the Limited Partner bears to the sum of that calculation for all
    Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;third, all semi-annual distributions of cash made to
    the Limited Partners under Section&#160;11.1 shall be
    distributed among the Limited Partners in the ratio that the
    number of Units held by each Limited Partner multiplied by the
    number of days in the semi-annual period preceding the
    semi-annual period in which the distribution is made that the
    Units were held by the Limited Partner bears to the sum of that
    calculation for all Limited Partners. If the General Partner
    determines at any time that the sum of the semi-annual period
    distributions made to any Limited Partner during or with respect
    to a Fiscal Year does not (or will not) properly reflect the
    Limited Partner&#146;s share of the total distributions made or
    to be made by the Partnership for the Fiscal Year, the General
    Partner shall, as soon as practicable, make a supplemental
    distribution to the Limited Partner, or withhold from a
    subsequent distribution that otherwise would be payable to the
    Limited Partner, an amount that will cause the total
    distributions to the Limited Partner for the Fiscal Year to be
    the proper amount.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Transfer.</I>&#160;&#160;In the event of a transfer
    of a Unit during a Fiscal Year in accordance with
    Article&#160;XIII, the transferor and transferee shall be
    allocated a ratable share of Income and Loss for the Fiscal Year
    based on the number of days in the Fiscal Year that each held
    the transferred Unit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)<I>&#160;Application of Distributions.</I>&#160;&#160;Solely
    for purposes of calculating a Limited Partner&#146;s Cumulative
    Return, each distribution made to a Limited Partner under
    Sections&#160;11.1, 11.5 or 14.3, and any interest earned on a
    Limited Partner&#146;s subscription funds while held in an
    Escrow Account before the admission of the Limited Partner to
    the Partnership and subsequently paid to the Limited Partner
    under Section&#160;8.11 or while held in the escrow account
    established for residents of Pennsylvania before the admission
    of the Limited Partner to the Partnership and subsequently paid
    to the Limited Partner under Section&#160;8.12, shall be deemed
    to be applied as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;first, in reduction of the Limited Partner&#146;s
    Unpaid Cumulative Return, to the extent thereof, as determined
    immediately before the distribution;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;thereafter, in reduction of the Limited Partner&#146;s
    Adjusted Capital Contribution, as determined immediately before
    the distribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.4&#160;<I>Tax Allocations: Code Section&#160;704(c);
    Revaluations</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)<I>&#160;Contribution of Property.</I>&#160;&#160;In
    accordance with Section&#160;704(c) of the Code and the Treasury
    Regulations thereunder, Income, Loss and items thereof with
    respect to any property contributed to the capital of the
    Partnership shall, solely for tax purposes, be allocated among
    the Partners so as to take account of any variation between the
    adjusted basis of the property to the Partnership for federal
    income tax purposes and its initial Gross Asset Value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;Adjustments.</I>&#160;&#160;In the event the Gross
    Asset Value of any Partnership asset is adjusted pursuant to
    clause&#160;(ii) of Section&#160;1.1(43), subsequent allocations
    of Income, Loss, and items thereof with respect to the asset
    shall take account of any variation between the adjusted basis
    of the asset for federal income tax purposes and its Gross Asset
    Value in a manner consistent with the requirements of Treas.
    Reg.
    <FONT style="white-space: nowrap">Section&#160;1.704-3(a)(6).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Elections.</I>&#160;&#160;Any elections or other
    decisions relating to the allocations required by
    subsections&#160;(a) and (b), above, shall be made in a manner
    that reasonably reflects the purpose and intention of this
    Agreement. Allocations under this subsection&#160;(c) are solely
    for purposes of federal, state, and local income taxes and shall
    not affect, or in any way be taken into account in computing,
    any Partner&#146;s Capital Account or share of Income or Loss
    under any provision of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.5&#160;<I>Return of Uninvested Capital
    Contribution.</I>&#160;&#160;If 100% of the Partnership&#146;s
    Net Offering Proceeds has not been used to make Investments,
    committed to Reserves (to the extent Reserves have been
    established and maintained for the acquisition of Investments)
    or used to pay permitted Front-End Fees within 24&#160;months
    from the date of the Prospectus, the amount of the uninvested
    Net Offering Proceeds shall be promptly distributed by the
    Partnership to the Limited Partners, pro rata based on their
    respective number of Units, as a return of capital, without
    interest. Funds shall be deemed to have been committed to
    investment and need not be returned to the Limited Partners to
    the extent written agreements in principle, commitment letters,
    letters of intent or understanding, option agreements or any
    similar contracts are executed and not terminated during the
    applicable
    <FONT style="white-space: nowrap">24-month</FONT>
    period described above, if the investments are ultimately
    consummated within a further period of 12&#160;months. Funds
    deemed committed which are not actually so invested within the
    12&#160;month period shall be promptly distributed, without
    interest, to the Limited Partners on a pro rata basis, as a
    return of capital, except that Investments using funds from Ohio
    Limited Partners must be completed within a three-month period
    or those funds must be returned to the Ohio Limited Partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.6&#160;<I>No Distributions in
    Kind.</I>&#160;&#160;Distributions in kind shall not be
    permitted except on dissolution and liquidation of the
    Partnership&#146;s assets and then only to a liquidating trust
    established for the purpose of liquidating the assets
    transferred to it and distributing the net cash proceeds of the
    liquidation in cash to the Partners in accordance with the
    provisions of this Agreement.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-30
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.7&#160;<I>Partnership Entitled to Withhold
    Taxes.</I>&#160;&#160;The Partnership shall at all times be
    entitled to withhold or make payments to any governmental
    authority with respect to any federal, state, local or foreign
    tax liability of any Partner or former Partner arising as a
    result of the Partner&#146;s participation in the Partnership.
    Each amount so withheld or paid shall be deemed to be a
    distributed to such Partner for all purposes of this Agreement.
    To the extent that the amount of withholdings or payments made
    with respect to any Partner exceeds the amount to which the
    Partner is then entitled as a distribution, the excess shall be
    treated as a demand loan, bearing interest at a rate equal to
    12% per annum simple interest from the date of the payment or
    withholding until the excess is repaid to the Partnership either
    by deduction from any distributions subsequently payable to the
    Partner under this Agreement or earlier payment of the excess
    and interest by the Partner to the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The excess withholdings or payments, together with interest
    thereon, shall, in any case, be payable not less than
    30&#160;days after demand therefor by the General Partner.
    However, the General Partner shall demand payment only if it
    determines that the Partner is not likely to be entitled to
    distributions within 12&#160;months from the date of the
    withholding or payment by the Partnership in an amount
    sufficient to pay the excess and interest.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XII&#160;&#151;
    WITHDRAWAL OF GENERAL PARTNER
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.1&#160;<I>Voluntary Withdrawal</I>.&#160;&#160;The General
    Partner may not voluntarily withdraw as a General Partner from
    the Partnership unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the Limited Partners have received 60&#160;days&#146;
    advance written notice of the General Partner&#146;s intention
    to withdraw;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Partnership has received an opinion of Counsel to
    the effect that the withdrawal will not constitute a termination
    of the Partnership as a limited partnership under the Delaware
    Act or otherwise materially adversely affect the status of the
    Partnership for federal income tax purposes;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;a Substitute General Partner has been selected, and
    the Substitute General Partner has:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;consented to its admission as General Partner;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;received the written Consent of a Majority Interest to
    its admission as General Partner;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;a Net Worth sufficient, in the opinion of Counsel, for
    the Partnership to continue to be classified as a partnership
    for federal income tax purposes and to satisfy the Net Worth
    requirements for &#147;sponsors&#148; under applicable laws,
    rules, regulations and policies of Administrators.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.2&#160;<I>Involuntary Withdrawal</I>.&#160;&#160;The General
    Partner shall be deemed to have involuntarily withdrawn as a
    General Partner from the Partnership on the removal of the
    General Partner pursuant to the Consent of the Majority Interest
    or on the occurrence of any other event that constitutes an
    event of withdrawal under the Delaware Act as then in effect.
    For purposes of this Section&#160;12.2 and Article&#160;XVI,
    neither the General Partner nor any Affiliate of the General
    Partner may participate in any vote by the Limited Partners to
    involuntarily remove the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.3&#160;<I>Consequences of Withdrawal</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)<I>&#160;Upon Withdrawal.</I>&#160;&#160;On the withdrawal of
    the General Partner as such from the Partnership:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the Partnership shall pay to the withdrawn General
    Partner the fair market value of the Partnership Interest then
    held by the General Partner, calculated in the manner set forth
    in subsection (b), below, and payable as set forth in subsection
    (c), below;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;an amount equal to the difference between any fees
    accrued but not yet paid to the General Partner, plus all other
    amounts due and owing to the General Partner by the Partnership,
    minus any amounts due and owing by the General Partner to the
    Partnership, which shall be payable in cash within 30&#160;days
    of the date of withdrawal, by the debtor party to the creditor
    party.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-31
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;Determination of Fair Market
    Value.</I>&#160;&#160;For purposes of this Section&#160;12.3,
    the fair market value of the withdrawn General Partner&#146;s
    Partnership Interest shall be determined, in good faith, by the
    withdrawn General Partner and the Substitute General Partner,
    or, if they cannot agree, by arbitration in accordance with the
    then current rules of the American Arbitration Association. The
    expense of arbitration shall be borne equally by the withdrawn
    General Partner and the Partnership, provided, however, that
    each party shall bear its own attorneys fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Method of Payment.</I>&#160;&#160;The method of
    payment to the General Partner on withdrawal, whether voluntary
    or involuntary, must be fair and must protect the solvency and
    liquidity of the Partnership. When the withdrawal is voluntary,
    the method of payment will be presumed to be fair if it provides
    for a non-interest-bearing, unsecured promissory note of the
    Partnership, with principal payable, if at all, from
    distributions that the withdrawn General Partner otherwise would
    have received under the Partnership Agreement had the General
    Partner not withdrawn.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the withdrawal is involuntary, unless otherwise agreed by
    the withdrawn General Partner and the Partnership, the method of
    payment shall be a promissory note providing for repayments of
    principal thereunder in 60 equal monthly installments, together
    with accrued but unpaid interest, bearing interest on the
    outstanding principal amount thereof at the lesser of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the rate of interest (inclusive of any points or other
    loan charges) that the Partnership would be required to pay to
    an unrelated bank or commercial lending institution for an
    unsecured, 60&#160;month loan of like amount;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the &#147;Prime Rate&#148; of interest published in
    the Money Rates section of the Wall Street Journal, plus 4%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.4&#160;<I>Liability of Withdrawn General
    Partner</I>.&#160;&#160;If the business of the Partnership is
    continued after withdrawal of the General Partner, the General
    Partner, or its estate, successors or legal representatives,
    shall remain liable for all obligations and liabilities incurred
    by it or by the Partnership while it was acting in the capacity
    of General Partner and for which it was liable as General
    Partner, but they shall be free of any obligation or liability
    incurred on account of or arising from the activities of the
    Partnership from and after the time the withdrawal became
    effective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.5&#160;<I>Notice of Withdrawal; Admission of Substitute
    General Partner; Dissolution if No Substitute General Partner
    Approved.</I>&#160;&#160;If the General Partner voluntarily
    withdraws from the Partnership, the General Partner, or its
    estate, successors or legal representatives, shall deliver to
    the Limited Partners a Notice that includes the effective date
    of its withdrawal. Within 90&#160;days following a voluntary or
    involuntary withdrawal, a Majority Interest may agree in writing
    to continue the business of the Partnership and elect, effective
    as of the date of the withdrawn General Partner&#146;s
    withdrawal, a Substitute General Partner. The Substitute General
    Partner shall execute a counterpart of this Agreement. If this
    action is not taken within 90&#160;days following the date of
    the General Partner&#146;s withdrawal, then the Partnership
    shall dissolve.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XIII&#160;&#151;
    TRANSFER OF UNITS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13.1&#160;<I>Withdrawal of a Limited Partner</I>.&#160;&#160;A
    Limited Partner may withdraw from the Partnership only by
    Assigning or having the Partnership Redeem all Units owned by
    the Limited Partner in accordance with this Article&#160;XIII.
    The withdrawal of a Limited Partner shall not dissolve or
    terminate the Partnership. If a Limited Partner withdraws
    because of death, legal incompetence, dissolution or other
    termination, the estate, legal representative or successor of
    the Limited Partner shall be deemed to be the Assignee of the
    Limited Partner&#146;s Units and may become a Substitute Limited
    Partner on compliance with the provisions of Section&#160;13.3.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-32
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13.2&#160;<I>Assignment</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)<I>&#160;Assignment by a Limited
    Partner.</I>&#160;&#160;Subject to the provisions of
    subsections&#160;(b) and (c), below, and Section&#160;13.3, any
    Limited Partner may Assign all or any portion of his Units to an
    Assignee if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the Limited Partner and the Assignee each execute a
    written Assignment, which:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;sets forth the terms of the Assignment;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;in the case of Assignments other than by operation of
    law, states the intention of the Limited Partner that the
    Assignee shall become a Substitute Limited Partner and, in all
    cases, evidences the acceptance by the Assignee of all of the
    terms and provisions of this Agreement;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;includes a representation by both the Limited Partner
    and the Assignee that the Assignment was made in accordance with
    all applicable laws and regulations (including, without
    limitation, the minimum investment and investor suitability
    requirements as may then be applicable under state securities
    laws);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Assignee pays to the Partnership an aggregate
    amount, not exceeding $150, for expenses reasonably incurred by
    the Partnership in connection with processing the Assignment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;General Partner Must Consent to the
    Withdrawal.</I>&#160;&#160;Notwithstanding the foregoing, unless
    the General Partner specifically Consents, no Units may be
    Assigned:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;to a minor or incompetent (unless a guardian, custodian
    or conservator has been appointed to handle the affairs of that
    Person);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;to any Person if, in the opinion of Counsel, the
    Assignment would result in the termination of the
    Partnership&#146;s taxable year or its status as a partnership
    for federal income tax purposes, provided that the Partnership
    may permit the Assignment to become effective if and when, in
    the opinion of Counsel, the Assignment would no longer result in
    the termination of the Partnership&#146;s taxable year or its
    status as a partnership for federal income tax purposes;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;to any Person if the Assignment, in the opinion of
    Counsel, would affect the Partnership&#146;s existence or
    qualification as a limited partnership under the Delaware Act or
    the applicable laws of any other jurisdiction in which the
    Partnership is then conducting business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;to any Person not permitted, in the opinion of
    Counsel, to be an Assignee under applicable law, including,
    without limitation, applicable federal and state securities laws;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;if the Assignment would result in the transfer of less
    than 25 Units (unless the Assignment includes all of the Units
    owned by the Limited Partner);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;if the Assignment would result in the retention by the
    Limited Partner of a portion of his Units representing less than
    the greater of 25 Units or the minimum number of units required
    to be purchased under the minimum investment standards
    applicable under state securities laws to applicable Limited
    Partner&#146;s initial purchase of the Units;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;if, in the opinion of Counsel, the effect of the
    Assignment would be to cause the &#147;equity
    participation&#148; in the Partnership by &#147;benefit plan
    investors&#148; (within the meaning of Department of Labor Reg.
    <FONT style="white-space: nowrap">Section&#160;2510.3-101(f))</FONT>
    and possibly other tax-exempt investors (as determined by the
    General Partner after consultation with Counsel) to equal or
    exceed 25% of the Partnership&#146;s total outstanding Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any attempt to make any Assignment of Units in violation of this
    Section&#160;13.2(b) shall be without force or effect.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Publicly Traded Partnership
    Prohibition.</I>&#160;&#160;The General Partner shall not permit
    any interest in a Unit to be Assigned (including Redemptions of
    Units under Section&#160;13.5) on a &#147;secondary market or
    substantial equivalent thereof&#148; as within the meaning of
    Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.7704-1(c)</FONT>
    (a &#147;Secondary Market&#148;). For purposes of this
    Section&#160;13.2(c), any Assignment that fails to meet one or
    more of the secondary market &#147;safe-
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-33
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    harbor&#148; provisions of Treas. Reg.
    <FONT style="white-space: nowrap">Section&#160;1.7704-1</FONT>
    or any substitute safe-harbor provisions that subsequently may
    be established by Treasury Regulations or published notices of
    the IRS, shall be treated as an Assignment on a Secondary Market
    under this Section&#160;13.2(c).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the General Partner determines, pursuant to an opinion of
    Counsel, that an Assignment was or will be effected on a
    Secondary Market, the Partnership and the General Partner shall
    not recognize the Assignment and shall not admit the transferee
    as a Substitute Limited Partner, nor recognize any rights of the
    transferee in the Partnership, such as the right to receive
    distributions of Distributable Cash or any interest in
    Partnership capital or profits. Each Limited Partner agrees to
    provide to the General Partner all information with regard to
    any Assignment by the Limited Partner, whether proposed or
    purportedly completed, that the General Partner deems necessary
    in order to determine whether the Assignment by the Limited
    Partner occurred or will occur on a Secondary Market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)<I>&#160;Effectiveness of
    Assignment.</I>&#160;&#160;Assignments made in accordance with
    this Section&#160;13.2 shall be considered effective on the last
    day of the month on which all of the conditions of this
    Section&#160;13.2 have been satisfied. Distributions to the
    Assignee shall begin the month following effectiveness of the
    Assignment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13.3&#160;<I>Substitution</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)<I>&#160;Condition on Substitution.</I>&#160;&#160;An
    Assignee of a Limited Partner shall be admitted to the
    Partnership as a Substitute Limited Partner only if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner has reasonably determined that all
    of the conditions specified in Section&#160;13.2 have been
    satisfied and no adverse effect to the Partnership will result
    from the admission;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Assignee has executed a transfer agreement and the
    other forms, including a power of attorney to the effect
    required by Article&#160;XVIII, as the General Partner
    reasonably may require to comply with this Article&#160;XIII.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;Effect of Assignment Without
    Substitution.</I>&#160;&#160;An Assignee of Units who does not
    become a Substitute Limited Partner in accordance with this
    Section&#160;13.3 and who desires to make a further Assignment
    of his Units shall be subject to all of the provisions of
    Sections&#160;13.2, 13.3 and 13.4 to the same extent and in the
    same manner as a Limited Partner desiring to make an Assignment
    of his Units. Failure or refusal of the General Partner to admit
    an Assignee as a Substitute Limited Partner, if the Assignment
    otherwise complies with Section&#160;13.2, and
    subsection&#160;(c) thereof in particular, shall not affect the
    right of the Assignee to receive Distributable Cash and the
    share of Income or Loss to which his predecessor in interest
    would have been entitled in accordance with Article&#160;XI and
    Article&#160;XIV.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Amendment of Records.</I>&#160;&#160;The Partnership
    shall amend its records at least once each calendar quarter, to
    the extent necessary, to effect the substitution of Substitute
    Limited Partners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13.4&#160;<I>Status of an Assigning Limited
    Partner</I>.&#160;&#160;If a Limited Partner Assigns all of his
    Units to an Assignee who becomes a Substitute Limited Partner,
    the assignor Limited Partner shall cease to be a Limited Partner
    in the Partnership and shall no longer have any of the rights or
    privileges of a Limited Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13.5&#160;<I>Limited Right of Presentment for Redemption of
    Units</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)<I>&#160;Limited Right to Redeem
    Units.</I>&#160;&#160;Subject to the limitations set forth
    below, beginning with the admission of a Limited Partner to the
    Partnership, each Limited Partner (other than the General
    Partner or its Affiliates if they own Units) may request that
    the Partnership Redeem, for cash, up to 100% of the Limited
    Partner&#146;s Units. This right of presentment shall be subject
    to the limitations set forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;The Partnership shall never be required to Redeem any
    Units of any Limited Partner and shall do so only with the prior
    Consent of the General Partner, which is in the sole discretion
    of the General Partner. In this regard, the General Partner may
    take into consideration the time of year during which a
    Redemption request is made, and the effect making a Redemption
    would have on the Partnership&#146;s compliance with the 2%
    limitation described in clause (ii), below.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-34
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;The Partnership shall not, in any calendar year,
    Redeem Units that, in the aggregate with all Units otherwise
    transferred in that calendar year, would exceed 2% of the
    Partnership&#146;s total capital or profits interests as of the
    last day of that year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;No Reserves shall be established by the Partnership
    for the Redemption of Units. The availability of funds for the
    Redemption of any Unit shall be subject to the availability of
    sufficient Cash Flow. Furthermore, Units may be Redeemed only if
    the Redemption would not impair the capital or the Operations of
    the Partnership and would not result in the termination under
    the Code of the Partnership&#146;s taxable year or its federal
    income tax status as a partnership, all as determined in the
    sole discretion of the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;The Partnership may charge a reasonable administrative
    fee as determined by the General Partner in its sole discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)<I>&#160;Applicable Redemption&#160;Price.</I>&#160;&#160;The
    Redemption price for a Limited Partner&#146;s Units (the
    &#147;Applicable Redemption&#160;Price&#148;) will depend on
    when the Limited Partner presents his Units for Redemption and
    shall be determined as set forth below. If a Limited Partner
    presents his Units for Redemption:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;during the Offering Period and Operating Period, the
    Redemption price will equal not less than $850.00 per Unit, less
    100% of previous distributions paid to the Limited Partner per
    Unit;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;during the Liquidation Period, the Redemption price
    will equal the equity per Unit as set forth on the
    Partnership&#146;s balance sheet in its most recent periodic
    report filed with the Securities and Exchange Commission before
    the Redemption request, less 100% of any distributions paid to
    the Limited Partner per Unit since the date of the balance sheet.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)<I>&#160;Procedure for Presentment.</I>&#160;&#160;A Limited
    Partner desiring to have a portion or all of his Units Redeemed
    shall submit a written request to the General Partner on a form
    approved by the General Partner and duly signed by all owners on
    the books of the Partnership of the Units to be Redeemed.
    Redemption requests shall be deemed given on the earlier of the
    date they are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;personally delivered with receipt acknowledged;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;mailed by certified mail, return receipt requested,
    postage prepaid, to the General Partner&#146;s address set forth
    in this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Requests arising from death, major medical expense and family
    emergency related to disability or a material loss of family
    income, collectively &#147;Hardship Redemptions,&#148; shall be
    treated as having been received at 12:01&#160;A.M.&#160;EST on
    the day of receipt and all other Redemption requests shall be
    deemed received with the start of the business day during which
    received.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)<I>&#160;Priority of
    Redemption&#160;Requests.</I>&#160;&#160;If the General Partner
    receives requests for the Partnership to redeem more Units than
    there are funds sufficient to redeem, the General Partner shall
    use its reasonable efforts to honor requests for Redemptions of
    Units with the same request date first as to Hardship
    Redemptions, second so as to provide liquidity for IRAs or
    Qualified Plans to meet required distributions and finally as to
    all other Redemption requests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)<I>&#160;Notice and Closing of Redemption of
    Units.</I>&#160;&#160;Redemption requests shall be accepted or
    rejected quarterly following the date on which the General
    Partner receives a written request from any Limited Partner to
    Redeem the Limited Partner&#146;s Units, and the General Partner
    shall deliver a written notice to the Limited Partner (the
    &#147;Notice&#148;):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;stating the number, if any, of the Units to be
    Redeemed;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;if appropriate:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;stating the date of the Redemption of the Units, which
    shall be a date within 30&#160;days following the date of the
    Notice;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;stating the Applicable Redemption&#160;Price with
    respect to the Units to be Redeemed;&#160;and
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-35
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;advising the Limited Partner that not less than
    10&#160;days before the Redemption date stated in the Notice
    (the &#147;Delivery Date&#148;) the Limited Partner must duly
    execute and deliver to the Partnership all transfer instruments
    and other documents requested by the Partnership to evidence the
    Redemption of the Units. In the General Partner&#146;s
    discretion, these transfer instruments and documents may be
    prepared by the Partnership for execution by the Limited Partner
    and enclosed with the Notice.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On or before the Redemption date stated in the Notice, the
    Partnership shall pay the Applicable Redemption&#160;Price to
    the Limited Partner for each Unit Redeemed if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;all of the Limited Partner&#146;s transfer instruments
    and other documents requested by the Partnership are duly
    executed and returned to the Partnership no later than the
    Delivery Date stated in the Notice;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the transfer instruments and other documents are in
    good order and acceptable to the General Partner, in its sole
    discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)<I>&#160;Effect of Redemption.</I>&#160;&#160;If all of the
    Units owned by a Limited Partner are Redeemed by the
    Partnership, then the Limited Partner shall cease to be a
    Limited Partner in the Partnership and shall no longer have any
    of the rights or privileges of a Limited Partner in the
    Partnership.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XIV&#160;&#151;
    DISSOLUTION AND
    <FONT style="white-space: nowrap">WINDING-UP</FONT>
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.1&#160;<I>Events Causing Dissolution</I>. The Partnership
    shall be dissolved on the happening of any of the following
    events (each a &#147;Dissolution Event&#148;):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.1(a).&#160;<I>Withdrawal of General
    Partner.</I>&#160;&#160;The withdrawal of the General Partner,
    whether voluntarily or involuntarily, unless a Substitute
    General Partner has been admitted to the Partnership in
    accordance with Section&#160;12.5.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.1(b).&#160;<I>Voluntary Dissolution.</I>&#160;&#160;The
    voluntary dissolution of the Partnership either by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the General Partner with the Consent of a Majority
    Interest;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Consent of a Majority Interest without action by
    the General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the Sale of all or substantially all of the assets of
    the Partnership not constituting a Financing Transaction, but
    only with the vote or Consent of the Majority Interest;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;the expiration of the Partnership&#146;s term as set
    forth in Section&#160;7.1;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;any other event that causes the dissolution or
    <FONT style="white-space: nowrap">winding-up</FONT>
    of the Partnership under the Delaware Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.2&#160;<I>Winding Up of the Partnership; Capital Contribution
    by the General Partner On Dissolution</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.2(a).&#160;<I>Effectiveness of
    Dissolution.</I>&#160;&#160;Dissolution of the Partnership shall
    be effective on the day on which the Dissolution Event occurs,
    but the Partnership shall not terminate until a certificate of
    termination has been filed in accordance with the Delaware Act
    and the assets of the Partnership have been distributed as
    provided in Section&#160;14.3. Notwithstanding the dissolution
    of the Partnership as provided above, its business and the
    affairs of the Partners, as such, shall continue to be governed
    by this Agreement until the Partnership is terminated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.2(b).&#160;<I>Liquidation.</I>&#160;&#160;On dissolution of
    the Partnership, the General Partner (or any other Person
    effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    shall liquidate the assets of the Partnership and apply and
    distribute the proceeds as set forth in Section&#160;14.3.
    Notwithstanding anything to the contrary contained in this
    Article&#160;XIV, if the General Partner (or any other Person
    effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    determines that an immediate sale of part or all of the
    Partnership assets would cause undue loss to the Partners, the
    General Partner (or any other Person effecting the
    <FONT style="white-space: nowrap">winding-up),</FONT>
    in order to avoid the loss, may, after having notified all of
    the Limited Partners, to
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-36
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the extent not then prohibited by law, defer liquidation of, and
    withhold from distribution for a reasonable time, any assets of
    the Partnership except those necessary to satisfy the
    Partnership&#146;s debts and obligations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.2(c).&#160;<I>Procedures on Liquidation.</I>&#160;&#160;In
    connection with the dissolution of the Partnership:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;all Income or Loss or items thereof, and all amounts
    required to be specially allocated for the period before final
    termination, shall be allocated among the Capital Accounts of
    the Partners in accordance with Article&#160;XI;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;if after all requirements of clause&#160;(i) of this
    Section&#160;14.2(c) have been accomplished, the General Partner
    has a deficit balance in its Capital Account, then within
    30&#160;days the General Partner shall contribute the amount of
    the deficit balance to the Partnership as a Capital
    Contribution, provided that for this purpose, any payments made
    by the General Partner as co-signatory or guarantor of any
    Indebtedness of the Partnership that has not yet been reimbursed
    to the General Partner by the Partnership at the time of
    dissolution of the Partnership, and any amounts due and unpaid
    to the General Partner with respect to any Partnership Loans at
    the time of dissolution, shall be deemed to be Capital
    Contributions by the General Partner to the Partnership and any
    obligation of the Partnership to reimburse or repay those
    amounts to the General Partner shall then cease;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the proceeds from Sales or other dispositions of all
    other assets of the Partnership shall be applied and distributed
    in liquidation of the Partnership as provided in
    Section&#160;14.3;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;the General Partner (or any other Person effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    shall file all certificates and other documents as may be
    required by the Delaware Act, the Code and any other applicable
    laws to terminate the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.2(d).&#160;<I>Fees for
    <FONT style="white-space: nowrap">Winding-Up.</FONT></I>&#160;&#160;Whether
    the
    <FONT style="white-space: nowrap">winding-up</FONT>
    of the Partnership is effected by the General Partner or any
    other Person (whether selected by the Majority Interest or as
    required by law), either the General Partner or the other
    Person, as the case may be, shall be compensated for its
    services in connection therewith in an amount not in excess of
    the amount customarily paid to non-affiliated third-parties
    rendering similar services in respect of similar entities in the
    same geographic location.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.3&#160;<I>Application of Liquidation Proceeds On
    Dissolution.</I>&#160;&#160;Following the occurrence of any
    Dissolution Event, the proceeds of liquidation Sales and the
    Sale or other disposition of the other assets of the Partnership
    shall be applied as follows and in the following order of
    priority:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;first, to the payment of creditors of the Partnership
    in the order of priority as provided by law, except obligations
    to Partners or their Affiliates;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;next, to setting up any Reserve that the General
    Partner (or any other Person effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    determines is reasonably necessary for any contingent or
    unforeseen liability or obligation of the Partnership or the
    General Partner; the Reserve may, in the sole discretion of the
    General Partner (or the other Person effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    be deposited with an escrow agent selected by it to be held in
    escrow for the purpose of disbursing the Reserve in payment of
    any of the aforementioned contingencies, and at the expiration
    of the period that the General Partner (or the other Person
    effecting the
    <FONT style="white-space: nowrap">winding-up)</FONT>
    deems advisable, to distribute the remaining balance as provided
    in subsections&#160;(iii) through (vi), below;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;next, to the payment of all obligations to the
    Partners in proportion to, and to the extent of, advances made
    by them to the Partnership under the provisions of this
    Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;next, to the payment of all reimbursements to which
    the General Partner and its Affiliates may be entitled under
    this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;next, to the Limited Partners pro rata in proportion to
    their respective Adjusted Capital Contributions;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;next, prior to Payout, 1% to the General Partner and
    99% to the Limited Partners;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;thereafter, 20% to the General Partner and 80% to the
    Limited Partners.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-37
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    14.4&#160;<I>No Recourse Against Other
    Partners</I>.&#160;&#160;Each Limited Partner shall look solely
    to the assets of the Partnership for the return of, and any
    return on, the Limited Partner&#146;s Capital Contribution
    (whether before or after a Dissolution Event). If, after the
    complete payment and discharge of all debts, liabilities and
    other obligations of the Partnership, the assets of the
    Partnership are insufficient to provide the return of, or a
    return on, the Capital Contribution of any Limited Partner, the
    Limited Partner shall have no recourse against any other Limited
    Partner, the Partnership or the General Partner, except to the
    extent that the General Partner is obligated to make an
    additional Capital Contribution to the Partnership under
    Section&#160;14.2.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XV&#160;&#151;
    FISCAL MATTERS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.1&#160;<I>Title to Property and Bank
    Accounts.</I>&#160;&#160;Unless trustees, nominees or other
    agents are used as permitted under this Agreement, all
    Investments and other assets of the Partnership shall be held in
    the name of the Partnership or its subsidiaries. The funds of
    the Partnership shall be deposited in the name of the
    Partnership in any bank account or accounts as are designated by
    the General Partner, and withdrawals therefrom shall be made on
    the signature of the General Partner or any Person or Persons as
    may be designated in writing by the General Partner. The funds
    of the Partnership shall not be commingled with the funds of any
    other Person.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.2&#160;<I>Maintenance of and Access to Basic Partnership
    Documents</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.2(a).&#160;<I>Maintenance of Documents.</I>&#160;&#160;The
    General Partner shall maintain at the General Partner&#146;s
    principal office, on behalf of the Partnership, the following
    documents:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the Participant List;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;a copy of the certificate of limited partnership and
    all amendments thereto, together with executed copies of any
    powers of attorney under which the certificate or any amendment
    thereto has been executed;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;copies of this Agreement and any amendments hereto;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;copies of the audited financial statements of the
    Partnership for the three most recently completed Fiscal Years,
    including, in each case, the balance sheet and related
    statements of operations, cash flows and changes in
    Partners&#146; equity at or for those Fiscal Years, together
    with the reports of the Partnership&#146;s independent auditors
    with respect thereto;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;copies of the Partnership&#146;s federal, state and
    local income tax returns and reports, if any, for its three most
    recently completed Fiscal Years;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;records as required by applicable tax authorities,
    including those specifically required to be maintained by
    &#147;reportable transactions,&#148; if so required of the
    Partnership;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;investor suitability records for Units sold for a
    period of no less than six years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.2(b).&#160;<I>Access to Records.</I>&#160;&#160;Each Limited
    Partner and his designated representative shall be given access
    to the records specified in Section&#160;15.2(a)(i) through
    (vi)&#160;and any other records of the Partnership that relate
    to the business affairs and financial condition of the
    Partnership, other than records under Section&#160;15.2(a)(vii)
    relating to other Limited Partners, and may inspect the same and
    make copies of the same during normal business hours, subject to
    the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;a reasonable copying charge;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;providing reasonable advance written notice to the
    General Partner that states the date and time of the intended
    visit and identifies with reasonable specificity the documents
    that the Limited Partner or his representative wishes to examine
    or copy;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;in the case of copying the Participant List,
    compliance with Section&#160;15.2(c).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.2(c).&#160;<I>Maintenance of Participant
    List.</I>&#160;&#160;The General Partner shall mail a copy of
    the Participant List to any Limited Partner or his
    representative within 10&#160;days of the Partnership&#146;s
    receipt of the Limited Partner&#146;s
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-38
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    written request therefor and a check in payment of the
    reasonable copying charge permitted under
    Section&#160;15.2(b)(i); provided that, in connection with any
    request for a copy of the Participant List, the Limited Partner
    shall provide the certification required in the penultimate
    sentence of Section&#160;15.2(d).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.2(d).&#160;<I>General Partner&#146;s Refusal to Provide
    Participant List.</I>&#160;&#160;If the General Partner refuses
    or neglects to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;permit a Limited Partner or his representative to
    examine the Participant List at the General Partner&#146;s
    principal office during normal business hours and with
    reasonable notice to the General Partner;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;mail a copy of the Participant List to the Limited
    Partner or his representative as required by
    Section&#160;15.2(c);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the General Partner shall be liable to the Limited Partner who
    requested the Participant List for the costs, including
    reasonable attorneys&#146; fees, incurred by the Limited Partner
    to compel production of the Participant List, and for the actual
    damages (if any) suffered by the Limited Partner by reason of
    the General Partner&#146;s refusal or neglect.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It shall be a defense that the requesting Limited Partner failed
    or refused to provide the General Partner with the certification
    called for in the next sentence or that the actual purpose and
    reason for a request to inspect or copy the Participant List is
    to secure the Participant List or other information for the
    purpose of the sale, reproduction or other use thereof for a
    commercial purpose other than in the interest of the Limited
    Partner relative to the affairs of the Partnership. The General
    Partner shall require a Limited Partner requesting the
    Participant List to certify that the Participant List is not
    being requested for the purpose of the sale, reproduction or
    other use thereof for a commercial purpose unrelated to the
    Limited Partner&#146;s interest in the Partnership or for any
    unlawful purpose. The remedies provided under this
    Section&#160;15.2(d) to Limited Partners requesting to inspect
    or copy the Participant List are in addition to, and shall not
    in any way limit, other remedies available to Limited Partners
    under federal law or the laws of any state.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.3&#160;<I>Financial Books and Accounting.</I>&#160;&#160;The
    General Partner shall keep, or cause to be kept, complete and
    accurate financial books and records with respect to the
    business and affairs of the Partnership. Except to the extent
    otherwise required by the accounting methods adopted by the
    Partnership for federal income tax purposes, the books and
    records shall be kept on an accrual basis and all financial
    statements of the Partnership shall be prepared for each Fiscal
    Year in accordance with GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.4&#160;<I>Fiscal Year.</I>&#160;&#160;Except as may otherwise
    be determined from time to time by the General Partner (in a
    manner which is consistent with the Code and the Treasury
    Regulations thereunder or as consented to by the IRS), the
    Fiscal Year of the Partnership for both federal income tax and
    financial reporting purposes shall end on December 31 of each
    year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.5&#160;<I>Reports</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.5(a).&#160;<I>Quarterly Reports.</I>&#160;&#160;Within
    45&#160;days after the end of each of the first three Fiscal
    Quarters of each Fiscal Year, the General Partner shall send to
    each Person who was a Limited Partner at any time during the
    Fiscal Quarter the following written materials:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;a report containing the same financial information as
    is contained in the Partnership&#146;s quarterly report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    filed with the Commission under the Securities Exchange Act of
    1934, as amended;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;a detailed statement identifying any services rendered
    or to be rendered to the Partnership by the General Partner or
    any of its Affiliates and the compensation received therefor and
    summarizing the terms and conditions of any contract that was
    not filed as an exhibit to the Registration Statement; and the
    requirement for this statement shall not be circumvented by
    lump-sum payments to non-Affiliates who then disburse the funds
    to, or for the benefit of, the General Partner or its
    Affiliates;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;until all Capital Contributions have been invested or
    committed to investment in Investments and Reserves, used to pay
    permitted Front-End Fees or returned to the Limited Partners (as
    provided in
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-39
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Section&#160;11.5), a special report concerning all Investments
    made during the Fiscal Quarter which shall include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;a description of the types of Investments made;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;the total Purchase Price paid for each category of
    Investment;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;the amounts of cash used to acquire the Investments;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (D)&#160;the Acquisition Fees and Acquisition Expenses paid,
    identified by party, in connection therewith;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (E)&#160;the amount of Capital Contributions, if any, that
    remain unexpended and uncommitted to pending Investments as of
    the end of the Fiscal Quarter.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.5(b).&#160;<I>Annual Reports.</I>&#160;&#160;Within
    90&#160;days after the end of each Fiscal Year, the General
    Partner shall send to each Person who was a Limited Partner at
    any time during the Fiscal Year the following written materials:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;financial statements for the Partnership for the Fiscal
    Year, including a balance sheet as of the end of the Fiscal Year
    and related statements of operations, cash flows and changes in
    Partners&#146; equity, which shall be prepared in accordance
    with Section&#160;15.3 and shall be accompanied by an
    auditor&#146;s report containing an opinion of the Accountants;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;an analysis prepared by the General Partner (which
    need not be audited, but shall be reviewed by the Accountants)
    of distributions made to the General Partner and the Limited
    Partners during the Fiscal Year, separately identifying the
    portion (if any) of the distributions from:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;Cash Flow during the period;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;Cash Flow from prior periods that had been held as
    Reserves;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;Cash Flow
    <FONT style="white-space: nowrap">and/or</FONT>
    Distributable Cash from Sales and refinancings;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (D)&#160;Capital Contributions originally used to establish a
    Reserve;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;a status report with respect to each Investment that
    individually represents at least 10% of the aggregate Purchase
    Price of the Partnership&#146;s Investments held at the end of
    the Fiscal Year, which report shall state:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;the condition of the Equipment and each material item
    thereof and of any collateral securing any Investment to which
    the report applies;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;how the Equipment or collateral was being used as of
    the end of the Fiscal Year (e.g., leased, operated directly by
    the Partnership, or held for lease, repair or Sale);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (C)&#160;the projected or intended use of the Equipment or
    collateral during the next following Fiscal Year (e.g., renew
    lease, lease, retire or Sale);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (D)&#160;the remaining term of the Investment;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (E)&#160;such other information as may be relevant to the value
    or use of the Equipment or collateral as the General Partner, in
    good faith, deems appropriate, including a description of the
    method used or basis for valuation;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;a breakdown of all fees and other compensation paid,
    and all costs and expenses reimbursed, to the General Partner or
    its Affiliates by the Partnership during the Fiscal Year
    identified (and properly allocated) as to type and amount:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;in the case of any fees and other compensation, the
    breakdown shall provide the information required under
    Section&#160;15.5(a)(ii);&#160;and
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-40
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;in the case of reimbursed costs and expenses, the
    General Partner shall also prepare an allocation of the total
    amount of all those items in accordance with this Agreement. The
    cost and expense allocation shall be reviewed by the Accountants
    in connection with their audit of the financial statements of
    the Partnership for the Fiscal Year in accordance with the
    American Institute of Certified Public Accountants United States
    Auditing standards relating to special reports and such
    Accountants shall state that, in connection with the performance
    of the audit, they reviewed, at a minimum, the time records of,
    and the nature of the work performed by, individual employees of
    the General Partner or its Affiliates, the cost of whose
    services were reimbursed. The additional costs of the special
    review required by this clause shall be itemized by the
    Accountants on a Program by Program basis and shall be
    reimbursed to the General Partner by the Partnership only to the
    extent that the reimbursement, when added to the cost for
    administrative services rendered, does not exceed the amount the
    Partnership would be required to pay independent third-parties
    for comparable administrative services in the same geographic
    location;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;a special report containing the information required by
    Section&#160;15.5(a)(iii).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.5(c).&#160;<I>Reports to State Securities Law
    Administrators.</I>&#160;&#160;The General Partner shall submit
    to all state securities law Administrators, including Arizona,
    California and Ohio, if applicable, any information which the
    Administrator requires, including, but not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;reports and statements required by this Agreement to be
    distributed to Limited Partners;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;reports required to be filed with the Administrator by
    state securities laws, regulations or policies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.6&#160;<I>Tax Returns and Tax Information.</I>&#160;&#160;The
    General Partner shall:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;prepare, or cause the Accountants to prepare, in
    accordance with applicable laws and regulations, the
    Partnership&#146;s tax returns (federal, state, local and
    foreign, if any) for each Fiscal Year within 75&#160;days after
    the end of the Fiscal Year;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;deliver to each Partner by March 15 following each
    Fiscal Year a
    <FONT style="white-space: nowrap">Schedule&#160;K-1</FONT>
    or other statement permitted under the Code or by the IRS
    setting forth the Partner&#146;s share of the Partnership&#146;s
    Income or Loss for the Fiscal Year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.7&#160;<I>Accounting Decisions.</I>&#160;&#160;All decisions
    as to accounting matters, except as specifically provided to the
    contrary in this Agreement, shall be made by the General Partner
    in accordance with the accounting methods adopted by the
    Partnership for federal income tax purposes or otherwise in
    accordance with GAAP. Such decisions must be acceptable to the
    Accountants, and the General Partner may rely on the advice of
    the Accountants as to whether its decisions are in accordance
    with the methods adopted by the Partnership for federal income
    tax purposes or GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.8&#160;<I>Federal Tax Elections.</I>&#160;&#160;The
    Partnership, in the sole discretion of the General Partner, may
    make elections for federal tax purposes as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.8(a).&#160;<I>Elections Under Section&#160;754 of the
    Code.</I>&#160;&#160;In case of a transfer of all or part of a
    General Partner&#146;s Partnership Interest or a Limited
    Partner&#146;s Units, the Partnership may timely elect under
    Section&#160;754 of the Code (or corresponding provisions of
    future law), and under similar provisions of applicable state or
    local income tax laws, to adjust the basis of the assets of the
    Partnership. In that event, any basis adjustment attributable to
    the election shall be allocated solely to the transferee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.8(b).&#160;<I>Other Elections.</I>&#160;&#160;All other
    elections, including but not limited to the adoption of
    accelerated depreciation and cost recovery methods, required or
    permitted to be made by the Partnership under the Code shall be
    made by the General Partner in a manner that will, in the
    opinion of the General Partner (as advised by Counsel or the
    Accountants as the General Partner deems necessary), be most
    advantageous to the Limited Partners as a group. The Partnership
    shall, to the extent permitted by applicable law and
    regulations, elect to treat as an expense for federal income tax
    purposes all amounts incurred by it for state and local taxes,
    interest and other charges that may, in accordance with
    applicable law and regulations, be considered to be expenses.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-41
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.8(c).&#160;<I>Elections Regarding Partnership Interests
    Issued for Services.</I>&#160;&#160;The Partnership, the General
    Partner and each Limited Partner hereby agree to be legally
    bound by the provisions of this Section&#160;15.8(c) and further
    agree that, in the General Partner&#146;s sole discretion, the
    Partnership and all of its Partners may elect a safe harbor
    (that is the same or substantially similar to the safe harbor
    set forth in Internal Revenue Service Notice
    <FONT style="white-space: nowrap">2005-43</FONT> ,
    <FONT style="white-space: nowrap">2005-24</FONT>
    I.R.B. 1221 and Proposed Treasury Regulations
    <FONT style="white-space: nowrap">Section&#160;1.83-3(l)</FONT>
    [REG-105346-03]) under which the fair market value of a
    Partnership Interest that is transferred in connection with the
    performance of services is treated as being equal to the
    liquidation value of that interest for transfers on or after the
    date final regulations providing the safe harbor are published
    in the Federal Register. If the General Partner determines that
    the Partnership and all of its Partners will elect the safe
    harbor, which determination may be made solely in the best
    interests of the General Partner, then the Partnership, the
    General Partner and each Limited Partner further agree that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the Partnership shall be authorized and directed to
    elect the safe harbor;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the Partnership and each of its Partners (including
    any Person to whom a Partnership Interest is transferred in
    connection with the performances of services) shall comply with
    all requirements of the safe harbor with respect to all
    Partnership Interests transferred in connection with the
    performance of services while the election remains
    effective;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the General Partner, in its sole discretion, may
    cause the Partnership to terminate the safe harbor election,
    which determination may be made in the best interests of the
    General Partner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.9&#160;<I>Tax Matters Partner</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>15.9(a).&#160;Designation of Tax Matters
    Partner.</I>&#160;&#160;The General Partner is hereby designated
    the Partnership&#146;s &#147;Tax Matters Partner&#148; under
    Section&#160;6231(a)(7) of the Code, and may hereafter designate
    its successor as Tax Matters Partner, to manage administrative
    and judicial tax proceedings conducted at the Partnership level
    by the IRS with respect to Partnership matters. The Limited
    Partners shall not act independently with respect to tax audits
    or tax litigation affecting the Partnership, and actions taken
    by the General Partner as Tax Matters Partner in connection with
    tax audits of the Partnership shall be binding in all respects
    on the Limited Partners, except as provided below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.9(b).&#160;<I>Duties of Tax Matters
    Partner.</I>&#160;&#160;The Tax Matters Partner shall have the
    following duties:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;to the extent and in the manner required by applicable
    law and regulations, the Tax Matters Partner shall furnish the
    name, address, number of Units and taxpayer identification
    number of each Limited Partner to the Secretary of the Treasury
    or his delegate (the &#147;Secretary&#148;);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;to the extent and in the manner required by applicable
    law and regulations, the Tax Matters Partner shall keep each
    Limited Partner informed of administrative and judicial
    proceedings for the adjustment at the Partnership level of any
    item required to be taken into account by a Limited Partner for
    income tax purposes (these judicial proceedings are referred to
    hereinafter as &#147;judicial review&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.9(c).&#160;<I>Indemnification of Tax Matters
    Partner.</I>&#160;&#160;Subject to Section&#160;9.3, the
    Partnership shall indemnify and reimburse the Tax Matters
    Partner for all expenses, including legal and accounting fees,
    claims, liabilities, losses and damages incurred in connection
    with any administrative or judicial proceeding with respect to
    the tax liability of the Partners. The payment of all of these
    expenses shall be made before any distributions are made from
    Distributable Cash. Neither the General Partner nor any
    Affiliate or other Person, except the Partnership, shall have
    any obligation to provide funds for this purpose. The taking of
    any action and the incurring of any expense by the Tax Matters
    Partner in connection with any of these proceedings, except to
    the extent required by law, shall be in the sole discretion of
    the Tax Matters Partner. The provisions on limitations of
    liability of the General Partner and indemnification set forth
    in Section&#160;9.3 shall be fully applicable to the General
    Partner acting in its capacity as Tax Matters Partner.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-42
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    15.9(d).&#160;<I>Authority of Tax Matters
    Partner.</I>&#160;&#160;The Tax Matters Partner is hereby
    authorized, but not required:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;to enter into any settlement with the IRS with respect
    to any tax audit or judicial review of the Partnership, in which
    agreement the Tax Matters Partner may expressly state that the
    agreement shall bind the other Partners, except that the
    settlement agreement shall not bind any Partner who (within the
    time prescribed pursuant to Section&#160;6224(c)(3) of the Code
    and regulations thereunder) files a statement with the IRS
    providing that the Tax Matters Partner does not have authority
    to enter into a settlement agreement on the behalf of the
    Partner;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;if a notice of a final administrative adjustment at
    the Partnership level of any item required to be taken into
    account by a Partner for tax purposes (a &#147;final
    adjustment&#148;) is mailed to the Tax Matters Partner, to seek
    judicial review of the final adjustment, including the filing of
    a petition for readjustment with the Tax Court, the District
    Court of the United States for the district in which the
    Partnership&#146;s principal place of business is located, the
    United States Court of Claims or any other appropriate forum;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;to intervene in any action brought by any other
    Partner for judicial review of a final adjustment relating to
    the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;to file a request for an administrative adjustment
    relating to the Partnership with the IRS at any time and, if any
    part of the request is not allowed by the IRS, to file a
    petition for judicial review with respect to the request;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;to enter into an agreement with the IRS to extend the
    period for assessing any tax which is attributable to any item
    of the Partnership required to be taken in to account by a
    Partner for tax purposes, or an item affected by the
    item;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;to take any other action on behalf of the Partners or
    the Partnership in connection with any administrative or
    judicial tax proceeding to the extent permitted by applicable
    law or regulations.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XVI&#160;&#151;
    MEETINGS AND VOTING RIGHTS OF THE LIMITED PARTNERS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.1&#160;<I>Meetings of the Limited Partners</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>16.1(a).&#160;Procedure for Limited Partner
    Meetings.</I>&#160;&#160;A meeting of the Limited Partners for
    any purpose(s) may be called by the General Partner. A meeting
    of the Limited Partners shall be called by the General Partner
    following its receipt of written request(s), either in person or
    by registered mail, for a meeting on any matter on which the
    Limited Partners may vote as set forth in this Article&#160;XVI
    from Limited Partners holding 10% or more of the then
    outstanding Units. Every request for a meeting shall state with
    reasonable specificity the purpose(s) for which the meeting is
    to be held and the text of any matter, resolution or action
    proposed to be voted on by the Limited Partners at the meeting.
    Within 10&#160;days following the receipt of the request, the
    General Partner shall give Notice to all Limited Partners of the
    meeting in the manner and at a time and place as specified in
    Section&#160;16.1(b), below. In addition, the General Partner
    may, and if so requested by the Limited Partners in the manner
    described above, shall, submit the proposed matter, resolution
    or action for action by Consent of the Limited Partners in lieu
    of a meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.1(b).&#160;<I>Delivery of Notice.</I>&#160;&#160;A Notice of
    any meeting or action by written Consent of the Limited Partners
    shall be given to all Limited Partners either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;personally or by certified mail (if a meeting is being
    called or a Consent action is being solicited, by the General
    Partner on the request of the Limited Partners);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;by regular mail (if a meeting is being called or a
    Consent action is being solicited, by the General Partner).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A meeting called pursuant to a Notice shall be held, or Consent
    action taken, not less than 15&#160;days nor more than
    60&#160;days after the date a Notice is distributed, subject to
    extension to the extent necessary to comply with applicable
    requirements of the Commission and Administrators. The Notice
    shall be delivered or mailed
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-43
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    to each Limited Partner at his record address, or at any other
    address as he may have furnished in writing to the General
    Partner as his address for receipt of Notices and, with respect
    to meetings, shall state the place, date and time of the meeting
    (which shall be the place, date and time specified in the
    request for the meeting or, if none, any other place, date and
    time as the General Partner determines to be reasonable and
    convenient to the Limited Partners) and, with respect both to
    meetings or solicitations of Consent actions, shall state the
    purpose(s) for which the meeting is to be held or the Consent
    action is requested.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any meeting of the Limited Partners is properly adjourned to
    another time or place, and if any announcement of the
    adjournment of time or place is made at the meeting, it shall
    not be necessary to give notice of the adjourned meeting. The
    presence in person or by proxy of a Majority Interest shall
    constitute a quorum at all meetings of the Limited Partners;
    provided, however, that, if there is no quorum, holders of a
    majority of the Units so present or so represented may adjourn
    the meeting from time to time without further notice, until a
    quorum has been obtained. No Notice of any meeting of Limited
    Partners need be given to any Limited Partner who attends in
    person or is represented by proxy (except when a Limited Partner
    attends a meeting for the express purpose of objecting at the
    beginning of the meeting to the transaction of any business on
    the ground that the meeting is not lawfully called or convened)
    or to any Limited Partner otherwise entitled to Notice who has
    executed and filed with the records of the meeting, either
    before or after the time thereof, a written waiver of Notice.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.1(c).&#160;<I>Record Date for Voting.</I>&#160;&#160;For the
    purpose of determining the Limited Partners entitled to vote on
    any matter submitted to the Limited Partners at any meeting of
    the Limited Partners, or to take action by Consent in lieu
    thereof, or any adjournment thereof, the General Partner or the
    Limited Partners requesting the meeting may fix, in advance, a
    date as the record date, which shall be a date not more than
    60&#160;days nor less than 10&#160;days prior to the meeting (or
    Consent action), for the purpose of that determination.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.1(d).&#160;<I>Proxies.</I>&#160;&#160;Any Limited Partner may
    authorize any Person or Persons to act for such Limited Partner
    by proxy in respect of all matters as to which the Limited
    Partner is entitled to participate, including matters proposed
    for actions by Consent. Every proxy must be signed by a Limited
    Partner or his attorney-in- fact. No proxy shall be valid after
    the expiration of eleven months from the date thereof unless
    otherwise provided in the proxy. Every proxy shall be revocable
    at the pleasure of the Limited Partner executing&#160;it.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.1(e).&#160;<I>Procedure at Meeting.</I>&#160;&#160;At each
    meeting of the Limited Partners, the Limited Partners present or
    represented by proxy may adopt rules for the conduct of the
    meeting as they deem appropriate, provided that the rules shall
    not be inconsistent with the provisions of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.2&#160;<I>Voting Rights of the Limited
    Partners.</I>&#160;&#160;Subject to Section&#160;16.3, the
    Limited Partners, acting by Consent of the Majority Interest, or
    by the vote of the Majority Interest at a meeting duly called
    for that purpose, may take the following actions without the
    concurrence of the General Partner:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;amend this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;dissolve the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;remove the General Partner and elect one or more
    Substitute General Partners;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;approve or disapprove of the Sale or series of Sales
    of all, or substantially all, of the assets of the Partnership,
    except any Sale or series of Sales that is in connection with a
    Financing Transaction or in the ordinary course of liquidating
    the Partnership&#146;s Investments after the Operating
    Period;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;modify or terminate on 60&#160;days&#146; notice any
    contract or arrangement with the General Partner or any of its
    Affiliates to provide goods or services for the Partnership
    other than this Agreement, the Management, Origination and
    Servicing Agreement and all other contracts specifically
    authorized under this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The General Partner and its Affiliates may not vote or Consent
    on matters submitted to the Limited Partners regarding the
    removal of the General Partner or regarding any transaction
    between the Partnership and the General Partner or any of its
    Affiliates. In determining the requisite percentage of Units
    necessary to
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-44
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    approve a matter on which the General Partner or its Affiliates
    may not vote or Consent, any Units owned by the General Partner
    or its Affiliates shall not be included in either the numerator
    or the denominator.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16.3&#160;<I>Limitations on Action by the Limited
    Partners.</I>&#160;&#160;This Agreement may not be amended by
    the Limited Partners to do the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;allow the Limited Partners to take part in the control
    or management of the Partnership&#146;s business or otherwise
    subject a Limited Partner to liability as a general partner
    under the Delaware Act or under the laws of any other
    jurisdiction in which the Partnership may be qualified or own an
    Investment;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;alter the rights, powers, duties or obligations of the
    General Partner without the Consent of the General Partner;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;contract away the fiduciary duty owed to any Limited
    Partner by the General Partner;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;except in connection with the offer and sale of the
    Units as provided in this Agreement, alter the interest of any
    Partner in any item of Income or Loss or in distributions
    without the consent of each affected Partner;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;Without the consent of all of the Limited Partners,
    amend the provisions of this Agreement relating to how this
    Agreement may be amended.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XVII&#160;&#151;
    AMENDMENTS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    17.1&#160;<I>Amendments by the General
    Partner.</I>&#160;&#160;In addition to any amendments by the
    Limited Partners under Section&#160;16.2, as limited by
    Section&#160;16.3, this Agreement may be amended, at any time
    and from time to time, by the General Partner without the
    Consent of a Majority Interest:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;to add to the representations, duties or obligations of
    the General Partner or to surrender any right or power granted
    to the General Partner in this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;to cure any ambiguity in this Agreement, to correct or
    supplement any provision in this Agreement that may be
    inconsistent with any other provision in this Agreement, or to
    add any provision to this Agreement with respect to matters or
    questions arising under this Agreement that is not inconsistent
    with the other provisions of this Agreement;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;to preserve the status of the Partnership as a
    partnership for federal income tax purposes, or as a limited
    partnership under the Delaware Act or any comparable law of any
    other state in which the Partnership may be required to be
    qualified;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;to delete any provision of this Agreement, or add any
    provision to this Agreement, required to be so deleted or added
    by the staff of the Commission, by any other federal or state
    regulatory body or other agency (including, without limitation,
    any &#147;blue sky&#148; commission), or by any Administrator or
    similar such official;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;to permit the Units to fall within any exemption from
    the definition of &#147;plan assets&#148; contained in
    <FONT style="white-space: nowrap">Section&#160;2510.3-101</FONT>
    of Title&#160;29 of the Code of Federal Regulations or any
    successor regulation or law;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vi)&#160;if the Partnership is advised by Counsel, the
    Accountants or the IRS that any allocation of Income, Loss or
    distribution provided for in this Agreement is unlikely to be
    respected for federal income tax purposes, the General Partner
    may amend the allocation provisions of this Agreement, in
    accordance with that advice to the minimum extent necessary to
    comply with federal income tax requirements and still effect, as
    nearly as practicable, the original plan of allocations and
    distributions set forth in this Agreement;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (vii)&#160;to change the name of the Partnership or the location
    of its principal office.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-45
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XVIII&#160;&#151;
    POWER OF ATTORNEY
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    18.1&#160;<I>Appointment of
    <FONT style="white-space: nowrap">Attorney-in-Fact.</FONT></I>&#160;&#160;By
    subscribing for Units and being admitted as a Limited Partner of
    the Partnership under this Agreement, each Limited Partner
    makes, constitutes and appoints the General Partner, each
    authorized officer of the General Partner and each Person who
    thereafter becomes a Substitute General Partner during the term
    of the Partnership, with full power of substitution, the true
    and lawful attorney-in-fact of, and in the name, place and stead
    of, the Limited Partner, with the power from time to time to
    make, execute, sign, acknowledge, swear to, verify, deliver,
    record, file and publish:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;this Agreement, the Partnership&#146;s certificate of
    limited partnership and any amendment of any thereof, including,
    without limitation, amendments reflecting the addition of any
    Person as a Partner or any admission or substitution of other
    Partners (or the Capital Contribution made by any Person or by
    any Partner) and any other document, certificate or instrument
    required to be executed and delivered, at any time, in order to
    reflect the admission of any Partner (including, without
    limitation, any Substitute General Partner and any Substitute
    Limited Partner) to the Partnership;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;any other document, certificate or instrument required
    to reflect any action of the Partners duly taken in the manner
    provided for in this Agreement, whether or not the Limited
    Partner voted in favor of or otherwise Consented to the action;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;any other document, certificate or instrument that
    may be required by any regulatory body or other agency or the
    applicable laws of the United States, any state or any other
    jurisdiction in which the Partnership is doing or intends to do
    business or that the General Partner deems advisable;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;any certificate of dissolution or cancellation of the
    certificate of limited partnership that may be reasonably
    necessary to effect the termination of the Partnership;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;any instrument or documents required to continue or
    terminate the business of the Partnership under
    Section&#160;12.5 and Article&#160;XIV; provided that no
    attorney-in-fact shall take any action as attorney-in-fact for
    any Limited Partner if the action could in any way increase the
    liability of the Limited Partner beyond the liability expressly
    set forth in this Agreement or alter the rights of the Limited
    Partner under Article XI, unless (in either case) the Limited
    Partner has given a power of attorney to the attorney-in-fact
    expressly for that purpose.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    18.2&#160;<I>Amendments to Agreement and Certificate of Limited
    Partnership.</I>&#160;&#160;If, under this Agreement, any
    action, adoption proposal, right, power or authority requires
    the Consent, vote, ratification or approval of fewer than all of
    the Limited Partners, then, on the satisfaction of that
    requirement, the Consent, vote, ratification or approval shall
    be deemed, and each Limited Partner hereby agrees that it shall
    constitute, that of all of the Limited Partners for all
    purposes, including unanimity requirements under the Delaware
    Act. Limited Partners who did not respond in connection with the
    proposed Consent, vote, ratification or approval, if any, shall
    be deemed to have abstained for all purposes under this
    Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    18.3&#160;<I>Power Coupled With an Interest.</I>&#160;&#160;The
    grant of authority by each Limited Partner in Section&#160;18.1:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;is a special power of attorney coupled with an interest
    in favor of the attorney-in-fact and shall be irrevocable and
    shall survive the death, incapacity, insolvency, dissolution or
    termination of the Limited Partner;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;may be exercised for the Limited Partner by a
    signature of the attorney-in-fact or by listing or referring to
    the names of all of the Limited Partners, including that Limited
    Partner, and executing any instrument with a single signature of
    any one of the attorneys-in-fact acting as attorney-in-fact for
    all of them;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;shall survive the Assignment by any Limited Partner
    of all or any portion of the Limited Partner&#146;s Units,
    provided that, if any Assignee of all of a Limited
    Partner&#146;s Units has furnished to the General Partner a
    power of attorney complying with the provisions of
    Section&#160;18.1 and the admission to the Partnership of the
    Assignee as a Substitute Limited Partner has been approved by
    the General Partner, this power of attorney shall survive the
    Assignment with respect to the assignor Limited Partner for the
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-46
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    sole purpose of enabling the attorneys-in-fact to execute,
    acknowledge and file any instrument necessary to effect the
    Assignment and admission and shall thereafter terminate with
    respect to the assignor Limited Partner.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">ARTICLE&#160;XIX&#160;&#151;
    GENERAL PROVISIONS
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.1&#160;<I>Notices, Approvals and Consents.</I>&#160;&#160;All
    Notices, approvals, Consents or other communications under this
    Agreement shall be in writing and signed by the party giving the
    same and, except as otherwise specifically provided in this
    Agreement, shall be deemed to have been delivered when the same
    are deposited in the United States mail and sent by first class
    or certified mail, postage prepaid; hand delivered; sent by
    overnight courier; or sent by facsimile and confirmed by
    telephone during normal business hours.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In each case, delivery shall be made to the parties at the
    addresses set forth below or at any other addresses as the
    parties may designate by Notice to the Partnership as specified
    in Section&#160;5.1:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;if to the Partnership: SQN Alternative Investment
    Fund&#160;III, L.P.,
    <FONT style="white-space: nowrap">c/o&#160;SQN</FONT>
    AIF III GP, LLC, 48 Wall Street, 24th&#160;Floor, New York, New
    York 10005; Telephone Number:
    <FONT style="white-space: nowrap">212-422-2166;</FONT>
    Fax Number:
    <FONT style="white-space: nowrap">877-214-1425.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;if to the General Partner: SQN AIF III GP, LLC, 48
    Wall Street, 24th&#160;Floor, New York, New York 10005;
    Telephone Number:
    <FONT style="white-space: nowrap">212-422-2166;</FONT>
    Fax Number:
    <FONT style="white-space: nowrap">877-214-1425.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;if to any Limited Partner, at the address set forth
    in the Limited Partner&#146;s Subscription Agreement unless a
    different address has been provided to the Partnership under
    Section&#160;5.1.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.2&#160;<I>Further Assurances.</I>&#160;&#160;The Partners
    agree to execute, acknowledge and deliver all further
    instruments and do all further acts and things as may reasonably
    be necessary to carry out the intent and purpose of this
    Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.3&#160;<I>Captions.</I>&#160;&#160;Captions contained in this
    Agreement are inserted only as a matter of convenience and do
    not define, limit, extend or describe the scope of this
    Agreement or the intent of any provision of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.4&#160;<I>Binding Effect.</I>&#160;&#160;Except to the extent
    required under the Delaware Act and for fees, rights to
    reimbursement and other compensation provided as such, none of
    the provisions of this Agreement shall be for the benefit of, or
    be enforceable by, any creditor of the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.5&#160;<I>Severability.</I>&#160;&#160;If one or more of the
    provisions of this Agreement or any application thereof shall be
    invalid, illegal or unenforceable in any respect, the validity,
    legality and enforceability of the remaining provisions of this
    Agreement and any other application thereof shall not be
    affected or impaired in any way thereby, and the remaining
    provisions shall be interpreted consistently with the omission
    of the invalid, illegal or unenforceable provision or applicable
    thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.6&#160;<I>Integration.</I>&#160;&#160;This Agreement
    constitutes the entire agreement among the parties pertaining to
    the subject matter of this Agreement and supersedes all prior
    and contemporaneous agreements and understandings of the parties
    in connection with the subject matter of this Agreement that
    conflict with the express terms of this Agreement. No covenant,
    representation or condition not expressed in this Agreement
    shall affect or be effective to interpret, change or restrict
    the express provisions of this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.7&#160;<I>Applicable Law.</I>&#160;&#160;This Agreement shall
    be construed and enforced in accordance with, and governed by,
    the laws of the State of Delaware, including, without
    limitation, the Delaware Act (except and solely to the extent
    that provisions of the laws of any other jurisdiction are stated
    to be applicable in any section of this Agreement), without
    giving effect to the conflict of laws provisions thereof that
    would apply the laws of another jurisdiction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.8&#160;<I>Counterparts.</I>&#160;&#160;This Agreement may be
    signed by each party to this Agreement on a separate counterpart
    (including, in the case of a Limited Partner, a separate
    Subscription Agreement or signature page
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-47
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    executed by one or more the Partners), but all counterparts,
    when taken together, shall constitute but one and the same
    instrument.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.9&#160;<I>Creditors.</I>&#160;&#160;No creditor who makes a
    loan to the Partnership shall have or acquire at any time, as a
    result of making the loan, any direct or indirect interest in
    the profits, capital or property of the Partnership other than
    as a secured creditor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    19.10&#160;<I>Successors and Assigns.</I>&#160;&#160;Each and
    every covenant, term, provision and agreement contained in this
    Agreement shall be binding on and inure to the benefit of the
    successors and assigns of the respective parties to this
    Agreement. In furtherance of, and not in limitation of, the
    foregoing, the General Partner may assign, as collateral
    security or otherwise, any items of compensation payable to it
    under the terms of this Agreement. Notwithstanding the
    assignment, if any, however, the General Partner, and not the
    assignee, shall remain solely liable for the General
    Partner&#146;s obligations under this Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.11&#160;<I>Waiver of Action for Partition.</I>&#160;&#160;Each
    of the parties to this Agreement irrevocably waives during the
    term of the Partnership any right that he may have to maintain
    any action for partition with respect to the Partnership&#146;s
    Investments and other property and assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    IN WITNESS WHEREOF, the undersigned have executed this Agreement
    as of this&#160;&#160;day
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    201&#160;.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>GENERAL PARTNER:<BR>
    </B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>SQN AIF III GP, LLC</B>
</DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:center; width:90%">&#160;&#160;&#160;<FONT style="font-variant: SMALL-CAPS">&#160;</FONT></DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Name:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Its:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>ORIGINAL LIMITED PARTNER:<BR>
    </B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>SQN CAPITAL MANAGEMENT, LLC</B>
</DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:center; width:90%">&#160;&#160;&#160;<FONT style="font-variant: SMALL-CAPS">&#160;</FONT></DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Name:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Its:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>LIMITED PARTNERS:</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By:&#160;SQN AIF III GP, LLC, as Attorney in Fact
</DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:center; width:90%">&#160;&#160;&#160;<FONT style="font-variant: SMALL-CAPS">&#160;</FONT></DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Name:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Its:&#160;&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-48
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='218'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">APPENDIX&#160;B</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PRIOR
    PERFORMANCE TABLES</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table I:
    Experience in Raising and Investing Funds (on a percentage
    basis)<BR>
    March&#160;31, 2010<BR>
    (Unaudited)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth certain information as of
    March&#160;31, 2010, concerning the experience of SQN Capital
    Management, LLC in raising and investing funds in all prior
    direct participation programs. The prior programs have been
    private programs with the same investment strategy and target
    investment community as SQN Alternative Investment
    Fund&#160;III, LP. As private programs, the prior programs have
    been limited to 100 accredited investors. This limitation does
    not apply to a publicly registered offering. SQN II is still in
    the Offering Period and will continue to raise equity through
    May&#160;15, 2010. SQN II is therefore not yet fully invested.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="28%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Program Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN I</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN II</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>% of Dollar<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>% of Dollar<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount Raised</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount Raised</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Dollar amount offered
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,000,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,000,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Dollar amount raised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,007,500.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,593,500.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Less Offering Expenses:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Selling commissions and discounts retained by affiliates
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Organizational and offering expenses
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    140,186.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    148,553.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.66
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Reserves
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.71
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.89
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Offering proceeds available for investment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,817,314.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97.29
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,444,947.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97.34
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Total assets acquired
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    32,357,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    461.75
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,438,799.09
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    79.36
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Acquisition costs*:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Acquisition fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Legal fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Appraisal costs
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Total acquisition cost
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Percent leverage**
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Date offering began
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    12-Feb-08
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    15-Apr-09
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Length of offering (in months)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    13
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    13
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Months to invest 90% of amount available for investment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    13
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom">
    Still in Offering Period
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    When applicable, Acquisition Costs are passed off to
    counterparties and financed as part of the investment.
    Appraisals on transactions not consummated have been voluntarily
    paid by the Investment Manager.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    ** </TD>
    <TD></TD>
    <TD valign="bottom">
    The SQN Funds do not use traditional leverage. The funds sell
    the receivable streams on certain investments on a non-recourse
    basis to offset a portion of the original investment cost. Under
    this method, there is no cross-collateralization and the
    respective fund retains title to the underlying asset(s).</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table II:
    Compensation to SQN Capital Management LLC and Affiliates<BR>
    March&#160;31, 2010<BR>
    (Unaudited)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth certain information as of
    March&#160;31, 2010, concerning the compensation received by SQN
    Capital Management LLC and its Affiliates from all prior
    programs. The prior programs have been private programs with the
    same investment strategy and target investment community as SQN
    Alternative Investment Fund&#160;III, LP. It is anticipated
    that, as a publicly registered program, SQN Alternative
    Fund&#160;III, LP will have more associated expenses than the
    private programs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="42%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="26%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Program Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN I</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN II</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Date offering commenced
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2/12/2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4/15/2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Dollar amount raised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,007,500.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,593,500.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Amount paid to SQN Capital Management LLC and Affiliates:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Underwriting fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Organizational and offering expenses
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    140,186.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    148,553.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Dollar amount of cash generated from operations before deducting
    payments to sponsor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,380,833.69
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    189,967.30
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Amount paid to sponsor from operations:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Management fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    605,988.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    346,000.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Acquisition fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Debt placement fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Remarketing fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Administrative expense reimbursements
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Other fees
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table
    III: Operating Results of Prior Programs</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN I and SQN II are each still in their Operating Period and
    have limited results from operations. As Equipment Leasing
    Programs, SQN I and SQN II, and as anticipated for SQN
    Alternative Investment Fund&#160;III, LP, will generate book
    losses during the Operating Periods while making distributions
    to investors. See Table 5 for individual investment performance.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table IV:
    Sales or Disposals of Assets&#160;&#151; SQN I<BR>
    March&#160;31, 2010<BR>
    (Unaudited)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table summarizes the sales and dispositions of
    equipment for SQN I. SQN II has not sold or disposed of any
    equipment. The table does not include transactions that have
    reached their initial maturity dates and have been extended and
    continue to produce revenue.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="34%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>Type of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Year<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Year<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Sale/Disposition<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Profit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Investment<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Asset</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Asset Acquired</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Asset Sold</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Acquisition Cost</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Proceeds</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Loss)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Term (Months)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Industrial Equipment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,435.49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,691.04
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,255.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    14,275.72
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,122.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    846.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,232.82
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,717.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,484.18
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    103,506.45
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    110,812.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,306.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    175,270.93
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    187,568.63
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    12,297.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    41,208.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    95,279.84
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    54,071.52
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    30,137.23
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    69,195.76
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    39,058.53
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    IT Infrastructure
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,438.07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,777.23
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,339.16
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table V:
    Sales or Disposals of Assets&#160;&#151; SQN II</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">SQN II has
    not sold or disposed of any assets
    </FONT>
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table
    VI:&#160;&#160;Acquisition of Assets by Programs</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth the aggregate equipment
    acquisition information of SQN Capital Management LLC for all
    prior programs. The prior programs have been private programs
    with the same investment strategy as SQN Alternative Investment
    Fund&#160;III, LP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="38%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="34%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="11" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN I</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Lessee</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Type of Asset</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Acquired</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Acquisition Cost*</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    A.R.G. Electrodesign Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Industrial Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,435.49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Biwater Treatment Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    14,275.72
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Biwater Treatment Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,232.82
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Chandler Chicco (UK) Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,558.93
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Crosby Capital Partners Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    550,044.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Crosby Capital Partners Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Furniture and Fixtures
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    152,267.19
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Crosby Capital Partners Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    481,093.37
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Hartpury College
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Modular Accommodations
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    239,036.18
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    19,470.56
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,043.65
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,729.24
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    12,080.86
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    33,834.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    11,890.09
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Killik &#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,222.74
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Littlewoods Finance Company Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    103,506.45
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Littlewoods Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    175,270.93
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Nearby Stores Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,030.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Nearby Stores Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,627.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    OMX Securities Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    41,208.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    OMX Securities Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    30,137.23
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Pall Mall Partners Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    19,722.98
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Pall Mall Partners Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,064.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Princes Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,438.07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Robert Gordon University
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Modular Accommodations
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    275,083.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Whipps Cross University Hospital NHS Trust
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Medical Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    14,820.92
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Pro Buyer Homes Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    54,500.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Tidel Engineering Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Retail Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    114,998.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Solihull Borough Council
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Modular Accommodations
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    162,021.69
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Hodge Hill Girls School
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Modular Accommodations
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    39,641.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Vets4Pets Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Medical Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    231,384.77
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Well Pict European
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Agricultural Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    370,107.85
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Unilever Best Foods North America
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Transportation Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,514,470.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Velocity Express Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    46,992.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Vets4Pets Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Medical Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    84,899.87
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Vets4Pets Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Medical Equipment
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    84,141.30
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    BOSHire Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Modular Accommodations
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    221,937.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    The total Acquisition Cost in SQN I is greater than the Offering
    Proceeds Available for Investment in Table 1 as a result of
    reinvestment of lease, sale, and disposition proceeds.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Table VI:
    Acquisition of Assets by Programs (continued)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="37%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="33%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="11" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>SQN II</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Lessee</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Type of Asset</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Acquired</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Acquisition Cost</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    WellPict
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Agricultural
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    336,709.03
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Falcon
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    266,133.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cabin Centre
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Furniture and Fixtures
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    655,940.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Arbis
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    IT Infrastructure
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    79,067.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Business Environment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Furniture and Fixtures
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    648,301.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    BOSHire
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Modular Accommodation
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,109,688.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Sandwell
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Modular Accommodation
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,342,959.42
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='219'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">APPENDIX&#160;C</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SUBSCRIPTION
    AGREEMENT<BR>
    SQN Alternative Investment Fund&#160;III, L.P.<BR>
    INSTRUCTIONS&#160;FOR COMPLETING THE SUBSCRIPTION
    AGREEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Consult with your registered representative or financial
    planner regarding suitability requirements and subscriber
    representations.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="33%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="65%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    1.&#160;INVESTMENT
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;&#160;&#160;Complete all of the information
    requested in section 1 hereof.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    &#160;&#160;&#149;&#160;&#160;&#160;Each unit costs $1,000.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    &#160;&#160;&#149;&#160;&#160;&#160;The minimum initial
    investment is 25&#160;units ($25,000).
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    2.&#160;REGISTRATION INFORMATION
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Complete all of the information
    requested in sections 2(a) through (c) hereof. If you are not a
    United States citizen, please specify the country of which you
    are a citizen.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Complete section 2(d) hereof only if you
    are investing in us as an IRA, Qualified Plan, Keogh plan or
    trust.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    3.&#160;FORM&#160;OF OWNERSHIP
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Mark only one box in section 3 hereof.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Consult your registered representative
    or investment advisor with any questions about designating the
    form of ownership.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    4.&#160;DIRECT DEPOSIT AND ALTERNATIVE PAYEES ELECTION
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;All subscribers except IRAs should
    complete section 4 hereof if you wish to have our distributions
    to you sent to an address different from the address shown in
    section 2(a) hereof, and you should complete this section if you
    want direct deposit.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    5.&#160;SIGNATURES AND INITIALS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;All investors must sign and initial the
    various items in section 5 hereof to the extent applicable as
    indicated in the form. The signature of an authorized partner,
    manager or officer is required for a partnership, limited
    liability company or corporation investor.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -13pt; margin-left: 13pt">
    6.&#160;SUBSCRIPTION CHECKS, MAILING INSTRUCTIONS&#160;AND
    CONFIRMATIONS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;If your registered representative or
    investment advisor notifies you that the sale of
    1,200&#160;units
    (or&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;units
    in the case of residents of Pennsylvania) has not been
    completed, checks should be made payable to
    &#147;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;.&#148;
    Otherwise, checks should be made payable to
    &#147;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;.&#148;
    Wire transfer instructions are available on request. Mailing:
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    &#160;&#160;&#149;&#160;&#160;&#160;IRAs, Qualified Plans and
    Keogh plan investors should mail all of their subscription
    documents with their check and transfer instructions to their
    designated custodian.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    &#160;&#160;&#149;&#160;&#160;&#160;All other investors should
    mail all their subscription documents with their check and
    transfer instructions to their investment advisor, or the
    Selling Agent at the address below:
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#160;&#160;&#160;&#160;&#160;SQN Securities, LLC<BR>
    &#160;&#160;&#160;&#160;&#160;48 Wall Street, 24th&#160;Floor<BR>
    &#160;&#160;&#160;&#160;&#160;New York, New York 10005<BR>
    &#160;&#160;&#160;&#160;&#160;Telephone: (800) 258-6610<BR>
    &#160;&#160;&#160;&#160;&#160;Fax: (877) 214-1475
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Mail your signed Subscription Agreement
    as set forth above. We will send you a confirmation letter for
    your records after your subscription to purchase units in us has
    been approved by our general partner and we will return a copy
    of the signed Subscription Agreement to you for your records.
</DIV>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>YOUR SUBSCRIPTION AGREEMENT WILL NOT BE PROCESSED BY US
    UNLESS IT IS FULLY COMPLETED AND ACCOMPANIED BY PAYMENT IN FULL.
    ANY SUBSCRIPTION PAYMENT THAT IS DISHONORED WILL CAUSE THE
    SUBSCRIPTION AND ANY NOTICE OF </B>
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>ACCEPTANCE OF THE SUBSCRIPTION BY OUR GENERAL PARTNER TO BE
    VOID AS OF THE SUBSCRIPTION DATE AND SHALL OBLIGATE THE
    SUBSCRIBER TO PAY ALL COSTS AND CHARGES ASSOCIATED WITH THE
    DISHONORED PAYMENT.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If you have any questions about completing this Subscription
    Agreement, please call SQN Securities, LLC, Investor Services at
    <FONT style="white-space: nowrap">(800)&#160;258-6610.</FONT>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">IMPORTANT
    INFORMATION FOR POTENTIAL SUBSCRIBER(S)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    No offer to sell our units to you may be made except by means of
    this Prospectus.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    You should not rely on any oral statements made by any person,
    or on any written information other than this Prospectus or
    supplements to this Prospectus in deciding whether or not to
    purchase our units.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An investment in our units involves certain risks including,
    without limitation, the matters set forth in this Prospectus
    under the captions &#147;Risk Factors,&#148; &#147;Conflicts of
    Interest and Fiduciary Responsibilities,&#148; &#147;Investment
    Objectives and Strategies,&#148; and &#147;Material
    U.S.&#160;Federal Income Tax Consequences.&#148;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The representations you make in the &#147;Investor Suitability
    Requirements and Subscriber Representations&#148; section hereof
    are not a waiver of any of your rights under the Delaware
    Revised Uniform Limited Partnership Act or applicable federal
    and state securities laws.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our units are subject to substantial restrictions on
    transferability.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    There will be no public market for our units.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    It may not be possible for you to readily liquidate your units,
    if at all, even in the event of an emergency.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Any transfer of units is subject to our approval and must comply
    with the terms of Article XIII of our partnership agreement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Important
    Information for Residents of Certain States</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Alabama Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and similar equipment leasing programs may
    not exceed 10% of your liquid net worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>California Investors.</I>&#160;&#160;You must have either
    (1)&#160;a liquid net worth of not less than $100,000 and a
    gross annual income of not less than $75,000, or (2)&#160;a
    liquid net worth of $250,000, in both instances exclusive of
    your home, home furnishings and automobiles.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You will receive units that have certain additional restrictions
    on transfer as summarized by the following legend:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
    SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
    CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
    COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
    AS PERMITTED IN THE COMMISSIONER&#146;S RULES.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Connecticut Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Florida Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Illinois Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Iowa Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliates may not exceed 10% of
    your net worth, calculated exclusive of your home, home
    furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Kansas Investors.</I>&#160;&#160;Under suitability guidelines
    of the Office of the Kansas Securities Commissioner, you are
    cautioned to carefully evaluate whether your aggregate
    investment in us and other similar investments should exceed 10%
    of your liquid net worth. Liquid net worth is that portion of
    your total net worth, or total assets minus total liabilities,
    that is comprised of cash, cash equivalents and readily
    marketable securities. Readily marketable securities may include
    investments in an IRA or other retirement plan that can be
    liquidated within a short time, less any income tax or other
    penalties that may apply for early distribution.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Kentucky Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Maryland Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Michigan Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliated programs may not exceed
    10% of your liquid net worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Missouri Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>New Jersey Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $60,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $60,000 in excess of your invested capital; or
    (ii)&#160;have a net worth (determined with the same exclusions)
    of at least $225,000 in excess of your invested capital. It is
    recommended by the New Jersey Office of the Attorney General
    that New&#160;Jersey investors not invest, in the aggregate,
    more than 10% of their Liquid Net Worth in this and similar
    direct participation investments. Liquid Net Worth is defined as
    that portion of Net Worth which consists of cash, cash
    equivalents and readily marketable securities.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>New York Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>North Carolina Investors.</I>&#160;&#160;You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Ohio Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and in affiliated programs may not exceed
    10% of your liquid net worth, calculated exclusive of your home,
    home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Oklahoma Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth,
    calculated exclusive of your home, home furnishings and
    automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Oregon Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Pennsylvania Investors.</I>&#160;&#160;Because the minimum
    offering amount is less than $5,000,000, which represents 10% of
    the maximum offering amount, you are cautioned to carefully
    evaluate the program&#146;s ability to fully accomplish its
    stated objectives and to inquire as to the current dollar volume
    of program subscriptions. In addition, subscription proceeds of
    Pennsylvania investors will be held in an escrow account until
    we receive and accept subscriptions for at least $7,500,000 in
    offering proceeds. We must offer you the opportunity to rescind
    your subscription if we have not received subscriptions for
    $7,500,000 within 120&#160;days of the date the escrow agent
    receives your subscription proceeds. We must repeat this offer
    to you every 120&#160;days during the Offering Period until we
    have received and accepted subscriptions for $7,500,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Rhode Island Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>South Carolina Investors.</I>&#160;&#160;You must have
    (i)&#160;an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii)&#160;a net worth (determined with the same exclusions) of
    at least $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Texas Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Tennessee Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us must not exceed 10% of your liquid net
    worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Vermont Investors.</I>&#160;&#160;You must meet the general
    investor suitability requirements set forth above. In addition,
    your maximum investment in us and our affiliates may not exceed
    10% of your net worth.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Virginia Investors.</I>&#160;&#160;You must have (i)&#160;an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii)&#160;a
    net worth (determined with the same exclusions) of at least
    $150,000.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Washington Investors.</I>&#160;&#160;You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">SUBSCRIPTION
    AGREEMENT<BR>
    SQN ALTERNATIVE INVESTMENT FUND&#160;III, L.P.<BR>
    A Delaware Limited Partnership
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="4%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="19%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="25%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    1.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Initial<BR>
    Investment:<BR>
    </B>(Please complete<BR>
    the blanks)
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Initial Subscription Amount:
    $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;($25,000
    minimum)<BR>
    No. of Initial Units ($1,000 per
    Unit):&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(25&#160;units
    minimum)<BR>
    No. of Additional Units ($1,000 per
    Unit):&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(No
    minimum)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    2.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Registration<BR>
    Information:<BR>
    </B>(Please type or<BR>
    print clearly)
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    (a)&#160;&#160;<B>Subscriber Information<BR>
    </B>Name(s)&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT><BR>
    Tax I.D. No.(s) or Social Security
    No.(s)&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -110pt; margin-left: 110pt">
    Residential Street
    Address&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    City&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    State
    <FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -21pt; margin-left: 21pt">
    Zip
    Code&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" valign="top">
<DIV style="text-indent: -92pt; margin-left: 92pt">
    Telephone No. (Day)
    &#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: 35pt; margin-left: -35pt">
    Date of
    Birth&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -62pt; margin-left: 62pt">
    Email
    Address&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -22pt; margin-left: 22pt">
    (b)&#160;&#160;<B>Citizenship&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    </B>U.S.
    Citizen&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    U.S. Resident Alien<BR>
    (check
    one)&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>
    Non-Resident of U.S. (Specify
    Country:&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -21pt; margin-left: 21pt">
    (c)&#160;&#160;<B>Investment Advisor Firm<BR>
    <BR>
    </B><DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -22pt; margin-left: 22pt">
    (d)&#160;&#160;<B>If applicable: Trustee, Custodial IRA&#146;s,
    Qualified Plans, SEP, Keogh, etc.)</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -70pt; margin-left: 70pt">
    Trustee
    Name(s)&#160;<FONT style="word-spacing: 260pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -54pt; margin-left: 54pt">
    Tax I.D.
    No.&#160;<FONT style="word-spacing: 250pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -95pt; margin-left: 95pt">
    Date Trust
    Established&#160;<FONT style="word-spacing: 240pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -78pt; margin-left: 78pt">
    Grantor&#146;s
    Name(s)&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -62pt; margin-left: 62pt">
    Street
    Address&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    City&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    State
    <FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -21pt; margin-left: 21pt">
    Zip
    Code&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -72pt; margin-left: 72pt">
    Name of
    Contact&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -108pt; margin-left: 108pt">
    Telephone No. of
    Contact&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -21pt; margin-left: 21pt">
    <B>(e)&#160;&#160;Custodian
    Name<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>Custodian Acct.
    No.<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT></B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    3.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Form of<BR>
    Ownership:<BR>
    </B>(check only one)
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Individual<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;S
    Corporation<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Joint
    Tenants<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Limited
    Liability
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Spouses
    as Community<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Profit
    Sharing Plan<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Tenants
    in Common<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Trust
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Custodial
    Agent<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;IRA,
    SEP, Keogh<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Partnership<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Other&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note to Corporations:
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Please attach a copy of the corporate resolution to purchase
    units and articles of incorporation and by-laws, as amended
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note to Partnerships:
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Please attach a copy of the current partnership agreement, as
    amended
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note to Trusts:
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Please attach a copy of the instrument creating the trust, as
    amended
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note to Estates:
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Please attach a copy of the will and current letters testamentary
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note to LLCs:
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Please attach a copy of the limited liability company resolution
    to purchase units and articles of organization and operating
    agreement, as amended
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="4%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="19%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="25%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    4.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Direct Deposit<BR>
    and Alternative<BR>
    Payee Elections:</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
    Check if:<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;You
    want your distributions sent to your custodial account indicated
    in Section&#160;2(e).<BR>
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;You
    want your distributions sent to you by direct deposit, or to a
    different Payee and Address. Complete the following section:
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -74pt; margin-left: 74pt">
    &#160;&#160;&#160;&#160;&#160;Payee
    Name&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -103pt; margin-left: 103pt">
    &#160;&#160;&#160;&#160;&#160;ABA (Routing)
    No.&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -74pt; margin-left: 74pt">
    &#160;&#160;&#160;&#160;&#160;Account
    No.&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -80pt; margin-left: 80pt">
    &#160;&#160;&#160;&#160;&#160;Account
    Type&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -87pt; margin-left: 87pt">
    &#160;&#160;&#160;&#160;&#160;Account
    Holder&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -82pt; margin-left: 82pt">
    &#160;&#160;&#160;&#160;&#160;Street
    Address&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -40pt; margin-left: 40pt">
    &#160;&#160;&#160;&#160;&#160;City&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: 17pt; margin-left: -17pt">
    State&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: 7pt; margin-left: -7pt">
    Zip&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="5" valign="top">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;You
    want to split your distributions between one or more Payees. If
    you elect this alternative you must request from your registered
    representative or investment advisor and complete a Special
    Payment Instruction Form. Split distributions are available only
    for direct deposit by Automated Clearing House (ACH), a
    financial network run by the Federal Reserve to transfer funds
    electronically. This option is not available for IRAs or Keogh
    plans.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    5.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
    <B>Initials and Signatures:</B>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
    The undersigned confirms that he/she/it:
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Received the Prospectus at least 5
    business days prior and has read this Subscription Agreement.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Makes the representations contained in
    the section entitled &#147;Investor Suitability Requirements and
    Subscriber Representations&#148; hereof.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Acknowledges that an investment in us is
    not liquid.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Declares that, to the best of
    his/her/its knowledge, all applicable information in this
    Subscription Agreement is accurate and may be relied on by our
    general partner.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Appoints our general partner as
    his/her/its attorney-in-fact as described in Paragraph 2 under
    the section entitled &#147;Investor Suitability Requirements and
    Subscriber Representations&#148; hereof.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Meets the minimum income and net worth
    standards set forth in the Prospectus <B>AND </B>if he/she/it
    resides in a state for which more stringent suitability
    standards are required, as described in the Prospectus,
    he/she/it meets such applicable standards.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Is purchasing the units for his/her/its
    own account and not with a view to distribution.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Will inform us of any change in
    residence.<BR>
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
    (Initial&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;)
</DIV>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="27%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="27%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="27%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD rowspan="5" align="left" valign="top">
    Your Subscription<BR>
    cannot be accepted<BR>
    without your<BR>
    initials and signature(s)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Sign
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    X<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Sign
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    X<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>
</TD>
</TR>
<TR valign="bottom">
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Here
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Authorized Signature&#160;&#160;&#160;&#160;&#160;Date<BR>
    (If entity:
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Here
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Authorized Signature&#160;&#160;&#160;&#160;&#160;Date<BR>
    (If entity:
</TD>
</TR>
<TR valign="bottom">
<TD>
&nbsp;
</TD>
<TD colspan="3" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Custodian/Trustee/Officer/Partner)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" valign="top">
    Custodian/Trustee/Officer/Partner)
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>Print
    Name
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>Print
    Name
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="4%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="71%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    6.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Investment Check<BR>
    and Subscription<BR>
    Agreement:</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" valign="top">
    Return the completed Subscription Agreement, your Taxpayer
    Identification Certification, with a check for your initial
    subscription amount as set forth in Section 1 hereof made
    payable as indicated in Section 6 of the Instructions for
    Completing the Subscription Agreement to your registered
    representative or investment advisor.
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="48%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Acceptance of Subscription Agreement by General Partner of
    SQN Alternative Investment Fund&#160;III, L.P.</B>&#160;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    SQN AIF III GP, LLC, General Partner<BR>
    <BR>
    By:&#160;<FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt; color: #000000"><U>&#173;
    &#173;</U></FONT>&#160;&#160;Authorized
    Signature&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Date
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    C-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTOR
    SUITABILITY REQUIREMENTS AND SUBSCRIBER
    REPRESENTATIONS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">1.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Subscription
    for Units.</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    I, by signing my name in Section&#160;5 hereof:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;subscribe for the number of units and dollar
    subscription amount set forth in Section&#160;1 hereof;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;agree to become a limited partner of SQN Alternative
    Investment Fund&#160;III, L.P. (&#147;SQN III&#148;) on the
    acceptance of my subscription by SQN AIF III GP, LLC, the
    general partner of SQN III (the &#147;General
    Partner&#148;);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;adopt and agree to be bound by each and every provision
    of SQN III&#146;s partnership agreement (the &#147;Partnership
    Agreement&#148;) and my Subscription Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    I am tendering good funds with my Subscription Agreement in full
    payment for the units I have subscribed for (if I am required to
    do so under Section&#160;1 hereof) at the per unit subscription
    price applicable to me.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">2.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Appointment
    of the General Partner as the Subscriber&#146;s
    <FONT style="white-space: nowrap">Attorney-in-Fact.</FONT></FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    By signing my name in Section&#160;5 hereof (and effective on my
    admission as a limited partner of SQN III), I hereby make,
    constitute and appoint the General Partner, each authorized
    officer of the General Partner and each person who may
    thereafter become a substitute general partner of SQN III, with
    full power of substitution, as my true and lawful
    attorney-in-fact, in my name, place and stead, to the full
    extent and for the purposes and duration set forth in
    Article&#160;XVIII of the Partnership Agreement (all of the
    terms of which are hereby incorporated in this Subscription
    Agreement by this reference).
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Such purposes include, without limitation, the power to make,
    execute, sign, acknowledge, swear to, verify, deliver, record,
    file and publish any of the following:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (a)&#160;
</TD>
    <TD align="left">
    the Partnership Agreement, certificates of limited partnership
    and any amendment thereof, including amendments reflecting the
    admission or substitution of any general partner or limited
    partner (or their capital contributions) and any other document,
    certificate or instrument required to reflect the admission of
    any partner (including any substitute general partner and any
    substitute limited partner);
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (b)&#160;
</TD>
    <TD align="left">
    any other document, certificate or instrument required to
    reflect any action of the partners provided for in the
    Partnership Agreement (whether or not I voted in favor of or
    otherwise consented to the action);
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (c)&#160;
</TD>
    <TD align="left">
    any other document, certificate or instrument that may be
    required by any regulatory body or other agency or the
    applicable laws of the United States, any state or any other
    jurisdiction in which SQN III is doing or intends to do business
    or that the General Partner deems advisable;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (d)&#160;
</TD>
    <TD align="left">
    any certificate of dissolution or cancellation of the
    certificate of limited partnership that may be reasonably
    necessary to effect the termination of SQN III;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (e)&#160;
</TD>
    <TD align="left">
    any instrument or papers required to continue or terminate the
    business of SQN III under Section&#160;12.5 or Article&#160;XIV
    of the Partnership Agreement; provided that no such
    attorney-in-fact shall take any action as attorney-in-fact for
    me if the action could in any way increase my liability beyond
    the liability expressly set forth in the Partnership Agreement
    or alter my rights under Article&#160;XI of the Partnership
    Agreement, unless (in either case) I have given a power of
    attorney to the attorney-in-fact expressly for that purpose.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The foregoing appointment shall not in any way limit the
    authority of the General Partner as my attorney-in-fact under
    Article&#160;XVIII of the Partnership Agreement. The power of
    attorney hereby granted is coupled with an interest, is
    irrevocable and shall survive my death, incapacity, insolvency,
    dissolution or termination or my delivery of any assignment of
    all or any portion of my units.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The above representations do not constitute a waiver of any
    rights that I may have under federal or state law.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">3.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">General
    Subscriber Representations.</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    As a condition to my being admitted as a limited partner of SQN
    III, I represent and warrant to the General Partner and SQN III
    that I:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (a)&#160;
</TD>
    <TD align="left">
    either:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="4%"></TD>
    <TD width="86%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (i)&#160;
</TD>
    <TD align="left">
    have annual gross income of at least $70,000, plus a net worth
    of at least $70,000 (exclusive of my investment in SQN III, home
    furnishings, automobiles and equity in my home), or a net worth
    of at least $250,000 (determined in the same manner);&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="4%"></TD>
    <TD width="86%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (ii)&#160;
</TD>
    <TD align="left">
    meet any higher investor gross income
    <FONT style="white-space: nowrap">and/or</FONT> net
    worth standards applicable to residents of my State, as set
    forth in the &#147;Investor Suitability&#148; section of the
    Prospectus (which begins on page&#160;1 of the Prospectus);
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (b)&#160;
</TD>
    <TD align="left">
    if I am investing as an IRA, Qualified Plan, HR-10 (Keogh) plan
    or other benefit plan or trust, I have accurately been
    identified as such in Section&#160;2(d) hereof and
    Section&#160;3 hereof;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (c)&#160;
</TD>
    <TD align="left">
    have been accurately identified in Section&#160;2(b) hereof as
    either a U.S.&#160;Citizen or a
    <FONT style="white-space: nowrap">non-U.S.&#160;Citizen;&#160;and</FONT>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (d)&#160;
</TD>
    <TD align="left">
    am not less than 21&#160;years of age.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    If I am investing in a fiduciary or representative capacity, the
    investment is being made for one or more persons, entities or
    trusts, all of which meet the applicable suitability
    requirements described above.
</TD>
</TR>

</TABLE>
<!-- XBRL,n -->
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">4.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    Fiduciary and Entity Representations.</FONT></B>
</TD>
</TR>

</TABLE>
<!-- XBRL,body -->
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    If the person signing this Subscription Agreement is doing so on
    behalf of another person or entity who is the subscriber,
    including, without limitation, a corporation, a partnership, an
    IRA, a Qualified Plan, a Keogh plan, or a trust (other than a
    Qualified Plan or Keogh plan), the signatory, by signing
    his/her/its name in Section&#160;5 hereof, represents and
    warrants to the General Partner and SQN III that:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (a)&#160;
</TD>
    <TD align="left">
    he or she is duly authorized to:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="4%"></TD>
    <TD width="86%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (i)&#160;
</TD>
    <TD align="left">
    execute and deliver this Subscription Agreement;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="4%"></TD>
    <TD width="86%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (ii)&#160;
</TD>
    <TD align="left">
    make the representations contained in this Subscription
    Agreement on behalf of the Subscriber;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="5%"></TD>
    <TD width="85%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (iii)&#160;
</TD>
    <TD align="left">
    bind the Subscriber by signing this Subscription
    Agreement;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (b)&#160;
</TD>
    <TD align="left">
    this investment is an authorized investment for the Subscriber
    under applicable documents
    <FONT style="white-space: nowrap">and/or</FONT>
    agreements (articles of incorporation or corporate bylaws or
    action, partnership agreement, trust indenture, etc.) and
    applicable law.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">[THE REST
    OF THIS PAGE&#160;INTENTIONALLY LEFT BLANK.]</FONT></B>
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Taxpayer Identification Number Certification&#160;&#151; You
    should check the first box below, unless you are a foreign
    investor or you are investing as a U.S.&#160;grantor trust.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Note:&#160;&#160;If there is a change in circumstances that
    makes any of the information provided by you in the
    certification below incorrect, then you are under a continuing
    obligation so long as you own units in SQN III to notify the
    General Partner and furnish the General Partner a new
    certificate within thirty (30)&#160;days of the change.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="4%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    Under penalties of perjury, you certify that:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="4%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (1)&#160;
</TD>
    <TD align="left">
    the number provided in this Subscription Agreement is your
    correct &#147;TIN&#148; ( i.e. , social security number or
    taxpayer identification number);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (2)&#160;
</TD>
    <TD align="left">
    you are not subject to backup withholding because (a)&#160;you
    are exempt from backup withholding under &#167;3406(g)(1) of the
    Internal Revenue Code and the related regulations, or
    (b)&#160;you have not been notified by the Internal Revenue
    Service (IRS) that you are subject to backup withholding as a
    result of failure to report all interest or dividends, or
    (c)&#160;the IRS has notified you that you are no longer subject
    to backup withholding;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (3)&#160;
</TD>
    <TD align="left">
    you are a U.S.&#160;person (which includes U.S.&#160;citizens,
    resident aliens, entities or associations formed in the
    U.S.&#160;or under U.S.&#160;law, and U.S.&#160;estates and
    trusts.)
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (Note: You must cross out item (2)&#160;above if you have been
    notified by the IRS that you are currently subject to backup
    withholding because you have failed to report all interest and
    dividends on your tax return.)
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="4%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    Foreign Partner. You are at least 21&#160;years of age and you
    have provided SQN III with the appropriate
    <FONT style="white-space: nowrap">Form&#160;W-8</FONT>
    certification or, if a joint account, each joint account owner
    has provided SQN III the appropriate
    <FONT style="white-space: nowrap">Form&#160;W-8</FONT>
    certification, and if any one of the joint account owners has
    not established foreign status, that joint account owner has
    provided SQN III with a certified TIN.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    U.S.&#160;Grantor Trusts. Under penalties of perjury, I certify
    that:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="4%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (1)&#160;
</TD>
    <TD align="left">
    the trust designated as the Subscriber on the Subscription
    Agreement is a United States grantor trust that the person(s)
    designated as the grantor(s) of the trust on the Subscription
    Agreement can amend or revoke while living;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (2)&#160;
</TD>
    <TD align="left">
    under subpart E of subchapter J of the Internal Revenue Code
    (check only one of the boxes below):
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="5%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    (a)&#160;100% of the trust is treated as owned by the grantor;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    (b)&#160;the trust is treated as owned in equal shares by the
    grantor and the grantor&#146;s spouse;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;&#160;&#160;
</TD>
    <TD align="left">
    (c)&#160;&#160;&#160;&#160;&#160;% of the trust is treated as
    owned
    by&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    and the remainder is treated as
    owned&#160;&#160;&#160;&#160;&#160;% by the grantor
    and&#160;&#160;&#160;&#160;&#160;% by the grantor&#146;s
    spouse);&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="4%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (3)&#160;
</TD>
    <TD align="left">
    each grantor or other owner of any portion of the trust has
    provided SQN III with the appropriate
    <FONT style="white-space: nowrap">Form&#160;W-8</FONT>
    or
    <FONT style="white-space: nowrap">Form&#160;W-9</FONT>
    certification.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Note:&#160;&#160;If you check the box in (2)(c), you must insert
    the information called for by the blanks.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The Internal Revenue Service does not require your consent to
    any provision of this document other than the certifications
    required to avoid backup withholding.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    ON YOUR EXECUTION OF THIS SUBSCRIPTION AGREEMENT AND ITS
    ACCEPTANCE BY THE GENERAL PARTNER, SECTIONS&#160;1 THROUGH 7 OF
    THIS SUBSCRIPTION AGREEMENT WILL BECOME A PART&#160;OF THE
    PARTNERSHIP AGREEMENT.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CONSENT
    TO ELECTRONIC DELIVERY OF OFFERING MATERIALS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN Alternative Investment Fund&#160;III, L.P. (&#147;SQN
    III&#148;) can deliver offering materials to investors
    electronically. By signing the consent provided below you can
    choose to have SQN III electronically deliver offering materials
    to you, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prospectuses;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prospectus supplements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prospectus amendments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    annual, quarterly and periodic reports;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    notices:&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    supplemental sales literature (collectively &#147;Offering
    Materials&#148;).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN III may accomplish electronic delivery via:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    posting Offering Materials to the SQN Capital Management, LLC
    Internet Website
    <I>(<U><FONT style="white-space: nowrap">http://www.sqncapital.com</FONT></U>)</I>,
    whereby investors will be notified that such materials are
    available for viewing on the Website by
    <FONT style="white-space: nowrap">e-mail,</FONT>
    physical mail or telephone;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sending
    <FONT style="white-space: nowrap">e-mails</FONT> to
    investors containing Offering Materials (including portable
    document format (.pdf) of such material);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sending CD-ROMs to investors containing Offering Materials
    (including portable document format (.pdf) of such material).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should note that electronic delivery may impose costs on you
    that you would not bear with traditional, physical mailing. You
    may incur Internet online costs for accessing
    <FONT style="white-space: nowrap">e-mail.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At the same time, you may need to download a .pdf document
    viewer, such as Adobe
    Acrobat<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in order to view Offering Materials sent as a .pdf file. You can
    download the Adobe
    Acrobat<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    software free of charge at
    <I><FONT style="white-space: nowrap">http://www.adobe.com/products/acrobat/readermain.html.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The general partner of SQN III (the &#147;General Partner&#148;)
    will try to provide assistance to investors in connection with
    electronic delivery of Offering Materials free of charge. If you
    are in need of such assistance, you should contact the General
    Partner at
    <FONT style="white-space: nowrap">(212)&#160;422-2166.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The undersigned hereby consents to electronic delivery of all
    Offering Materials by SQN III in any or all of the manners
    described above. Information provided below as to the
    undersigned&#146;s
    <FONT style="white-space: nowrap">e-mail</FONT>
    address will be used by SQN III in lieu of different
    instructions from the undersigned.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The undersigned understands that he or she may revoke this
    consent at any time by providing timely notice of revocation to
    the General Partner. Revocation of such consent will act to
    revoke consent as to all future electronic deliveries of
    Offering Materials by SQN III.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The undersigned also understands that he or she may elect to
    receive paper copies of Offering Materials at any time upon
    request, with or without revoking this consent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The undersigned also understands that this Consent to Electronic
    Delivery of Offering Materials is optional and is not a part of
    the SQN III Subscription Agreement, which must be executed in
    accordance with the instructions hereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 8pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Print Name
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <DIV style="font-size: 8pt; margin-left: 0%; width: 100%; border-bottom: 1pt solid #000000"></DIV></TD>
    <TD nowrap align="right">    <DIV style="font-size: 8pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <FONT style="font-family: 'Times New Roman', Times">Signature
    </FONT></TD>
    <TD nowrap align="right">    <FONT style="font-family: 'Times New Roman', Times"> Date
    </FONT></TD>
</TR>

</TABLE>

<DIV style="font-size: 8pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">E-mail</FONT>
    Address (please print, and include domain extension [.com, .net,
    etc.])
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    C-11
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No person is authorized to give any information or make any
    representation that is not contained in this prospectus. You
    must not rely on any unauthorized representations or
    information. This prospectus is an offer to sell only the units
    of limited partnership interest offered by this prospectus, and
    only under circumstances and in jurisdictions where it is lawful
    to do so. The information contained in this prospectus is
    current only as of its date.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">SQN ALTERNATIVE INVESTMENT
    FUND&#160;III, L.P.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Units of Limited Partnership
    Interest</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">$1,000 per unit</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 14%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 14%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">,
    2010</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No one has been authorized to give any information or make any
    representations other than those contained in this prospectus in
    connection with this offering. If given or made, you should not
    rely on such information or representations as having been
    authorized by the General Partner. The delivery of this
    prospectus does not imply that its information is correct as of
    any time after its date. This prospectus is not an offer to sell
    these securities in any state to any person where the offer and
    sale is not permitted.
    Until&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    2010, all dealers that effect transactions in these securities,
    whether or not participating in this offering, may be required
    to deliver a prospectus. This is in addition to the
    dealers&#146; obligation to deliver a prospectus when acting as
    underwriters and with respect to their unsold allotments of
    subscriptions.
</DIV>

<DIV style="margin-top: 14pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PART&#160;II<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INFORMATION
    NOT REQUIRED IN PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;13.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Other
    Expenses of Issuance and Distribution</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Set forth below are the expenses (other than distribution
    expenses) expected to be paid by the registrant in connection
    with the issuance and distribution of the securities registered
    hereby. With the exception of the Securities and Exchange
    Commission&#146;s registration fee and FINRA&#146;s filing fee,
    the amounts set forth below are estimated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="88%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Securities and Exchange Commission registration fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,565
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    State Blue Sky registration fees (excluding legal fees)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
    *
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FINRA filing fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Printing and engraving expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    125,000
</TD>
<TD nowrap align="left" valign="bottom">
    *
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Legal fees (including Blue Sky) and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    600,000
</TD>
<TD nowrap align="left" valign="bottom">
    *
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Accounting fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Miscellaneous
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,163,935
</TD>
<TD nowrap align="left" valign="bottom">
    *
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,998,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    Estimated</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;14.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Indemnification
    of Directors and Officers</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">Section&#160;17-108</FONT>
    of the Delaware Revised Uniform Limited Partnership Act states:
    &#147;Subject to such standards and restrictions, if any, as are
    set forth in its partnership agreement, a limited partnership
    may, and shall have the power to, indemnify and hold harmless
    any partner or other person from and against any and all claims
    and demands whatsoever.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Section&#160;9.3 of the partnership agreement of the registrant,
    included in the prospectus as Appendix&#160;A, provides for
    indemnification of the registrant&#146;s general partner, SQN
    AIF III GP, LLC (the &#147;General Partner&#148;), its
    affiliates and individual officers under certain circumstances.
    Reference is made to such section of the partnership agreement
    and to &#147;Summary of Our Partnership Agreement.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The above discussion of the registrant&#146;s partnership
    agreement is not intended to be exhaustive and is qualified in
    its entirety by the registrant&#146;s partnership agreement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;15.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Recent
    Sales of Unregistered Securities</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant has recently been formed but has not issued any
    securities other than the General Partner&#146;s interest in the
    registrant, for a capital contribution of $100. This sale
    occurred on March&#160;10, 2010 in reliance upon the exemption
    from registration contained in Section&#160;4(2) of the
    Securities Act of 1933, as amended. This sale was for the
    purpose of organizing the registrant as a limited partnership
    and for investment purposes and not with a view to the
    distribution of such securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;16.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Exhibits
    and Financial Statements Schedules</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;Exhibits:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="92%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exhibit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Selling Agent Agreement with SQN Securities, LLC
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Certificate of Limited Partnership of SQN Alternative Investment
    Fund&#160;III, L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated Agreement of Limited Partnership of SQN
    Alternative Investment Fund&#160;III, L.P. (included as
    Appendix&#160;A to the prospectus)
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="92%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exhibit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    5
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Troutman Sanders LLP as to the legality of the units
    being registered
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    8
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Troutman Sanders LLP relating to tax matters*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Escrow Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .2
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Subscription Agreement (included as Appendix&#160;C to
    the prospectus)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Management, Origination and Servicing Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Holtz Rubenstein Reminick LLP&#160;&#151; SQN AIF III
    GP, LLC
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .2
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Holtz Rubenstein Reminick LLP&#160;&#151; SQN
    Alternative Investment Fund&#160;III, L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Troutman Sanders LLP (contained in Exhibits&#160;5.1)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .4
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Troutman Sanders LLP (contained in Exhibits&#160;8.1)*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    24
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Power of Attorney (included on the signature page to this
    Registration Statement)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    To be Filed by Amendment.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;Financial Statement Schedules
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SQN AIF
    III GP, LLC.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See Index to Financial Statements at
    <FONT style="white-space: nowrap">page&#160;F-1</FONT>
    of the prospectus included in Part&#160;I of this Registration
    Statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN Alternative Investment Fund&#160;III, L.P.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See Index to Financial Statements at
    <FONT style="white-space: nowrap">page&#160;F-1</FONT>
    of the prospectus included in Part&#160;I of this Registration
    Statement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;17.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Undertakings</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant hereby undertakes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;(1)&#160;To file, during any period in which offers or
    sales are being made, a post-effective amendment to this
    registration statement:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;To include any prospectus required by
    section&#160;10(a)(3) of the Securities Act of 1933;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;To reflect in the prospectus any facts or events
    arising after the effective date of the registration statement
    (or the most recent post-effective amendment thereof) which,
    individually or in the aggregate, represent a fundamental change
    in the information set forth in the registration statement.
    Notwithstanding the foregoing, any increase or decrease in
    volume of securities offered (if the total dollar value of
    securities offered would not exceed that which was registered)
    and any deviation from the low or high end of the estimated
    maximum offering range may be reflected in the form of
    prospectus filed with the Commission pursuant to
    Rule&#160;424(b) ( &#167;&#160;230.424(b<U>)</U> of this
    chapter) if, in the aggregate, the changes in volume and price
    represent no more than 20% change in the maximum aggregate
    offering price set forth in the &#147;Calculation of
    Registration Fee&#148; table in the effective registration
    statement;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;To include any material information with respect to
    the plan of distribution not previously disclosed in the
    registration statement or any material change to such
    information in the registration statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;That, for the purpose of determining any liability
    under the Securities Act of 1933, each such post-effective
    amendment shall be deemed to be a new registration statement
    relating to the securities offered therein, and the offering of
    such securities at that time shall be deemed to be the initial
    bona fide offering thereof.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    II-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;To remove from registration by means of a
    post-effective amendment any of the securities being registered
    which remain unsold at the termination of the offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;That, for the purpose of determining liability of the
    registrant under the Securities Act of 1933 to any purchaser in
    the initial distribution of the securities, the registrant
    hereby undertakes that in a primary offering of securities of
    the registrant pursuant to this registration statement,
    regardless of the underwriting method used to sell the
    securities to the purchaser, if the securities are offered or
    sold to such purchaser by means of any of the following
    communications, the registrant will be a seller to the purchaser
    and will be considered to offer or sell such securities to such
    purchaser:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;Any preliminary prospectus or prospectus of the
    undersigned registrant relating to the offering required to be
    filed pursuant to Rule&#160;424 (&#167;230.424 of this chapter);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;Any free writing prospectus relating to the offering
    prepared by or on behalf of the undersigned registrant or used
    or referred to by the undersigned registrant;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;The portion of any other free writing prospectus
    relating to the offering containing material information about
    the undersigned registrant or its securities provided by or on
    behalf of the undersigned registrant;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iv)&#160;Any other communication that is an offer in the
    offering made by the undersigned registrant to the purchaser.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;That all such post-effective amendments will comply
    with the applicable forms, rules and regulations of the
    Securities and Exchange Commission in effect at the time such
    post-effective amendments are filed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;Insofar as indemnification for liabilities arising
    under the Securities Act of 1933&#160;may be permitted to
    directors, officers and controlling persons of the registrant
    pursuant to the foregoing provisions, or otherwise, the
    registrant has been advised that in the opinion of the
    Securities and Exchange Commission such indemnification is
    against public policy as expressed in the Act and is, therefore,
    unenforceable. In the event that a claim for indemnification
    against such liabilities (other than the payment by the
    registrant of expenses incurred or paid by a director, officer
    or controlling person of the registrant in the successful
    defense of any action, suit or proceeding) is asserted by such
    director, officer or controlling person in connection with the
    securities being registered, the registrant will, unless in the
    opinion of its counsel the matter has been settled by
    controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is
    against public policy as expressed in the Act and will be
    governed by the final adjudication of such issue.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;The undersigned registrant hereby undertakes that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;For purposes of determining any liability under the
    Securities Act of 1933, the information omitted from the form of
    prospectus filed as part of this registration statement in
    reliance upon Rule&#160;430A and contained in a form of
    prospectus filed by the registrant pursuant to
    Rule&#160;424(b)(1) or (4)&#160;or 497(h) under the Securities
    Act shall be deemed to be part of this registration statement as
    of the time it was declared effective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;For the purpose of determining any liability under the
    Securities Act of 1933, each post-effective amendment that
    contains a form of prospectus shall be deemed to be a new
    registration statement relating to the securities offered
    therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant undertakes to send to each limited partners at
    least on an annual basis a detailed statement of any
    transactions with the general partner or its affiliates, and of
    fees, commissions, compensation and other benefits paid, or
    accrued to the general partner or its affiliates for the fiscal
    year completed, showing the amount paid or accrued to each
    recipient and the services performed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant undertakes to provide to the limited partners the
    financial statements required by
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the first full fiscal year of operations of the registrant.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant undertakes to file a sticker supplement pursuant
    to Rule&#160;424(c) under the Securities Act during the
    distribution period describing each lease transaction not
    identified in the prospectus at such time as there arises a
    reasonable probability that such property will be acquired and
    to consolidate all such stickers into a post-effective amendment
    filed at least once every three months, with the information
    contained in such amendment provided simultaneously to the
    existing limited partners. Each sticker supplement should
    disclose all compensation and fees received by the general
    partner and its affiliates in connection with any such
    acquisition. The post-effective amendment shall include audited
    financial statements meeting the requirements of
    <FONT style="white-space: nowrap">Rule&#160;3-14</FONT>
    of
    <FONT style="white-space: nowrap">Regulation&#160;S-X</FONT>
    only for properties acquired during the distribution period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The registrant undertakes to file, after the end of the offering
    period, a current report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    containing the financial statements and any additional
    information required by
    <FONT style="white-space: nowrap">Rule&#160;3-14</FONT>
    of
    <FONT style="white-space: nowrap">Regulation&#160;S-X,</FONT>
    to reflect each commitment made after the end of the offering
    period involving the use of 10% or more (on a cumulative basis)
    of the net proceeds of the offering and to provide the
    information contained in such report to the members at least
    once each quarter after the offering period has ended.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='220'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SIGNATURES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, as
    amended, the registrant has duly caused this Registration
    Statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    to be signed on its behalf by the undersigned, thereunto duly
    authorized, in New York, New York on April&#160;20, 2010.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    SQN ALTERNATIVE INVESTMENT FUND&#160;III, L.P.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    SQN AIF III GP, LLC
</TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    its General Partner
</DIV>

<DIV style="margin-top: 48pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Jeremiah
    J. Silkowski</DIV>
</DIV>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Name:&#160;&#160;&#160;&#160;&#160;Jeremiah J. Silkowski
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="53%"></TD>
    <TD width="8%"></TD>
    <TD width="39%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    Title:&#160;
</TD>
    <TD align="left">
    President and Chief Executive Officer
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The undersigned hereby constitute and appoint Neil Roberts and
    Jeremiah J. Silkowski and each of them with full power to act
    without the other and with full power of substitution and
    resubstitution, our true and lawful attorneys-in-fact with full
    power to execute in our name and behalf in the capacities
    indicated below this Registration Statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    and any and all amendments thereto, including post-effective
    amendments to this Registration Statement and to sign any and
    all additional registration statements relating to the same
    offering of securities as this Registration Statement that are
    filed pursuant to Rule&#160;462(b) of the Securities Act, and to
    file the same, with all exhibits thereto and other documents in
    connection therewith, with the Securities and Exchange
    Commission and hereby ratify and confirm that all such
    attorneys-in-fact, or any of them, or their substitutes shall
    lawfully do or cause to be done by virtue thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, as
    amended, this Registration Statement has been signed below by
    the following persons on behalf of the registrant and in the
    capacities for the general partner and on the dates indicated
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="2%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="39%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="39%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Signature</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 12pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Neil
    A. Roberts</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>Neil
    A. Roberts
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Chairman
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    April 20, 2010
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Jeremiah
    J. Silkowski</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>Jeremiah
    J. Silkowski
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    President and Chief Executive Officer (Principal Executive
    Officer)
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    April 20, 2010
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;David
    C. Wright</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV>David
    C. Wright
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    Chief Financial Officer (Principal Financial and Accounting
    Officer)
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    April 20, 2010
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='221'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEX TO
    EXHIBITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="91%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exhibit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Selling Agent Agreement with SQN Securities, LLC
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Certificate of Limited Partnership of SQN Alternative Investment
    Fund&#160;III, L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated Agreement of Limited Partnership of SQN
    Alternative Investment Fund&#160;III, L.P. (included as
    Appendix&#160;A to the prospectus)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    5
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Troutman Sanders LLP as to the legality of the units
    being registered
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    8
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Troutman Sanders LLP relating to tax matters*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Escrow Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .2
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Subscription Agreement (included as Appendix&#160;C to
    the prospectus)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Management, Origination and Servicing Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Holtz Rubenstein Reminick LLP&#160;&#151; SQN AIF III
    GP, LLC
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .2
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Holtz Rubenstein Reminick LLP&#160;&#151; SQN
    Alternative Investment Fund&#160;III, L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Troutman Sanders LLP (contained in Exhibits&#160;5.1)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .4
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Troutman Sanders LLP (contained in Exhibits&#160;8.1)*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    24
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Power of Attorney (included on the signature page to this
    Registration Statement)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    To be Filed by Amendment</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
</BODY>
</HTML>
[{"type": "S-1", "sequence": "1", "filename": "y03348sv1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1703231}]
{"company-data": {"conformed-name": "SQN Alternative Investment Fund III, L.P.", "cik": "0001489367", "irs-number": "272173346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-166195", "film-number": "10759946"}, "business-address": {"street1": "48 WALL STREET", "street2": "24TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10005", "phone": "212-422-2166"}, "mail-address": {"street1": "48 WALL STREET", "street2": "24TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10005"}}
sv1
Table of Contents
As filed with the Securities and Exchange Commission on April
    20, 2010
Registration
Number 333-
UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
Washington, D.C.
    20549
Form S-1
REGISTRATION
    STATEMENT
UNDER
THE SECURITIES ACT OF
    1933
SQN Alternative Investment
    Fund III, L.P.
(Exact name of registrant as
    specified in its charter)
Delaware
7359
27-2173346
(State or other jurisdiction
of incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
48 Wall Street
24
th
Floor
New York, New York 10005
(212) 422-2166
(Address, including zip code,
    and telephone number,
including area code, of
    registrant's principal executive offices)
Jeremiah J. Silkowski
President and Chief Executive Officer
SQN Capital Management, LLC
48 Wall Street
24
th
Floor
New York, New York 10005
(212) 422-2166
(Name, address, including zip
    code, and telephone
number, including area code, of
    agent for service)
With a Copy to:
Brinkley Dickerson, Esq.
Troutman Sanders LLP
Bank of America Plaza
600 Peachtree Street, NE
Atlanta, Georgia 30308
(404) 885-3000
Approximate date of commencement of proposed offering to the
    public:
As soon as practicable after this
    registration statement becomes effective.
If any of the securities being registered on this Form are to be
    offered on a delayed or continuous basis pursuant to
    Rule 415 under the Securities Act of 1933, check the
    following
    box:
þ
If this Form is filed to register additional securities for an
    offering pursuant to Rule 462(b) under the Securities Act,
    please check the following box and list the Securities Act
    registration statement number of the earlier effective
    registration statement for the same
    offering.
o
If this Form is a post-effective amendment filed pursuant to
    Rule 462(c) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.
o
If this Form is a post-effective amendment filed pursuant to
    Rule 462(d) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.
o
Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    "large accelerated filer," "accelerated
    filer" and "smaller reporting company" in Rule
12b-2
of the
    Exchange Act. (Check one):
Large
    accelerated
    filer
o
Accelerated
    filer
o
Non-accelerated
filer
o
Smaller reporting
    company
þ
(Do not check if a smaller
    reporting company)
CALCULATION
    OF REGISTRATION FEE
Proposed Maximum
Proposed Maximum
Amount of
Title of Each Class of
Amount to
Offering Price
Aggregate
Registration
Securities to be Registered
be Registered
per Unit
Offering Price
Fee
Limited Partner Units
50,000
$1,000
$50,000,000
$3,565
The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the Registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act of 1933 or until this Registration
    Statement shall become effective on such date as the Commission,
    acting pursuant to said Section 8(a), may determine.
Table of Contents
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED
    APRIL 20, 2010
SQN Alternative Investment
    Fund III, L.P.
Units of Limited Partner
    Interests at $1,000 per Unit
Minimum Offering
    Proceeds — 1,200 Units ($1,200,000)
Maximum Offering
    Proceeds — 50,000 Units ($50,000,000)
We are SQN Alternative Investment Fund III, L.P., a
    Delaware limited partnership. Our General Partner is SQN AIF III
    GP, LLC, a Delaware limited liability company, and our
    Investment Manager is SQN Capital Management, LLC, a Delaware
    limited liability company. We are offering a minimum of
    1,200 units ($1.2 million) and a maximum of
    50,000 units ($50.0 million). We intend to use the net
    proceeds from this offering to invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams. Many of our investments will be
    structured as equipment leases, but we also intend to use other
    structures, including, but not limited to, participation
    agreements, residual sharing agreements, project financings and
    vendor and rental (hire) programs.
We expect that approximately 95.0% of the proceeds of this
    offering will be available for investment and to pay fees, 4.0%
    of the proceeds of this offering will be used to pay fees and
    expenses associated with our organization and this offering and
    1.0% of the proceeds from this offering will be used to fund a
    capital reserve. Our principal objectives are to generate
    non-correlated capital appreciation and make regular cash
    distributions to you. We anticipate that during our initial
    years of operation our distributions will be substantially
    tax-deferred due primarily to depreciation deductions on a
    portion of our equipment and operating losses.
Investing in our units involves a high degree of
    risk. You should purchase these securities only if you can
    afford a complete loss of your investment. You should read
    "Risk Factors," beginning on page 16 of this
    prospectus, for a discussion of factors you should consider
    before buying our units. Among the most prominent of these risks
    are the following:
•
A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital
    and not a return on capital.
•
This is a "blind-pool" offering because we have not
    specifically identified our investments at the time you invest.
    As a result, you cannot evaluate the risks of, or potential
    returns from, any of our investments at the time you invest.
•
Since there is no public market for our units, an investment in
    our units is considered illiquid. You should be prepared to hold
    your units for the life of the fund, which is anticipated to be
    approximately seven years, but may be longer.
•
You will have very limited voting rights and you must rely on
    our General Partner, our Investment Manager and their affiliates
    to manage us.
•
A prolonged economic recession and/or changes in general
    economic conditions, including fluctuations in demand for
    equipment and other portfolio assets, lease rates, and interest
    rates may result in delays in investment and reinvestment,
    delays in leasing, re-leasing and disposition of equipment, and
    reduced returns on capital.
•
Our performance will be subject to the risk of lease and other
    investment defaults. Uncertainties associated with the equipment
    leasing and financing industry may have an adverse effect on our
    business and may adversely affect our ability to provide you any
    economic return from our units or a complete return of your
    capital.
•
Our success will depend in part on our ability to realize
    residual value from a portion of our assets and equipment once
    the leases on those assets and equipment terminate.
•
Our General Partner, our Investment Manager and their affiliates
    will receive significant compensation from us, which will reduce
    distributions to you.
•
There are potential conflicts of interest between us and our
    General Partner, our Investment Manager and their affiliates.
•
There are material federal income tax risks associated with this
    offering.
Proceeds
to Us
Price to
Distribution
Before Other
Public
Expenses(1)
Expenses(2)
Per Unit
$
1,000
$
20
$
980
Total Minimum
$
1,200,000
$
24,000
$
1,176,000
Total Maximum(3)
$
50,000,000
$
998,000
$
49,002,000
(1)
To be paid by us to SQN Securities,
    LLC, our exclusive selling agent.
(2)
Before deducting total
    Organizational and Offering Expenses. The total Distribution
    Expenses and Organizational and Offering Expenses are estimated
    at $48,000 for the minimum offering and $1,998,000 for the
    maximum offering. See "Estimated Use of Proceeds."
(3)
Assumes that our General Partner or
    its affiliates purchases 100 units.
Our General Partner or its affiliates currently intend to
    purchase 100 of our units offered hereby at a purchase price of
    $1,000 per unit. We will not pay any Distribution Expenses in
    connection with units sold to our General Partner or its
    affiliates.
SQN Securities, LLC, which is an affiliate of our General
    Partner, will act as the exclusive selling agent for the
    offering of our units. The units will be offered on a "best
    efforts," "minimum-maximum" basis. This means the
    selling agent must sell at least 1,200 units and receive
    subscription proceeds of at least $1.2 million in order for
    this offering to close (excluding subscription proceeds from our
    General Partner or its affiliates and from residents of
    Pennsylvania), and it must use only its best efforts to sell our
    remaining units. Our subscription proceeds will be held in an
    interest bearing escrow account until $1.2 million has been
    received. This offering will not extend
    beyond          ,
    2012. If the minimum subscription proceeds are not received by
    January 1, 2011, then your subscription will be promptly
    returned to you from the escrow account with interest earned, if
    any, and without deduction for any fees.
Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or passed upon the adequacy or accuracy of this
    prospectus. Any representation to the contrary is a criminal
    offense.
The use of forecasts in this offering is prohibited. Any
    representations to the contrary and any predictions, written or
    oral, as to the amount or certainty of any present or future
    cash benefit or tax consequence which may flow from an
    investment in this program is not permitted
.
SQN Securities, LLC —
    Selling Agent
The date of this prospectus
    is          ,
    2010
Table of Contents
TABLE OF
    CONTENTS
Page
INVESTOR SUITABILITY
iv
General
iv
General Investor Suitability Requirements
iv
Additional State Investor Suitability
    Requirements
v
Additional Considerations for IRAs, Qualified
    Plans and Tax-Exempt Organizations
vii
Investor Suitability Requirements in Connection
    with Transfers of Units
vii
Who Should Invest
viii
QUESTIONS AND ANSWERS ABOUT THIS
    OFFERING
viii
PROSPECTUS SUMMARY
1
SQN Alternative Investment Fund III,
    L.P.
1
The Offering
5
ESTIMATED USE OF PROCEEDS
9
MANAGEMENT COMPENSATION
10
Summary Table
10
Limitations on Fees
13
Defined Terms Used in the "Management
    Compensation" Section
14
RISK FACTORS
16
Risks Associated with this Offering
16
Risks Associated with our Business
20
Risks Associated with our Organization and
    Structure
24
Risks Associated With the Tax Treatment of Our
    Units
27
FORWARD-LOOKING STATEMENTS AND ASSOCIATED
    RISKS
29
CONFLICTS OF INTEREST AND FIDUCIARY
    RESPONSIBILITIES
30
General
30
Our General Partner, Our Investment Manager and
    Their Affiliates Will Receive Fees and Other Substantial
    Compensation From Us
31
Actions Taken by Our General Partner and Our
    Investment Manager Will Affect the Amount of Cash Available for
    Distribution to Limited Partners and Our General Partner's
    and Investment Manager's Compensation
31
Our General Partner, Our Investment Manager and
    Their Affiliates Will Engage in Activities That Compete With
    Us
31
We May Enter Into Joint Ventures With Affiliated
    Programs
32
We Do Not Have Any Employees and Rely on the
    Employees of Our General Partner, Our Investment Manager and
    Their Affiliates
33
We May Reimburse Our General Partner, Our
    Investment Manager and Their Affiliates for Expenses
33
We Have Not Retained Separate Counsel or Other
    Professionals
33
Lack of Independent Underwriter and Due Diligence
    Investigation in This Offering
33
Conflicts Regarding Redemption of Units
33
Our General Partner is Our Tax Matters Partner
34
Our General Partner or Its Affiliates Will
    Purchase Units as Investors
34
General Restrictions
34
Fiduciary Duty of Our General Partner
36
i
Table of Contents
Page
MANAGEMENT
38
Our General Partner
38
Our Investment Manager
38
Investment Committee
40
Code of Business Conduct and Ethics
40
Compensation
40
Change in Partnership Management
41
Affiliated Company
41
CAPITALIZATION
42
OTHER PROGRAMS MANAGED BY OUR INVESTMENT
    MANAGER OR ITS AFFILIATES
43
INVESTMENT OBJECTIVES AND STRATEGIES
45
Principal Investment Objectives
45
Principal Investment Strategies
45
Equipment and Other Assets for Lease to
    End – Users
48
Equipment and Other Assets Already Subject to
    Lease
48
Types of Equipment and Other Assets
48
Market
48
Industry Participants and Segments
49
Industry and Market Data
49
Equipment Leasing Figures
49
Competitive Conditions
49
Leasing and Financing Strategies
50
Sales of Revenue Streams
55
Management, Origination and Servicing
    Agreement
56
Changes in Investment Objectives and Policies
56
INCOME, LOSSES AND DISTRIBUTIONS
57
Allocations of Net Income, Net Loss and
    Distributions Among Investors
57
Timing of Distributions
57
Reinvestments in Additional Equipment, Other
    Assets, Leases and Other Investments During the Operating
    Period
57
Return of Unused Capital
57
Reserve Account and Sources of Funds for
    Distributions
58
MATERIAL U.S. FEDERAL INCOME TAX
    CONSEQUENCES
59
INVESTMENT BY QUALIFIED PLANS AND IRAS
79
Fiduciaries under ERISA
79
Prohibited Transactions
79
Plan Assets
80
Other ERISA Considerations
80
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION
81
SUMMARY OF OUR PARTNERSHIP AGREEMENT
82
General
82
Capital Contributions
82
Powers of our General Partner
82
Liability of Our General Partner
82
ii
Table of Contents
Page
Limited Liability of Limited Partners
82
Withdrawal or Removal of Our General Partner
83
Consequences of Withdrawal or Removal of Our
    General Partner
83
Liability of Withdrawn or Removed General
    Partner
83
Transfer of Units
83
Redemption of Units
84
Books and Records
84
Meetings of Limited Partners
85
Voting Rights of Limited Partners
85
Amendment by Limited Partners Without Our General
    Partner's Concurrence
86
Amendment by Our General Partner Without the
    Consent of the Limited Partners
86
Events Causing Dissolution
86
Liquidation
87
Roll-Up
Transactions
87
REDEMPTION OF UNITS
88
Redemption Price of Units
88
Procedure for Redemption of Units
88
Restrictions on Redemption of Units
88
Consequences of Redemption of Units
89
REPORTS TO LIMITED PARTNERS
90
Tax Reports
90
Annual Reports
90
Quarterly Reports
90
Reports to State Securities Laws
    Administrators
91
PLAN OF DISTRIBUTION
92
Compensation of the Selling Agent
92
Indemnification
92
THE OFFERING
93
Terms of this Offering and the Offering Period
93
Escrow Arrangements
93
HOW TO SUBSCRIBE
95
SUPPLEMENTAL SALES LITERATURE
96
LEGAL MATTERS
96
EXPERTS
96
FORECASTS
97
WHERE YOU CAN FIND MORE INFORMATION
97
GLOSSARY
98
INDEX TO FINANCIAL STATEMENTS
F-1
APPENDIX A AMENDED AND RESTATED AGREEMENT
    OF LIMITED PARTNERSHIP OF SQN ALTERNATIVE INVESTMENT
    FUND III, L.P.
A-1
APPENDIX B PRIOR PERFORMANCE
    TABLES
B-1
APPENDIX C SUBSCRIPTION AGREEMENT
C-1
SIGNATURES
II-5
INDEX TO EXHIBITS
II-6
EX-1.1
EX-3.1
EX-5.1
EX-10.1
EX-10.3
EX-23.1
EX-23.2
iii
Table of Contents
In this prospectus, "we," "us,"
    "our," "the Fund," and "SQN" refer
    to SQN Alternative Investment Fund III, L.P., a Delaware
    limited partnership, references to our "General
    Partner" refer to SQN AIF III GP, LLC, a Delaware limited
    liability company, and references to our "Investment
    Manager" refer to SQN Capital Management, LLC, a Delaware
    limited liability company.
INVESTOR
    SUITABILITY
General
Our units are illiquid assets and are not freely transferable.
    There is no public market in which to sell our units, and we do
    not expect a public market for the sale of our units to develop.
    You should purchase our units only if you:
•
have adequate financial means;
•
do not need liquidity of your investment; and
•
are able to withstand the risks inherent in a long-term
    investment.
Our units are not an appropriate investment if you must rely on
    distributions from us as an important source of income. Thus,
    you must, at a minimum, meet the requirements described below in
    order to purchase our units.
We, or the selling agent, must have reasonable grounds to
    believe, on the basis of information obtained from you,
    (i) that an investment in our units is suitable and
    appropriate for you in light of your age, investment objectives,
    investment experience, income, financial situation and needs and
    other investments; (ii) that your net worth is sufficient
    to sustain the risks inherent in an investment in our units,
    including loss of investment and lack of liquidity; and
    (iii) that you are or will be in a financial position
    appropriate to enable you to realize to a significant extent the
    benefits described in this prospectus. We and the selling agent
    will rely on what you tell us in your subscription agreement,
    the form of which is attached to this prospectus as
    Appendix C, about your financial situation and investment
    objectives, and the selling agent must maintain documents in its
    files disclosing the basis on which it made the suitability
    determination of an investment in us by the investors to whom it
    sold our units. Thus, it is important that you provide complete
    and accurate information on your subscription agreement.
When evaluating your suitability for this investment using the
    standards listed below, keep in mind that net worth does not
    include the value of your home furnishings, personal automobiles
    and the equity in your home. Also, you must value the assets
    included in your net worth calculation at their fair market
    value. For fiduciary accounts, such as IRA's, Keogh Plans,
    and other benefit plans or trusts, these suitability standards
    must be met by the beneficiary, the IRA, plan or trust or the
    donor or grantor who directly or indirectly supplies the funds
    to purchase our units, if that donor or grantor is the fiduciary
    of the IRA, plan or trust. We will maintain your suitability
    records for a minimum period of six years.
Investment in our units involves substantial risks. You should
    carefully consider the information in the "Risk
    Factors" section and all other information included in this
    prospectus before investing in our units.
General
    Investor Suitability Requirements
You must meet our general suitability requirements in order to
    purchase our units. In general, you must have either:
•
a net worth of at least $70,000 plus at least $70,000 of annual
    gross income; or
•
a net worth of at least $250,000.
iv
Table of Contents
Additional
    State Investor Suitability Requirements
Residents of certain states are required to meet suitability
    requirements that differ or are in addition to the general
    investor suitability requirements stated above. In addition, we
    are required to make certain disclosures regarding an investment
    in the units and their transferability. If you are a resident of
    one of the following states, the differing investor suitability
    requirements
and/or
disclosures apply to you. Any additional investor suitability
    requirements imposed by a state after the date of this
    prospectus will be disclosed in a supplement to this prospectus.
    You are urged to review any supplement to this prospectus to
    determine whether more restrictive standards apply to your
    investment.
•
Alabama Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and similar equipment leasing programs may
    not exceed 10% of your liquid net worth.
•
California Investors.
You must have either
    (1) a liquid net worth of not less than $100,000 and a
    gross annual income of not less than $75,000, or (2) a
    liquid net worth of $250,000, in both instances exclusive of
    your home, home furnishings and automobiles.
You will receive units that have certain additional restrictions
    on transfer as summarized by the following legend:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
    SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
    CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
    COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
    AS PERMITTED IN THE COMMISSIONER'S RULES.
•
Connecticut Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
Florida Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Illinois Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Iowa Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliates may not exceed 10% of
    your net worth, calculated exclusive of your home, home
    furnishings and automobiles.
•
Kansas Investors.
Under suitability guidelines
    of the Office of the Kansas Securities Commissioner, you are
    cautioned to carefully evaluate whether your aggregate
    investment in us and other similar investments should exceed 10%
    of your liquid net worth. Liquid net worth is that portion of
    your total net worth, or total assets minus total liabilities,
    that is comprised of cash, cash equivalents and readily
    marketable securities. Readily marketable securities may include
    investments in an IRA or other retirement plan that can be
    liquidated within a short time, less any income tax or other
    penalties that may apply for early distribution.
•
Kentucky Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth.
•
Maryland Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
v
Table of Contents
•
Michigan Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliated programs may not exceed
    10% of your liquid net worth.
•
Missouri Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
•
New Jersey Investors.
You must have
    (i) an annual gross income of at least $60,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $60,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $225,000 in excess of your invested capital. It is
    recommended by the New Jersey Office of the Attorney General
    that New Jersey investors not invest, in the aggregate,
    more than 10% of their Liquid Net Worth in this and similar
    direct participation investments. Liquid Net Worth is defined as
    that portion of Net Worth which consists of cash, cash
    equivalents and readily marketable securities.
•
New York Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
North Carolina Investors.
You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
•
Ohio Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and in affiliated programs may not exceed
    10% of your liquid net worth, calculated exclusive of your home,
    home furnishings and automobiles.
•
Oklahoma Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth,
    calculated exclusive of your home, home furnishings and
    automobiles.
•
Oregon Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
•
Pennsylvania Investors.
Because the minimum
    offering amount is less than $5,000,000, which represents 10% of
    the maximum offering amount, you are cautioned to carefully
    evaluate the program's ability to fully accomplish its
    stated objectives and to inquire as to the current dollar volume
    of program subscriptions. In addition, subscription proceeds of
    Pennsylvania investors will be held in an escrow account until
    we receive and accept subscriptions for at least $7,500,000 in
    offering proceeds. We must offer you the opportunity to rescind
    your subscription if we have not received subscriptions for
    $7,500,000 within 120 days of the date the escrow agent
    receives your subscription proceeds. We must repeat this offer
    to you every 120 days during the Offering Period until we
    have received and accepted subscriptions for $7,500,000.
•
Rhode Island Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
South Carolina Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
Texas Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
vi
Table of Contents
•
Tennessee Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us must not exceed 10% of your liquid net
    worth.
•
Vermont Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your maximum investment in us and our affiliates may not exceed
    10% of your net worth.
•
Virginia Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Washington Investors.
You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
Additional
    Considerations for IRAs, Qualified Plans and Tax-Exempt
    Organizations
An investment in our units will not, in and of itself, create an
    IRA or qualified plan. To form an IRA or qualified plan, an
    investor must comply with all applicable provisions of the
    Internal Revenue Code (the "Code") and the Employee
    Retirement Income Security Act of 1974 ("ERISA").
    IRAs, qualified plans and tax-exempt organizations should
    consider the following when deciding whether to invest:
•
any income or gain realized could be unrelated business taxable
    income ("UBTI"), which is subject to the unrelated
    business income tax;
•
for qualified plans and IRAs, ownership of our units may cause a
    pro rata share of our assets to be considered plan assets for
    the purposes of ERISA and the excise taxes imposed by the Code;
•
any entity that is exempt from federal income taxation will be
    unable to take full advantage of any tax benefits generated by
    us; and
•
charitable remainder trusts that have any UBTI will be subject
    to an excise tax equal to 100% of such UBTI.
Although our units may represent suitable investments for some
    IRAs, qualified plans and tax-exempt organizations, our units
    may not be suitable for your plan or organization due to the
    particular tax rules that apply to your plan or organization.
    Furthermore, the investor suitability requirements represent
    minimum requirements, and the fact that your plan or
    organization satisfies them does not mean that an investment
    would be suitable or prudent under your particular facts and
    circumstances. You should consult your plan's tax and
    financial advisors to determine whether this investment would be
    advantageous for your particular situation.
If you are a fiduciary or investment manager of a qualified plan
    or IRA, or if you are a fiduciary of another tax-exempt
    organization, you should consider all risks and investment
    concerns, including those related to tax considerations, in
    deciding whether this investment is appropriate and economically
    advantageous for your plan or organization. See the "Risk
    Factors" and "Material U.S. Federal Income Tax
    Consequences" sections of this prospectus beginning on
    page 59.
Investor
    Suitability Requirements in Connection with Transfers of
    Units
Our units are subject to substantial transfer restrictions and
    may be transferred only under certain circumstances and then
    subject to certain conditions. One condition is that you may
    sell or transfer our units only to a recipient who meets all
    applicable investor suitability requirements. If the transfer is
    affected through a member firm of the Financial Industry
    Regulatory Authority ("FINRA"), the member firm must
    be satisfied that a proposed buyer meets investor suitability
    standards for this investment. FINRA conduct rules also require
    the member firm to inform the proposed buyer of all pertinent
    facts relating to the liquidity and marketability of our units.
vii
Table of Contents
Who
    Should Invest
You should purchase our units only if you:
•
meet the minimum income, net worth standards and other investor
    suitability requirements specified above;
•
are prepared to hold your investment in us for our entire term,
    which we expect will be approximately seven years, but may be
    longer;
•
have no need for your investment in us to be liquid; and
•
are prepared to assume the substantial risks associated with an
    investment in us.
QUESTIONS
    AND ANSWERS ABOUT THIS OFFERING
Q-1.
What is SQN Alternative Investment Fund III, L.P. and
    what does it do?
A-1.
We are a form of investment opportunity that is commonly
    referred to as a direct participation program. That means you
    will beneficially own a pro-rata share of the equipment and
    other assets in which we invest and that you are eligible to
    receive the tax benefits inherent in the ownership of certain
    leased equipment and other assets.
We will offer our units and raise funds on a continuous basis
    until the earlier of (i) two years from the date hereof, or
    (ii) the date that we have raised $50.0 million. We
    will hold our initial closing once a minimum of
    $1.2 million in cash subscriptions has been received
    (excluding cash subscriptions from our General Partner or its
    affiliates and from residents of Pennsylvania) on or prior to
    January 1, 2011. At such time we will pay fees and expenses
    associated with our organization and this offering and fund a
    small capital reserve. In addition, we will begin to invest in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as equipment leases, but we also
    intend to use other structures, including, but not limited to,
    participation agreements, residual sharing agreements, project
    financings and vendor and rental (hire) programs.
For a more detailed discussion of our investment objectives
    and strategies, please refer to the "Investment Objectives
    and Strategies" section of this prospectus beginning on
    page 45.
Q-2.
What types of investments will be in our portfolio?
A-2.
Although the composition of our portfolio cannot be determined
    at this stage, we expect to invest in equipment and other assets
    that are considered essential use or core to a business or
    operation in the agricultural, energy, environmental, medical,
    manufacturing, technology, and transportation industries. Our
    Investment Manager also may identify other assets or industries
    that meet our investment objectives such as modular
    accommodations. We expect to invest in equipment and other
    assets located primarily within the United States, Canada and
    the European Union.
Many of our investments will be structured as full payout or
    operating leases. Full payout leases generally are leases under
    which the rent over the initial term of the lease will return
    our invested capital plus an appropriate return without
    consideration of the residual value, and where the lessee may
    acquire the equipment or other assets at the end of the lease
    term. Operating leases generally are leases under which the
    aggregate noncancellable rental payments during the original
    term of the lease, on a net present value basis, are not
    sufficient to recover the purchase price of the equipment or
    other assets leased under the lease.
For a more detailed
    discussion of our strategies to recover the residual value of
    equipment it leases to others under operating leases, see the
    "Investment Objectives and Strategies — Leasing
    and Financing Strategies — Residual realization"
    section of this prospectus beginning on page 52.
In addition, we intend to invest by way of participation
    agreements and residual sharing agreements where we would
    acquire an interest in a pool of equipment or other assets, or
    rights to those equipment
viii
Table of Contents
or other assets, at a future date. We also may structure
    investments as project financings that are secured by, among
    other things, essential use equipment and/or assets. Finally, we
    may use other investment structures that our Investment Manager
    believes will provide us with the appropriate level of security,
    collateralization, and flexibility to optimize our return on
    investment while protecting against downside risk, such as
    vendor and rental (hire) programs. In most cases, the structure
    will include us holding title to or a priority position in the
    equipment or other asset.
For a more detailed discussion of the factors our Investment
    Manager will consider in selecting our investments please refer
    to the "Investment Objectives and Strategies" section
    of this prospectus beginning on page 45.
Q-3.
What are the credits and the terms of the investments that
    will make up the portfolio?
A-3.
We will invest in a variety of credits ranging from small
    private businesses, publicly listed entities, international
    organizations, colleges and universities, hospitals, governments
    and municipalities. Our Investment Manager is primarily an asset
    investor and will look at the underlying credit as further
    investment enhancement. In all cases, the investment committee
    of our Investment Manager, when contemplating investments, will
    consider a range of factors including, but not limited to, the
    following:
• the remaining economic useful life of the equipment
    or other assets;
• the anticipated residual value of the equipment or
    other asset;
• whether the equipment or other assets are new or
    used and their condition;
• required registrations;
• regulatory considerations;
• portfolio diversification;
• how essential the equipment or other assets are to
    the operations of the business; and
• the cash flow profile of the equipment or other
    assets, and the depth of the market and exit mechanisms.
Typical investments are expected to have a term of 36 to
    60 months with some investments being shorter and others
    being longer. It is anticipated that our portfolio will be
    divided between investments that generate regular income on a
    monthly, quarterly, semi-annual, or annual basis and other
    investments that will not have cash flows until the end of their
    initial term. The investments that do not generate regular cash
    flows are intended to be higher yielding while the investments
    that do generate regular cash flows are intended to provide cash
    for operations and distributions during the Operating Period (as
    described below).
For a more detailed discussion of the lease types anticipated
    in us, please refer to the "Investment Objectives and
    Strategies" section of this prospectus beginning on
    page 45.
Q-4.
What are the investor suitability requirements for this
    investment?
A-4.
In general, you must have either (i) a net worth of at
    least $70,000, plus at least $70,000 of annual gross income, or
    (ii) a net worth of at least $250,000. Net worth is
    determined excluding home, home furnishings and automobiles.
    Some states impose higher suitability requirements. Also, the
    minimum investment amount for most investors is $25,000
    (25 units). Since there is no public market for our units,
    an investment in our units is considered illiquid. You should
    invest in us only if you are prepared to hold your units for the
    life of the Fund which is anticipated to be approximately seven
    years, but may be longer.
For a more detailed discussion of investor suitability
    requirements in particular states, please refer to the
    "Investor Suitability" section of this prospectus
    beginning on page iv, above.
ix
Table of Contents
Q-5.
Who are our General Partner, SQN AIF III GP, LLC, and our
    Investment Manager, SQN Capital Management, LLC?
A-5.
Our General Partner, SQN AIF III GP, LLC, was formed in March
    2010 as a limited liability company to serve as our general
    partner. Our General Partner is wholly-owned by our Investment
    Manager, SQN Capital Management, LLC, which was formed in
    December 2007 to manage direct participation programs.
Our Investment Manager's senior management team has
    substantial experience in the lease investment and finance
    industries. For the four-year period ended December 31,
    2009, our Investment Manager and its affiliates had originated
    approximately $150.0 million of equipment leasing and
    finance transactions. The Managing Directors of our Investment
    Manager have collective experience in managing over
    $2.0 billion of assets over the past two decades. Our
    Investment Manager is expected to act as servicer of all of our
    investments.
In addition, our Investment Manager serves as manager of SQN
    Alternative Investment Fund I, LLC ("SQN I") and
    SQN Alternative Investment Fund II, LLC ("SQN
    II"), which are prior equipment leasing and finance
    programs that were privately offered beginning in February 2008.
For a more detailed discussion of our General Partner and our
    Investment Manager, please refer to the "Management"
    section of this prospectus beginning on page 38 and for a
    more detailed discussion of the operating results of SQN I and
    SQN II, please refer to the "Prior Performance Tables"
    in Appendix B to this prospectus.
Q-6.
What can you expect happens after you invest in us?
A-6.
Once our General Partner has accepted your subscription, you
    will receive a confirmation letter indicating our acceptance of
    your investment and a copy of your fully executed subscription
    agreement. We have three phases of different lengths. It is very
    important to be aware of how we will operate during these three
    phases so you can evaluate this investment opportunity.
We call the period when we are raising money from investors the
    "Offering Period." This period will not exceed two
    years. We will hold our initial closing once a minimum of
    $1.2 million in cash subscriptions (excluding cash
    subscriptions from our General Partner or its affiliates and
    from residents of Pennsylvania) has been received on or prior to
    January 1, 2011. We then will begin to make investments in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as equipment leases but we also
    will use other structures, including, but not limited to,
    participation agreements, residual sharing agreements, project
    financings and vendor and rental (hire) programs. After we have
    raised a minimum of $1.2 million, we will continue to hold
    regular closings to admit new investors until the earlier of
    (i) two years from the date hereof, or (ii) the date
    that we have raised $50.0 million.
Once we begin investing offering proceeds, the "Operating
    Period" will commence. We anticipate that the Operating
    Period will overlap with the Offering Period and, unless
    extended by our General Partner, will last for three years from
    the date it begins. During this period, we will continue to
    invest and re-invest in business-essential, revenue-producing
    (or cost-saving) equipment and other physical assets with
    substantial economic lives and, in many cases, associated
    revenue streams.
During the Operating Period, we plan to make semi-annual
    distributions of cash to you and our other partners if, in our
    Investment Manager's opinion, such distributions are in our
    best interests. Therefore, the amount and rate of cash
    distributions could vary and are not guaranteed. The targeted
    distribution rate is 6% annually, paid semi-annually at 3%, of
    your capital contributions.
For a more detailed discussion of our distributions to you,
    please refer to the "Income, Losses and Distributions"
    section of this prospectus beginning on page 57.
x
Table of Contents
Following the Operating Period, the "Liquidation
    Period" will begin. Unless extended by our General Partner,
    the Liquidation Period will last for four years. During the
    Liquidation Period we will make irregular distributions to you
    and our other limited partners as the investments in the
    portfolio mature. We generally will not be reinvesting the
    proceeds from investments during this period. However, if, in
    our Investment Manager's opinion, it would be in the best
    interests of our limited partners to reinvest, we may do so. It
    is our intention to wind down the portfolio and distribute
    proceeds to you and our other limited partners during the
    Liquidation Period.
For a more detailed discussion of our investment objectives,
    please refer to the "Investment Objectives and
    Strategies" section of this prospectus beginning on
    page 45.
Q-7.
What will be the terms of the investments?
A-7.
We expect our investments to meet economic and legal standards
    that our Investment Manager has derived from its experience in
    the equipment lease investment and finance business. In general,
    we expect that the investment documents will be enforceable
    contracts that create non-cancelable obligations of the lessee
    or other counterparty with respect to timely payments,
    insurance, proper maintenance of the assets or equipment in
    which we invest, and, if applicable, the return of such assets
    or equipment in a specified condition. Often such investment
    documents will create rights for us in the event of a failure of
    the lessee or other counterparty to perform its payment and
    other obligations over and above the obligation to cure such a
    failure. In addition, such investment documents also may include
    guarantees by parent companies, affiliates, and individual
    owners of such lessees and other counterparties of such
    entities' obligations to us under the investment documents.
For a more detailed discussion of our distributions to you,
    please refer to the "Investment Objectives and
    Strategies" section of this prospectus beginning on
    page 45.
Q-8.
Are there tax benefits and consequences of investing in
    us?
A-8.
We, as a limited partnership, will not pay income taxes
    ourselves. Instead, all of our taxable income or losses and
    other tax items will be passed through to you and our other
    limited partners. Our General Partner anticipates that during
    our early years income taxes on distributions to you and to our
    other limited partners will be substantially tax-deferred by
    operating losses and depreciation deductions available from the
    portion of our equipment leased to third-party end users under
    our operating leases, but not under its full payout leases or
    other investments.
By the time we are in liquidation, the total tax you pay in the
    aggregate may likely be consistent with the tax you would pay
    with respect to other taxable investments. The benefit of paying
    taxes later instead of currently is commonly referred to as
    "tax deferral." We use the term "tax
    deferral" to mean that, in the early years of the
    investment, only a small portion of the cash distributed to you
    will be considered a return on investment. To the extent in
    later years the portion considered a return on investment grows,
    it will be taxable at that time. This is not the same as a tax
    deferral commonly associated with qualified plans or IRAs where
    even the portion of your portfolio performance considered a
    return on investment is not taxable when distributed to the
    qualified plan or IRA and such earnings remain untaxed until
    withdrawn. An investment in our units should not be made solely
    because of the potential for tax deferral. In addition, in some
    cases other taxes or loss disallowance rules may offset the
    deferral benefit.
Also, the passive activity rules under the Code will apply to
    natural persons and most other types of investors in us. Thus,
    you should anticipate that your share of our net income or net
    loss in each of our taxable years generally will be
    characterized as passive activity income or loss.
Employee benefit plans, such as qualified pension and profit
    sharing plans, Keogh plans and IRA's, generally are exempt
    from federal income tax, except that any net UBTI that exceeds a
    specific deduction of $1,000 in any taxable year is subject to
    tax. Other charitable and tax exempt organizations are also
    subject to tax on UBTI. Most of our net income, if any, in a
    given year may constitute UBTI, because of the nature of
    equipment leasing.
xi
Table of Contents
For a more detailed discussion, please refer to the
    "Material U.S. Federal Income Tax Consequences"
    section of this prospectus beginning on page 59 and the
    "Investment by Qualified Plans and IRAs" section of
    this prospectus beginning on page 79. You are urged to seek
    advice based on your individual circumstances from an
    independent tax advisor with respect to the tax consequences to
    you of an investment in us.
Q-9.
Will you be able to sell your investment in our units?
A-9.
Since there is no public market for our units, an investment in
    our units is considered illiquid. You should only invest money
    that you can afford to have unavailable for at least seven
    years, net of distributions that are expected to be made to you
    during those years. Our units will not be listed on any national
    securities exchange at any time and we will take steps to ensure
    that no public trading market develops for our units. Also, in
    any calendar year, we are limited as to the number of units we
    may redeem so that we will not be treated as a publicly traded
    partnership for tax purposes. In addition, the redemption price
    for your units is unlikely to reflect the fair market value of
    your units at the time of redemption, particularly during the
    Liquidation Period. You may realize a greater return by holding
    on to your units for the duration of our term.
For a more detailed discussion, please refer to the
    "Redemption of Units" section of this prospectus
    beginning on page 88.
Q-10.
Where can I get more information?
A-10.
We have filed a registration statement on
Form S-1
with the Securities and Exchange Commission (the
    "SEC") regarding the units we offer by this prospectus
    and we will file periodic reports and other information with the
    SEC. These documents are available at the SEC's web site at
http://
www.sec.gov
.
    After you are an investor in us, you may contact Investor
    Relations regarding your account information. The telephone
    number is
(800) 258-6610.
You are urged to thoroughly discuss an investment in us with
    your financial, tax and legal advisors.
For a more detailed discussion, please refer to the
    "Where You Can Find More Information" section of this
    prospectus beginning on page 97.
xii
Table of Contents
PROSPECTUS
    SUMMARY
The following summary highlights information contained
    elsewhere in this prospectus. It does not contain all of the
    information that may be important to you in making your
    investment decision. You should read this entire prospectus,
    including the "Risk Factors" section, before deciding
    to invest in our units. Throughout this prospectus when there is
    a reference to you it is a reference to you as a potential
    investor or limited partner in us.
SQN
    Alternative Investment Fund III, L.P.
The Partnership
We are a Delaware limited partnership formed on March 10,
    2010. We will operate a fund in which the capital you invest
    will be pooled with capital invested by other investors. This
    pool of capital is then used to invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams. The pooled capital contributions
    also will be used to pay fees and expenses associated with our
    organization and this offering and to fund a capital reserve.
Many of our investments will be structured as full payout or
    operating equipment leases. In addition, we intend to invest by
    way of participation agreements and residual sharing agreements
    where we acquire an interest in a pool of equipment or other
    assets or rights to those equipment or other assets, at a future
    date. We also may structure investments as project financings
    that are secured by, among other things, essential use equipment
    and/or assets. Finally, we may use other investment structures,
    such as vendor and rental (hire) programs, that our Investment
    Manager believes will provide us the appropriate level of
    security, collateralization, and flexibility to optimize our
    return on investment while protecting against downside risk. In
    most cases, the structure will include us holding title to or a
    priority position in the equipment or other asset.
Although the composition of our portfolio cannot be determined
    at this stage, we expect to invest in assets and equipment that
    are considered essential use or core to a business or operation
    in the agricultural, energy, environmental, medical,
    manufacturing, technology, and transportation industries. Our
    Investment Manager also may identify other assets or industries
    that meet our investment objectives such as modular
    accommodations. We expect to invest in assets and equipment
    located primarily within the United States, Canada and the
    European Union. See "Investment Objectives and
    Strategies" section of this prospectus beginning on
    page 45.
We expect that we will conduct our activities for at least seven
    years and divide the life of the Fund into three periods:
Offering Period.
We will raise money from
    investors during this period which we expect will last for up to
    two years from the date of this prospectus. After we have raised
    $1.2 million (excluding cash subscriptions from our General
    Partner or its affiliates and from residents of Pennsylvania),
    we will begin to invest in business-essential, revenue-producing
    (or cost-saving)
1
Table of Contents
equipment and Other Physical Assets with substantial economic
    lives and, in many cases, associated revenue streams.
Operating Period.
After we begin investing the
    offering proceeds, the Operating Period will begin and, unless
    extended by our General Partner, will last for three years from
    the date it begins. We anticipate that the Operating Period will
    overlap with the Offering Period. During this period, we will
    continue to invest and re-invest in business-essential,
    revenue-producing (or cost-saving) equipment and other physical
    assets with substantial economic lives and, in many cases,
    associated revenue streams.
Liquidation Period.
Unless extended by our
    General Partner, the Liquidation Period will last four years.
    During the Liquidation Period we will make irregular
    distributions to you and our other limited partners as the
    investments in the portfolio mature. We generally will not be
    reinvesting the proceeds from investments during this period. It
    is our intention to wind down the portfolio and distribute
    proceeds to you and the other limited partners during this
    period.
Management
Our General Partner, SQN AIF III GP, LLC, and our Investment
    Manager, SQN Capital Management, LLC, will manage all aspects of
    our business. Our General Partner will manage all of our day to
    day activities and operations and our Investment Manager will
    make all of our investment decisions and manage our investment
    portfolio. The principal office of our General Partner and
    Investment Manager is 48 Wall Street, 24th Floor, New York, New
    York 10005, and their telephone number is
(212) 422-2166.
Neil A. Roberts is the Chairman and Jeremiah J. Silkowski is the
    President and CEO of our General Partner and our Investment
    Manager. Neil A. Roberts, Jeremiah J. Silkowski, Michael
    Miroshnikov, Hugh Shelmerdine and Timothy R. Spring are the
    current members of our Investment Manager's investment
    committee. Messrs. Silkowski and Roberts will maintain
    ultimate investment discretion and will have to be in agreement
    on the funding of any transactions. They may be contacted at SQN
    Capital Management, LLC, 48 Wall Street, 24th Floor, New York,
    New York 10005, telephone
(212) 422-2166.
See the "Management — Investment Committee"
    section of this prospectus beginning on page 40.
The management team of our General Partner, our Investment
    Manager and their affiliates has substantial experience in the
    lease investment and finance industries. See the
    "Management" section of this prospectus beginning on
    page 38.
Investment Objectives
Our investment objectives are to:
• preserve, protect and return your invested capital;
• generate semi-annual cash distributions to you and
    our other partners during the Operating Period;
• during the period from the date of the initial
    closing through the end of the Operating Period (i) make
    investments in business-essential, revenue-producing (or
    cost-saving) equipment and
2
Table of Contents
other physical assets with substantial economic lives and, in
    many cases, associated revenue streams;
• during the Liquidation Period wind down our
    portfolio and distribute the proceeds therefrom to you and our
    other limited partners;
• generate investment returns that are not correlated
    to stock, bond, real estate or commodity markets; and
• generate a favorable total return on your investment.
During the Operating Period, we plan to make semi-annual
    distributions of cash to you and our other partners, if, in our
    Investment Manager's opinion, such distributions are in our
    best interests. Therefore, the amount and rate of cash
    distributions could vary and are not guaranteed. The targeted
    distribution rate is 6% annually, paid semi-annually as 3%, of
    your capital contribution.
See the "Investment Objectives and Strategies" section
    of this prospectus beginning on page 45 and the
    "Income, Losses and Distributions" section of this
    prospectus beginning on page 57.
Most, if not all, of our equipment under our operating leases,
    but not under our full payout leases or other investments, is
    expected to be depreciated using accelerated depreciation
    methods under the Modified Accelerated Cost Recovery System. See
    the "Material U.S. Federal Income Tax Consequences"
    section of this prospectus beginning on page 59.
Risk Factors
Investing in our units involves a high degree of risk.
    Accordingly, you should read this entire prospectus, including
    the section entitled "Risk Factors," before making an
    investment decision.
• A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital
    and not a return on capital.
• This is a "blind-pool" offering because we
    have not specifically identified our investments at the time you
    invest. As a result, you cannot evaluate the risks of, or
    potential returns from, any of our investments at the time you
    invest.
• Our units will not be listed on any stock exchange
    or interdealer quotation system, and there are significant
    restrictions in our partnership agreement on your ability to
    transfer your units. We do not intend to assist in the
    development of any secondary market for, or provide qualified
    matching services for purchasers and sellers of, our units. Any
    sale that you may be able to arrange for your units, including
    the redemption of the units by us, which is at our General
    Partners sole discretion, is likely to be at a substantial
    discount to your investment, partnership equity per unit or
    other measures of value. Therefore, your units will effectively
    be illiquid. You should be prepared to hold your units for the
    life of the Fund, which is anticipated to be approximately seven
    years, but may be longer.
3
Table of Contents
• You will have very limited voting rights and you
    must rely on our General Partner, our Investment Manager and
    their affiliates to manage us.
• A prolonged economic recession and/or changes in
    general economic conditions, including fluctuations in demand
    for equipment and other portfolio assets, lease rates, and
    interest rates may result in delays in investment and
    reinvestment, delays in leasing, re-leasing and disposition of
    equipment, and reduced returns on capital.
• Higher than expected lease and other investment
    defaults may result in our inability to fully recover our
    investment or expected income from the affected equipment or
    physical assets and could reduce our cash distributions to you
    and our other limited partners. Uncertainties associated with
    the equipment leasing industry may have an adverse effect on our
    business and may adversely affect our ability to provide you any
    economic return from our units or a complete return of your
    capital.
• Our success will depend in part on our ability to
    realize residual value from a portion of our assets and
    equipment once the leases on those assets and equipment
    terminate.
• Our General Partner, our Investment Manager and
    their affiliates will receive significant compensation from us,
    which will reduce distributions to you.
• There are potential conflicts of interest between us
    and our General Partner, our Investment Manager and their
    affiliates.
• There are material income tax risks associated with
    this offering.
See the "Risk Factors" section of this prospectus
    beginning on page 16.
Sale of Revenue Streams
In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments. See
    the "Investment Objectives and Strategies — Sale
    of Revenue Streams" section of this prospectus beginning on
    page 55 of this prospectus.
Income, Losses, and
Distributions
Our income, losses and distributions will be allocated 99% to
    you and our other limited partners and 1% to our General Partner
    until you and our other limited partners have received total
    distributions equal to your and their capital contributions plus
    an 8% per annum, compounded annually, cumulative return on your
    and their capital contributions. After such time, all
    distributed Cash Available for Distribution and distributed Net
    Disposition Proceeds will be allocated 80% to you and our other
    limited partners and 20% to our General Partner. Until the end
    of the Operating Period (and in certain circumstances, during
    the Liquidation Period), we may invest our Net Disposition
    Proceeds in additional investments. See
4
Table of Contents
the "Income, Losses and Distributions" section of this
    prospectus beginning on page 57.
Material U.S. Federal Income Tax
Consequences
This prospectus has a discussion of material U.S. Federal income
    tax consequences relating to an investment in our units. For a
    more complete description of the Federal income tax consequences
    you should read the "Material U.S. Federal Income Tax
    Consequences" section of this prospectus beginning on
    page 59. Investors should consult with their tax and
    financial advisors to determine whether an investment in our
    units is suitable for their portfolio.
Investor Suitability Requirements
The units are a long-term investment. Investors must satisfy
    minimum net worth and income requirements. We have established
    minimum investor suitability requirements and many state
    securities commissioners have established investor suitability
    standards different from these minimum standards which apply to
    investors in their respective jurisdictions. See the
    "Investor Suitability" section of this prospectus
    beginning on page iv.
Glossary
In general, defined terms in this prospectus have the meanings
    assigned to them in the Glossary to this prospectus, or if not
    defined therein, in our partnership agreement, which is attached
    as Appendix A to this prospectus.
The
    Offering
Securities Offered
A minimum of 1,200 units ($1.2 million) and a maximum
    of 50,000 units ($50.0 million). Our General Partner
    and Investment Manager have determined that the minimum offering
    amount represents a level of subscription proceeds which will
    enable our portfolio to be sufficiently diversified. Our General
    Partner and Investment Manager limited our maximum offering
    amount to 50,000 units ($50.0 million) in order to be
    able to remain selective in choosing our investments.
Minimum Investment
You must purchase a minimum of 25 units for $25,000.
    However, the minimum may be waived by our General Partner, at
    its sole discretion, on a case by case basis.
Offering Period
The earlier of (i) two years from the date hereof, or
    (ii) the date that the we have raised $50.0 million.
    This offering will terminate if we do not receive and accept
    subscriptions for the minimum offering amount of
    1,200 units ($1.2 million), excluding cash
    subscriptions from our General Partner or its affiliates and
    from residents of Pennsylvania, by January 1, 2011.
Escrow
We will deposit your investment in an interest-bearing escrow
    account until we have received the minimum offering amount or
    until January 1, 2011, whichever is earlier. If we have not
    received the minimum offering amount by January 1, 2011,
    all of your funds will be promptly returned to you with any
    interest earned, and without deduction for any fees. If we
    receive the minimum offering amount on or before January 1,
    2011, however, then:
• you will be admitted as a limited partner, in our
    General Partner's discretion;
5
Table of Contents
• your escrowed subscription proceeds will be
    delivered to us for use as described in this prospectus; and
• the interest earned on your escrowed subscription
    proceeds, if any, net of bank fees, will be paid to you.
Estimated Use of Proceeds
Assuming that the maximum offering of 50,000 units being
    offered hereby are sold, we expect that approximately 95.0% of
    the gross proceeds will be available for investment and to pay
    fees, 4.0% of the gross proceeds will be used to pay fees and
    expenses associated with our organization and this offering and
    1.0% of the gross proceeds will be used to fund a capital
    reserve. See the "Estimated Use of Proceeds" section
    of this prospectus beginning on page 9.
Fees of Our General Partner and its Affiliates
Our General Partner, our Investment Manager and their
    affiliates, including SQN Securities, LLC in its capacity as the
    selling agent, will receive fees and compensation from the
    offering of our units, including the following:
•
Distribution Expense
:  We will pay
    the selling agent Distribution Expenses of 2.0% of the aggregate
    offering proceeds (excluding proceeds we receive from the sale
    of our units to our General Partner or its affiliates).
•
O&O Expense
:  Our General
    Partner will receive an organization and offering expense
    allowance (the "O&O Expense Allowance") of 2.0%
    of our offering proceeds to reimburse it for expenses incurred
    in preparing us for registration or qualification under federal
    and state securities laws and subsequently offering and selling
    our units. The O&O Expense Allowance will not exceed the
    actual fees and expenses incurred by our General Partner and its
    affiliates.
•
Management Fee
:  Our Investment
    Manager will receive a management fee in an amount equal to the
    greater of (i) 1.975% per annum of the aggregate offering
    proceeds, or (ii) $60,000, payable monthly.
Our General Partner's and Investment Manager's
Relationship with Us May be Conflicted
Our General Partner, our Investment Manager and their affiliates
    may be subject to conflicts of interest because of their
    relationship to us. These potential conflicts include:
• our General Partner, our Investment Manager and
    their affiliates may compete with us;
• no independent underwriter conducted due diligence
    with respect to this offering;
• we and our General Partner, our Investment Manager
    and their affiliates are not represented by separate counsel;
• the receipt of fees and other compensation by our
    General Partner, our Investment Manager and their affiliates;
• we will rely on employees of our General Partner,
    our Investment Manager and their affiliates;
6
Table of Contents
• the resolution of conflicts will be undertaken by
    the investment committee of our Investment Manager; and
• our General Partner will act as our tax matters
    partner.
See the "Conflicts of Interest and Fiduciary
    Responsibilities" section of this prospectus beginning on
    page 30.
Partnership Agreement
You and the other purchasers of our units will be our limited
    partners. Our partnership agreement will govern the following:
• our activities;
• the relationships among you and our other limited
    partners; and
• the relationship between our General Partner, our
    Investment Manager and their affiliates, on the one hand, and
    you and our other limited partners, on the other hand.
The following is a brief summary of some of the principal
    provisions of our partnership agreement, apart from the income,
    loss and distribution allocation provisions and the fees of our
    General Partner, our Investment Manager and their affiliates
    described previously in this summary. See the "Summary of
    Our Partnership Agreement" section of this prospectus
    beginning on page 82. In addition, you should read the form
    of our partnership agreement, which is included as
    Appendix A to this prospectus.
•
Voting rights
:  You will have one
    vote for each unit you purchase. You and our other limited
    partners are entitled to vote on specified fundamental matters,
    such as:
• amendments to our partnership agreement;
• removal of our General Partner and election of a
    substitute general partner;
• our merger with another entity;
• the sale of all, or substantially all, of our assets
    (except during the Liquidation Period); or
• our dissolution.
Otherwise, you and our other limited partners have no
    participation in determining our operations or policies.
•
Meetings:
Our General Partner, or
    our limited partners holding 10% or more of our outstanding
    units, may call a meeting of the limited partners on matters on
    which they are entitled to vote.
•
Limited liability:
So long as you
    do not participate in the control of our business and otherwise
    act in conformity with our partnership agreement, your liability
    as a limited partner will be limited to the amount of your
    invested capital, plus your share of any of our undistributed
    profits and assets.
•
Transferability of units
:  Our
    partnership agreement restricts the transfer of units so that we
    will not be treated as a "publicly traded partnership"
    for federal income tax purposes and will not be taxed as a
    corporation. As a result of these restrictions, you
7
Table of Contents
probably will not be able to transfer your units if, or when,
    you want to.
•
Removal of general partner:
Our
    General Partner may be removed only on a vote of limited
    partners holding a majority of our outstanding units. Neither
    our General Partner nor any of its affiliates may participate in
    any vote by you and our other limited partners to remove our
    General Partner as general partner.
•
Amendment of partnership
    agreement:
Our partnership agreement generally
    may be amended by the vote of limited partners holding a
    majority of our outstanding units. However, no amendment may be
    made that would change any partner's interest in
    distributions without the consent of all affected partners.
•
Term
:  Our term will end at
    midnight on December 31, 2034, unless sooner dissolved or
    terminated by our General Partner.
Subscription Procedure
You must fill out and sign a subscription agreement, the form of
    which is attached to this prospectus as Appendix C, in
    order to purchase our units. You should send your subscription
    agreement and a check for the purchase price of your units as
    instructed in the subscription agreement. Wire transfer
    instructions are available on request.
Closings
We will hold the initial closing of this offering when we
    receive subscription proceeds of at least $1.2 million,
    excluding subscription proceeds from Pennsylvania residents and
    from our General Partner and its affiliates. At that time, we
    will admit investors as limited partners and receive the
    escrowed subscription proceeds from the escrow agent. After the
    initial closing, we will hold regular closings until we have
    sold all of the units or this offering closes, whichever comes
    first.
8
Table of Contents
ESTIMATED
    USE OF PROCEEDS
The table below sets forth information about our expected use of
    proceeds from this offering, assuming we pay the maximum
    compensation and expense reimbursements under our partnership
    agreement. Many of the amounts set forth below, such as the
    amount of offering and organization expenses, distribution
    expenses and capital reserves, are only estimates and not
    statements of expenditures already incurred. The actual amounts
    will depend on the course of the offering of our units and our
    operations. We expect to commit approximately 95.0% of the gross
    proceeds of this offering to the cash portion of the purchase
    price of our portfolio.
Minimum Offering
Maximum Offering
Amount
Percent
Amount
Percent
Gross Offering Proceeds
$
1,200,000
100.00
%
$
50,000,000
100.00
%
Less Offering and Organization
    Expenses
(1)
24,000
2.00
%
1,000,000
2.00
%
Distribution
    Expenses
(2)
24,000
2.00
%
998,000
(3)
2.00
%
(3)
Net Offering Proceeds
1,152,000
96.00
%
48,002,000
96.00
%
Capital
    Reserves
(4)
12,000
1.00
%
500,000
1.00
%
Total Proceeds Available for
    Investment
(5)
$
1,140,000
95.00
%
$
47,502,000
95.00
%
(1)
Includes expenses incurred in connection with our organization.
(2)
We will pay SQN Securities, LLC, our exclusive sales agent,
    Distribution Expenses of 2.0% of the aggregate offering proceeds
    (excluding proceeds we receive from the sale of our units to our
    General Partner or its affiliates). See "Plan of
    Distribution" beginning on page 92 of this prospectus.
(3)
Our General Partner and its affiliates currently intend to
    purchase 100 of our units offered hereby. Our General Partner
    and its affiliates who participate in the offering will pay
    $1,000 per unit and we will not pay any Distribution Expenses in
    connection with the sale of such units.
(4)
We will initially establish capital reserves in an amount equal
    to 1.0% of offering proceeds for general working capital
    purposes. This amount may fluctuate from time to time as our
    General Partner determines the level of reserves necessary for
    our proper operation in the exercise of its business judgment.
    Any net offering proceeds not used to acquire portfolio
    investments or needed as capital reserves will be returned to
    our limited partners as described under "Investment
    Objectives and Strategies" beginning on page 45 of
    this prospectus.
(5)
The amount available to pay the cash portion of the purchase
    price of equipment or other assets plus related acquisition
    expenses, which are treated for tax and accounting purposes as
    capitalized costs added to the basis of the items of equipment
    or other assets to which they relate and management fees.
9
Table of Contents
MANAGEMENT
    COMPENSATION
Summary
    Table
The following table includes estimates of the maximum amounts of
    all compensation and other payments that our General Partner,
    our Investment Manager and their affiliates will receive,
    directly or indirectly, in connection with our operations. The
    terms of the compensation of our General Partner, our Investment
    Manager and their affiliates were not determined by
    arms'-length negotiation, but are consistent with the
    guidelines set forth by the North American Securities
    Administrators Administration. Our partnership agreement does
    not permit our General Partner, our Investment Manager or their
    affiliates to receive more than the maximum fees or expenses
    stated for each type of compensation by reclassifying such items
    under a different category.
Estimated Amount Assuming
Entity Receiving Compensation
Type of Compensation
Maximum Units Sold
ORGANIZATIONAL AND OFFERING STAGE
Selling Agent
Distribution Expenses.
2.0% of the aggregate offering
    proceeds (excluding proceeds we receive from the sale of our
    units to our General Partner or its affiliates).
The total amount of Distribution Expenses cannot be determined
    because it is based on the number of units sold. If the minimum
    amount of $1.2 million is raised, the total amount of
    Distribution Expenses will be $24,000. If the maximum amount of
    $50.0 million is raised, inclusive of the $100,000 that will be
    purchased by our General Partner or its affiliates, the total
    amount of Distribution Expenses will be $998,000.
General Partner and affiliates
Organizational and Offering Expense Allowance ("O&O
    Expense Allowance").
We will pay our General
    Partner an allowance for the O&O Expense. The amount of the
    O&O Expense Allowance is based upon the number of units
    that are sold, including units sold to our General Partner or
    its affiliates. Total O&O Expense Allowance payable or
    reimbursable by us may not exceed 2.0% of all offering proceeds.
    The O&O Expense Allowance will not exceed the actual fees
    and expenses incurred by our General Partner or its affiliates
    in connection with our organization and this offering.
The total amount of O&O Expense Allowance cannot be
    determined because it is based on the number of units sold. If
    the minimum amount of $1.2 million is raised, the total amount
    of O&O Expense Allowance will be $24,000. If the maximum
    amount of $50.0 million is raised, the total amount of O&O
    Expense Allowance will be $1.0 million.
Collectively, the O&O Expense Allowance and the
    Distribution Expenses will not exceed 4.0% of the aggregate
    offering proceeds.
10
Table of Contents
Estimated Amount Assuming
Entity Receiving Compensation
Type of Compensation
Maximum Units Sold
OPERATIONAL STAGE
Investment Manager
Management Fee
.  We will pay our Investment
    Manager a Management Fee in an amount equal to the greater of
    1.975% per annum of the aggregate offering proceeds, or $60,000,
    paid monthly.
The total amount of Management Fee to be paid each month cannot
    be determined because it is based on the aggregate offering
    proceeds. If the minimum amount of $1.2 million is raised, the
    monthly Management Fee will be $60,000. If the maximum amount of
    $50.0 million is raised, the monthly Management Fee will be
    $82,292.
The amount of the Management Fee and/or the Promotional
    Interest, as described below, payable in any year will be
    reduced for that year to the extent it would otherwise exceed
    the Sponsor Fee Limit, as described below. The Management Fee
    will be paid for services rendered by our Investment Manager and
    its affiliates in determining portfolio and investment
    strategies and generally managing or supervising the management
    of the investment portfolio. Our Investment Manager will
    supervise performance of all management activities, including,
    among other activities:
•   the acquisition and financing of the
    investment portfolio;
•   the collection of lease and other
    revenues;
•   monitoring compliance by lessees and
    other counterparties with their contract terms;
•   assuring that investment assets are
    being used in accordance with all operative contractual
    arrangements;
•   paying operating expenses and arranging
    for necessary maintenance and repair of equipment and property
    in the event a lessee fails to do so;
•   monitoring property, sales and use tax
    compliance;
•   originating and servicing our investment
    portfolio; and
•   preparation of operating financial data
    (excluding financial statements and tax matters).
11
Table of Contents
Estimated Amount Assuming
Entity Receiving Compensation
Type of Compensation
Maximum Units Sold
General Partner and affiliates
Reimbursement of Operating and Acquisition
    Expenses
.  We may reimburse our General Partner,
    our Investment Manager and their affiliates for expenses they
    pay on our behalf. These reimbursements will include:
The total amount of Operating and Acquisition Expenses cannot be
    determined at this time.
•   the actual cost to our General Partner,
    our Investment Manager or their affiliates of services, goods
    and materials used for and by us and obtained from unaffiliated
    parties; and
•   the cost of administrative services
    provided by our General Partner, our Investment Manager and
    their affiliates and necessary or prudent for our operation,
    provided that reimbursement for administrative services will be
    at the lower of (i) the actual cost of such services, or (ii)
    the amount that we would be required to pay to independent
    parties for comparable services
.
General Partner and affiliates
Distributions and Promotional Interest
.  Our
    General Partner will initially receive 1.0% of all distributed
    Cash Available for Distribution and distributed Net Disposition
    Proceeds. Our General Partner will have a Promotional Interest
    in us equal to 20.0% of all distributed Cash Available for
    Distribution and distributed Net Disposition Proceeds after we
    have provided a return to our limited partners of their
    respective capital contributions plus an 8.0% per annum,
    cumulative return, compounded annually on their capital
    contributions. Our General Partner will not contribute any cash
    to us in return for the Promotional Interest.
The total amount of Promotional Interest cannot be determined
    because it will depend upon the amount by which our income from
    operations and from the disposition of investments exceeds our
    expenses as well as whether the required investor return has
    been achieved.
The amount of the Management Fee and/or the Promotional Interest
    payable in any year will be reduced for that year to the extent
    it would otherwise exceed the Sponsor Fee Limit, as described
    below.
12
Table of Contents
We estimate that the total amount of expenses we will reimburse
    to our General Partner, our Investment Manager and their
    affiliates for their administrative services on our behalf
    during our first full year of operations, assuming we sell the
    maximum number of units, will be approximately $0.
Limitations
    on Fees
We have adopted a single Management Fee plus the Promotional
    Interest as a means of compensating our General Partner and the
    Investment Manager for sponsoring us and managing our
    operations, respectively. While this compensation structure is
    intended to simplify management compensation for purposes of
    investors' understanding, state securities administrators
    use a more complicated compensation structure in their review of
    equipment program offerings in order to assure that those
    offerings are fair under the states' merit review
    guidelines. The total of all Front-End Fees, the Promotional
    Interest and the Management Fee will be subject to the Sponsor
    Fee Limit in order to assure these state administrators that we
    will not bear greater fees than permitted under the states'
    merit review guidelines. The North American Securities
    Administrators Association ("NASAA") is an
    organization of state securities administrators and those state
    government agencies responsible for qualifying securities
    offerings in their respective states. NASAA has established
    standards for the qualification of a number of different types
    of securities offerings and investment products, including its
    Statement of Policy on Equipment Programs (the "NASAA
    Equipment Leasing Guidelines"). Article IV,
    Sections C through G of the NASAA Equipment Leasing
    Guidelines establish the standards for payment to program
    sponsors of reasonable carried interests, promotional interests
    and fees for equipment acquisition, management, resale and
    releasing services, and sets the maximum compensation payable to
    the sponsor and its affiliates from an equipment leasing program
    such as us. The Sponsor Fee Limit will equal the maximum
    compensation payable under Article IV, Sections C
    through G of the NASAA Equipment Leasing Guidelines as in effect
    on the date of our prospectus (the "NASAA Fee
    Limitation"). Under the Sponsor Fee Limit, we will
    calculate the maximum fees payable under the NASAA Fee
    Limitation and guarantee that the Management Fee we will pay the
    Investment Manager and its affiliates, when added to our General
    Partner's Promotional Interest, will never exceed the fees
    and interests payable to a sponsor and its affiliates under the
    NASAA Fee Limitation.
Sponsor Fee Limit.
The Sponsor Fee Limit will
    be calculated each year during our term by calculating the total
    fees that would be paid to our General Partner, our Investment
    Manager and their affiliates, if our General Partner, our
    Investment Manager and their affiliates were to be compensated
    on the basis of the maximum compensation payable under the NASAA
    Fee Limitation through the end of such year, including our
    General Partner's Promotional Interest. To the extent that
    the amount paid as Front-End Fees, the Management Fee, and the
    Promotional Interest for any year would, when added to amounts
    paid in all prior years, cause the total fees through the end of
    such year to exceed the aggregate amount of fees calculated
    under the NASAA Fee Limitation for the same period, the
    Management Fee
and/or
Promotional Interest for that year will be reduced so that the
    total of all such compensation paid through the end of the
    period will not exceed the maximum aggregate fees under the
    NASAA Fee Limitation. To the extent any such fees are reduced,
    the amount of such reduction will be accrued and deferred, and
    such accrued and deferred compensation would be paid to our
    Investment Manager or our General Partner, as the case may be,
    in a subsequent period, but only to the extent that the deferred
    compensation would be within the Sponsor Fee Limit as calculated
    through that later period. Any deferred fees that cannot be paid
    under the applicable limitations through the date of liquidation
    would be forfeited by our General Partner or Investment Manager,
    as the case may be, at liquidation.
Under the NASAA Equipment Leasing Guidelines, we are required to
    commit a minimum percentage of the Gross Offering Proceeds to
    Investment in Equipment, calculated as the greater of:
    (i) 80% of the Gross Offering Proceeds reduced by 0.0625%
    for each 1% of indebtedness encumbering our equipment; or
    (ii) 75% of such Gross Offering Proceeds. We intend to
    incur total indebtedness equal to 0% of the aggregate cost of
    its equipment. Our partnership agreement requires us to commit
    at least 95.0% of the Gross Offering Proceeds to Investment in
    Equipment and to pay fees. Based on the formula in the NASAA
    Equipment Leasing Guidelines, our minimum Investment in
    Equipment would equal 80.00% of gross proceeds (80%−0%
    ×.0625% = 80.00%),
13
Table of Contents
and our minimum Investment in Equipment therefore would exceed
    the NASAA Fee Limitation minimum by 15.0%.
The amount of the Promotional Interest our General Partner is
    permitted under the NASAA Fee Limitation will be dependent on
    the amount by which the percentage of Gross Offering Proceeds we
    ultimately commit to Investment in Equipment exceeds the minimum
    Investment in Equipment under the NASAA Fee Limitation. The
    NASAA Fee Limitation permits our General Partner and its
    affiliates to receive compensation in the form of a carried
    interest in Fund Net Income, Net Loss and Distributions
    equal to 1% for the first 2.5% of excess Investment in Equipment
    over the NASAA Guidelines minimum, 1% for the next 2% of such
    excess, and 1% for each additional 1% of excess Investment in
    Equipment. With a minimum Investment in Equipment of 95.0%, our
    General Partner and its affiliates may receive an additional
    carried interest equal to 12.5% of Net Profit, Net Loss and
    Distributions under the foregoing formula (2.5% + 2% + 10.5% =
    15%; 1% + 1% + 10.5% = 12.5%). At the lowest permitted level of
    Investment in Equipment, the NASAA Guidelines would permit our
    General Partner and its affiliates to receive a promotional
    interest equal to 5% of Distributions of Cash from Operations
    and 1% of Distributions of Sale or Refinancing Proceeds until
    limited partners have received total Distributions equal to
    their capital contributions plus an 8% per annum cumulative
    return on their adjusted invested capital, as calculated under
    the NASAA Equipment Leasing Guidelines and, thereafter, the
    promotional interest may increase to 15% of all Distributions.
With the additional carried interest calculated as described
    above, the maximum aggregate fees payable to our General
    Partner, our Investment Manager and their affiliates under the
    NASAA Equipment Leasing Guidelines as carried interest and
    promotional interest would equal 17.5% of Distributions of Cash
    from Operations (12.5% + 5% = 17.5%), and 13.5% of Distributions
    of Sale or Refinancing Proceeds
    (12.5% + 1% = 13.5%), before the
    subordination level was reached, and 27.5% of all Distributions
    thereafter. The maximum amounts to be paid under the terms of
    the our partnership agreement are subject to the application of
    the Sponsor Fee Limit provided in Section 9.4(e) of our
    partnership agreement, which limits the annual amount payable to
    our General Partner, our Investment Manager and their affiliates
    as the Front-End Fees, Management Fee and the Promotional
    Interest to an aggregate not to exceed the total amount of fees
    that would be payable to our General Partner, our Investment
    Manager and their affiliates under the NASAA Fee Limitation.
Upon completion of the offering of our units, final commitment
    of offering proceeds to acquisition of equipment and other
    assets and establishment of final levels of permanent portfolio
    debt, if any, our General Partner will calculate the maximum
    carried interest and promotional interest payable to our General
    Partner and its affiliates under the NASAA Fee Limitation and
    compare such total permitted fees to the total of the Front-End
    Fees, Management Fee and Promotional Interest. If and to the
    extent that the Front-End Fees, Management Fee and Promotional
    Interest would exceed the fees calculated under the NASAA Fee
    Limitation, the fees payable to our General Partner, our
    Investment Manager and their affiliates will be reduced by an
    amount sufficient to cause the total of such compensation to
    comply with the NASAA Fee Limitation. The adjusted Sponsor Fee
    Limit will then be applied to the Management Fee
and/or
Promotional Interest as described above. A comparison of the
    Front-End Fees actually paid by us and the NASAA Fee Limitation
    maximums will be repeated, and any required adjustments will be
    made, at least annually thereafter.
Defined
    Terms Used in the "Management Compensation"
    Section
Definitions of certain capitalized terms used in the foregoing
    "Management Compensation" section are as follows:
"Cash Available for Distribution"
means our
    cash funds provided from operations, without deduction for
    depreciation, but after deducting cash funds used to pay all
    other expenses plus cash available for distribution from our
    reserves less amounts set aside for restoration or creation of
    reserves.
"Distributions"
means any cash distributed to
    holders and our General Partner arising from their respective
    interests in us.
14
Table of Contents
"Front-End Fees"
means fees and expenses paid
    by any party for any services rendered during our organization
    and acquisition phase including organization and offering
    expenses, leasing fees, acquisition fees, acquisition expenses,
    and any other similar fees, however designated. Notwithstanding
    the foregoing, Front-End Fees shall not include any acquisition
    fees or acquisition expenses paid by a manufacturer of equipment
    to any of its employees unless such persons are affiliates of
    our General Partner.
"Investment in Equipment"
means the amount of
    capital contributions actually paid or allocated to purchase,
    manufacture, or renovate equipment and other portfolio assets
    (such as physical assets or leases) acquired by us, including
    the purchase of equipment, working capital reserves allocable
    thereto (except that working capital reserves shall not be
    included), and other cash payments such as interest and taxes
    but excluding Front-End Fees.
"Net Disposition Proceeds"
means the proceeds
    we realized from the sale, refinancing or other disposition of
    our investments (including insurance proceeds or lessee or
    borrower indemnity payments arising from the loss or destruction
    of an asset) less all our liabilities.
"Net Income"
or
"Net Loss"
means our taxable income or taxable loss as determined for
    federal income tax purposes, computed by taking into account
    each item of income, gain, loss, deduction or credit not already
    included in the computation of taxable income and taxable loss,
    but does not mean Distributions.
"Promotional Interest"
means the allocable
    share of all distributed Cash Available for Distribution and
    distributed Net Disposition Proceeds (after a return to our
    limited partners of their respective capital contributions plus
    an 8% per annum cumulative return on their capital
    contributions) payable to our General Partner pursuant to
    Sections 9.4 of our partnership agreement.
"Sponsor Fee Limit"
means the total fees
    payable calculated pursuant to the NASAA Fee Limitation
    determined in the manner described therein.
15
Table of Contents
RISK
    FACTORS
This investment involves a high degree of risk. You should
    consider the following risk factors together with all of the
    other information included in this prospectus in evaluating the
    purchase of our units. If any of the following risks actually
    occurs, our business, financial condition or results of
    operations could be materially adversely affected. In that case,
    you may lose some or all of your investment.
Risks
    Associated with this Offering
We may
    not return all of your investment or any rate of return on your
    investment.
A substantial portion, and possibly all, of the cash
    distributions you receive from us will be a return of capital.
    The portion of your total distributions that is a return of
    capital and the portion that is investment income will depend on
    a number of factors and cannot be determined until all of our
    investments have been sold or matured. At that time, you will be
    able to compare the total amount of all cash distributions
    received by you to your total capital invested in us, and
    determine your investment income.
We
    cannot predict the amount of cash we will generate. Therefore,
    we cannot predict the amount of cash distributions we will make
    to you and our other partners.
We cannot predict the amount of cash we will generate and, as a
    result, the amount of distributions we may pay you and our other
    partners, if any. The actual amounts of cash we generate will
    depend on numerous factors which may be beyond our control and
    may reduce or delay our cash distributions to you and our other
    partners, including:
•
the demand for the leases we provide;
•
our ability to obtain financings or leverage on acceptable terms
    to build our portfolio;
•
profitability of our operations;
•
lease and other investment defaults;
•
prevailing economic conditions; and
•
government regulations.
The
    amount and timing of distributions may vary over time and cash
    distributions may not be made on schedule.
From time to time, our General Partner may vary the amount of,
    or completely suspend, cash distributions to you and our other
    partners if it believes it to be in our best interests to do so.
    Losses from our investments or unavailability of liquid assets
    also may result in suspensions of distributions. Furthermore:
•
during the Liquidation Period, cash distributions will be
    irregular while our investments are being disposed of; and
•
large returns of capital during our term will reduce the cash
    available for future distributions.
During the Operating Period, we plan to pay you and our other
    partners semi-annual distributions in an aggregate amount equal
    to 3.0% on your and their respective capital contributions.
    However, you should not assume that we will generate cash
    sufficient to pay you and our other partners all or any part of
    the 3.0% semi-annual distribution.
You should not rely on the cash distributions from your units as
    a regular source of cash.
Because
    we do not know what the composition of our investment portfolio
    will be, you cannot evaluate our portfolio at the time you
    invest.
We are what is typically referred to as a "blind pool"
    offering because we have not specifically identified any of our
    investments. We will begin to develop our portfolio after we
    receive the minimum offering
16
Table of Contents
proceeds and are ready to invest our funds. Therefore, you will
    not be able to assess all of the potential risks associated with
    the investment in our units as you do not have information about
    the transactions we will enter into, including:
•
the types, ages, manufacturers, model or condition of the
    equipment and other assets in our portfolio;
•
the identity, financial condition and creditworthiness of the
    end-users;
•
the terms and conditions of the transactions;
•
the type of collateral securing the investment;
•
the purchase price that will be paid for our investments; or
•
the expected residual value of the investments.
You must rely upon our Investment Manager's judgment and
    ability to select our investments, evaluate the asset's
    condition, evaluate the ability of end-users to perform their
    obligations to us and negotiate transaction documents. We cannot
    assure you that our Investment Manager will be able to perform
    such functions in a manner that will achieve our investment
    objectives.
Our
    and our General Partner's and our Investment Manager's
    lack of operating history decreases your ability to evaluate
    your investment.
We and our General Partner were formed in March 2010 and have no
    performance history upon which to evaluate your investment.
    Also, we cannot predict whether our intended operations will
    meet our stated investment objectives. SQN I and SQN II, which
    are prior private equipment leasing and finance funds sponsored
    by our Investment Manager are still in their operating stages
    and have only a limited performance history. Thus, our
    Investment Manager has only a limited history in managing funds
    similar to us for you to evaluate. See
    "Appendix B — Prior Performance
    Tables," to this prospectus.
Since
    there is no public market for our units, an investment in our
    units is considered illiquid. You should be prepared to hold
    your units for the duration of the Fund, which is anticipated to
    be approximately seven years, but may be longer.
Our units will not be listed on any national securities exchange
    at any time and we will take steps to ensure that no public
    trading market develops for our units. Your ability to sell or
    transfer your units will be very limited. You should be prepared
    to hold your units for the life of the Fund, which is
    anticipated to be approximately seven years, but may be longer.
We have established these restrictions to comply with federal
    and state securities laws and so that we will not be considered
    to be a publicly traded partnership that is taxed as a
    corporation for federal income tax purposes. Thus, you probably
    will not be able to sell or otherwise liquidate your units in
    the event of an emergency and if you were able to arrange a
    sale, the price you would receive for your units would likely be
    at a substantial discount to the price you paid for your units.
You should invest in us only if you are prepared to hold your
    units for at least seven years, which is the period consisting
    of:
•
an Offering Period of up to two years;
•
an Operating Period of three years which we expect will overlap
    with the Offering Period; and
•
a subsequent Liquidation Period of approximately four years,
    during which our investments will either mature or be sold.
17
Table of Contents
Our
    General Partner, our Investor Manager and their affiliates will
    manage our operations and may make decisions with which you do
    not agree or which do not achieve our business
    objectives.
Our General Partner, our Investment Manager and their affiliates
    will have all management control over our operations and you are
    not permitted to take part in managing, establishing or changing
    our investment objectives or policies. Our success will
    significantly depend upon:
•
the ability of our Investment Manager to source appropriate
    transactions for us in a timely manner;
•
the quality of the investment decisions our Investment Manager
    makes, especially relating to the types of investments into
    which we invest, the timing and management of those investments,
    assessments of potential end-users and the residual value of our
    investments; and
•
our Investment Manager's ability to extract maximum value
    from assets and equipment once they reach the end of the lease
    term.
Unlike a holder of common stock in a corporation, as a limited
    partner you will have only limited voting rights on matters
    affecting our business. For example, an affirmative vote of
    partners owning not less than a majority of our units is
    required to remove our General Partner or anyone else as general
    partner. You should not purchase our units unless you are
    willing to entrust all aspects of our management to our General
    Partner and our Investment Manager.
If you
    request that we redeem your units you may receive much less than
    if you kept your units for the duration of our
    term.
At any time after you have been admitted as one of our limited
    partners, you may request us to redeem some or all of your
    units. However, the redemption of your units is subject to the
    following:
•
we have no obligation to redeem any of your units;
•
we will not maintain a cash reserve for this purpose; and
•
in any given year our total unit transfers, including
    redemptions of our units, may not exceed 2% of our total capital
    or profits interests.
If we do agree to redeem your units, the redemption price may
    provide you a much lower value than the value you would realize
    if you kept your units for the duration of our term. Depending
    on when you request redemption, the redemption price may be less
    than the unreturned amount of your investment.
Spreading
    the risks of leasing by diversifying our investments will be
    reduced if we raise only the minimum offering
    proceeds.
We may begin operations with a minimum capitalization of
    $1.2 million (excluding cash subscriptions from our General
    Partner or its affiliates and from residents of Pennsylvania).
    Should we raise less than our maximum offering amount of
    $50.0 million, our portfolio may be less diversified than
    would otherwise be the case. As we will be limited in the types
    and number of transactions we may enter into, a single
    transaction may have a greater impact on the overall performance
    of our portfolio. If we only raise the minimum offering, or have
    a low level of capitalization, a loss on any single transaction
    may have a greater negative impact on our financial performance.
If we
    do not raise our minimum offering amount we will not commence
    operations.
We require a minimum capitalization of $1.2 million to
    commence operations. If the amount of proceeds raised as of
    January 1, 2011 are insufficient to constitute the minimum
    offering, all subscription proceeds deposited by you into our
    escrow account will be returned to you, together with any
    interest earned and without deduction for fees, commissions or
    expenses. In such a case we will not begin any business
    operations, we will not make any investments and we will not
    make any distributions.
18
Table of Contents
Any
    delays in the investment of the offering proceeds may diminish
    the returns on our investments.
We will receive only minimal, if any, returns on the offering
    proceeds until the time the offering proceeds are invested in
    equipment, other assets or other investments. If we do not
    invest the offering proceeds promptly, the delay may diminish
    the returns that the investment would have otherwise realized
    had a given investment been made earlier.
The
    price of the units offered by this prospectus has been
    arbitrarily determined. You should not rely on this price as an
    indication of the value of the units.
The offering price per unit has been determined arbitrarily and
    is not based upon our actual or potential earnings or any other
    criteria for determining value. No representation is made hereby
    that a unit has a market value equal to the purchase price or
    could be sold at the purchase price or at any other price.
Lack
    of independent counsel or an independent underwriter may reduce
    the due diligence review of us and our General Partner, our
    Investment Manager and their affiliates.
The legal counsel that represents our General Partner, our
    Investment Manager and their affiliates, including our selling
    agent, also represents us. You and our other limited partners,
    as a group, have not been represented by separate legal counsel,
    and the selling agent's due diligence examination of us and
    this offering cannot be considered to be independent. See the
    "Conflicts of Interest and Fiduciary
    Responsibilities — Lack of Independent Underwriter and
    Due Diligence Investigation in This Offering" section of
    this prospectus.
You
    could be liable for our obligations if you participate in the
    control of our business, and you may be required to return
    improperly received distributions.
In general, limited partners are not liable for the obligations
    of a limited partnership unless they participate in the control
    of the limited partnership's business. If it were
    determined that any of the following rights, or the exercise of
    those rights by the limited partners as a group, constituted
    participation in the control of our business, then you could be
    held liable for our obligations to the same extent as a general
    partner:
•
the right to remove our General Partner and elect a substitute
    general partner;
•
the right to approve certain amendments to our partnership
    agreement; or
•
the right to take other specified actions under our partnership
    agreement.
This means that if you were deemed to be a general partner, you
    could be held personally liable for our obligations and losses
    beyond the amount you paid for your units.
In addition, under the laws of the State of Delaware you may be
    required to return to us any distribution you received from us
    if you knew at the time the distribution was made that it was
    improper because it rendered us insolvent. For a further
    discussion of your liabilities as a limited partner, you should
    read the "Summary of Our Partnership Agreement —
    Limited Liability of Limited Partners" section of this
    prospectus.
Your
    ability to begin an action against our General Partner, our
    Investment Manager and their affiliates is limited by our
    partnership agreement.
Our partnership agreement provides that none of our General
    Partner, our Investment Manager or their affiliates will have
    any liability to us for any loss we suffer arising out of any
    action or inaction of our General Partner, our Investment
    Manager or their affiliates, if our General Partner, our
    Investment Manager or their affiliates, as the case may be,
    determined, in good faith, that the course of conduct was in our
    best interests and did not constitute negligence or misconduct.
    As a result of these provisions in our partnership agreement,
    your right to begin an action against our General Partner may be
    more limited than it would be without these provisions. For a
    discussion of these provisions of our partnership agreement, you
    should read the "Conflicts of Interest and Fiduciary
    Responsibilities — Fiduciary Duty of Our General
    Partner" section of this prospectus.
19
Table of Contents
Risks
    Associated with our Business
Poor
    economic conditions may adversely affect our ability to build
    our portfolio.
A prolonged economic slowdown in the United States, European
    Union,
and/or
Canada could adversely affect our ability to invest the proceeds
    of this offering as quickly as we would like to if businesses
    aggressively seek to reduce their costs. If this happens, our
    distributions to you and our other partners during the initial
    period of our operations may be less than if our offering
    proceeds were fully invested in accordance with our timetable.
    It also could result in reduced interest rates, which could
    reduce the returns we can obtain on our investments and, as a
    consequence, the distributions we can make to you and our other
    partners. Depending primarily on the severity and duration of a
    general economic slowdown, the creditworthiness of our end-users
    could be adversely affected if they have difficulty obtaining
    financing for their business operations, which could cause them
    to default on their obligations to us and cause us to incur a
    loss.
Our
    success will be subject to risks inherent in the equipment
    leasing and finance business, any of which may affect our
    ability to operate profitably.
A number of factors may affect our ability to operate profitably
    including, the following:
•
changes in economic conditions, including fluctuations in demand
    for equipment and other assets, interest rates and inflation
    rates;
•
the quality of the equipment or other assets we acquire and
    lease or finance;
•
the continuing strength of equipment manufacturers;
•
the timing of our investments and our ability to forecast
    technological advances;
•
technological and economic obsolescence of the equipment and
    other assets we acquire;
•
our ability to obtain financings or leverage on acceptable terms
    to build our portfolio;
•
defaults by our lessees or other counterparties; and
•
increases in our expenses, including labor, tax and insurance
    expenses.
Fluctuations in demand for equipment may affect the ability of a
    leasing and finance program to invest its capital in a timely
    manner. Equipment lessors have experienced a more difficult
    market in which to make suitable investments during historical
    periods of reduced growth and recession in the U.S. economy
    as a result of the softening demand for capital equipment during
    these periods. Economic recession resulting in lower levels of
    capital expenditure by businesses may result in more used
    equipment becoming available on the market and downward pressure
    on prices and lease rates due to excess inventory. Periods of
    low interest rates exert downward pressure on lease rates and
    may result in less demand for lease financing. There can be no
    assurance as to what future developments may occur in the
    economy in general or in the demand for equipment and lease
    financing in particular.
Higher
    than expected equipment lease or other investment defaults may
    result in losses.
Higher than expected equipment lease or other investment
    defaults may result in a loss of anticipated revenues. These
    losses may adversely affect our ability to make distributions to
    you and our other partners and, if the level of defaults is
    sufficiently large, may result in our inability to fully recover
    our investment.
While we will seek to repossess and re-lease or sell any
    equipment or other asset that is subject to a defaulted lease,
    we may not be able to do so on terms that are favorable to us.
    In some cases, the cost of repossessing the equipment or other
    asset subject to a defaulted lease or other investment may make
    trying to recover the equipment or other asset impractical.
    Also, if a lessee or borrower under a defaulted lease or other
    investment files for protection under the bankruptcy laws, then:
•
we may experience difficulties and delays in recovering the
    equipment or other asset from the defaulting party; and
20
Table of Contents
•
we may be unable to enforce important contract provisions
    against the insolvent party, including the contract provisions
    that require the equipment or other asset to be returned to us
    in good condition.
In addition, we may suffer a loss, or our ability to make
    distributions may be adversely affected, by the high costs of:
•
enforcing a lessee's or borrower's contract
    obligations;
•
recovering equipment or other asset from the defaulting party;
•
transporting, storing, and repairing the equipment or other
    asset; and
•
finding a new lessee or purchaser for the equipment or other
    asset.
The
    equipment leasing industry is highly competitive, which may
    hinder our ability to source appropriate or attractive
    investments.
The equipment leasing industry both in the U.S. and abroad,
    and across different equipment classes, is highly competitive.
    In particular:
•
it is often relatively easy for new entrants to enter the
    equipment leasing industry as lessors;
•
leasing companies often act irrationally or unprofitably to gain
    market share, reducing the availability of attractive lease
    transactions to other lessors in the market; and
•
lease transactions are not always written in a manner which
    provide the lessor with an appropriate rate of return for the
    risk being assumed.
The equipment leasing and finance business is highly fragmented.
    We will compete with:
•
a large number of national, regional and local banks, savings
    banks, leasing companies and other financial institutions;
•
captive finance and leasing companies affiliated with major
    equipment manufacturers; and
•
other sources of equipment lease financing, including other
    publicly-offered partnerships.
Some of our competitors are substantially larger and have
    considerably greater financial, technical and marketing
    resources than either we or our General Partner and its
    affiliates will have, even if we sell the maximum number of
    units in this offering.
If we
    are unable to realize the residual value of our equipment or
    other assets under our operating leases, we may incur
    losses.
We expect that some of our leases will be "operating
    leases," under which the net present value of aggregate
    rental payments during the initial lease term is structured to
    result in our recovery of an amount less than or equal to 90% of
    the purchase price of the equipment or other asset. Thus, our
    ability to recover the full purchase price of the equipment or
    other asset and our expected return in connection with an
    operating lease depends on the potential value of the equipment
    or other asset once the primary lease term expires. We call this
    the "residual value." The residual value will depend
    on numerous factors beyond our control, including:
•
whether the original lessee wants to keep the equipment or other
    asset;
•
the cost of comparable new equipment or other asset;
•
whether the leased equipment or other asset is obsolete or in
    poor condition; and
•
whether there is a secondary market for the type of used
    equipment or other asset.
We cannot assure you that our value assumptions will be accurate
    or that the equipment or other assets will not lose value more
    rapidly than we anticipated.
21
Table of Contents
The
    market value of our equipment or any asset may be lower than
    anticipated, resulting in a loss on our
    investment.
When we enter into a lease, we will not know what the
    remarketing price of the equipment or other asset leased will be
    when the lease ends and the equipment or other asset is returned
    to us. If the remarketing price is lower than anticipated, we
    will either lose money or receive lower returns than
    anticipated. There are numerous factors beyond our control which
    can materially adversely affect the remarketing price we can
    achieve for equipment or other asset, including:
•
the general market value for the equipment or other asset at the
    time we are attempting to remarket that equipment or other asset;
•
the cost of new equipment or other asset at the time we are
    remarketing the used equipment or other asset;
•
technological and regulatory developments since our initial
    purchase of the equipment or other asset which could reduce the
    market value of the equipment or other asset;
•
general economic conditions and the conditions in
    industry-specific market sectors; and
•
the condition of the equipment or other asset returned to or
    repossessed by us.
Additionally, there is a risk that the best remarketing price
    available is only obtainable in a market where we do not have
    appropriate or adequate remarketing resources. We cannot assure
    you that our assumptions with respect to value will be accurate
    or that the equipment or other asset will not lose value more
    rapidly than we anticipate.
Our
    inability to obtain insurance for certain types of losses means
    we must bear the cost of any losses from the non-insurable
    risks.
While our leases will generally require lessees to have
    comprehensive insurance on the equipment or other assets under
    lease and to assume the risk of loss, some losses may be either
    uninsurable or not economically feasible to insure, such as
    losses from war, earthquakes or terrorist acts. Furthermore, we
    can neither anticipate nor obtain insurance against all possible
    contingencies that may affect the equipment or other asset. If
    an event occurs for which we have no insurance, we could lose
    some or all of our investment in the affected equipment or other
    asset. Furthermore, lessees who are obliged to insure equipment
    or any asset may nevertheless fail to do so in breach of their
    lease contract.
In
    leasing some types of equipment and other assets we may be
    exposed to environmental tort liability.
In leasing some types of equipment and other assets, such as
    transportation assets designed to carry hazardous materials, we
    may be exposed to environmental tort liability. Although we will
    use reasonable efforts to minimize the possibility of and
    exposure to environmental tort liability, including by means of
    attempting to obtain insurance, we cannot assure you that our
    equipment and other assets will be protected against those
    claims.
Failure
    to maintain equipment registrations and unexpected regulatory
    compliance costs may result in losses.
Certain types of transportation equipment are subject to
    registration requirements by governmental agencies in the United
    States and abroad. Should we fail to properly maintain
    registration of that equipment, we may lose the ability to own
    or operate that equipment. In addition to impairing our ability
    to earn rentals from that equipment, penalties may be imposed
    upon us and we may be forced into a sale of that equipment on
    unfavorable terms. Furthermore, governmental agencies may
    require changes or improvements to equipment resulting in
    increased costs and loss of rental revenue while the changes are
    made. This would adversely affect our anticipated returns from
    that investment.
22
Table of Contents
If we
    are, or become, subject to usury laws, it could result in
    reduced revenues or, possibly, loss on our
    investment.
Leases of equipment and other assets have sometimes been deemed
    to be loan transactions subject to state usury laws. These laws
    impose maximum interest rates that may be charged on loans as
    well as penalties for violation, including restitution of any
    excess interest received and declaring the debt to be
    unenforceable. We will seek to structure our leases of equipment
    and other assets so that they will not be deemed to be loans and
    violate state usury laws. However, uncertainties in the
    application of some laws may result in inadvertent violations
    which could result in reduced investment returns or, possibly,
    loss on our investment in the affected equipment and other
    assets.
Interest
    rate changes may reduce the value of our portfolio and our
    returns.
Changes in interest rates will affect the market value of our
    portfolio. In general, the market value of an equipment lease
    will change in inverse relation to an interest rate change when
    the lease has a fixed rate of return. Thus, in a period of
    rising interest rates, the market value of our equipment leases
    will decrease. A decrease in the market value of our portfolio
    will adversely affect our ability to liquidate it.
Participation
    with affiliated programs or third-parties in joint ventures may
    require us to pay additional costs or incur losses because of
    actions taken by the third-parties.
Our partnership agreement permits us to invest in equipment or
    other assets through joint venture arrangements with our General
    Partner's affiliated investment programs or independent
    third-parties. Investing in joint ventures involves risks not
    present when we invest by ourself. These risks include:
•
our co-venturer may have business or economic objectives or
    interests that are inconsistent with ours and it may want to
    manage the joint venture in ways that do not maximize our return;
•
actions by a co-venturer might subject equipment or other asset
    leases owned by the joint venture to liabilities greater than
    those we contemplate; and
•
when more than one person owns property, there may be a
    stalemate on decisions, including decisions regarding a proposed
    sale or other transfer of the equipment or other assets.
Although our partnership agreement requires that any joint
    venture arrangement in which we participate must permit us to
    buy equipment or other assets from the other co-venturer in the
    case of a proposed sale of the equipment or other assets, we may
    not have the resources to do so. See the "Conflicts of
    Interest And Fiduciary Responsibilities — We May Enter
    Into Joint Ventures With Affiliated Programs" section of
    this prospectus.
We may
    suffer losses as a result of transacting business in foreign
    countries, dealing with foreign clients or having our equipment
    or other assets located in a foreign jurisdiction.
It is likely that we will enter into transactions:
•
with foreign clients;
•
where the equipment or other asset is permanently or temporarily
    located outside the U.S.; or
•
where the contracts are governed by foreign laws.
These transactions involve a number of risks, including the
    following:
•
we may have difficulty enforcing our rights under foreign
    contracts;
•
we may have difficulty repossessing our equipment or other asset
    outside the U.S.;
•
legal costs may be more expensive outside the U.S.;
23
Table of Contents
•
foreign governments may confiscate equipment or other assets,
    nationalize equipment, retrospectively change laws, impose new
    or changed fees, duties or taxes or impose foreign exchange
    restrictions which hamper our ability to receive payment in the
    U.S.;
•
foreign courts may not recognize judgments obtained in
    U.S. courts;
•
we may have documentary risks where contracts are written in a
    language other than English;
•
complications may arise from interpretations of tax or legal
    codes and any regulatory registration requirements;
•
changes in, or interpretations of, foreign laws and regulations
    may adversely affect our ability to enter into leases, sell
    equipment or other assets or repatriate profits to the U.S.;
•
the income earned in foreign jurisdictions may be subject to
    withholding
and/or
income taxes, and depending on the foreign country, the
    U.S. may not have a tax treaty in place to reduce or
    eliminate the tax; and
•
the U.S. tax code imposes restrictions on the use of
    foreign tax credits, which may prevent you from claiming full
    credit for your share of foreign taxes. See the "Material
    U.S. Federal Income Tax Consequences" section of this
    prospectus.
Movements
    in foreign currency rates may result in losses.
We will enter into purchase, sale and lease contracts for
    equipment and other assets where the payments to be made or
    received are not in U.S. dollars. We do not anticipate that
    we will hedge our portfolio against foreign currency fluctuation
    risk. If we are due to receive payments from a client or
    purchaser in a currency other than U.S. dollars, a
    strengthening of the U.S. dollar against that currency will
    mean we are receiving less, as expressed in U.S. dollars,
    than initially anticipated, which would have a negative impact
    on our returns.
Risks
    Associated with our Organization and Structure
Our
    General Partner, our Investment Manager and their affiliates may
    be subject to various conflicts of interest arising out of their
    relationship to us.
The decisions of our General Partner, our Investment Manager and
    their affiliates will be subject to various conflicts of
    interest arising out of their relationship to us and their
    affiliates. Conflicts of interest that may affect us and our
    limited partners include:
•
our partnership agreement does not prohibit our General Partner,
    our Investment Manager or any of their affiliates from competing
    with us for investments and engaging in other types of business;
•
the selling agent, which is an affiliate of our General Partner
    and our Investment Manager and not an independent securities
    firm, will review and perform due diligence on us and the
    information in this prospectus and thus its review cannot be
    considered an independent review and may not be as meaningful as
    a review conducted by an unaffiliated broker-dealer;
•
the lack of separate legal representation for us and our General
    Partner and our Investment Manager and lack of arms'-length
    negotiations regarding compensation payable to our General
    Partner and our Investment Manager;
•
we will pay fees to the General Partner, our Investment Manager
    and their affiliates including the selling agent, before
    distributions are paid to you and other partners even if we do
    not generate profits;
•
we rely on the employees of our General Partner, our Investment
    Manager and their affiliates;
•
the resolution of conflicts will be undertaken by the investment
    committee of our Investment Manager; and
24
Table of Contents
•
our General Partner will act as our tax matters partner, and
    will negotiate with the Internal Revenue Service to settle tax
    disputes that would bind us and our other partners; those
    negotiations might not be in your best interest given your
    individual tax situation.
Our
    General Partner's, our Investment Manager's or their
    affiliates' operating systems could be damaged or disrupted
    by events beyond their control, which could interfere with our
    ability to conduct our business and make us less attractive to
    customers as a source of equipment leases.
Our ability to manage our operations and realize residual values
    from our leases of equipment and other investments depends on
    the operating systems of our General Partner, our Investment
    Manager and their affiliates. In particular, this includes our
    General Partner's, our Investment Manager's or their
    affiliates' computer and telecommunications and related
    equipment, and their ability to protect those systems against
    damage or disruptions from such contingencies as:
•
power loss;
•
acts of God, such as earthquakes, etc.;
•
telecommunications failure;
•
acts of terrorism;
•
computer intrusions; and
•
viruses and similar adverse events.
Although our General Partner, our Investment Manager and their
    affiliates will implement security and protective measures,
    these systems could still be vulnerable. Any damage or
    disruption to these systems could make us less attractive to
    end-users as a source of equipment or other asset leases.
Our
    General Partner and Investment Manager rely heavily on their
    respective key personnel to manage us, and the loss of such
    personnel could adversely affect us.
Our success will be dependent upon our utilizing sufficient and
    appropriately skilled resources and personnel to manage us and
    our business affairs. In managing and directing the
day-to-day
activities and affairs and our investment decisions, our General
    Partner and our Investment Manager rely heavily on their
    respective principals. As a result, if any of their key
    personnel were to leave or be unable to carry out his or her
    present responsibilities, our results of operations and
    financial condition may be harmed and we may not be able to meet
    our investment objectives.
Our
    Investment Manager's investment committee is not
    independent.
Any conflicts in determining and allocating investments between
    us and our General Partner, or between us and another program
    managed by our General Partner, our Investment Manager or their
    affiliates will be resolved by our Investment Manager's
    investment committee, which also will serve as the investment
    committee for other funds managed by our Investment Manager.
    Since all of the members of our Investment Manager's
    investment committee are officers of our General Partner, and
    are not independent, matters determined by the investment
    committee, including conflicts of interest between us and our
    General Partner, our Investment Manager and their affiliates
    involving investment opportunities, may not be as favorable to
    you and our other partners as they would be if independent
    members were on the committee. Generally, if an investment is
    appropriate for more than one program, our Investment Manager
    and its investment committee will allocate the investment to a
    program (which includes us) after taking into consideration at
    least the following factors:
•
which program has been seeking investments for the longest
    period of time;
•
whether the program has the cash required for the investment;
•
whether the amount of debt to be incurred with respect to the
    investment is acceptable for the program;
•
the effect the investment would have on the program's cash
    flow;
25
Table of Contents
•
whether the investment would further diversify, or unduly
    concentrate, the program's investments in a particular
    lessee or borrower, class or type of equipment, location,
    industry, etc.; and
•
whether the term of the investment is within the term of the
    program.
Notwithstanding the foregoing, our Investment Manager and its
    investment committee may make exceptions to these general
    policies when, in our Investment Manager's judgment, other
    circumstances make application of these policies inequitable or
    uneconomic.
Also, under our partnership agreement our General Partner, our
    Investment Manager and their affiliates may engage in equipment
    acquisitions, refinancing, leasing and releasing opportunities
    on their own behalf or on behalf of other partnerships, even if
    they compete with us.
We,
    our General Partner, our Investment Manager and their affiliates
    do not have independent audit and compensation
    committees.
Although our General Partner believes that the fees and other
    compensation we will pay to it, our Investment Manager and their
    affiliates are reasonable and competitive in the industry, they
    were established by our General Partner and were not determined
    by an independent compensation committee composed of persons who
    are not affiliates of our General Partner. Also, our General
    Partner and our Investment Manager, rather than an independent
    audit committee composed of persons who are not affiliates of
    either our General Partner or our Investment Manager, will
    select our independent registered public accounting firm and
    supervise the preparation of our audited financial statements
    included in our annual reports to you. See the "Management
    Compensation" and "Reports to Limited Partners"
    sections of this prospectus.
Our
    internal controls over financial reporting may not be effective
    or our independent registered public accounting firm may not be
    able to certify as to their effectiveness, which could have a
    significant and adverse effect on our business.
After our first full year of operations, our General Partner
    will be required to evaluate our internal controls over
    financial reporting in order to allow management to report on,
    and if and when required, our independent registered public
    accounting firm to attest to, our internal controls over
    financial reporting, as required by Section 404 of the
    Sarbanes-Oxley Act of 2002, as amended, and the rules and
    regulations of the SEC hereunder, which we refer to as
    "Section 404." During the course of testing, our
    General Partner may identify deficiencies that it may not be
    able to remediate in time to meet the deadline imposed by the
    Sarbanes-Oxley Act for compliance with the requirements of
    Section 404. In addition, if we fail to achieve and
    maintain the adequacy of our internal controls, as such
    standards are modified, supplemented or amended from time to
    time, we may not be able to ensure that we can conclude on an
    ongoing basis that we have effective internal controls over
    financial reporting in accordance with Section 404. We
    cannot be certain as to the timing of completion of our
    evaluation, testing and any remediation actions or the impact of
    the same on our operations. If we are not able to implement the
    requirements of Section 404 in a timely manner or with
    adequate compliance, we may be subject to sanctions or
    investigation by regulatory authorities, such as the SEC. As a
    result, our General Partner and its affiliates may be required
    to incur costs in improving our internal control system and the
    hiring of additional personnel.
Our
    Investment Manager may have difficulty managing its growth,
    which may divert its resources and limit its ability to expand
    its operations successfully.
The amount of assets that our Investment Manager manages has
    grown substantially since our Investment Manager was formed in
    December 2007, and our Investment Manager intends to continue to
    sponsor funds similar to us, which may be concurrent with us,
    and our Investment Manager expects to experience further growth
    in their respective assets under management. Our Investment
    Manager's future success will depend on the ability of its
    officers and key employees to implement and improve its
    operational, financial and management controls, reporting
    systems and procedures, and manage a growing number of assets
    and investment funds. Our Investment Manager, however, may not
    implement improvements to its management information and control
    systems in an efficient or timely manner and may discover
    deficiencies in its existing
26
Table of Contents
systems and controls. Thus, our Investment Manager's
    anticipated growth may place a strain on its administrative and
    operations infrastructure, which could increase its costs and
    reduce its efficiency and could negatively impact our operating
    results.
Our
    General Partner, our Investment Manager and their affiliates may
    receive expense reimbursements and fees from us and those
    reimbursements and fees are likely to exceed the income portion
    of distributions made to you during our early
    years.
Before making any distributions to you and our other partners,
    we may reimburse our General Partner, our Investment Manager and
    their affiliates for expenses incurred on our behalf, and pay
    our General Partner, our Investment Manager and their affiliates
    fees for selling our units and acquiring, managing, and
    realizing our investments for us, regardless of whether we are
    profitable. The expense reimbursements and fees of our General
    Partner, our Investment Manager and their affiliates were
    established by our General Partner and, are not based on
    arm's-length negotiations, but are subject to the
    limitations set forth in our partnership agreement.
    Nevertheless, the amount of these expense reimbursements and
    fees is likely to exceed the income portion of distributions
    made to you in the early years of our term.
In general, expense reimbursements and fees will be paid without
    regard to the amount of our cash distributions to you and our
    other partners, and regardless of the success or profitability
    of our operations. For example, after we receive our minimum
    offering proceeds and begin operations, our General Partner, our
    Investment Manager and their affiliates may be entitled to
    certain fees and expense reimbursements. Some of those fees and
    expense reimbursements may be paid at the time of the Initial
    Closing in this offering or as we acquire our portfolio and we
    may pay other expenses, such as accounting and interest
    expenses, costs for supplies, etc., even though we may not yet
    have begun to receive revenues from our investments.
Risks
    Associated With the Tax Treatment of Our Units
You
    may be required to pay taxes on income from us, even if you do
    not receive commensurate cash distributions from
    us.
Generally, you will be required to pay federal income taxes, and
    probably state and local income taxes, on your share of our
    taxable income, regardless of whether or not you receive cash
    distributions from us. For example, your share of our taxable
    income could exceed the amount of cash that we distribute to you
    if we repay the principal of any debt we incur with our rental
    or interest income or net proceeds from the sale of our
    investments. This could happen because repaying the principal
    amount of a debt reduces the amount of cash available for
    distribution to you and our other partners, but is not tax
    deductible. Thus, your cash distributions from us may not equal
    your share of our taxable income or even equal your tax
    liability resulting from that income. See the "Material
    U.S. Federal Income Tax Consequences — Our Income
    Versus Our Distributions" section of this prospectus.
We
    will not apply for an advance ruling from the Internal Revenue
    Service as to any federal tax consequence of an investment in
    us, and if the Internal Revenue Service classifies us as a
    corporation you will lose tax benefits.
We will not apply for an advance ruling from the Internal
    Revenue Service ("IRS") as to whether we will be
    treated as a partnership for federal tax purposes or with
    respect to any other tax consequence to you of an investment in
    us. Instead, we intend to rely on the opinion of our special tax
    counsel, Troutman Sanders LLP, that we will be classified as a
    partnership for federal income tax purposes. See the
    "Material U.S. Federal Income Tax
    Consequences — Opinion of Counsel" section of
    this prospectus. If the IRS were to successfully contend that we
    should be treated as a "publicly traded partnership,"
    then we would be treated as a corporation for federal income tax
    purposes rather than a partnership. This would have the
    following principal consequences to you:
•
tax losses realized by us would not pass through to you;
•
we would be taxed at income tax rates applicable to
    corporations, which would reduce our cash distributions to you
    and our other partners; and
27
Table of Contents
•
our distributions to you and our other partners would be taxable
    to you and our other limited partners as dividend income to the
    extent of our current and accumulated earnings and profits.
To reduce the possibility that the IRS could successfully
    contend that our units are "publicly-traded,"
    Section 13.2 of our partnership agreement places
    substantial restrictions on your ability to transfer your units.
    With respect to our tax status as a partnership, see the
    "Material U.S. Federal Income Tax
    Consequences — Opinion of Counsel,"
    "— Taxation of Limited Partnerships in
    General," and "— Publicly Traded
    Partnerships" sections of this prospectus.
We
    could lose cost recovery or depreciation deductions if the IRS
    treats our operating leases as sales or
    financings.
We intend to claim cost recovery or depreciation deductions on
    the equipment subject to our operating leases, but not the
    equipment subject to our full payout leases or other
    investments. In this regard, we anticipate that some portion of
    our leases will be operating leases and others will be full
    payout leases. In addition, our equipment and other assets may
    be financed for others under secured financings. If the IRS were
    to successfully contend that our operating leases were actually
    sales, including full payout leases or other investments, rather
    than operating leases, we would not be entitled to cost recovery
    or depreciation deductions with respect to the equipment covered
    by those leases. See the "Investment Objectives and
    Strategies — Equipment and Other Assets for Lease to
    End-Users" section of this prospectus. The IRS could also
    challenge our method of calculating our cost recovery or
    depreciation deductions, or our other deductions, and the amount
    of our deductions could be reduced if we were audited. See the
    "Material U.S. Federal Income Tax
    Consequences — Tax Treatment of Leases,"
    "— Cost Recovery," and
    "— Limitations on Cost Recovery Deductions"
    sections of this prospectus.
You
    will need passive income in order to deduct any tax losses we
    may generate.
Because our operations generally will be treated as passive
    activities by you and our other partners, your share of any tax
    losses we generate will likely be passive losses which you may
    use on your personal federal income tax returns only to offset
    passive income you receive from us or from other passive
    activities (other than publicly-traded partnerships) in which
    you invest, if any, in calculating your personal federal income
    tax liability. For example, you cannot use a passive loss from
    us to offset any "active" (i.e., non-passive) income,
    such as your salary, on your personal federal income tax
    returns. In addition, a portion of your share of our gross
    income might be treated for federal income tax purposes as
    portfolio income or gross income that is not from a passive
    activity, which cannot be offset by passive losses. See the
    "Material U.S. Federal Income Tax
    Consequences — Deductibility of Losses; Passive
    Activity Losses, Tax Basis and At "Risk"
    Limitation" section of this prospectus.
You
    will likely be subject to state and local taxes as a result of
    purchasing our units.
You will likely be subject to state and local taxes imposed by
    the various jurisdictions in which we do business or own
    property. It is your responsibility to file all of your personal
    federal, state and local tax returns. Our special tax counsel
    has not given any opinion on the state or local tax consequences
    of an investment in us. We urge you to seek advice based on your
    particular circumstances from an independent tax advisor with
    respect to the state and local tax consequences of purchasing
    our units. See the "Material U.S. Federal Income Tax
    Consequences — State and Local Taxation" section
    of this prospectus.
An IRS
    audit of our annual federal information tax return may result in
    adjustments to, or an audit of, your personal income tax
    returns.
We anticipate incurring tax losses during at least our early
    years due primarily to depreciation of equipment leased to
    others under our operating leases, and operating expenses. Also,
    we may be required to file disclosure reports with the IRS and
    its Office of Tax Shelter Analysis if the tax results of our
    intended activities cause us to be a "reportable
    transaction" under the Internal Revenue Code and the
    Treasury Regulations. Our anticipated tax losses and any
    reportable transaction reports to the IRS would increase the
28
Table of Contents
risk of an IRS audit of our federal information income tax
    returns, and could result in an IRS audit of your personal
    federal income tax returns. Also, any adjustments to our returns
    required by the IRS could require you to make corresponding
    adjustments on your personal federal income tax returns. In
    addition, an IRS audit of your personal federal income tax
    return could include an examination by the IRS of your returns
    for prior years, and could cover items unrelated to your
    investment in us. See the "Material U.S. Federal
    Income Tax Consequences — Audit by the IRS" and
    "— Registrations; Reportable Transactions,
    Interest and Penalties" sections of this prospectus.
Your
    investment in us may cause you to pay alternative minimum
    tax.
You may have to pay alternative minimum tax as a result of your
    investment in us, because you will be allocated a share of our
    alternative minimum tax preference and adjustment items. For
    example, depreciation or cost recovery deductions of equipment
    subject to our operating leases generally are computed
    differently for regular federal income tax purposes than for
    alternative minimum tax purposes. This would increase your
    alternative minimum taxable income, as compared to your regular
    taxable income, during the early years of the applicable cost
    recovery or depreciation period of the equipment subject to our
    operating leases. See the "Material U.S. Federal
    Income Tax Consequences — Alternative Minimum
    Tax" section of this prospectus.
IRA's
    and tax-exempt organizations may have unrelated business taxable
    income from an investment in us.
Tax-exempt organizations, such as pension plans, IRA's, and
    certain types of foreign entities or persons are potentially
    subject to tax on UBTI. Although rental and interest income
    generally are not included in UBTI, our General Partner
    anticipates that most of your income, if any, from an investment
    in us could constitute UBTI, because of a special rule in the
    Internal Revenue Code that treats such income as UBTI to the
    extent it is attributable to equipment leases. See the
    "Material U.S. Federal Income Tax
    Consequences — Taxation of Tax-Exempt
    Organizations" section of this prospectus.
Foreign
    investors in us will be subject to U.S. Tax
    withholding.
We generally will be required to withhold federal income tax at
    the highest applicable rate under the Internal Revenue Code on
    the income, if any, we allocate to units owned by foreign
    investors, regardless of whether any corresponding cash
    distributions are made to them. If too much tax is withheld,
    foreign investors will have to file U.S. income tax returns
    to seek a refund. See the "Material U.S. Federal
    Income Tax Consequences" section of this prospectus.
FORWARD-LOOKING
    STATEMENTS AND ASSOCIATED RISKS
Certain statements within this prospectus, including statements
    contained in the sections entitled "Prospectus
    Summary," "Risk Factors," "Investment
    Objectives and Strategies," and "Management Discussion
    and Analysis of Financial Condition," contain
    forward-looking statements concerning our objectives, plans,
    intentions, strategies, expectations and predictions concerning
    our future investment activities, results of operations and
    other future events or conditions based on views and opinions of
    our General Partner and our Investment Manager. For this
    purpose, any statements contained herein that are not of
    historical fact may be deemed to be forward-looking statements.
    Without limiting the generality of the foregoing, words such as
    "believes," "may," "will,"
    "could," "intends," "anticipates,"
    "estimates," "expects" or "might,"
    or the negative or other variations thereof or comparable
    terminology are intended to identify forward-looking statements.
    These forward-looking statements include such things as:
•
investment objectives;
•
references to future operating results, credit availability and
    financial success;
•
business strategy;
•
estimated future capital expenditures;
•
competitive strengths and goals; and
29
Table of Contents
•
other similar matters.
These statements are based on certain assumptions and analyses
    made by us, our General Partner and our Investment Manager in
    light of our experience and our perception of historical trends,
    current conditions, and expected future developments. However,
    whether actual results will conform with these expectations is
    subject to a number of risks and uncertainties, many of which
    are beyond our control. Such risks include, but are not limited
    to, those described under the "Risk Factors" section
    of this prospectus and the following:
•
changes in economic conditions, including fluctuations in demand
    for equipment or other assets, interest rates and inflation
    rates;
•
the quality of equipment and other assets we acquire and lease
    or finance;
•
the continuing strength of equipment and other manufacturers;
•
the timing of our equipment and other asset purchases and our
    ability to forecast technological advances;
•
technological and economic obsolescence of the equipment and
    other assets we acquire;
•
defaults by our lessees or other counterparties; and
•
increases in our expenses.
Although we believe the expectations reflected in such
    forward-looking statements are based upon reasonable
    assumptions, we cannot assure investors that our expectations
    will be attained or that any deviations will not be material.
    You are cautioned that forward-looking statements speak only as
    of the date they are made and that, except as required by law,
    we undertake no obligation to update these forward-looking
    statements to reflect any future events or circumstances. All
    subsequent written or oral forward-looking statements
    attributable to us or to individuals acting on our behalf are
    expressly qualified in their entirety by this paragraph.
CONFLICTS
    OF INTEREST AND FIDUCIARY RESPONSIBILITIES
General
Our General Partner and our Investment Manager may be subject to
    various conflicts of interest arising out of their relationship
    to us. Because of our General Partner's and our Investment
    Manager's organizational and operational control over us,
    these conflicts will not be resolved through arms'-length
    negotiations but, rather, through the exercise of our General
    Partner's and Investment Manager's judgment consistent
    with their fiduciary responsibilities to you and us. Some
    provisions of our partnership agreement are designed to protect
    the interests of you and our other partners if conflicts arise.
    In this regard, you should read Article IX of our
    partnership agreement and, in particular, Section 9.5.
    These sections do the following:
•
limit the actions our General Partner may take on our behalf;
•
limit the compensation and fees we will pay our General Partner,
    our Investment Manager and their affiliates; and
•
limit the expenses for which we will reimburse our General
    Partner, our Investment Manager and their affiliates.
However, our partnership agreement does not necessarily directly
    respond to each potential conflict, and there will be no
    established mechanism to resolve these conflicts. In these
    situations, our Investment Manager will rely solely on its
    judgment, subject to its fiduciary duties, to resolve the
    conflict. The potential conflicts include those set forth below.
30
Table of Contents
Our
    General Partner, Our Investment Manager and Their Affiliates
    Will Receive Fees and Other Substantial Compensation From
    Us
We will pay fees and other substantial compensation to our
    General Partner, our Investment Manager and their affiliates.
    Further, we may reimburse our General Partner, our Investment
    Manager and their affiliates for costs incurred by them in
    managing us and our portfolio.
Subject to its fiduciary duties and the terms of our partnership
    agreement, our Investment Manager has sole discretion with
    respect to the terms and timing of our investments, although it
    is anticipated that those investments will be consistent with
    our investment objectives and policies. The agreements and
    arrangements, including those relating to compensation, between
    us and our General Partner, our Investment Manager and their
    affiliates are not the result of arms'-length negotiations
    and may create conflicts between the interests of our General
    Partner, our Investment Manager and their affiliates on the one
    hand and us and our partners on the other. However, our General
    Partner believes that the compensation and fees provided for in
    our partnership agreement are consistent with practices in the
    industry and the NASAA Equipment Leasing Guidelines in effect as
    of on the date of this prospectus.
Actions
    Taken by Our General Partner and Our Investment Manager Will
    Affect the Amount of Cash Available for Distribution to Limited
    Partners and Our General Partner's and Investment
    Manager's Compensation
The amount of cash we have available for distribution to you and
    our other partners will be affected by decisions of our General
    Partner and our Investment Manager regarding various matters,
    including:
•
the amount and timing of asset and equipment purchases and sales;
•
cash expenditures;
•
financing; and
•
the creation, reduction or increase of reserves.
See the "Management Compensation" section of this
    prospectus beginning on page 10.
Our General Partner will be liable for our obligations to the
    extent that they exceed our assets. As a result, our General
    Partner has the right to cause us to establish and maintain cash
    reserves that it believes are necessary to meet our obligations.
    Because our General Partner may be exposed to liability to our
    creditors if our reserves are insufficient to pay our contingent
    liabilities, our General Partner may have a conflict of interest
    in allocating our cash flow between distributions to you and our
    other partners or to our reserve accounts. To the extent that
    our General Partner increases the amount of cash it allocates to
    reserves, the amount of cash available for distributions to you
    and our other partners will decrease and our General
    Partner's exposure to our contingent liabilities may be
    lessened.
Our
    General Partner, Our Investment Manager and Their Affiliates
    Will Engage in Activities That Compete With Us
Our partnership agreement does not prohibit our General Partner,
    our Investment Manager or their affiliates from investing in,
    acquiring or leasing equipment or other assets, and they will
    continue to engage in equipment and other asset acquisitions,
    leasing and re-leasing opportunities on their own behalf or on
    behalf of other partnerships or entities. None of our General
    Partner, our Investment Manager or their affiliates may,
    however, publicly offer for sale interests in more than one
    direct participation program simultaneously unless the programs:
•
have different investment objectives; or
•
are specified equipment programs, as defined under relevant
    securities regulations or state securities guidelines.
31
Table of Contents
Our General Partner, our Investment Manager and their affiliates
    have the right to take for their own accounts, or to recommend
    to any program they manage, any particular investment
    opportunity, subject to the limitations set forth in our
    partnership agreement.
Any conflicts in determining and allocating investments between
    us and our General Partner, our Investment Manager or their
    affiliates, or between us and another program managed by our
    General Partner, our Investment Manager or their affiliates,
    will be resolved by our Investment Manager's investment
    committee, which also serves as SQN I and SQN II's
    investment committee as discussed in the
    "Management — Investment Committee" section
    of this prospectus beginning on page 40. Generally, if an
    investment is appropriate for more than one program our
    Investment Manager's investment committee will allocate the
    investment to a program (which includes us) after taking into
    consideration at least the following factors:
•
which program has been seeking investments for the longest
    period of time;
•
whether the program has the cash required for the investment;
•
whether the amount of debt to be incurred with respect to the
    investment is acceptable for the program;
•
the effect the investment would have on the program's cash
    flow;
•
whether the investment would further diversify, or unduly
    concentrate, the program's investments in a particular
    lessee, class or type of equipment or other asset, location,
    industry, etc.; and
•
whether the term of the investment is within the term of the
    program.
Notwithstanding the foregoing, our Investment Manager's
    investment committee may make exceptions to these general
    policies when, in its judgment, other circumstances make
    application of these policies inequitable or uneconomic.
We May
    Enter Into Joint Ventures With Affiliated Programs
We may invest in joint ventures with other programs that are
    sponsored by our General Partner, our Investment Manager or
    their affiliates. These investments may result in conflicts of
    interest resulting from the differing financial positions of the
    co-venturers. For example, it may be in the interest of one
    entity to sell jointly-held equipment while it may be in the
    interest of the other entity to continue holding the equipment.
    However, we will not participate in a joint venture unless:
•
we and the other program have substantially similar investment
    objectives;
•
we and the other program invest on substantially the same terms;
•
there are no duplicate fees;
•
our General Partner's compensation in us and the other
    program is substantially the same;
•
we have the right of first refusal to buy any investment the
    other program wants to sell; and
•
the joint venture is entered into either for the purpose of
    effecting appropriate diversification for us and the other
    program, or for the purpose of relieving our General Partner or
    its affiliates from a commitment entered into for the purposes
    of:
-
facilitating our acquisition of equipment or other assets or
    investments; or
-
any other lawful purpose related to our business.
Notwithstanding, there may be an impasse on joint venture
    decisions since neither we nor the other program will have
    complete control over the joint venture's equipment and,
    although we will have the right to buy the equipment from the
    other joint venturer in the event of a sale, we may not have the
    resources do so.
32
Table of Contents
We
    Do Not Have Any Employees and Rely on the Employees of Our
    General Partner, Our Investment Manager and Their
    Affiliates
We will not have any independent employees or officers, and will
    rely solely on our General Partner and Investment Manager to
    manage us and our operations. Our General Partner and our
    Investment Manager will provide us with those administrative
    services necessary for our prudent operation in accordance with
    the terms of our partnership agreement. Those employees are not
    required to spend all of their time on affairs which effect us
    and in fact may devote significant time to the affairs of our
    General Partner, our Investment Manager or their affiliates and
    will be compensated by our General Partner, our Investment
    Manager or their affiliates for those services. The availability
    or lack thereof of these employees to provide services to us may
    create significant conflicts between us and our General Partner,
    our Investment Manager and their affiliates.
We May
    Reimburse Our General Partner, Our Investment Manager and Their
    Affiliates for Expenses
We may reimburse our General Partner, our Investment Manager and
    their affiliates for costs incurred by them in managing us and
    our portfolio, including specified costs incurred by them in
    providing corporate staff and support services properly
    allocable to us. See the "Management Compensation"
    section of this prospectus beginning on page 10.
We Have
    Not Retained Separate Counsel or Other Professionals
Troutman Sanders LLP, the legal counsel that represents our
    General Partner, our Investment Manager and their affiliates,
    including the selling agent, also represents us. You and our
    other limited partners, as a group, have not been represented by
    legal counsel. Prospective investors should seek independent
    counsel if they so desire or if any legal matters discussed in
    this prospectus are unclear.
Lack of
    Independent Underwriter and Due Diligence Investigation in This
    Offering
No independent lead underwriter has been engaged for the
    distribution of our units. Therefore, we will not have the
    benefit of an independent "due diligence" review and
    investigation of the type normally performed by an unaffiliated,
    independent lead underwriter in connection with an offering of
    securities. Although the selling agent believes that its
    investigation of us, our General Partner and our Investment
    Manager for purposes of this offering of units has been as
    complete as would be the case in dealing with unaffiliated
    parties, there is no assurance that the due diligence has been
    performed in the same manner as that of an independent lead
    underwriter.
Conflicts
    Regarding Redemption of Units
You and our other partners may present your units to us for
    redemption at any time. This creates the following conflicts of
    interest between you and our General Partner:
•
We have no obligation to redeem your units at any time for any
    reason. Our General Partner may decline your redemption request
    in its sole discretion. For example, if our General Partner
    determines that we do not have the necessary cash flow, taking
    into account future distributions to our other partners and
    foreseeable investments, reinvestments, and operating expenses,
    your request may be declined. In addition, our General Partner
    may conclude that the requested redemption might cause our total
    unit transfers in the year to exceed 2% of our total capital or
    profits interests, which is not permitted under our partnership
    agreement. See Appendix A to this prospectus. All of these
    determinations will be made in our General Partner's sole
    discretion.
•
Our General Partner also has determined the redemption price of
    our units. To the extent the redemption price, or the provisions
    for determining the redemption price in certain circumstances,
    includes any subjective decisions, they will fall within the
    discretion of our General Partner.
See the "Redemption of Units" section of this
    prospectus beginning on page 88.
33
Table of Contents
Our
    General Partner is Our Tax Matters Partner
Our General Partner will serve as our tax matters partner and
    represent us before the IRS and all other taxing authorities. As
    tax matters partner, our General Partner will have broad
    authority to act on behalf of you and our other partners in any
    administrative or judicial proceeding involving the IRS or other
    tax agencies, and this authority may involve conflicts of
    interest. For example, a potential conflict would include
    whether to contest or settle a proposed adjustment by the IRS to
    the amount of our depreciation deductions under our operating
    leases, which are allocated 99% to you and our other partners,
    which would also affect your personal income tax returns. While
    our General Partner will take into account the interests of you
    and our other partners as a whole, there is no assurance that
    any settlement would be in the best interest of you or any other
    particular partner given your or his particular tax situation.
Our
    General Partner or Its Affiliates Will Purchase Units as
    Investors
Our General Partner or its affiliates currently intend to
    purchase 100 units. These subscriptions will not be
    included in the minimum number of units required for us to begin
    operations. Thus these partners generally will:
•
share in our income, losses and distributions on the same basis
    as you and our other partners as described in the "Income,
    Losses and Distributions" section of this prospectus
    beginning on page 57; and
•
have the same voting rights, except that they are prohibited
    from voting on the removal of our General Partner as general
    partner and the appointment of a successor general partner.
The purchase of units by our General Partner, its officers,
    directors, or other affiliates as limited partners will dilute
    the voting rights of you and our other partners and there may be
    a conflict with respect to certain matters. See the
    "Summary of Our Partnership Agreement — Voting
    Rights of Limited Partners" section of this prospectus
    beginning on page 85.
General
    Restrictions
To reduce, but not eliminate, certain conflicts of interest we
    will not:
•
issue any units after this offering terminates or issue units in
    exchange for property;
•
make loans to our General Partner, our Investment Manager or
    their affiliates;
•
receive loans from our General Partner, our Investment Manager
    or their affiliates unless the loan has a term of 12 months
    or less from the date on which it was made and any interest or
    other financing charges or fees we pay do not exceed the lower
    of the following:
–
if our General Partner, our Investment Manager or an affiliate
    borrowed to make the loan, the rate of interest and other
    amounts paid or payable by our General Partner, our Investment
    Manager or the affiliate in connection with the
    borrowing; or
–
if our General Partner, our Investment Manager or an affiliate
    did not borrow to make the loan, the rate of interest and other
    amounts paid or payable in an arms'-length borrowing that
    we could obtain, without reference to our General
    Partner's, our Investment Manager's or the
    affiliate's financial abilities or guarantees;
•
invest in or underwrite the securities of other partnership
    programs;
•
operate in a manner that would cause us to be classified as an
    "investment company" for purposes of the Investment
    Company Act of 1940, as amended;
•
grant our General Partner, our Investment Manager or any of
    their affiliates exclusive listing rights to sell our
    investments or other assets;
34
Table of Contents
•
permit our General Partner, our Investment Manager or any of
    their affiliates to receive a fee or commission in connection
    with the reinvestment of our cash from sales or operations, or
    the resale,
re-lease,
exchange or refinancing of equipment, except as permitted by our
    partnership agreement and in the "Management
    Compensation" section of this prospectus beginning on
    page 10;
•
grant our General Partner, our Investment Manager or any of
    their affiliates any rebates or
give-ups
or
    participate in any reciprocal business arrangements with them
    that would circumvent the restrictions in our partnership
    agreement, including the restrictions applicable to transactions
    with affiliates of our General Partner;
•
permit our General Partner, directly or indirectly, to pay or
    award any commissions or other compensation to any person
    engaged by a potential investor for investment advice as an
    inducement to the advisor to advise the purchaser of our units;
    but this does not prohibit the normal sales commissions and
    other compensation payable to the selling agent as described in
    the "Plan of Distribution" section of this prospectus
    beginning on page 92;
•
purchase or lease any equipment or other asset from, or sell or
    lease equipment or other assets to our General Partner, our
    Investment Manager or their affiliates or any investment program
    in which they have an interest. However, if the conditions set
    forth below are met, we expect that we will acquire
    substantially all of our equipment and other assets from our
    Investment Manager or its affiliates (other than affiliated
    equipment leasing and finance programs), provided that they
    acquire the equipment or other assets on a temporary or interim
    basis in order to facilitate our acquisition of the equipment or
    other assets or our financing needs. The conditions referred to
    above are the following:
–
our Investment Manager or its affiliates hold the equipment or
    other assets only on an interim basis, generally not longer than
    six months, for purposes of facilitating their acquisition by
    us, borrowing money or obtaining financing for us or for other
    purposes related to our business;
–
our Investment Manager determines that the acquisition of
    equipment or other assets is in our best interest;
—
we acquire the equipment or other assets at a price no greater
    than the cost to our Investment Manager or its affiliates, as
    adjusted for intervening operations, plus compensation permitted
    under our partnership agreement and described in this prospectus;
—
there is no difference in the interest terms of any financing
    secured by the equipment or other assets at the time acquired by
    our Investment Manager or its affiliates, and the time acquired
    by us, although there may be different interest terms if the
    applicable financing is provided through a different credit
    facility or different lender; and
—
our Investment Manager or its affiliates do not benefit from the
    transaction apart from compensation permitted under our
    partnership agreement and described in this prospectus. See the
    "— We May Enter Into Joint Ventures With
    Affiliated Programs" above and the "Investment
    Objectives and Strategies — Management, Origination
    and Servicing Agreement" section of this prospectus
    beginning on page 56.
Also, except as permitted under the Management, Origination and
    Servicing Agreement and our partnership agreement, our General
    Partner may not enter into any other agreements, contracts or
    arrangements on our behalf with itself or any of its affiliates.
It is likely that our Investment Manager will manage the
    investments of other equipment leasing funds in the future.
    Investment opportunities may arise which are suitable both for
    us and for those other equipment leasing funds. In those cases,
    when allocating investment opportunities between us and other
    equipment leasing funds it manages, our Investment Manager will
    take into consideration factors which include the following:
•
specified equipment programs will have first preference for
    investment opportunities which meet their investment guidelines;
35
Table of Contents
•
the period of time in which the funds have been seeking
    investments;
•
the size of the investment opportunity and the cash available to
    the funds to make such an investment;
•
the extent to which the investment will contribute to each fund
    meeting its investment objectives, including the objective of
    portfolio diversification;
•
the duration of the investment and the remaining duration of
    each fund; and
•
the anticipated cash flow and performance effect of the
    investment on each fund.
These considerations will not restrict our Investment Manager or
    its affiliates or other funds managed by our Investment Manager
    or its affiliates from considering or accepting investment
    opportunities.
Fiduciary
    Duty of Our General Partner
Our General Partner is accountable to us as a fiduciary. Under
    Delaware law, this generally means that our General Partner has
    duties of due care and fair dealing in acting for us and
    handling our affairs. Our partnership agreement does not excuse
    our General Partner from liability or provide it with any
    defenses for breach of its fiduciary duty. However, our
    partnership agreement permits our General Partner, our
    Investment Manager and their affiliates to have business
    interests or activities that may conflict with ours, and
    includes provisions to resolve conflicts in allocating
    investment opportunities among us and other programs that may be
    sponsored by our General Partner, our Investment Manager or
    their affiliates.
The fiduciary duty owed by a general partner is analogous to the
    fiduciary duty owed by directors to a corporation and its
    stockholders and is subject to the same rule, commonly referred
    to as the "business judgment rule." Under this rule,
    directors are not liable for mistakes made in the good faith
    exercise of honest business judgment or for losses incurred in
    the good faith performance of their duties when performed with
    such care as an ordinarily prudent person would use. Under the
    terms of our partnership agreement our General Partner, our
    Investment Manager and their affiliates have limited their
    liability to us and to you and our other partners for any loss
    suffered by us or by you and our other partners that arises out
    of any action or inaction on their part if:
•
they determined in good faith that the course of conduct was in
    our best interest;
•
they were acting on behalf of, or performing services for,
    us; and
•
their course of conduct did not constitute negligence or
    misconduct.
This is a rapidly developing and changing area of the law and if
    you have questions concerning the duties of our General Partner
    you should consult with your legal counsel.
In addition, as permitted by Delaware law and as discussed
    above, we will indemnify our General Partner, our Investment
    Manager and their affiliates against any loss of the kind
    described in the preceding sentences to the extent of our
    assets, but without any additional obligation on the part of you
    and our other partners. However, we will not indemnify our
    General Partner, our Investment Manager or their affiliates for
    any violation, or alleged violation, of federal or state
    securities laws unless:
•
there has been a judgment on the merits in favor of our General
    Partner, our Investment Manager or their affiliates or the
    claims were dismissed on the merits by the court;
•
the court has been advised by us of the position of the SEC and
    applicable state securities law authorities on the issue of
    indemnification for securities law violations; and
•
the court approves the indemnification of litigation
and/or
settlement costs.
The effect of the foregoing provisions may be to limit your
    recourse to our General Partner, our Investment Manager and
    their affiliates. However, you should be aware that, in the
    SEC's opinion, the indemnification for liabilities under
    the Securities Act of 1933, as amended, is contrary to public
    policy and therefore unenforceable.
36
Table of Contents
The Delaware Revised Uniform Limited Partnership Act provides
    that a limited partner may institute legal action (a
    "derivative" action) on a partnership's behalf to
    recover damages from a third-party when the general partner
    refuses to institute the action or where an effort to cause the
    general partner to do so is not likely to succeed. In addition,
    the statutory or case law may permit a limited partner to
    institute legal action on behalf of himself and all other
    similarly situated limited partners (a "class action")
    to recover damages from a general partner for violations of its
    fiduciary duties to the limited partners. In addition, we will
    not incur the cost of that portion of any insurance that insures
    any party against any liability the indemnification of which is
    prohibited under our partnership agreement;
provided,
    however,
that with respect to public liability insurance
    obtained by us in connection with any of our equipment, other
    assets, leases or business operations, our General Partner is
    permitted to add itself and its affiliates as additional
    insureds thereunder so long as, and to the extent that, our
    General Partner or its affiliates pays for the resulting
    incremental premium costs. For this purpose, "public
    liability insurance" includes insurance that would cover
    damage to property or personal injury to non-affiliated persons
    incurred during the performance of services related to us and
    our operations.
37
Table of Contents
MANAGEMENT
Our
    General Partner
Our General Partner is SQN AIF III GP, LLC, a Delaware limited
    liability company with offices at 48 Wall Street,
    24
th
Floor, New York, New York 10005. Our General Partner was formed
    in March 2010. The sole member of our General Partner is SQN
    Capital Management, LLC, our Investment Manager. As of the date
    of this prospectus, the executive officers of our General
    Partner are as follows:
Name
Age
Position
Neil A. Roberts
61
Chairman
Jeremiah J. Silkowski
35
President and Chief Executive Officer
David Charles Wright
52
Chief Financial Officer
Timothy R. Spring
52
Senior Vice President — Asset Management
Michael C. Ponticello
31
Senior Vice President and National Sales Manager
Hugh Shelmerdine
58
Chief Credit Officer
Michael Miroshnikov
27
Vice President
Biographical information regarding the officers and directors of
    our General Partner follows the table setting forth information
    regarding our Investment Manager's current managing
    directors and executive officers.
Our
    Investment Manager
Our Investment Manager is SQN Capital Management, LLC, a
    Delaware limited liability company with offices at 48 Wall
    Street, 24th Floor, New York, New York 10005. Our Investment
    Manager was formed in December 2007 to act as the manager of
    direct participation programs and its managing directors and
    executive officers will be responsible for selecting, managing
    and disposing of our assets, equipment and leases. In this
    regard, after we receive the minimum offering proceeds and hold
    our initial closing, we intend to enter into the Management,
    Origination and Servicing Agreement under which our Investment
    Manager will originate leases and other investments for us, and
    our Investment Manager will service our portfolio of leases and
    other investments. Our Investment Manager had a Net Worth as of
    December 31, 2009, its most recent fiscal year end, in
    excess of the NASAA Equipment Leasing Guidelines minimum of
    $1,000,000. Our Investment Manger is responsible for all aspects
    of the performance by its affiliates of services necessary to
    our operation and for the facilities, personnel, equipment,
    financial and other resources used by its affiliates in the
    performance of those services.
As of the date of this prospectus, the managing directors and
    executive officers of our Investment Manager are as follows:
Name
Age
Position
Neil A. Roberts
61
Chairman, Managing Director
Jeremiah J. Silkowski
35
President, Chief Executive Officer and Managing Director
David Charles Wright
52
Chief Financial Officer
Timothy R. Spring
52
Senior Vice President — Asset Management
Michael C. Ponticello
31
Senior Vice President and National Sales Manager
Hugh Shelmerdine
58
Chief Credit Officer
Michael Miroshnikov
27
Vice President
Neil A. Roberts
has served as Managing Director of our
    Investment Manager since December 2007 and Chairman since April
    2010 and has served as Chairman of our General Partner since
    March 2010. Mr. Roberts has been Managing Director of
    Summit Asset Management Limited, a premier London based asset
    finance company, since forming the company in 1992. From 1996 to
    1998, Mr. Roberts was Chairman of ICON Capital Corp., one
    of the largest privately held equipment leasing and asset based
    income fund managers in
38
Table of Contents
the United States. From 1988 to 1991, Mr. Roberts served as
    CEO of Parc Limited, a leading UK technology vendor finance
    company and under his leadership grew it threefold. From 1984 to
    1988, Mr. Roberts was a Managing Director of HSBC, where he
    was responsible for its UK and ultimately European asset finance
    operations. From 1972 to 1984, Mr. Roberts worked for
    Chemical Bank and its subsidiaries in various capacities,
    including Deputy General Manager of its Italian leasing
    subsidiary, Vice President and European Credit Manager and
    Managing Director of its UK asset finance subsidiary.
Jeremiah J. Silkowski
has been President and Chief
    Executive Officer of SQN Capital Corporation, a company that
    provides asset-backed and lease-based financing to multiple
    under-served market sectors including the off-shore oilfield
    services industry, since its inception in January 2006.
    Mr. Silkowski has served as Managing Director of our
    Investment Manager since December 2007 and President and Chief
    Executive Officer since April 2010 and has served as President
    and Chief Executive Officer of our General Partner since
    March 2010. Prior to forming SQN Capital Corporation,
    Mr. Silkowski spent 13 years in various capacities
    with ICON Capital Corp., including Senior Vice President of
    Operations and head of Portfolio Management, Remarketing, Cash
    Management, Tax, Middle Market Acquisitions, and Structured
    Finance. Mr. Silkowski was responsible for the
day-to-day
management of over $1.0 billion dollars of assets including
    two securitizations and eight public partnerships.
    Mr. Silkowski received his B.A. in Economics from New York
    University.
David Charles Wright
has been the Chief Financial Officer
    of our Investment Manager since December 2007 and of our General
    Partner since March 2010. Mr. Wright is a Certified Public
    Accountant with more than 25 years of accounting and audit
    experience with top level finance and leasing companies
    throughout the United States. Mr. Wright has held senior
    positions with both public and private reporting requirements.
    Mr. Wright has been an SEC Audit Manager and the Senior
    Vice President and Controller of three public reporting
    partnerships and three limited liability companies with more
    than 30,000 investors, approximately $921,000,000 of total
    assets under management and approximately $153,000,000 in total
    revenue. Mr. Wright is a member of the American Institute
    of Certified Public Accountants, the New York State Society of
    Certified Public Accountants, and the SEC Practice
    Section Committee of the New York State Society of
    Certified Public Accountants.
Timothy R. Spring
has served as Senior Vice
    President — Asset Management of our Investment Manager
    since April 2010, and of our General Partner since March 2010.
    Previously from December 2007 to March 2010, Mr. Spring served
    as Vice President — Asset Management of our Investment
    Manager. Since 1993, Mr. Spring has served as Commercial
    Director of Summit Asset Management Limited, responsible for
    transaction finance and documentation, residual investment
    policy and asset management. From 1996 to 1998, Mr. Spring
    was a Director of ICON Capital Corp. From 1983 to 1989,
    Mr. Spring was Commercial Manager at HSBC's equipment
    leasing subsidiary and from 1989 to 1993, Commercial Manager and
    ultimately Commercial Director at Kleinwort Benson's IT
    leasing subsidiary.
Michael C. Ponticello
has served as Vice President of SQN
    Capital Corporation since April 2007 and was responsible for the
    establishment and development of the equity-raising arm of the
    company through our Investment Manager. Mr. Ponticello has
    also served as Senior Vice President and National Sales Manager
    of our Investment Manager since December 2007, and of our
    General Partner since March 2010. From June 2001 until December
    2004, Mr. Ponticello served as a Management Associate of
    ICON Capital Corp., from December 2004 to January 2006, he
    served as Regional Marketing Director of the Southwest for
    ICON Securities Corp. and from March 2006 to April 2007, he
    served as Assistant Vice President of Operations at ICON Capital
    Corp. responsible for the management and monitoring of
    eight-investment funds with assets in excess of
    $1.0 billion. Mr. Ponticello received his B.B.A. from
    the Zicklin School of Business at Baruch College.
Hugh Shelmerdine
has served as Chief Credit Officer of
    our Investment Manager since October 2009 and of our General
    Partner since March 2010. From 1977 to 1985,
    Mr. Shelmerdine served as a Director of Chemco Equipment
    Finance Ltd., the asset finance subsidiary of Chemical Bank.
    From 1985 to 1995, Mr. Shelmerdine served as a Director of
    Concord Leasing, the asset finance subsidiary of HSBC, from 1996
    to 1997, served as Director Vendor Finance of Nikko Bank (UK)
    plc. From 1997 to 1999, Mr. Shelmerdine
39
Table of Contents
served as Senior Account Manager of de Lage Landen Leasing, the
    leasing subsidiary of Rabobank. From 2000 until 2006,
    Mr. Shelmerdine served as a Business Adviser of Business
    Link for London. From 2006 to 2009, Mr. Shelmerdine served
    as a Director of The Business Development Experience Ltd. The
    last two appointments were providing coaching, mentoring and
    business advice to business owners.
Michael Miroshnikov
has served as Vice President of our
    Investment Manager since April 2008 and of our General Partner
    since March 2010. Since March 2006, Mr. Miroshnikov also
    has served as Senior Analyst of SQN Capital Corporation. From
    October 2001 until May 2003, Mr. Miroshnikov was employed
    by ICON Capital Corp. where he served in an Operations
    Assistance capacity supporting its equipment leasing and income
    funds. Mr. Miroshnikov has developed a specific expertise
    in oil field services, energy and marine transportation
    companies and assets. Mr. Miroshnikov graduated Cum Laude
    with a B.B.A. in Investment Finance from the Zicklin School of
    Business at Baruch College and has received a Juris Doctorate
    degree from Brooklyn Law School. He also holds Series 7,
    24, and 63 licenses.
Investment
    Committee
Our Investment Manager's investment committee will review
    all transactions involving us that, in their judgment, are
    significant as well as potential conflicts of interest regarding
    the acquisition of an investment by us and another affiliated
    program. The current members of the investment committee are
    Messrs. Roberts, Silkowski, Miroshnikov, Spring, and
    Shelmerdine. Mr. Silkowski and Mr. Roberts will
    maintain ultimate investment discretion and will have to be in
    agreement on the funding of any transactions.
The members of the investment committee may change from time to
    time in the discretion of our Investment Manager. In addition,
    other executive officers of our Investment Manager may be called
    on by our Investment Manager to provide advice to the investment
    committee on an as needed basis. We will not pay fees to the
    members of our investment committee.
See the "Investment Objectives and Strategies" section
    of this prospectus beginning on page 45 for a discussion of the
    various services the investment committee will provide on behalf
    of us and our General Partner.
Code of
    Business Conduct and Ethics
Because we do not directly employ any persons, we rely on a Code
    of Business Conduct and Ethics adopted by our General Partner
    that applies to the principal executive officer, principal
    financial officer and principal accounting officer of our
    General Partner, as well as to persons performing services for
    us generally. You may request a copy of this code of ethics from
    our General Partner at SQN AIF III GP, LLC,
    48 Wall Street, 24th Floor, New York, New York 10005.
Compensation
We do not pay the officers or directors of our General Partner,
    our Investment Manager or their affiliates any compensation.
    However, we will pay our General Partner, our Investment Manager
    and their affiliates fees and reimburse certain of their
    expenses incurred on our behalf as described in the
    "Management Compensation" section of this prospectus
    beginning on page 10. These expense reimbursements include
    reimbursing our General Partner, our Investment Manager and
    their affiliates for certain costs incurred on our behalf,
    including the cost of personnel, other than controlling persons
    of our General Partner, our Investment Manager and their
    affiliates, who will perform administration, accounting,
    secretarial, transfer and other services required by us. These
    individuals also will perform similar services for our General
    Partner, our Investment Manager or their affiliates and other
    affiliated investment programs, including our Investment
    Manager's prior equipment leasing and finance programs, as
    well as investment programs to be formed in the future by our
    General Partner and its affiliates. Our partnership agreement
    provides that expense reimbursements paid by us to our General
    Partner, our Investment Manager and their affiliates must be
    limited to the lesser of their actual cost or the cost of
    comparable services from third-parties. We expect that we will
    allocate the cost of compensation and benefits of our General
    Partner's officers, the officers and employees of
40
Table of Contents
our Investment Manager, and the officers and employees of their
    affiliates, excluding expenses allocable to their controlling
    persons, based on the amount of their business time spent on our
    business.
Change in
    Partnership Management
Our General Partner may withdraw as general partner, or be
    removed as general partner by our limited partners, under the
    circumstances described in the "Summary of Our Partnership
    Agreement — Withdrawal or Removal of Our General
    Partner" section of this prospectus beginning on
    page 83.
Affiliated
    Company
SQN Securities, LLC, the selling agent for this offering, is a
    Delaware limited liability company and a majority-owned
    subsidiary of SQN Capital Management, LLC, our Investment
    Manager. It anticipates that it will be registered as a
    broker-dealer with the SEC, and a member of Financial Industry
    Regulatory Authority ("FINRA") and the Securities
    Investor Protection Corporation.
41
Table of Contents
CAPITALIZATION
Our capitalization, as of the date of this prospectus and as
    adjusted to reflect the issuance and sale of the units offered
    hereby assuming (i) that we receive the minimum offering
    amount of $1.2 million, and (ii) that the maximum
    50,000 units are sold at the public offering price of
    $1,000 per unit is as follows:
As of
March 31,
Minimum
Maximum
2010
$1.2 Million
$50.0 million
Units ($1,000 per unit)
1
1,200
50,000
Total Capitalization
$
100
$
1,200,000
$
50,000,000
Less Estimated Organization and Offering Expenses
—
$
24,000
$
998,000
Net Capitalization
$
100
$
1,176,000
$
49,002,000
42
Table of Contents
OTHER
    PROGRAMS MANAGED BY OUR INVESTMENT MANAGER OR ITS
    AFFILIATES
Our Investment Manager and its affiliates previously sponsored
    two private equipment leasing and finance programs in the last
    10 years. SQN Alternative Investment Fund I, LLC
    ("SQN I") was created in December 2007 and our
    Investment Manager serves as its investment manager. SQN I had
    its final closing in March 2009, with total offering proceeds of
    approximately $7.0 million from 84 investors. SQN
    Alternative Investment Fund II, LLC ("SQN II")
    was created in April 2009 and our Investment Manager serves at
    its investment manager. SQN II anticipates that it will have its
    final closing in May 2010, with total offering proceeds of
    approximately $7.25 million from 97 investors.
According to their respective offering materials these private
    programs, which are still in their respective operating periods,
    expect to sell or otherwise dispose of all of their respective
    assets on an orderly basis and liquidate during the time periods
    set forth below, which are not binding on the programs under
    their respective partnership agreements:
•
SQN I —
during a four-year liquidation period
    beginning on February 12, 2011, and ending on
    February 11, 2015; and
•
SQN II —
during a four-year liquidation period
    beginning on April 15, 2012, and ending on April 14,
    2016.
Set forth below for SQN I and SQN II are charts of their
    respective equipment portfolios broken out by equipment type and
    by business type as of March 31, 2010. These charts will
    vary from time to time in each of those programs as investments
    in the portfolio mature and reinvestments are made. The charts
    below combine operating leases, full payout leases and secured
    financings for summary purposes.
SQN I
    Portfolio by Equipment Type
43
Table of Contents
SQN I
    Portfolio by Business Type
SQN II
    Portfolio by Equipment Type
44
Table of Contents
SQN II
    Portfolio by Business Type
Further information concerning SQN I and SQN II and their
    respective results of operations can be found in Appendix B
    to this prospectus.
INVESTMENT
    OBJECTIVES AND STRATEGIES
Principal
    Investment Objectives
Our principal objectives are to invest in business-essential,
    revenue-producing (or cost-saving) equipment and Other Physical
    Assets with substantial economic lives and, in many cases,
    associated revenue streams. Many of our investments will be
    structured as full payout or operating equipment leases. In
    addition, we intend to invest by way of participation agreements
    and residual sharing agreements where we would acquire an
    interest in a pool of equipment or other assets, or rights to
    that equipment or other assets, at a future date. We also may
    structure investments as project financings that are secured by,
    among other things, essential use equipment
and/or
assets. Finally, we may use other investment structures that our
    Investment Manager believes will provide us the appropriate
    level of security, collateralization, and flexibility to
    optimize our return on investment while protecting against
    downside risk. In most cases, the structure will include us
    holding title to or a priority position in the equipment or
    other asset.
Principal
    Investment Strategies
We will focus our investments in business-essential,
    revenue-producing equipment and other assets with high in-place
    value and long (relative to the investment term) economic life.
    We will acquire investments (i) originated and warehoused
    by certain affiliates of our Investment Manager;
    (ii) originated directly by us; or (iii) originated
    from brokers or other leasing/investment companies or banks.
Originating an investment involves, among other things,
    identifying a lessee or other end-user, inspecting the equipment
    or other asset, undertaking a business, credit, and industry
    review, projecting the residual value of the equipment or other
    asset, pricing the investment, and documenting the transaction.
    When we acquire investments from an affiliate of our Investment
    Manager, such affiliate will likely perform all of these
    originating services and fund the transaction directly. In this
    situation, subject to the NASAA Equipment Leasing Guidelines, we
    will purchase the investment in the same way that the
    investments have been sold to third parties which have
    historically yielded investors an above average return.
    Additionally, the affiliate will take a first loss position as a
    co-investor to our benefit. When we originate a transaction, our
    Investment Manager will perform these originating services on
    our behalf and we will fund the transaction directly.
45
Table of Contents
For equipment and other assets that have a minimum economic life
    of six to ten years, the typical investment term will be three
    to five years. Each investment will typically be a "hell or
    high water," triple-net lease that requires the lessee or
    other counterparty to bear all tax, maintenance, insurance, and
    other costs related to the lease or the operation of the
    underlying equipment or other asset. The contract provisions
    governing the investment will require that the end-user carry
    insurance covering all insurable damage that could occur to the
    equipment or other assets, including total loss insurance.
We will concentrate on transaction sizes below
    $10.0 million with a maximum equity investment of
    $3.0 million, or 10% of the total proceeds raised in this
    offering, whichever is higher. By doing so, we will be operating
    in areas with limited competition. We have made the decision to
    limit our size, in terms of the maximum offering proceeds, to
    $50.0 million so that we may be selective in choosing our
    investments. We will focus our investments on specific
    industries and asset types where the members or officers of our
    Investment Manager have extensive expertise and a deep and well
    developed sales and remarketing network. Our Investment Manager
    will focus on identifying equipment and other assets that are
    considered essential use or core to a business or operation in
    the agricultural, energy, environmental, medical, manufacturing,
    technology, and transportation industries. Our Investment
    Manager also may identify other assets or industries that meet
    our investment objectives such as modular accommodations.
We will invest in a combination of single investor and leveraged
    transactions in the United States, Canada and the European
    Union. We intend to invest in as much as $200.0 million of
    original equipment or other asset cost. Single investor
    transactions will generally be leases in which we will pay 100%
    of the equipment or other asset cost. In a single investor
    lease, we receive 100% of the lease payments over the term of
    the lease. On leveraged transactions, we will use debt, by way
    of receivable sales, to finance a portion of the equipment or
    other asset cost. In such cases, we may pledge all or a portion
    of the contractual payments of the end-user to the lender to
    amortize the debt. At the end of the original term, the debt
    should be paid off in full and we should hold unencumbered title
    to the equipment or other assets. Using leverage of this nature
    allows us to invest in larger, higher-yielding transactions
    while minimizing our risks and increasing our investment
    diversification. In both single investor and leveraged
    transactions, it is our objective that the original term
    payments pay down all or substantially all of the original
    equipment or other asset cost and, in some cases, with a rate of
    return before the residual value is taken into account. The
    residual value is the projected market value of the equipment or
    other asset at the end of the original term.
At the end of the original term of most leases or other form of
    investment, the end-user will have three options:
(1) Extend the term for an agreed upon rental amount which
    may be for the same amount or a discounted amount. In some
    cases, such as in vessels or modular building transactions, the
    extension rate may be higher than the original rate.
(2) Purchase the equipment or other assets from us at an
    agreed price.
(3) Return the equipment or other assets to us which
    includes, among other things, records, manuals, power cables,
    and all components. There are also certain usage standards that
    have to be met otherwise the end-user must pay a stipulated loss
    amount for the condition of the equipment or other assets. In
    many cases it is not economical for them to return the equipment
    or other assets.
Some contracts will have pre-negotiated end term provisions
    setting the price for an extension or sale. Many contracts will
    be open-ended or have fair market value ("FMV") end
    term provisions. In all cases, this is taken into account in
    pricing the investment.
We will realize the majority of our returns from the residual
    value of the equipment or other assets. Based on historical
    experience, our Investment Manager expects to begin to
    distribute returns on capital between years three and five and
    expects us to conclude within five to seven years from the first
    closing date of this offering.
As discussed above, certain affiliates of our Investment Manager
    will regularly originate transactions and offer to sell all or
    part of such transactions to us either individually or as a
    portfolio depending upon, among
46
Table of Contents
other things, the appropriateness of the proposed investment for
    us (as determined by our Investment Manager, in its sole
    discretion) and the amount available for investment by us at
    such time. During the Operating Period, we will have a right of
    first refusal, subject to the existing rights of SQN I and SQN
    II (which will be in different stages in their respective
    investment cycles), on all transactions originated by affiliates
    of our Investment Manager that meet our investment objectives.
In the event an affiliate of our Investment Manager proposes to
    sell an asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) to us, we may
    purchase such asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) from our
    General Partner or any of its affiliates (but not including an
    affiliated program) if:
•
our General Partner determines, in its sole discretion, that
    making the investment is in our best interests;
•
the investment is purchased by us a purchase price that does not
    exceed the sum of:
-
the cost to our General Partner or its affiliate of acquiring
    and holding the investment (as determined under GAAP and as
    adjusted for any income received, capital or investment returned
    and reasonable and necessary expenses paid or incurred while
    holding the investment); plus
-
any compensation to which the General Partner and any affiliate
    of our General Partner is entitled to under our partnership
    agreement;
•
there is no difference in the interest terms of any indebtedness
    secured by the investment at the time it is acquired by our
    General Partner or its affiliate and the time the investment is
    acquired by us, although there may be different interest terms
    if the applicable financing is provided through a different
    credit facility or different lender;
•
neither our General Partner nor any affiliate of our General
    Partner receives any other benefit, other than compensation
    permitted by our partnership agreement, as a result of us
    purchasing the investment; and
•
at the time of transfer of the investment to us, our General
    Partner or its affiliate had held the investment on a temporary
    or interim basis (generally not longer than six months) for
    the purposes of:
-
facilitating the acquisition of the investment by us; or
-
any other lawful purpose related to our business.
Our Investment Manager intends to structure each of our
    investments at a price that it determines will provide a present
    value return to us, including the estimated residual value of
    the equipment which may or may not be fully realized by us.
    However, our Investment Manager may not be successful in
    achieving our investment objectives.
We plan to make semi-annual distributions of cash to you and our
    other partners, if, in our Investment Manager's opinion,
    such distributions are in our best interests. We expect to begin
    distributions in the sixth month of the Operating Period and
    thereafter, every six months during the Operating Period.
    However, we cannot assure you of the following:
•
that our distributions to you and our other limited partners
    will be in any specific amount; or
•
when our distributions to you and our other limited partners
    will be made.
We also expect that during the early years of our operations our
    distributions to you and our other limited partners will be
    substantially tax-deferred.
See the "Risk Factors," and "Income, Losses and
    Distributions — Timing of Distributions" sections
    of this prospectus.
47
Table of Contents
Equipment
    and Other Assets for Lease to End–Users
We will purchase equipment and other assets for lease to
    end-users. We expect that the cost per unit of the equipment or
    other asset we purchase generally will range from $50,000 to
    $3.0 million and the average per unit cost will be between
    $400,000 and $1.5 million.
In addition to other investments, we will enter into both full
    payout leases and operating leases.
•
Full payout leases generally are leases under which the rent
    over the initial term of the lease will return our invested
    capital plus an appropriate return without consideration of the
    residual value, and where the lessee may acquire the equipment
    or other assets at the end of the lease term.
•
Operating leases generally are leases under which the aggregate
    noncancellable rental payments during the original term of the
    lease, on a net present value basis, are not sufficient to
    recover the purchase price of the equipment or other assets
    leased under the lease.
We are not limited as to type of leases we may enter into and,
    as a result, either operating leases or full payout leases could
    possibly constitute most of our portfolio.
Equipment
    and Other Assets Already Subject to Lease
We also may acquire portfolios of equipment or other assets
    subject to existing leases from our General Partner's or
    our Investment Manager's respective affiliates or
    independent third-parties. We anticipate that at the end of this
    offering our purchased portfolio of existing leases probably
    will not exceed 30% of our total investments. While the per unit
    cost range and average per unit cost for the equipment or other
    asset will depend on the existing portfolios of leases we may
    select for purchase, we anticipate that these costs may be less,
    and possibly materially less, than the cost of investments that
    we originate directly or through affiliates of our General
    Partner or our Investment Manager.
Types of
    Equipment and Other Assets
We expect that we will focus on equipment and other assets to
    invest in that are essential for businesses to conduct their
    operations so that the end–users will be highly motivated
    to make the required payments in order to keep the equipment or
    other assets in place during the initial term and afterward. We
    will particularly focus on business-essential equipment or other
    assets in the following areas:
Equipment/Asset Category
Example Equipment/Asset
Agricultural
Intermediate bulk containers that are used to transport and
    store fluids and bulk materials
Medical
Magnetic resonance imaging machines
Manufacturing
Machine tools and production line facilities
Technological
IT infrastructure
Transportation
Marine vessels
Energy
Hydro-electric turbines
Environmental
Waste management equipment; Anaerobic digestion
Other
Modular accommodations
Market
Equipment leasing and asset finance are methods by which
    companies access capital to sustain, grow, or improve their
    businesses and operations. Often, equipment leasing provides
    companies with the lowest cost means to acquire revenue
    generating or other business essential assets. Companies choose
    to lease or finance assets for a variety of different reasons
    including, but not limited to, cash flow management,
    preservation of working capital, off balance sheet treatment,
    the ability to pass the cost off to customers,
and/or
flexibility of capital equipment management.
48
Table of Contents
Industry
    Participants and Segments
We group domestic lease providers into the four major categories
    set forth below:
•
Banks —
companies that are either majority
    owned by, or affiliated with, a bank.
•
Industrial —
companies that are majority owned
    by an industrial or non-financial services parent company.
•
Independent —
public or privately owned and
    operated finance companies that offer leases or loans directly
    to businesses and are not affiliated with any particular
    manufacturer or dealer.
•
Captive —
companies that are primarily engaged
    in supporting the financing or leasing of a parent
    company's products.
Industry
    and Market Data
The industry and market data contained in this prospectus are
    based on independent industry publications, reports by
    governmental agencies or market research firms or other
    published independent sources and, in each case, are believed by
    us to be reasonable estimates. However, industry and market data
    is subject to change and cannot always be verified with complete
    certainty due to limits on the availability and reliability of
    raw data, the voluntary nature of the data gathering process and
    other limitations and uncertainties inherent in any statistical
    survey. We have not independently verified market and industry
    data from third-party sources. In addition, consumption patterns
    and customer preferences can and do change. As a result, you
    should be aware that market share, ranking and other similar
    data set forth herein, and estimates and beliefs based on that
    data, may not be verifiable or reliable. The industry and market
    data sources are publicly available and were not prepared for
    our benefit or paid for by us, nor were they paid by or prepared
    for the benefit of our General Partner's or our Investment
    Manager's affiliates.
Equipment
    Leasing Figures
The following figures provide an overview of features of the
    equipment leasing industry:
•
Annual world leasing volume is in excess of
    $760 billion.
1
•
North America comprises approximately 38.0% of annual world
    leasing volume, Europe 41.1% and Asia
    14.7%.
1
•
The top 15 countries, measured by way of annual leasing volume
    (in parentheses), are as follows: U.S.($188 billion),
    Germany ($80 billion), Japan ($63 billion), Italy
    ($45 billion), France ($45 billion), Russia
    ($34 billion), Spain ($30 billion), Brazil
    ($29 billion), Canada ($25 billion), United Kingdom
    ($25 billion), Poland ($16 billion), Sweden
    ($12 billion), Netherlands ($12 billion), Switzerland
    ($12 billion) and Australia ($11 billion).
•
Since 1988, the global aggregate annual leasing volume has grown
    from $194 billion to
    $760 billion.
1
•
In 2008, U.S. business investment in equipment and software
    has grown to an estimated $1.159 trillion, $657 billion of
    which was leasing
    volume.
2
1
Source:

    World Leasing Yearbook 2009, Euromoney Yearbooks, as of 2007.
2
Source:

    Equipment Leasing and Finance Association 2009 Annual Report.
Competitive
    Conditions
Our investment strategy is based on the fundamental principles
    of asset-backed finance. Our competitive advantage lies in our
    approach to equipment leasing and asset finance. Other companies
    have one of two investment strategies depending on their cost of
    capital. Companies such as GE, CIT, and major banks make lease
    investments based on low risk credit score models on specific
    equipment only. These companies earn low margins but do
    tremendous standardized volume and are often tax driven. Private
    leasing companies with higher costs of capital purchase leases
    in the secondary market from banks and other institutions when
    their
49
Table of Contents
tax advantages have run their course to the original lessor.
    Leasing companies with a higher cost of capital generate profits
    through their expertise in residual pricing by buying these
    leases based on different assumptions of the residual value.
We approach leasing as an innovative financing vehicle to
    provide growth capital to strong management teams with solid
    business models in need of revenue producing assets. We take the
    time to understand the underlying business in addition to having
    an existing expertise in the specific equipment being financed.
    We are not restricted to formulaic, cookie-cutter leases. We
    take a private equity-like approach to investing in businesses
    and therefore target private equity-like yields.
By maintaining a small fund size and working with the equipment
    expertise of our affiliates, we will be investing in
    opportunities not sufficiently served by other leasing companies
    and banks simply because the detail-specific nature of the
    investments and the amount of capital the other companies need
    to put to work does not make it an efficient market for them to
    invest in.
Our strategy is effective in all market conditions. When access
    to the inexpensive capital is limited, leasing provides a less
    capital intensive way for business owners to acquire equipment.
    When business cycles are strong, equipment leasing increases
    with the growth of businesses.
Leasing
    and Financing Strategies
We believe the key factors in establishing and maintaining our
    portfolio of equipment, other assets and leases are as follows:
•
Origination —
We expect our Investment Manager
    (directly and through its affiliates) and possibly independent
    third-parties, will originate all of our investments. See
    "Management, Origination and Servicing Agreement,"
    below. Through an internal sales force, our Investment Manager
    and its affiliates will originate transactions through an
    established network of end-users that include small private
    businesses, publicly listed entities, international
    organizations, colleges and universities, hospitals,
    governments, municipalities, banks, investor groups, other
    leasing and finance companies and individuals. An increasing
    portion of new business will be generated from vendors and
    manufacturers with which our affiliates have established, are
    establishing, or will establish proprietary relationships as a
    funding source. We also will originate transactions from the
    existing customers of our affiliates and by referral.
•
Underwriting —
Our Investment Manager along
    with other affiliates of our General Partner will service all of
    our investments. Primary underwriting on all foreign investments
    and secondary underwriting on certain U.S. transactions
    will be conducted by Summit Asset Management Ltd., an affiliate
    of our Investment Manager and General Partner located in the
    United Kingdom.
Overview
    of our underwriting policies and procedures
Our Investment Manager will be underwriting transactions from a
    diverse number of sources to a wide range of end-users
    attracting a premium return that reflects the nature of the
    underlying risks as well as the complexity of the transactions.
    The investment committee of our Investment Manager will assess
    risk with the intention that transactions are underwritten for
    the benefit of the portfolio within the specification and
    characteristics of the portfolio and with the intention of
    achieving our stated investment objectives.
Investments will be made in equipment and equipment leases but
    also may be made in other equipment and other physical asset
    related transactions that allow for the direct or indirect
    participation in the benefits and risks of ownership or usage.
    Such transactions may include but are not limited to equipment
    trading, residual sharing agreements, forward purchase
    agreements, investments in companies which lease equipment,
    participation agreements, equipment purchase options, and other
    transactions involving physical assets and equipment.
The key elements of risk will be identified and mitigation of
    those risks will be sought to secure an acceptable risk reward
    ratio as determined by the investment committee of our
    Investment Manager.
50
Table of Contents
The policy and procedures identifies the ways that we will seek
    to minimize the risk from each transaction while enabling us to
    meet our strategic objectives.
Summary
    of Policy
It is the intention of the policy to ensure that there is a mix
    of risk that will not create an imbalance of exposure for us in
    any industry, asset, or credit. Individual credit exposure to a
    single legal body shall not exceed 10% of our total equity
    raised or $3.0 million whichever is the greater. There
    shall be no greater than 35% of total equity raised invested in
    a single industry. The normal investment period is expected to
    be between 36 and 60 months but in no event shall exceed
    84 months.
All transactions must be clearly summarized enabling the
    investment committee of our Investment Manager to understand:
•
the structure of the transaction;
•
the source of the transaction;
•
the documentation;
•
the equipment or other assets being financed and the security
    they represent;
•
how the equipment or other assets are to be acquired;
•
the amount of residual risk within the transaction and the
    expected exit route or how the residual will be recovered;
•
the return that we anticipate from the transaction;
•
how the counterparty expects to benefit from the transaction;
•
the risks that are inherent within the transaction;
•
how the counterparty expects to be able to repay all monies due
    under the transaction;
•
any additional security that is being made available to support
    the transaction;
•
any third party security interests that may affect the equipment
    or other assets being financed; and
•
all other relevant information.
Financial
    Information
The investment committee of our Investment Manager must have
    sufficient financial information on the lessee, guarantor or any
    other participant or counterparty within the transaction to
    enable it to make an informed decision on the ability of the
    parties to be able to perform their obligations required within
    the transaction. The investment committee of our Investment
    Manager typically requires the following financial information:
•
if available, audited financial statements for the last two
    years;
•
unaudited financial statements for the latest completed quarter;
•
budget or forecast for the latest fiscal year;
•
confirmation that current customers are up to date with their
    payments or proposals clearly demonstrating how arrears will be
    brought up to date;
•
details of current levels of exposure within existing
    transactions aggregated with the new proposal; and
•
details of existing credit facilities, the remaining
    availability and any financial covenants affecting the
    counterparty, lessee, guarantor, or other parties.
51
Table of Contents
General
    Information
Additional information must also be provided, when relevant, to
    assist in our Investment Manager's assessment of the
    potential creditworthiness of a lessee or other counterparty
    including:
•
its structure;
•
its management structure and an overview of the experience of
    the key members of the management team;
•
an up to date business plan;
•
its marketing plan and any intelligence on its market share,
    market penetration and major competitors;
•
an analysis of its strengths, weaknesses, opportunities, and
    threats;
•
an overview of its customer base; and
•
details of any recent press or internet coverage.
Summary
    of Procedure
Proposal Format
A proposal for all transactions should be presented for credit
    underwriting in a standard and consistent format containing all
    relevant information and a supporting summary advocating the
    transaction.
Searches
Searches will be undertaken for all companies other than for
    widely followed listed companies. Similarly, key directors will
    be checked and verified. This process should also be applied to
    equipment suppliers. In the event of any cash payments being
    made within the structure of the transaction, full compliance
    with the Money Laundering Regulations must be undertaken and the
    identities of any counterparty must be established and
    documented.
Approval
All transactions must be approved by vote of the investment
    committee of our Investment Manager. Jeremiah Silkowski and Neil
    Roberts will maintain ultimate investment discretion and will
    have to be in agreement on all transactions.
Site Inspection
All customers should be visited, at least once, at their
    premises either prior to the first drawdown or by way of asset
    inspection before funding.
Reviews
After the first anniversary of the funding of a transaction or
    the production of the final accounts of the company whichever is
    the later, a review of its or any guarantor's
    creditworthiness will be undertaken. For transactions of three
    years or less one such review will be undertaken and for
    transactions of a longer duration a review will be undertaken on
    the second anniversary. The review summary shall recommend if
    any further reviews should be undertaken. Transactions that
    become delinquent in their payment of rentals to us for more
    than 30 days will be subjected to a formal review. Reviews
    not withstanding, all customers and credits will be continuously
    monitored by way of press tracking and industry intelligence.
•
Residual realization —
One of the main tenants
    of our investment strategy is to write original term contracts
    for a period less than the economic useful life of the equipment
    or other asset. The result of this approach leads to a high
    probability that the equipment or other asset will stay in place
    at the end of the initial term. The equipment or other asset is
    said to have "high in-place value." As part of the
    same strategy, when possible, we set original terms against
    other factors of the end-user's business. For example, we
    would write a 36 month IT infrastructure lease for
    equipment that has a 48 month software contract attached,
    thereby assuring a high probability that we will receive a
    minimum one year lease extension. Another example, we may write
    a 48 month contract to finance furniture and fixtures
52
Table of Contents
against an underlying landlord/tenant lease of our end-user of
    60 months. Some of the ways that we realize residual value
    are:
-
Automatic billing extension —
Our lease
    documentation will require the lessee to provide notice before
    the lease matures in order to arrange for disposition of the
    equipment or other asset. If the lessee does not provide this
    notice, then they will automatically be billed for continued use
    until proper notice is delivered.
-
Re-leasing to lessee —
We anticipate that a
    significant amount of our equipment and other assets will be
    re-leased to the current lessee at the end of the initial lease
    term.
-
Sold in place to lessee —
We anticipate that we
    will sell the majority of our equipment and other assets in
    place to the original lessee at the end of its lease, re-lease
    or automatic billing extension period.
-
Resale market —
On a limited basis, we may sell
    equipment and other assets that are not sold in place to the
    lessee at the end of its lease, re-lease or automatic billing
    extension period either to the original vendor or to a variety
    of used equipment dealers or other end-users.
We believe successful realization of residuals at the end of a
    lease term depends on an accurate residual value assessment at
    the beginning of a lease. Our Investment Manager, as servicer of
    our leases, will make residual value assessments on our behalf
    using information from a number of sources, including:
-
secondary market publications;
-
interviews with manufacturers and used equipment dealers;
-
auction sales guides;
-
historical sales data;
-
industry organizations;
-
valuation companies;
-
ongoing communications with the end-users; and
-
the prior experience of our Investment Manager's management
    as to propensity to re-lease or be sold in place.
Based on its analysis of this information, our Investment
    Manager will establish a residual value for the end of each term
    for each type of equipment or other asset. However, as to any
    particular piece of equipment or other asset, our Investment
    Manager may not be able to re-lease or sell the equipment or
    other asset on our behalf at the end of the original lease term
    at a rate or price that will provide us the residual value our
    Investment Manager estimated on that equipment or other asset.
Our Investment Manager's collections policy is designed to
    identify payment problems early enough to permit it to address
    delinquencies in our leases quickly and, when necessary, to act
    on our behalf to preserve our interest in the equipment or other
    assets.
•
Lease provisions.
The terms and provisions of
    each lease will vary depending on a number of factors, including:
-
the type and intended use of the equipment or other assets;
-
the business, operations and financial condition of the lessee;
-
any regulatory considerations; and
-
the tax consequences and accounting treatment of the lease
    transaction.
53
Table of Contents
Certain terms and provisions, however, generally will be
    included in all of our leases. For example, we anticipate that
    each lease will hold the lessee responsible for:
-
paying rent without deduction or offset of any kind;
-
bearing the risk of equipment or other asset loss and
    maintaining both casualty and liability insurance on the
    equipment or other asset;
-
paying sales, use or similar taxes relating to the lease or
    other use of the equipment or other asset;
-
paying all miscellaneous charges such as documentation fees,
    late charges, charges for returned checks and similar fees and
    costs;
-
indemnifying us against any liability resulting from any act or
    omission of the lessee or its agents related to the equipment or
    other asset;
-
maintaining the equipment or other asset in good working order
    and condition during the term of the lease;
-
notifying us and obtaining our approval for moving the equipment
    or other asset; and
-
requiring our prior written consent before assigning or
    subleasing the equipment or other asset.
Similar provisions will be included in our other investment
    documentation.
Our investments will usually have terms ranging from 36 to
    60 months. We anticipate that the average term over our
    aggregate portfolio will range from 42 to 54 months. We
    also anticipate that most of our investments will not be
    cancelable during their initial terms. However, we may agree to
    allow cancellation of a lease if the lessee pays us sufficient
    compensation so that the cancellation will not prevent us from
    achieving our objectives. At the end of each lease term, the
    lessee may have the option to buy the equipment or other assets,
    or renew the lease, either at set prices or at prices tied to
    current fair market value.
•
Portfolio acquisition strategies.
We may
    purchase portfolios of equipment and other assets subject to
    existing leases. We anticipate that the principal sources for
    these portfolios will be:
-
international banks and investment banks;
-
other leasing companies;
-
regional and national commercial banks; and
-
captive finance companies of large manufacturers.
In evaluating a portfolio acquisition, we expect to consider the
    following factors:
-
the business objectives of the seller in selling the portfolio;
-
the amount of the equipment and other assets and the number of
    leases in the portfolio;
-
how the leases were originated, whether directly with the
    end-user or through vendors or brokers;
-
the portfolio characteristics, including geographic and lessee
and/or
borrower concentrations, equipment and other asset cost range,
    types of leases and the original and remaining terms of the
    leases;
-
the seller's credit decision process;
-
the seller's lease documentation and any material
    variations from industry practices;
-
the seller's servicing policies; and
-
the portfolio's aging, performance and default history,
    including the default history of other portfolios sold by the
    seller.
We also will consider other elements such as:
-
who the seller is and its overall industry reputation;
54
Table of Contents
-
the performance of other portfolios we may have acquired from
    the seller;
-
the effect of the acquisition on our own portfolio; and
-
credit enhancements available from the seller, such as
    guarantees or additional security.
If we then decide to pursue the portfolio acquisition, our
    Investment Manager will do a credit analysis of the entire
    portfolio, or financial analysis or other appropriate
    procedures. The results of our Investment Manager's
    analysis will be presented to our Investment Manager's
    investment committee which will decide which portfolios, if any,
    we will make an offer to acquire and the terms of our offer.
In acquiring portfolios of equipment or other assets subject to
    existing leases, we will seek portfolios that will be consistent
    with the types of credits, industries and equipment we will
    focus on in our direct equipment leasing and financing
    activities. However, because a portfolio is often sold only in
    its entirety, it is possible that a material portion of the
    equipment, other assets and the related leases in a portfolio
    offered to us will not conform to these criteria. We will
    consider a portfolio for acquisition only when:
-
at least two-thirds of the equipment leases, by book value,
    conform to our equipment type and market criteria; or
-
our Investment Manager's investment committee believes that
    the lessees are creditworthy and that such acquisition is
    strategically beneficial to meet our investment objectives.
Once we acquire a portfolio of equipment or other assets subject
    to existing leases, it will become part of our overall portfolio
    and subject to our Investment Manager's normal
    administrative processes and procedures as the servicer of our
    leases.
•
Transaction approval policies.
From time to
    time, our Investment Manager's investment committee, will
    set and if necessary revise standards and procedures for the
    review and approval of our equipment and other asset
    acquisitions, leases, participation and residual sharing
    agreements and other investments. The investment committee will,
    among other things:
-
determine whether to approve transactions and portfolio
    purchases;
-
determine whether to approve transactions that vary from
    standard credit criteria and policies;
-
resolve conflicts, if any, that may arise in the allocation of
    investments between us and our General Partner or among us and
    other programs managed by our General Partner or its affiliates
    as described in the "Conflicts of Interest and Fiduciary
    Responsibilities — Our General Partner, Our Investment
    Manager and Their Affiliates Will Engage in Activities That
    Compete With Us" section of this prospectus; and
-
advise our General Partner and our Investment Manager with
    respect to any other matters submitted to the investment
    committee of our Investment Manager for its evaluation, as
    determined in the discretion of our Investment Manager.
The current members of the investment committee are
    Messrs. Roberts, Silkowski, Miroshnikov, Spring, and
    Shelmerdine. Messrs. Silkowski and Roberts will maintain
    ultimate investment discretion and will have to be in agreement
    on the funding of any transactions.
Sales of
    Revenue Streams
In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments.
55
Table of Contents
Management,
    Origination and Servicing Agreement
After we receive our minimum offering proceeds and begin
    operations, we will enter into a Management, Origination and
    Servicing Agreement with our Investment Manager, and we may
    enter into agreements with other affiliates of our General
    Partner and our Investment Manager. Under these agreements, in
    order to facilitate our acquisition of equipment, other assets
    and leases, our General Partner, our Investment Manager or their
    affiliates may:
•
temporarily acquire equipment and other assets from
    third-parties on our behalf;
•
originate leases with third-parties on our behalf, including
    equipment and other assets directly leased to end-users and
    equipment and other assets already subject to leases;
•
negotiate and arrange portfolio acquisitions, participatory
    interests in assets or equipment;
•
negotiate and arrange vendor programs and residual sharing
    agreements; and
•
purchase existing portfolios of equipment leases.
We expect to purchase equipment and other assets from affiliates
    of our Investment Manager which will regularly originate
    transactions and offer to sell all or part of such transactions
    to us either individually or as a portfolio depending upon,
    among other things, the appropriateness of the proposed
    investment for us (as determined by our Investment Manager, in
    its sole discretion) and the amount available for investment by
    us at such time. During the Operating Period, we will have a
    right of first refusal, subject to the existing rights of SQN I
    and SQN II (which will be in different stages in their
    respective investment cycles), on all transactions originated by
    our affiliates that meet our investment objectives. We will
    acquire the equipment or other assets at a price no greater than
    the cost to the affiliates of our Investment Manager, as
    adjusted for intervening operations, plus compensation permitted
    under our partnership agreement and described in this prospectus.
In the event an affiliate of our Investment Manager proposes to
    sell an asset or portfolio of assets (or a participation
    interest therein or any other suitable investment) to us, it
    will do so under a structure that creates and maintains an
    alignment of interest between us and the affiliate.
We further expect that our Investment Manager will service all
    of our equipment, other assets and other investments under the
    Management, Origination and Servicing Agreement, including but
    not limited to:
•
underwriting;
•
receivables management;
•
re-leasing or selling the equipment or other assets after the
    termination of a lease or other contract; and
•
marketing our services.
The compensation to our Investment Manager, for providing these
    services will be from the fees and reimbursements described in
    the "Management Compensation" section of this
    prospectus. The form of Management, Origination and Servicing
    Agreement is included as an exhibit to the registration
    statement of which this prospectus is a part. See the
    "Where You Can Find More Information" section of this
    prospectus. We also may use independent third-parties to
    originate or service a portion of our equipment, other assets
    and other investments at competitive rates.
Changes
    in Investment Objectives and Policies
You and our other partners will have no right to vote on the
    establishment or implementation of our investment objectives and
    policies, all of which are the responsibility of our General
    Partner. However, our General Partner cannot make any material
    changes in our investment objectives and policies without the
    consent of partners owning a majority of the total outstanding
    units entitled to vote. Any material change proposed by our
    General Partner, or any non-material change made by our General
    Partner without the vote of a majority of units held by you and
    our other partners, will be subject to our General
    Partner's duty to act in our best interests. In proposing a
    material change, our General Partner will consider whether the
    proposed
56
Table of Contents
change will be beneficial to our ability to preserve, protect
    and return your capital or make regular distributions to you and
    our other partners.
INCOME,
    LOSSES AND DISTRIBUTIONS
Our taxable income, taxable loss and cash distributions will be
    allocated 99% to you and our other partners, as a group, and 1%
    to our General Partner until you and our other partners have
    received total Distributions equal to your and their capital
    contributions plus an 8% per annum, compounded annually,
    cumulative return on your and their capital contributions. After
    such time, all distributed Cash Available for Distribution and
    distributed Net Disposition Proceeds will be allocated 80% to
    you and our other partners as a group and 20% to our General
    Partner.
Allocations
    of Net Income, Net Loss and Distributions Among
    Investors
For any fiscal period, we will apportion net income, net loss
    and cash distributions allocable to you and our other investors,
    as a group, including our General Partner and its affiliates to
    the extent they purchase units, in the ratio that the number of
    units held by each investor, multiplied by the number of days
    during the period the investor owned the units, bears to the
    amount obtained by totaling the number of units outstanding on
    each day during that period.
We will not make distributions in kind, that is, of our non-cash
    assets, except possibly on our liquidation, and then only to a
    liquidating trust.
Timing of
    Distributions
Generally, we intend to make cash distributions on a semi-annual
    basis during the Operating Period. Since cash distributions are
    subject to the availability of funds, any anticipated
    distributions may not be made.
Reinvestments
    in Additional Equipment, Other Assets, Leases and Other
    Investments During the Operating Period
We have the right to invest our Net Disposition Proceeds during
    the Operating Period. Before we can reinvest our Net Disposition
    Proceeds, however, we must, at a minimum, distribute to you and
    our other partners an amount which satisfies the following
    requirement:
•
the amount distributed must include an amount of net proceeds
    from sales and refinancing of our equipment and other asset
    investments, if any, sufficient for you and our other partners
    to pay your federal, state and local income taxes, if any,
    resulting from those sales, based on our assumption that you and
    our other investors are in a 30% tax bracket.
Return of
    Unused Capital
We will return to you and our other partners, without interest,
    any of your net subscription proceeds that we do not commit to
    investment within 24 months after the beginning of this
    offering or that are not required as reserves.
•
"Net subscription proceeds"
means your original
    subscription amount minus the organization and Offering Expense
    Allowance and distribution expenses paid on the sale of your
    units to you.
Subscription proceeds will be considered committed for
    investment, and need not be returned, to the extent we have
    written agreements in principle, commitment letters, letters of
    intent, option agreements or similar contracts for the use of
    your net subscription proceeds in our investments. However, we
    must complete our investments under those agreements within an
    additional period of 12 months or return the uninvested
    funds to you and our other partners, except that the additional
    period for investments under those agreements using funds from
    Ohio investors will only be three months.
57
Table of Contents
Reserve
    Account and Sources of Funds for Distributions
Our partnership agreement requires us to establish an initial
    cash reserve for general working capital purposes of 1.0% of our
    offering proceeds. Any cash reserves used need not be restored,
    but if they are restored they may be restored from our operating
    revenues. We may distribute to you and our other partners any
    cash reserves that our General Partner determines are no longer
    required for our operations. However, our General Partner
    intends to make distributions primarily out of our:
•
cash from operations; and
•
cash from sales or refinancings.
We will not borrow for the purpose of making distributions.
58
Table of Contents
MATERIAL
    U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material
    U.S. federal income tax consequences of acquiring, holding
    and disposing of our units for an individual investor who is a
    U.S. citizen or resident. It is based upon the Internal
    Revenue Code of 1986, as amended (the "Code"), the
    U.S. Treasury regulations ("Treasury
    Regulations") promulgated thereunder, published positions
    of the Internal Revenue Service (the "IRS"), judicial
    decisions and other applicable authorities, all as in effect on
    the date hereof and all of which are subject to change or
    different interpretations (possibly with retroactive effect).
    This summary does not purport to deal with all of the federal
    income tax consequences applicable to the Fund or to all
    categories of investors, some of whom may be subject to special
    rules (including, without limitation, dealers in securities or
    currencies, holders of units held as part of a
    "straddle," "hedge," "constructive
    sale" or "conversion transaction" with other
    investments, U.S. persons whose "functional
    currency" is not the U.S. dollar, persons who have
    elected "mark to market" accounting, persons who have
    not acquired their units upon their original issuance, persons
    who hold their unit through a partnership or other entity which
    is a pass-through entity for federal income tax purposes, or
    persons for whom an unit is not a capital asset). The tax
    treatment for other investors, such as trusts, corporations,
    tax-exempt organizations and employee benefit plans, and foreign
    investors, are likely to differ significantly from the principal
    tax consequences outlined in this section.
See
"— Tax Treatment of Certain Trusts and
    Estates," "— Taxation of Tax-Exempt
    Organizations" and ''— Corporate
    Investors." State and local tax consequences may differ
    from the federal income tax consequences described below. See
    "— State and Local Taxation." The tax
    consequences of an investment in the Fund will depend not only
    on the nature of our operations and the then applicable federal
    tax principles, but also on certain factual determinations that
    cannot be made at this time, and upon a particular Limited
    Partner's individual circumstances. No advance rulings have
    been or will be sought from the IRS regarding any matter
    discussed in this prospectus.
Each prospective investor is urged to consult its own tax
    advisor with respect to the U.S. federal, state, local and
    foreign tax consequences of the purchase, ownership and
    disposition of our units.
Opinion
    of Counsel
Troutman Sanders LLP has acted as our counsel in this offering.
    In that capacity, we have received a tax opinion from Troutman
    Sanders LLP to the effect that, under the existing provisions of
    the Code, the Treasury Regulations promulgated thereunder and
    judicial decisions related thereto, we will be treated as a
    partnership, and not an association taxable as a corporation,
    for federal income tax purposes. No ruling has been or will be
    requested from the IRS, and no assurance can be given that the
    IRS will concur with the foregoing opinion. Counsel's
    opinion is based upon the facts described in this prospectus and
    upon additional facts that we provided to counsel about our
    operations and, among other things, our representations that:
    (1) our business will be conducted as described in this
    prospectus and (2) we will not elect to be classified as an
    association taxable as a corporation. Any alteration of our
    activities from the description we provided counsel may render
    the opinion unreliable. Furthermore, the opinion of counsel is
    based upon existing law, which is subject to change either
    prospectively or retroactively. The discussion below assumes
    that we will be treated as a partnership for federal income tax
    purposes
Troutman Sanders LLP will not prepare or review our income tax
    information returns, which will be prepared by or on behalf of
    our General Partner and our independent registered public
    accounting firm. Our General Partner will make a number of
    decisions on such tax matters as the expensing or capitalizing
    of particular items, the proper period over which capital costs
    may be depreciated or amortized and many similar matters. Such
    matters are usually handled by a limited partnership's
    general partner, often with the advice of independent
    accountants, and are usually not reviewed with counsel.
With regard to the tax consequences to you of an investment in
    our units, your use of our counsel's tax opinion letter is
    subject to the limitations of the Code and proposed Treasury
    Regulations set forth below.
With respect to any material federal tax issue on which our
    counsel has issued a "more likely than not" or more
    favorable opinion, its opinion may not be sufficient for you to
    use for the purpose of avoiding penalties relating to any
    substantial understatement of income tax under
    Section 6662(d) of the Code.
59
Table of Contents
Because we have entered into a compensation arrangement with
    Troutman Sanders LLP to provide certain legal services to us,
    including its tax opinion letter, such tax opinion letter was
    not written and cannot be used by you for the purpose of
    avoiding penalties relating to any reportable transaction
    understatement of income tax under Section 6662A of the
    Code.
The limitations set forth above on your use of our
    counsel's tax opinion letter apply only for federal tax
    purposes. They do not apply to your right to rely on our
    counsel's tax opinion letter and the discussion in the
    "Material U.S. Federal Income Tax Consequences"
    section of this prospectus under the federal securities laws.
Taxation
    of Limited Partnerships in General
Multi-owner business organizations generally are treated either
    as corporations or partnerships for tax purposes. For income tax
    purposes, an unincorporated entity that is not subject to a
    specific classification provision and that does not elect to be
    taxed as a corporation is treated as a partnership and, thus, a
    pass through entity, which is generally a tax reporting entity
    and not a taxpaying entity. This means that the individual
    owners, i.e., the partners, and not the entity, i.e., the
    limited partnership, pay tax on the entity's income and
    deduct the entity's losses. As a limited partner, you will
    report your share of our income, deductions, capital gains and
    losses on your federal income tax return. You also will pay
    taxes on your share of any taxable income or gains earned by us.
One tax advantage of being taxed as a partnership is that the
    federal government taxes our earnings only once. The limited
    partnership files an informational return with the IRS, but has
    no federal income tax liability. Because it pays no federal
    income taxes, the limited partnership has more cash to
    distribute to its investors. By contrast, the federal government
    effectively taxes a corporation's earnings twice. The
    corporation itself must pay taxes on its taxable income,
    reducing the amount available to distribute in dividends to its
    shareholders and the shareholders are then required to pay
    income taxes on the dividends they receive. Another tax
    advantage of partnerships is that, subject to the limitations
    discussed in this section, investors often can deduct their
    share of any losses the limited partnership incurs, whereas a
    corporation does not pass through deductible losses to its
    investors.
We believe that your most substantial tax risk from this
    investment would be for the IRS to treat us as a corporation for
    tax purposes, by classifying us as a "publicly traded
    partnership," under Code Section 7704(b). Were that to
    happen, we would have to pay tax on our income, reducing the
    amount of cash available for distribution to you; and you would
    not be able to deduct your share of any of our losses. Such a
    classification would adversely affect your after-tax return,
    especially if the classification were to occur retroactively.
    Furthermore, a change in our tax status would be treated as an
    exchange by the IRS, which could give rise to additional tax
    liabilities. See "— Publicly Traded
    Partnerships."
Your ability to deduct our losses is limited to the amounts that
    you have at risk in this investment. This is generally the
    amount of your investment, plus any profit allocations and minus
    any loss allocations and distributions. Additionally, your
    ability to deduct losses attributable to passive activities is
    restricted. Because our operations predominantly will constitute
    passive activities to an individual investor, you may only use
    our losses to offset passive income in calculating your tax
    liability. For example, passive losses may not be used to offset
    portfolio income, including interest income from our lending
    activities. See "— Deductibility of Losses;
    Passive Activity Losses, Tax Basis and "At-Risk"
    Limitation."
Leasing activities will generate a significant portion of our
    income. We expect that, for federal income tax purposes, our
    operating and leveraged leases will be treated as true leases
    and we will be considered the owner and lessor of the asset. The
    IRS may challenge the leases, however, and instead assert that
    they are sales or financings. This would result in the loss of
    your share of our cost recovery or depreciation deductions. See
    "— Tax Treatment of Leases."
We also plan to generate income by loaning money to acquirers of
    assets. We may be in the trade or business of making loans due
    to the manner in which we conduct our lending activities.
    However, our lending activities may not rise to the level of
    being in a trade or business, or the IRS could assert that was
    the case
60
Table of Contents
even if we believed that our lending activities did constitute a
    trade or business of making loans. Finally, we may generate our
    remaining income through the buying and selling of financial
    instruments. This type of activity is governed by many specific
    tax rules. See "— Tax Treatment of Lending
    Activities."
Publicly
    Traded Partnerships
The Code classifies some partnerships as "publicly traded
    partnerships" for tax purposes ("PTPs"). If we
    are classified as a PTP, we will be taxed as a corporation, the
    treatment of which is described above. A PTP is a partnership in
    which interests are traded on an established securities market
    or are readily tradable on either a secondary market or the
    substantial equivalent of a secondary market. The Code contains
    an exception, however, from being taxed as a corporation if the
    PTP derives 90% or more of its gross income from sources such as
    interest and dividends, rents from real property and gains from
    the sale of real property. Because of our leasing activities, we
    do not expect to qualify for this exception.
The legislative history of Code Section 7704 provides that
    a secondary market for interests in a partnership or the
    substantial equivalent thereof exists if investors are readily
    able to buy, sell or exchange their partnership interests in a
    manner that is comparable, economically, to trading on
    established securities markets. A secondary market is generally
    indicated by the existence of a person standing ready to make a
    market in the interests. The substantial equivalent of a
    secondary market will be deemed to exist if (i) interests
    in the partnership are regularly quoted by any person, such as a
    broker or dealer, making a market in the interests;
    (ii) any person regularly makes available to the public
    (including customers and subscribers) bid or offer quotes with
    respect to interests in the partnership and stands ready to
    effect buy or sell transactions at the quoted prices for itself
    or on behalf of others; (iii) if the holders of interests
    in the partnership have a readily available, regular and ongoing
    opportunity to sell or exchange their interests through a public
    means of obtaining or providing information of offers to buy,
    sell, or exchange interests; or (iv) buyers and sellers
    have the opportunity to buy, sell, or exchange interests in the
    partnership in a time frame that a market-maker would provide
    and prospective buyers have similar opportunities to acquire
    such interests. The legislative history of Code
    Section 7704 also indicates that a regular plan of
    redemptions or repurchases by a partnership may constitute
    public trading where holders of interests have readily
    available, regular and ongoing opportunities to dispose of their
    interests.
We do not intend to list our units on any market. Our units also
    will not be readily tradable on a secondary market, nor do we
    expect them to be in the future. Therefore, we will be a PTP
    only if our units become readily tradable on the substantial
    equivalent of a secondary market. Our units will not become
    readily tradable merely because we provide information to our
    partners regarding other partners' desires to buy or sell
    units to each other, or occasionally arrange transfers between
    partners. Moreover, our units will not become readily tradable
    if we create a qualified matching program, because transfers
    made through a qualified matching service are also not counted.
    A matching service qualifies for this exclusion if it satisfies
    all seven of the following conditions:
(1) it consists of a system that lists customers' bid
    and ask quotes in order to match sellers and buyers;
(2) deals occur either by matching the list of interested
    buyers to interested sellers or by bidding on listed interests;
(3) sellers cannot enter into a binding agreement to sell
    their interest until at least 15 days after information
    regarding their offering is made available to potential buyers;
(4) the closing of the sale does not occur until at least
    45 days after information about the offering is made
    available;
(5) the matching service only displays quotes that express
    interest in trading but do not represent firm commitments to buy
    or sell at the quoted price;
61
Table of Contents
(6) the seller's information is removed from the
    matching service within 120 days after the posting and, if
    removed for any reason other than a sale, no offer to sell from
    that seller is entered into the matching service for at least
    60 days; and
(7) the percentage of interests in the capital or profits
    transferred during the tax year (other than through private
    transfers) does not exceed 10% of the total interests in
    partnership capital or profits.
The IRS should not treat us as a PTP. This conclusion is based
    in part on our representation to counsel that our units will not
    be listed on any securities exchange and that, in accordance
    with Section 13.2 of our Partnership Agreement, our General
    Partner will refuse to recognize or give effect to any
    assignment of our units for any purpose (including recognizing
    any right of the transferee, such as the right of the transferee
    to receive directly or indirectly our distributions or to
    acquire an interest in our capital or profits) that it knows or
    has reason to know occurred on an established securities market
    or a secondary market (or the substantial equivalent thereof),
    within the meaning of Section 7704 of the Code and the
    Treasury Regulations and published notices promulgated
    thereunder, or to permit, recognize or give effect to any
    assignment of units that would result in the transfer of more
    than 2% of our units in any year other than those that our
    General Partner determines in good faith fall within certain
    safe harbor provisions under Treasury Regulation
Section 1.7704-1.
See "Transfer of Our Units/Withdrawal —
    Restrictions on the Transfer of Our Units and Withdrawal."
    This is pursuant to a "safe harbor" under Treasury
Regulation Section 1.7704-1
that provides that a secondary market or its equivalent will not
    exist if the sum of the interests in partnership capital or
    profits attributable to those partnership interests that are
    sold, redeemed, or otherwise disposed of during the
    partnership's taxable year and do not fall within other
    "safe harbor" provisions does not exceed 2% of the
    total interests in partnership capital or profits. In
    determining whether we satisfy the 2% safe harbor, redemptions
    of our units pursuant to Section 13.5 of our partnership
    agreement will be counted.
While we will use our best efforts to limit the type and number
    of transfers of units to those that will allow us to remain
    within the 2% safe harbor, we do not warrant that we will
    satisfy this safe harbor during each of our taxable years. It is
    conceivable that transfers of units could occur that would cause
    us to fall outside the safe harbor. In this regard, Treasury
Regulation Section 1.7704-1(c)(3)
states that failure to meet any of the safe harbors will not
    create a presumption that a secondary market or its equivalent
    exists for units. No assurances can be offered, however, that,
    if the amount and type of trading in our units were to fall
    outside the safe harbor, the IRS would not assert PTP status
    with respect to us.
If we are classified as a PTP, we would be treated for federal
    income tax purposes as a corporation unless, as noted above, 90%
    or more of our income were to come from certain "qualified
    sources." A significant portion of our business will be the
    leasing of personal (but not real) property, and income from
    this source is not "qualified." Thus, if we were a
    PTP, we would be taxed as a corporation. As described above, the
    major consequences of corporate tax treatment would be that, in
    addition to being taxed when distributed to you, our income
    would be subject to corporate income tax and our losses would
    not be passed through to you. If we are taxed as a corporation,
    and particularly if the PTP classification is made
    retroactively, corporate taxation would have a substantial
    adverse effect on your after-tax return on your investment.
    Furthermore, the IRS would treat a change in tax status from a
    partnership to a PTP taxable as a corporation as an exchange
    that would give rise to tax liabilities for our limited partners
    if our debt exceeded the tax basis of our assets at the time of
    the change in tax status — even though limited
    partners likely would not receive cash distributions from us to
    cover such tax liabilities. See "— Classification
    as a Partnership" and "— Sale or Other
    Disposition of Units." In addition, our distributions would
    be classified as portfolio income (dividends) rather than
    passive activity income, and thus, would not be eligible to be
    offset by passive activity losses attributable to us or other
    activities giving rise to passive activity losses. See
    "— Deductibility of Losses; Passive Activity
    Losses, Tax Basis and "At-Risk" Limitation."
Taxation
    of Current Distributions
As long as we are classified as a partnership for federal income
    tax purposes, we will not be subject to federal income tax.
    Rather, you will be required to report on your federal income
    tax return, and pay taxes with respect to, your share of our
    annual income, gains, losses, deductions and credits. You must
    pay tax on
62
Table of Contents
your distributive share of our income regardless of the amount
    of distributions you receive. See "— Our Income
    Versus Our Distributions." Our tax returns (information
    returns) will be prepared using the accrual method of
    accounting. Under the accrual method, we will recognize as
    income items such as rentals and interest as and when earned by
    us, even if the proceeds are not received until a subsequent tax
    year.
We will furnish you with all information about us necessary to
    prepare your federal income tax return not later than
    75 days after the end of each fiscal year. We also will
    file an annual information return with the IRS and will report
    our finances on an accrual basis using a December 31 fiscal
    year. Our income and loss for the taxable year will be allocated
    among our partners to take into account the varying interests of
    our partners during the year using any method permissible under
    Code Section 706 that our General Partner may select. If
    any partners hold their units for less than the entire year,
    they will be allocated income and loss using such method as
    selected by our General Partner that reflects such part-year
    ownership as is permissible under Code Section 706. For
    purposes of allocating income or loss among our partners, we
    will treat our operations as occurring ratably over each fiscal
    year — in other words, we will assume that income and
    loss are spread evenly over the fiscal year. Thus, if some
    limited partners are admitted after others, those limited
    partners admitted later may receive a smaller portion of each
    item of our net profits and net losses than the limited partners
    who were admitted earlier. Nevertheless, those limited partners
    still will be obligated to make the same capital contributions
    to us for their interests as the limited partners who were
    admitted previously. In addition, where a limited partner
    transfers units during a taxable year, a limited partner may be
    allocated net profits for a period for which such limited
    partner will not receive a corresponding cash distribution.
    Moreover, depreciation or other cost recovery with respect to
    our assets may create a deferral of tax liability during your
    ownership of our units. Larger cost recovery deductions in the
    early years may reduce or eliminate our taxable income in the
    initial years of our operations. This deferral, however, will be
    offset in later years, when smaller depreciation and cost
    recovery deductions will offset less of our income, while an
    increasing portion of our revenue must be applied to reduce debt
    principal. In later years, it is possible that taxable income
    will exceed cash distributions.
With the exception noted below, you will not be required to pay
    income tax on cash distributions that exceed your share of our
    taxable income; however, the excess will reduce your tax basis
    for your units. Your tax basis also will increase or decrease
    annually based on your allocable share of our income or loss for
    the year. Any cash distributions you receive that exceed your
    tax basis (after adjustment for your allocated share of our
    income or loss) will be taxable to you, generally as capital
    gains, provided the units are held by you as capital assets. Any
    reduction in your share of non-recourse liabilities, such as
    might arise as a result of a reduction of your percentage
    interest in us upon issuance of additional units to new or
    existing partners, will be treated as a distribution of cash to
    you. A portion of any distribution in excess of your tax basis,
    however, will be recharacterized as ordinary income in the same
    percentage that ordinary income would be realized upon a sale by
    us of all our assets, for example, because of depreciation
    recapture. In addition, to the extent that a distribution would
    cause the amount you are considered to have "at risk"
    with respect to assets placed in service in a given year to
    become negative, you will have to include such amount in your
    gross income up to the amount of losses previously taken with
    respect to such assets. Further, a non-pro rata distribution of
    money or property, such as might arise as a result of a
    reduction of your share of our liabilities upon the admission of
    additional partners, may result in ordinary income to you,
    regardless of your tax basis in your units, if the distribution
    reduces your share of our "unrealized receivables,"
    including depreciation recapture, or substantially appreciated
    "inventory items." These terms are defined in
    Section 751 of the Code, and are known as
    "Section 751 assets." To that extent, you will be
    treated as having been distributed your proportionate share of
    our Section 751 assets and having exchanged those assets
    with us in return for the non-pro rata portion of the actual
    distribution made to you. This last deemed exchange generally
    will result in your realization of ordinary income under
    Section 751(b) of the Code. That ordinary income will equal
    the excess of (i) the non-pro rata portion of that
    distribution over (ii) your tax basis for your share of
    Section 751 assets deemed relinquished in the exchange.
    Similarly, upon our redemption of your units, it is possible
    that you could recognize both ordinary income and a capital loss.
63
Table of Contents
Each limited partner is responsible for keeping its own records
    for determining such limited partner's tax basis in its
    units and calculating and reporting any gain or loss resulting
    from a Fund distribution or disposition of a unit.
Our
    Income Versus Our Distributions
The taxable income we report to you each year will not equal the
    cash distributions that you receive during that year. The
    difference between reported income and cash distributions arises
    primarily from six facts: (i) depreciation and other cost
    recovery deductions reduce our taxable income, but not our cash
    available for distribution; (ii) our revenues or gain on
    sale that we reinvest or use to repay debt principal will
    generally constitute income even though using revenues for those
    purposes reduces the cash distributed to you. See
    "— Cost Recovery"; (iii) we will
    determine our income using the accrual method of accounting,
    which includes rental income as it accrues, even if not yet
    received; (iv) our financial assets may be subject to
    specific tax rules governing the timing of any inclusions of
    income and loss irrespective of any cash generated by our
    assets; (v) certain rules, such as the "at-risk"
    rules and the tax-exempt leasing rules, may prevent losses
    attributable to some of our investments in assets from being
    used to offset income attributable to our other investments in
    assets, with the result that our taxable income (and your share
    thereof) may be greater than our overall income (and your share
    thereof). Moreover, allowable "at-risk" losses may not
    offset our income from our lending activities under the passive
    loss rules; and (vi) we may need to disproportionately
    allocate our income on a per unit basis to equalize the limited
    partners' capital accounts (as adjusted by certain items)
    on a per unit basis. Therefore, the cash distributions that we
    make to you may be greater or less than your share of our
    taxable income in any given year.
Allocations
    of Profits and Losses
Your share of any item of our income, gain, loss, deduction or
    credit is determined by our partnership agreement. As a general
    rule, we will allocate 99% of our profits among our limited
    partners (including our General Partner to the extent it owns
    units), and 1% to our General Partner. This allocation will
    continue until the excess of the cumulative profits allocated to
    our limited partners, in the aggregate, over the cumulative
    losses allocated to our limited partners, in the aggregate (not
    taking into account certain items that are specially allocated,
    such as non-recourse deductions and minimum gain chargebacks)
    would, if distributed currently to the extent not previously
    distributed, provide our limited partners in the aggregate with
    an 8% cumulative annual return, compounded annually. Thereafter
    our profits will be allocated 80% among our limited partners
    (including our General Partner to the extent it owns units) and
    20% to our General Partner.
As a general rule, 1% of our losses will be allocated to our
    General Partner and 99% will be allocated among our limited
    partners (including our General Partner to the extent it owns
    units). However, losses will be allocated 20% to our General
    Partner and 80% to our limited partners to reverse profits that
    were allocated in such 20%/80% ratio, described above.
    Non-recourse deductions (deductions generally attributable to
    our debt financed property) will be allocated 1% to our General
    Partner and 99% among our limited partners (including our
    General Partner to the extent it owns units
).
The IRS respects a partnership's allocation of income,
    gain, loss, deductions or credits if:
(a) the allocation has economic effect and is
    substantial, or
(b) the partners can show that the allocation accords with
    each partner's respective interest in us, and
(c) in the case of either (a) or (b), the allocation
    complies with special rules requiring that partners receiving
    allocations of losses or deductions generated by purchasing
    assets with borrowed money be charged back income and gain as
    those funds are repaid.
64
Table of Contents
Treasury Regulations generally provide that, for an allocation
    to have economic effect, the following conditions must be true:
•
the allocation must be reflected by an increase or decrease in
    the relevant partner's capital account, as those accounts
    are maintained under the applicable Treasury Regulations;
•
liquidation proceeds must be distributed in accordance with the
    partner's positive capital account balances; and
•
the partnership agreement must provide that if a partner will
    have a deficit balance in his or her capital account upon
    liquidation of the partnership, the partner must be required to
    restore the deficit amount to the partnership, so that amount
    may be distributed to other partners with positive capital
    account balances. However, the Treasury Regulations provide that
    in the absence of an obligation to restore the deficit, the
    partnership agreement must contain a qualified income offset
    provision. A qualified income offset provision mandates that
    when a partner receives a distribution from the partnership that
    causes a deficit in the partner's capital account or
    increases a preexisting deficit, that partner must be allocated
    income and gains as quickly as possible to eliminate any deficit
    balance in his or her capital account that is greater than any
    amount that he or she is obligated to restore.
The economic effect of an allocation is substantial if there is
    a reasonable possibility that it will substantially affect the
    amount to be received by our partners from us, independent of
    tax consequences. In addition, an economic effect is not
    substantial if, at the time the allocation becomes part of our
    partnership agreement: (1) at least one partner's
    after-tax return may, in present value terms, be enhanced
    compared to his or her return if the allocation were not
    contained in our partnership agreement; and (2) there is a
    strong likelihood that no partner's after-tax return will,
    in present value terms, be substantially diminished compared to
    his or her return if the allocation were not contained in our
    partnership agreement. The Treasury Regulations on this issue
    state that, in determining after-tax return, a partner's
    entire tax situation, including aspects unrelated to the
    partnership, will be taken into account.
Our partnership agreement contains several provisions designed
    to ensure that allocations have a substantial economic effect,
    including.
(1) It requires that all allocations of income, gains,
    losses, deductions and distributions are reflected by an
    increase or decrease in the relevant partners' capital
    accounts.
(2) All partners who are allocated losses and deductions
    generated by assets acquired with borrowed money will be charged
    back income and gains generated by those assets.
(3) Although no partner (other than our General
    Partner's limited commitment) having a deficit balance in
    his or her capital account after the final liquidating
    distribution will be required to make a cash contribution to us
    to eliminate the deficit, our partnership agreement contains a
    provision for a qualified income offset and requires that, upon
    liquidation, our assets generally will be distributed to our
    partners first to the extent of any unreturned capital
    contributions and thereafter in the same manner as current
    distributions (which should correspond with such partners'
    positive capital accounts.)
Based on the foregoing, the allocations provided in our
    partnership agreement should be respected for tax purposes.
    However, depending on when a limited partner acquired a unit and
    for what price, it is possible that the allocations set forth in
    our partnership agreement have the effect of providing deferral
    for that partner. If, for example, the partner obtaining
    deferral is an individual in the highest tax bracket while the
    partner currently allocated income is tax-exempt, the
    allocations in our partnership agreement could be insubstantial.
    Nevertheless, because of the large number of expected partners,
    we do not believe there is a strong likelihood of this
    occurring. If upon audit the IRS were to take the position that
    any of our allocations of profits and losses should not be
    recognized, and if the IRS's position were sustained by the
    courts, you could be taxed on a portion of the income allocated
    to our General Partner or to another limited partner, and part
    of the deductions allocated to you could be disallowed.
65
Table of Contents
Estimated
    Tax Payments
You may be required to make estimated tax payments due to your
    liability for paying the taxes on your distributive share of our
    taxable income. See "— Taxation of Limited
    Partnerships in General." We do not anticipate withholding
    or making payments to any taxing authority on behalf of our
    partners. Nevertheless, there may be some circumstances under
    which we are required to withhold on behalf of a partner. For
    example, under certain circumstances we are required to withhold
    a foreign partner's share of our income effectively
    connected with the conduct of a U.S. trade or business. If
    we do withhold or make a payment to a governmental authority on
    your behalf, we will treat any excess of that amount over your
    next entitled distribution as a demand loan carrying an interest
    rate of 12% per year.
For further information regarding the tax consequences of our
    right or obligation to withhold or make a payment on your
    behalf, please consult your tax advisor.
Retroactive
    Allocations
Under Code Section 706(d), "retroactive
    allocations" — i.e., allocations of items to
    partners before they become partners — are prohibited,
    and Code Section 706(d) and the Treasury Regulations
    thereunder effect this prohibition by providing that if there is
    a change of a partner's interest in a partnership in any
    taxable year, each partner's distributive share of
    partnership tax items is to be determined by any method
    prescribed in the Treasury Regulations that takes into account
    the varying interests of the partners in the partnership during
    that year. Our partnership agreement provides that our items
    will, to the extent necessary in order to comply with Code
    Section 706(d), be allocated on a daily, monthly or other
    basis as determined by our General Partner using any permissible
    method under Code Section 706(d) and the Treasury
    Regulations promulgated thereunder. If, as a result, an amount
    of profit or loss allocated to a partner is limited compared to
    what would otherwise have been the case with respect to the
    general rules regarding the allocation of profits and losses,
    such excess will be allocated to the other partners in relation
    to the amounts otherwise allocated to them. As a result, if some
    limited partners are admitted after others, they may receive a
    smaller portion of our profits and losses even though they are
    required to contribute the same amount as those limited partners
    who were admitted earlier. As stated above, some of this
    disparity results from a timing issue that will resolve itself
    over the life of the fund due to our allocation provisions
    beginning in our first fiscal year. However, a portion of this
    disparity may result from the receipt of additional cash
    distributions by those partners who invested earlier.
Deductibility
    of Losses; Passive Activity Losses, Tax Basis and
    "At-Risk" Limitation
Passive Activity Losses.
The passive activity
    loss rules generally allow taxpayers to deduct their passive
    activity losses only against their passive activity income.
    Passive activity income does not include portfolio income like
    interest, dividends and royalties, or ordinary income from
    salary and other types of compensation for personal services.
    Therefore, taxpayers generally will be required to segregate
    income and loss into three categories: active trade or business
    income or loss; passive activity income or loss; and portfolio
    income or loss. The passive activity rules apply to individuals,
    estates, trusts, personal service corporations and some closely
    held corporations (including S corporations).
A passive activity is one that involves the conduct of a trade
    or business in which the taxpayer does not materially
    participate. The IRS generally considers rental activities
    passive, whether or not a taxpayer materially participates.
    Furthermore, the IRS generally considers the status of limited
    partners to be passive with respect to a limited
    partnership's activities. Accordingly, we expect that you
    should treat your share of our rental income or loss as passive
    activity income or loss. We expect our lending activities to
    consist of the origination of loans to buy assets and secured by
    such assets and the buying and selling of existing loans secured
    by assets. In addition, regardless of whether we are in the
    trade or business of making secured financings, we expect that
    our interest income will not be considered from a passive
    activity and, therefore, may not be offset by any of your
    passive activity losses due to our expectation that our lending
    activity will be equity-financed (that is financed primarily
    with our equity capital rather than with funds we have
    borrowed). However, the treatment of gains and losses from our
    lending activities will depend on whether we are in the
66
Table of Contents
trade or business of lending. If we are in the trade or business
    of lending, then our lending activities may generate passive
    activity gains or passive activity losses during the time you
    hold your units. Moreover, any interest you incur on debt used
    to acquire or maintain our units attributable to our leasing
    activities will be treated as a passive activity deduction.
    Regardless of whether we are in the trade or business of
    lending, the portion of any interest you incur on debt that is
    attributable to our lending activities will be attributable to
    our portfolio income (including our interest income from our
    lending activities), if any, and deduction of such amounts will
    be limited by the same principles as those applicable to losses
    passed through to you by us. We also will generate portfolio
    income or loss from our financial transactions, including
    interest on our funds pending their investment in assets.
    Finally, interest expense of a limited partner attributable to
    such portfolio income may be subject to other limitations on its
    deductibility. See "— Interest Expense."
You can deduct passive activity losses against passive activity
    income to reduce your overall income tax liability, but you
    cannot offset ordinary or portfolio income with passive activity
    losses. Accordingly, your tax deduction for passive activity
    losses will be limited by the amount of your passive activity
    income in any given tax year. If your share of our passive
    activity losses is greater than your passive activity income,
    you will have a suspended loss, meaning that you cannot deduct
    the loss in the year you incurred it. You can, however, carry
    the suspended loss forward indefinitely to offset any passive
    activity income you derive in future years, whether from us or
    another passive activity. Additionally, any suspended losses
    generally may be deducted against non-passive income when you
    recognize a gain or loss from the sale of your entire interest
    in us. Finally, passive activity income from us can be used to
    absorb losses from other passive activities, subject to special
    rules regarding PTPs.
Losses from a PTP are treated as passive activity losses that
    may only be used to offset income subsequently generated by the
    same PTP that is taxed as a partnership. The IRS generally
    treats income from a PTP as portfolio income, unless it is used
    to offset previous losses from the same PTP. We have been
    structured to avoid being classified as a PTP; however, these
    rules mean that our income or losses may not be used to offset
    any losses or income you may derive from another limited
    liability company or partnership that is classified as a PTP.
Tax Basis.
Your initial tax basis in your
    units will be the price you paid for your units. Your tax basis
    will then be increased by your share of our income, by your
    share of our non-recourse indebtedness (that is, indebtedness
    for which none of the partners are personally liable) and any
    liabilities we have to you. Your basis will be reduced by the
    amount of any cash distributions you receive from us, your share
    of any of our losses, any reductions in your share of our
    non-recourse indebtedness, and any reduction in any liabilities
    we have to you. You may deduct your share of our losses, if any,
    only to the extent of the tax basis in your unit. Any losses
    allocated to you in excess of your tax basis in your unit are
    rolled over to your subsequent tax years until the earlier of
    (1) your ability to use the loss due to having sufficient
    tax basis in your unit or (2) the disposition of your unit.
"At-Risk" Limitation.
Generally,
    taxpayers may not deduct partnership losses they incur that
    exceed the total amount they have at risk in the partnership at
    the end of a partnership's tax year. For the most part, the
    amount a taxpayer has at risk equals the money and the adjusted
    basis of other property contributed to the partnership. At-risk
    is determined on an activity, and not an entity, basis. Thus, a
    single entity, like us, will have multiple at-risk activities,
    each of which will be subject to a separate at-risk limitation.
You will not be at risk, and will not be entitled to increase
    the at-risk basis of your unit, with respect to our recourse
    liabilities, such as trade payables. Nor will you be at risk
    with respect to non-recourse liabilities incurred by us, such as
    amounts borrowed to finance asset purchases, even though our
    non-recourse liabilities (and, under certain circumstances, our
    recourse liabilities) may increase the tax basis of your unit.
    Thus, your initial amount at risk will be the amount of your
    investment, i.e., the price you paid for your units.
A limited partner's amount at risk will be reduced by
    (i) net losses that are allowed as a deduction to the
    limited partner under the "at-risk" rules and
    (ii) cash distributions received by a limited partner with
    respect to the limited partner's units, and increased by
    that limited partner's distributive share of our net
    profits. Investors should note that net losses that may be
    allowable as a deduction under the at-risk rules may be
    disallowed currently under the passive activity loss limitations.
67
Table of Contents
If a limited partner's at-risk amount is reduced below zero
    (due to a cash distribution to a limited partner), the limited
    partner must recognize income to the extent of the deficit at
    risk amount, up to the amount of loss the limited partner
    previously recognized that reduced his or her at-risk amount.
    Our losses that have been disallowed as a deduction in any year
    because of the at-risk rules will be allowable, subject to other
    limitations, as a deduction to the limited partner in subsequent
    years to the extent that the limited partner's amount
    at-risk has been increased. It is not anticipated that, on an
    aggregate basis, we will incur losses. For purposes of the
    "at risk" rules, however, the Code will not allow us
    to aggregate our equipment leasing and lending businesses.
    Moreover, we can only aggregate our equipment leasing activities
    with respect to assets placed in service during the same taxable
    year. Therefore, the "at risk" rules will be applied
    separately to the net taxable income or loss resulting from
    leasing assets that were placed in service during separate
    taxable years. This could result in a limited partner's
    deduction for losses with respect to certain items of assets
    being limited by the "at risk" rules, even though he
    or she must recognize income with respect to other assets. It
    also will require a limited partner to allocate his or her
    at-risk basis over the different activities described above,
    specifically, the different years' assets and our lending
    activities. In such circumstances, the application of the
    "at risk" rules could compel a limited partner to
    recognize more taxable income in a year than that limited
    partner's share of our aggregate income because of a
    limitation imposed by such rules on the ability to set off
    losses attributable to assets placed in service in one year
    against income attributable to assets placed in service in
    another year or against income from our lending activities.
The sum of the amounts for which a limited partner will be
    considered "at-risk" for purposes of Section 465
    of the Code, in any taxable year with respect to assets placed
    in service in that taxable year and in each prior year (treating
    all assets placed in service in the same year as a single
    activity separate from the activities represented by assets
    placed in service in other years) will be equal to (i) the
    capital contributions (as such term is defined in our
    partnership agreement) of such limited partner (provided that
    funds for such capital contributions are not from borrowed
    amounts other than amounts: (A) for which the limited
    partner is personally liable for repayment, or (B) for
    which property other than units are pledged as security for such
    borrowed amounts, but only to the extent of the fair market
    value of such pledged property and provided further that such
    capital contributions are invested in assets or otherwise
    expended in connection with our organization or leasing
    activities (or are subject to the rights of our creditors for
    amounts incurred by it with respect to same)), less
    (ii) the sum determined on a cumulative basis of
    (A) the total net losses with respect to such assets that
    have been allowed as deductions to the limited partner under the
    at risk rules and (B) cash distributions received by the
    limited partner with respect to the aforementioned assets, plus
    (iii) the limited partner's distributive share,
    determined on a cumulative basis, of total net profits with
    respect to our assets. We expect that your at-risk basis will be
    less than your investment in us due to fees and the amount of
    your investment allocable to our lending activities.
Deductions
    for Organizational and Offering Expenses;
Start-Up
Costs
The costs of our organization and the sale of our units, as well
    as other
start-up
costs, generally may not be deducted in the year they are
    incurred; rather, they must be capitalized. Organizational
    expenses and
start-up
costs may be currently deducted on a limited basis (up to
    $5,000) in the year incurred. However, this $5,000 amount is
    reduced (but not below zero) by the amount by which the
    cumulative cost of such expenditures exceeds $50,000. The
    remainder of the
start-up
costs can be amortized over a period of 180 months.
Syndication expenses, which are the costs incurred to promote or
    effect the sale of our units are non-deductible, must reduce
    partners' capital accounts when incurred and give rise to a
    tax offset, if at all, only upon our liquidation, and then, in
    most cases, only as a capital loss. Syndication expenses include
    brokerage fees (such as the distribution expenses provided for
    in our partnership agreement); registration and filing fees with
    the Securities and Exchange Commission and each State in which
    our units are sold; our legal fees for securities advice and
    advice concerning the adequacy of tax disclosures in the
    offering materials; accounting fees for the preparation of
    information to be included in the offering materials; printing
    and reproduction costs; and other selling or promotional
    expenses.
68
Table of Contents
We will endeavor to treat our organizational,
start-up
and
    syndication costs in accordance with the foregoing rules. There
    is uncertainty, however, about the distinction between trade or
    business expenses that may be currently deducted, and
    organizational,
start-up
and
    syndication costs that must be capitalized or deferred. Because
    of this uncertainty, the IRS could challenge the current
    deduction of some of our expenses on the grounds that the
    expenses are not deductible in the year incurred. Under our
    partnership agreement, distribution expenses are specially
    allocated to those limited partners with respect to whose
    purchase of units such commissions and fees were paid. Other
    syndication expenses will be allocated, to the extent possible,
    in equal amounts per unit. If such equality is not possible, our
    General Partner may make compensating allocations of items of
    income or loss to achieve the same effect on capital accounts.
Tax
    Treatment of Leases
Your depreciation and cost recovery deductions with respect to
    any item of our leased assets depends, in part, on the tax
    classification of the agreement under which such asset is
    leased. These deductions are only available if the agreement is
    a true lease of an asset for income tax purposes, which means we
    retain ownership of the asset. Depreciation and cost recovery
    deductions are not available if the transaction is classified as
    a sale, or as a financing or refinancing arrangement where, for
    tax purposes, the nominal lessee is treated as the owner of the
    asset.
Whether we are the owner of any particular asset, and whether a
    lease is a true lease for federal income tax purposes, depends
    upon both factual and legal considerations. The IRS has
    published guidelines on the tax treatment of leveraged leases.
    These guidelines do not purport to be substantive rules of law
    and are not supposed to be applied in audit contexts, although
    they have been in a number of instances.
Whether any lease will meet the relevant requirements to be
    characterized as a true lease, and whether we will be treated
    for tax purposes as the owner of each asset acquired by us, will
    depend upon the specific facts in each case. Because these facts
    cannot now be determined with regard to leases that will be
    entered into in the future, our counsel cannot render an opinion
    on this issue.
Cost
    Recovery
Generally, a significant portion of the assets that we plan to
    acquire and lease generally will be as
3-year,
5-year
or
7-year
property and may be written off for federal income tax purposes,
    through cost recovery or depreciation deductions, over our
    respective recovery period. The amount deductible in each year
    generally may be calculated using the 200 percent
    declining-balance depreciation method, switching to the
    straight-line method at a time that maximizes the deduction. A
    taxpayer may, however, choose to use a straight-line method of
    depreciation for the entire recovery period.
In some circumstances, a taxpayer will be required to recover
    the cost of an asset over a longer period of time than described
    above. These circumstances include the use of assets
    predominantly outside the United States and the use of assets by
    a tax-exempt entity. See "— Limitations on Cost
    Recovery Deductions."
Limitations
    on Cost Recovery Deductions
Property Used Predominantly Outside the United
    States.
We may own and lease assets that are used
    predominantly outside the United States. The cost of these
    assets must be written off for federal income tax purposes using
    the straight-line method of depreciation over a period
    corresponding to the asset's ADR Class Life, which
    generally is longer than the
3-year,
5-year
or
7-year
periods permitted for other property. If the asset does not have
    an ADR Class Life, a
12-year
period must be used. Certain types of property used
    predominantly outside the United States nevertheless qualify for
    the normal rules discussed above, that is, a shorter depreciable
    life should be allowable. The exceptions include the following:
(1) aircraft registered in the United States that are
    operated to and from the United States;
(2) some railroad rolling stock used within and without the
    United States;
69
Table of Contents
(3) vessels documented under the laws of the United States
    that are operated in the foreign or domestic commerce of the
    United States; and
(4) containers owned by a United States taxpayer that are
    used in the transportation of property to and from the United
    States.
Tax-Exempt Leasing.
We may lease assets to
    tax-exempt entities. Property leased to tax-exempt entities,
    called tax-exempt use property, must be written off for federal
    income tax purposes using the straight-line method of
    depreciation. The depreciation period is the longer of
•
the asset's ADR Class Life, which generally is longer
    than the
3-year,
5-year
or
7-year
periods permitted for property not leased to tax-exempt
    entities; or
•
125% of the term of the lease, including all options to renew as
    well as some successor leases for the asset.
The definition of a tax-exempt entity includes governmental
    bodies and tax-exempt governmental instrumentalities, tax-exempt
    organizations, some foreign persons and entities and some
    international organizations. The term also generally includes
    organizations that were tax-exempt at any time during the
    five-year period before the organization first uses the property
    involved. Foreign persons or entities are treated as tax-exempt
    entities with respect to property if less than 50% of the income
    derived from the leased property is subject to U.S. income
    tax.
The term tax-exempt use property does not include:
(1) property that is used predominantly by a tax-exempt
    entity in an unrelated trade or business, if the entity pays
    unrelated business income tax on the income from the trade or
    business;
(2) property leased to a tax-exempt entity under a
    short-term lease, meaning a lease that has a term of either less
    than one year, or less than 30% of the property's ADR
    Class Life as long as that is less than three
    years; and
(3) certain high-technology equipment.
In addition, under Code Section 470, enacted as part of the
    American Jobs Creation Act of 2004 (the "2004 Tax
    Act"), losses attributable to the leasing of tax-exempt use
    property (including property described in items (2) and
    (3) of the immediately preceding paragraph) cannot be
    deducted currently, but must be deferred until there is income
    derived from such property or when the interest therein is
    completely disposed of, unless the lease complies with certain
    requirements. Because these facts depend upon leases that will
    be acquired or entered into in the future, no conclusion can be
    expressed now regarding the possible application of Code
    Section 470 to leases of property to tax-exempt entities.
Consequences of Rules Regarding Depreciation of Assets
    Predominantly Used Outside the U.S. and Tax-Exempt
    Leasing.
To the extent that our assets are
    subject to the depreciation rules regarding property used
    outside the United States or regarding tax-exempt use property,
    and to the extent that the loss suspension rules under Code
    Section 470 apply because we have losses attributable to
    tax-exempt use property, a partner will generally have to
    recognize taxable income and may have to pay income tax in
    greater amounts in the early stages of our existence than would
    otherwise have been the case, for at least two reasons. First,
    the longer depreciation periods for assets used predominantly
    outside the United States and tax-exempt use property means that
    the annual depreciation deduction for such property will be
    smaller than otherwise would have been the case, but continue
    longer, thereby increasing net income (or reducing net loss)
    with respect to such property, in the early years, but reducing
    net income (or increasing net loss) in the later years. Second,
    if losses are suspended pursuant to Code Section 470,
    taxable net income is greater (or net loss is less) during the
    period that such loss is suspended than otherwise would have
    been the case, but such taxable net income would be less (or net
    loss would be greater) in later years, when the property to
    which the loss is attributable either produces income or is
    disposed of and the loss can then be taken.
70
Table of Contents
Deferred
    Payment Leases
Section 467 of the Code requires both the lessor and lessee
    in certain lease agreements to annually accrue the rent and
    interest on any rental payments that will be paid in the future.
    A Section 467 rental agreement is any rental agreement
    for the use of tangible property that involves total payments in
    excess of $250,000 and either provides for increasing (or
    decreasing) rental payments, or provides that some rent for the
    use of property in a calendar year is payable after the close of
    the following calendar year. In general, the amount of rent that
    must be allocated to a tax year will be determined by the terms
    of the lease. In some circumstances, however, rent will be
    required to be allocated to a year prior to the year in which it
    will be paid, with the exact amount determined based upon
    present-value principles and, in the case of certain rental
    agreements, on a constant, level rate; the present-value amount
    would accrue interest until paid. We may enter into transactions
    that meet the definition of a Section 467 lease agreement,
    which could result in the acceleration of income recognition by
    us prior to receipt of the corresponding cash flow. Another
    consequence would be the conversion of some of our income from
    rental income (passive) to interest income (portfolio) due to
    the deemed time value of money rules.
Sale or
    Other Disposition of Our Property
Because of the different individual tax rates for capital gains
    and ordinary income, the tax code provides various rules
    classifying income as ordinary income or capital gains, and for
    distinguishing between long-term and short-term gains and
    losses. The distinction between ordinary income and capital
    gains is relevant for other purposes as well. For example, there
    are limits on the amount of capital losses that an individual
    may offset against ordinary income.
Upon a sale or other disposition of our assets, we will realize
    gain or loss equal to the difference between the tax basis of
    the asset at the time of disposition and the price received for
    such asset upon disposition. Any foreclosure of a security
    interest in an asset will be considered a taxable disposition,
    and we will realize gain if the face amount of the debt being
    discharged were greater than the tax basis of the asset, even
    though we will not receive cash.
Because our assets are tangible personal property, upon the
    disposition of such assets, all of the depreciation and cost
    recovery deductions taken by us will be subject to recapture to
    the extent of any realized gain. Recapture means that the
    depreciation previously deducted is reversed by recognizing the
    depreciated amounts as ordinary income in the year of the sale
    or other disposition. Recapture cannot be avoided by holding the
    assets for any specified period of time. If we were to sell
    assets on an installment basis, all depreciation recapture
    income would be recognized at the time of sale, even though the
    payments are received in later taxable years.
Certain gains and losses are grouped together to determine their
    tax treatment. The gains on the sale or exchange of certain
    assets, including assets used in a trade or business such as
    that to be owned by us and held for more than one year, are
    added to the gains from some compulsory or involuntary
    conversions. If these gains exceed the losses from such sales,
    exchanges and conversions, the excess gains will be taxed as
    capital gains (subject to the general rules of depreciation
    recapture described above and a special recapture rule described
    below). If the losses exceed the gains, however, the excess
    losses will be treated as ordinary losses. Under a special
    recapture provision, any net gain under this aggregation rule
    will be treated as ordinary income rather than capital gain if
    the taxpayer has non-recaptured net losses, which are net losses
    under this aggregation rule from the five preceding taxable
    years that have not yet been offset against net gains in those
    years.
Because of the nature of our property, we expect that
    substantially all, if not all, of any gain we realize on the
    sale or other disposition of our assets will be treated as
    ordinary income for income tax purposes rather than capital gain.
71
Table of Contents
Tax
    Treatment of Lending Activities
Until we have conducted operations for a while, we will not know
    whether our lending activities constitute a trade or business of
    originating, buying, and selling loans. It could be that we will
    not be in the business of originating, buying, and selling
    loans, especially if our loan originations are a small part of
    our lending activity. The Code contains many special rules
    regarding the proper recognition of income, gain, loss,
    deduction and credits. For example, there are specific rules
    concerning the tax treatment of hedging transactions,
    constructive sales treatment for appreciated financial
    positions, and original issue discount. Also, management fees
    incurred for investment activities are not considered trade or
    business expenses. Instead, they are considered investment
    expenses and their deductibility is limited. Thus, if our
    lending activity (or other activity in which we engage) is not a
    trade or business, a portion of the Management Fees and other
    costs incurred by you may be considered investment expenses, the
    deductibility of which is subject to various limitations. In
    addition, your tax treatment of any losses we incur on our loans
    may depend on whether we are in the trade or business of making
    loans. For example, if loans we acquire are not considered to
    have been acquired and held by us in connection with our trade
    or business of lending money, any loss we might incur if a
    borrower or borrowers defaulted on such loans would be a capital
    loss rather than an ordinary loss. With very limited exceptions,
    capital losses can be deducted only against capital gains and
    not against ordinary income. Because the proper tax treatment
    will depend on the specific terms and conditions of the loans we
    originate, buy, and sell, our counsel cannot render an opinion
    on this issue.
Sale or
    Other Disposition of Units
The gain or loss you realize on the sale of our units includes
    the cash or other consideration you receive from the purchaser,
    as well as your share of our non-recourse indebtedness. This
    gain or loss will, except as noted below, be taxed as long-term
    or short-term capital gain or loss, depending on how long you
    hold your units, assuming that your units qualify as capital
    assets in your hands.
The portion of your gain attributable to ordinary income assets
    held by us, which includes inventory and unrealized receivables,
    would be treated as ordinary income. Ordinary income assets
    include assets that are subject to recapture of recovery or
    depreciation deductions, determined as if your proportionate
    share of our assets is sold at the time you sell your units.
    Ordinary income assets also include certain income from
    "market discount bonds" or short-term obligations that
    we may acquire at a discount. Thus, it is likely that most of
    any gain upon the sale of your units will be treated as ordinary
    income.
You must promptly notify us of any transfer of your units,
    whether by sale, gift or otherwise. Once we are notified, we are
    required to inform the IRS, the buyer and you of the fair market
    value of the allocable share of unrealized receivables and
    appreciated inventory attributable to the units you sold or
    exchanged. This report must be made on or before January 31
    following the calendar year of sale. There are penalties for
    failure to inform the IRS, and if you fail to notify us of the
    transfer of your units, you will be penalized $50 per
    failure.
Treatment
    of Cash Distributions Upon Redemption or Repurchase
The redemption or repurchase by us of all or a portion of your
    units will be treated as a sale or exchange of the units for
    income tax purposes and may generate taxable income or loss to
    you. The amount you realize in such redemption or repurchase
    will equal the sum of the cash you receive plus your share of
    our non-recourse liabilities.
Simultaneously with your receipt of a cash distribution from us
    in connection with a redemption or repurchase, your share of our
    ordinary income assets will be reduced. You will be treated as
    if you have received the cash, or a portion of the cash, in
    exchange for your share of ordinary income assets. If the
    distribution that is deemed a payment for the ordinary income
    assets exceeds your share of the adjusted basis of the ordinary
    income assets, you must recognize the excess as ordinary income.
    The remainder of the distribution, if any, will be treated in
    the same manner as a distribution (that is, you will recognize
    income only to the extent that the cash distributions exceed
    your adjusted basis in your units). See
    "— Taxation of
72
Table of Contents
Current Distributions." Thus, our redemption of your units
    may cause you to realize ordinary income and a capital loss.
Gifts of
    Units
Generally, no gain or loss is recognized upon the gift of
    property. A gift of units, however, including a charitable
    contribution, may be treated partially as a sale, to the extent
    of your share of our non-recourse liabilities. You may be
    required to recognize gain in an amount equal to the difference
    between your share of non-recourse indebtedness and, in the case
    of a charitable contribution, the portion of the basis in the
    units allocable to that deemed sale transaction. In the event of
    a non-charitable gift, the amount of your share of the
    non-recourse indebtedness is offset by your entire basis in the
    units. Charitable contribution deductions for the fair market
    value of the units will be reduced by the amounts involved in
    such a partial sale and, in any event, may be subject to
    reduction in certain cases by the amount of gain that would be
    taxed as ordinary income on a sale of your units.
Consequence
    of No Section 754 Election
Because of the complexities of the tax accounting required, we
    do not presently intend to file an election under
    Section 754 of the tax code to adjust the basis of our
    assets in the case of transfers of units. As a consequence, a
    person who obtains units from another partner may be subject to
    tax upon the portion of the proceeds of sales of our assets that
    represents a return of capital to that person. This may
    adversely affect the price that potential purchasers would be
    willing to pay for our units. Even if we do not make a
    Section 754 election, however, the Code requires mandatory
    basis adjustments for transfers of interests in partnerships
    with substantial built-in loss (where the adjusted basis of our
    property exceeds the property's market value by more than
    $250,000). In such instances, the adjusted tax basis of our
    assets will be reduced to their fair market value with respect
    to the transferee partner. Similarly, we will not make any
    adjustments upon redeeming a partner, unless required to under
    the Code.
Tax
    Treatment of Our Termination Pursuant to Our Partnership
    Agreement
When we terminate pursuant to our partnership agreement, we are
    required to dispose of our assets, apply the proceeds and other
    funds to repayment of our liabilities and generally distribute
    any remaining funds to our partners first to the extent of any
    unreturned capital contributions and thereafter in the same
    manner as current distributions. Provided that such termination
    does not occur very early during our existence, we expect that
    the distributions to our limited partners (including our General
    Partner to the extent it owns units) upon such termination will
    be proportionate based on the number of units owned by each
    limited partner as of the liquidation date because of the manner
    in which Profits and Losses are allocated among our limited
    partners during our early fiscal years. Sales and other
    dispositions of our assets would have the tax consequences
    described in "— Sale or Other Disposition of Our
    Property." Cash distributions made at liquidation that
    exceed the tax basis of your interest in us generally would be
    taxable as capital gain, provided your units constitute capital
    assets in your hands. Cash distributions in amounts less than
    your basis may result in a loss, generally a capital loss, which
    would be subject to the general limitations on deductibility of
    capital losses.
Audit by
    the IRS
No tax rulings have been sought by us from the IRS. While we
    (and any joint ventures in which we participate) intend to claim
    only those deductions and assert only those tax positions for
    which there is at least substantial authority, the IRS may audit
    our returns or any joint venture we are involved in, and it may
    not agree with some or all of the tax positions our General
    Partner takes.
An audit of our information return may result in an increase in
    our income, the disallowance of deductions, or the reallocation
    of income and deductions among our partners. In addition, an
    audit of our information return may lead to an audit of your
    personal income tax return, which could lead to adjustments of
    items unrelated to this investment.
73
Table of Contents
You must report your share of our income, gains, losses,
    deductions and credits on your individual return in a manner
    consistent with our return, even if the
Schedule K-1
we send to you reports the item differently unless you file a
    statement with the IRS identifying the inconsistency, or unless
    you can prove your return is in accordance with information
    provided by us. Failure to comply with this requirement will
    subject you to penalties and may result in an extended time
    period for the IRS to challenge your return.
In most circumstances, the federal tax treatment of the income,
    gains, losses, deductions and credits of a partnership will be
    determined at the limited partnership level in a unified
    partnership proceeding, rather than in separate proceedings with
    its partners. In any audit of a partnership, the IRS will deal
    with the partnership's "tax matters partner." Our
    General Partner is designated as our tax matters partner in our
    partnership agreement. Only limited partners having at least a
    1% interest in us will be entitled to receive a separate notice
    from the IRS of any audit of our return and of the results of
    the audit. Limited partners who have an interest of less than 1%
    will not be entitled to notice from the IRS; however, groups of
    limited partners who together own a 5% or greater interest in us
    may, by notification to the IRS, become a "notice
    group" and designate a limited partner of their group to
    receive IRS notices. All limited partners have the right to
    participate in any audit of us. We are required to keep you
    informed of any administrative and judicial proceedings
    involving our tax matters. Also, we will keep you advised of any
    significant audit activities with respect to us.
As the tax matters partner, our General Partner is authorized to
    enter into settlement agreements with the IRS that are binding
    upon limited partners with less than a 1% interest, except for
    those who belong to a notice group or who have filed a statement
    with the IRS that we do not have authority to enter into
    settlement agreements that are binding upon them. You are
    entitled to have any favorable settlement agreement reached
    between the IRS and another limited partner with respect to our
    item applied to you. Our tax matters partner also may extend the
    statute of limitations period with respect to our tax matters.
    Note that the statute of limitations for the IRS to adjust your
    partnership items is generally the longer of your personal
    statute of limitations or the partnership's statute of
    limitations.
Our partnership agreement empowers our General Partner to
    conduct, on behalf of us and our limited partners, all
    examinations by tax authorities relating to us at our expense.
    See "Summary of Our Partnership Agreement." A tax
    controversy could result in substantial legal and accounting
    expenses being charged to us, even if the outcome is favorable.
Alternative
    Minimum Tax
Some taxpayers must pay an alternative minimum tax
    ("AMT") if the AMT exceeds the taxpayer's regular
    federal income tax liability for the year. For non-corporate
    taxpayers, the AMT is imposed on alternative minimum taxable
    income ("AMTI") that is above an exemption amount. The
    AMTI is based on a different computation of taxable income,
    which is increased by tax preference items, and other
    adjustments to taxable income are made. The principal adjustment
    associated with an investment in our units relates to
    depreciation or cost recovery deductions. In this case
    depreciation deductions are limited to those that do not exceed
    those calculated using the 150% declining balance method.
We do not anticipate that any significant tax preference items
    will be generated by us. You should be aware, however, that, for
    purposes of computing AMTI, interest you pay to acquire or
    maintain an ownership interest in a passive activity (such as
    our units) is deductible only to the extent that the interest
    payments, when added to your passive activity income or loss and
    computed with the appropriate alternative minimum tax
    adjustments and tax preferences, does not result in a passive
    activity loss. Accordingly, if you borrow money and incur
    interest expense in connection with your purchase of our units,
    you may only be allowed a limited deduction for that interest in
    calculating AMTI.
Additionally, if our lending activity is characterized as an
    investment activity rather than as a trade or business, a
    portion of our Management Fees and other costs you incur could
    be considered investment expenses and not trade or business
    expenses. Investment expenses are not deductible for AMTI
    purposes.
74
Table of Contents
The rules relating to the alternative minimum tax for
    corporations are different than those just described.
    Corporations contemplating purchase of our units should consult
    their tax advisors as to the possible AMT consequences of
    investing in our units.
Interest
    Expense
In general, interest paid in connection with investment
    activities is deductible only against investment income.
    Interest paid in connection with investments in passive
    activities, such as in an investment in our units, may only be
    deducted in accordance with the rules for losses derived from
    passive activities, except to the extent allocable to portfolio
    income. As stated above, our activities will include both
    passive activities and non-passive activities. Thus, any
    interest expense you incur may need to be bifurcated between our
    passive activities and our non-passive activities when
    determining its deductibility on your personal return. See
    "— Deductibility of Losses; Passive Activity
    Losses, Tax Basis and "At-Risk" Limitation."
Interest paid by us will be allocated among our leasing
    activities, reserves and lending activities according to IRS
    rules that (subject to certain presumptions) look to how we used
    the money we borrowed. To the extent allocated to the assets
    that we lease, such interest will likely be treated as passive
    activity interest. Interest allocable to our reserves or to
    loans we make will likely be treated as investment expense and
    deductible only to the extent of investment income. Interest on
    money you borrow in order to purchase a unit will have to be
    allocated among these same categories. However, because we will
    enter into net leases, the IRS might also argue that the portion
    of interest expense we incur or that is incurred by you on
    monies borrowed to purchase our units attributable to such
    leases might be investment interest expense and deductible only
    to the extent of investment income. We may enter into
    transactions involving the prepayment of interest or the payment
    of points, commitment fees and loan origination or brokerage
    fees. In general, prepaid interest, points and similar costs may
    not be deducted currently; they usually have to be capitalized
    and expensed over the life of the related loan.
Self-Employment
    Tax
Under Code Section 1402(a)(13), limited partners in limited
    partnerships are not subject to self-employment tax with respect
    to their distributive share of income or loss of a limited
    partnership other than with respect to guaranteed payments to a
    partner for services actually rendered to or on behalf of the
    partnership. Thus, an individual limited partner's
    distributive share of our income, gain, loss, deduction, or
    credit is not included in the individual's net earnings
    from self-employment for purposes of calculating the
    self-employment tax.
Limited
    Deductions for Activities Not Engaged in for Profit
The ability to take deductions for activities not engaged in for
    profit is limited. The law presumes that an activity is engaged
    in for profit if the gross income from the activity exceeds the
    deductions from the activity in at least three out of five
    consecutive years, ending with the tax year at issue. We intend
    to operate for the purpose of providing an economic profit and
    anticipate that we will have sufficient income to entitle us to
    the benefit of the presumption that we operate for profit. If
    the IRS were to treat our activities as not being engaged in for
    profit, any deductions of ours in excess of our income might be
    permanently disallowed.
Foreign-Source
    Taxable Income
Rental income and interest received by us from sources in
    foreign countries could be subject to withholding
and/or
income taxes imposed by those countries. In addition, gains on
    the sale of our assets also may be subject to taxes in foreign
    countries where we sell assets. Tax treaties between some
    countries and the United States may reduce or eliminate such
    taxes. Our foreign activities, however, may require you to file
    tax returns in foreign countries. We cannot predict what tax
    rate our income will be subject to in other countries, since the
    amount and type of our investments in various countries is not
    known.
We will inform you of your proportionate share of any foreign
    income and the foreign taxes, if any, paid by us. You will then
    be required to include these items on your tax return. At your
    option, you generally will
75
Table of Contents
be entitled to claim either a credit (subject to the limitations
    discussed below) or, if you itemize your deductions, a deduction
    (subject to the limitations generally applicable to deductions)
    for your share of foreign taxes in computing your federal income
    taxes.
Generally, a credit for foreign taxes may not exceed the federal
    tax liability attributable to your total foreign-source taxable
    income. Your share of our rental and interest income
    attributable to assets used outside the United States or loans
    made to foreign persons generally will qualify as foreign-source
    income, and the source of income from the sale of assets will
    usually be attributed to the location of the asset. Several
    limits apply to the foreign tax credit. The credit is applied
    separately to different types of foreign-source income,
    including foreign-source passive income like interest income,
    and special limits also apply to income from the sale of capital
    assets. Furthermore, in calculating the foreign tax credit
    limitation, the amount of your foreign-source income is reduced
    by various deductions that are allocated
and/or
apportioned to the foreign-source income. One such deduction is
    interest expense, a portion of which will generally reduce the
    foreign-source income of any limited partner who owns foreign
    assets, either directly or indirectly. For these purposes,
    foreign assets owned by us will be treated as owned by our
    limited partners, and indebtedness incurred by us will be
    treated as incurred by limited partners.
Because of these limits, you may be unable to claim credit for
    the full amount of your proportionate share of the foreign taxes
    attributable to our income. In addition, any foreign losses
    generated by us could reduce the tax credits available to you
    from foreign-source income unrelated to us. The foregoing is
    only a general description of the foreign tax credit under
    current law. Since the availability of a credit or deduction
    depends on your particular circumstances, we advise you to
    consult your own tax advisor.
Registration,
    Reportable Transactions, Interest and Penalties
Tax Shelter Registration and Reportable
    Transactions.
The Code imposes disclosure and
    list maintenance obligations for persons that participate in
    listed and reportable transactions. In general, listed and
    reportable transactions are those that the IRS views as having
    substantial potential for tax avoidance or evasion. By category,
    reportable transactions include listed transactions,
    confidential transactions, transactions with contractual
    protection, transactions that result in substantial losses, and
    transactions of interest. The Treasury Regulations define
    "transaction" as including "all of the factual
    elements relevant to the expected tax treatment of any
    investment, entity, plan, or arrangement, and includes any
    series of steps carried out as part of a plan." Of the
    various reportable transaction categories that could apply to
    us, it is possible that the threshold of the gross
out-of-pocket
losses contemplated by the loss transaction reportable
    transaction category may be experienced by us or our partners
    (including the $2,000,000 in any one year, or $4,000,000 over
    any combination of years thresholds for a partnership that does
    not have only "C" corporations as partners). If an
    investment in our units or our investment in a specific asset or
    group of assets were considered to be a reportable transaction,
    then our partners would be required to adequately disclose such
    transactions on their income tax return and we would be required
    to disclose such transactions on our information return. We do
    not expect that, under current regulations, an investment in our
    units or our investments in assets will constitute reportable
    transactions, because it is expected that the requisite
    magnitude of losses, if any, will not be incurred, and the
    disclosure and list maintenance requirements for such
    transactions are therefore not applicable. It is possible,
    however, that we may lease a asset or group of assets that
    experience losses that meet the threshold or we may incur losses
    exceeding the threshold in a lending transaction subject to
    these rules. Nevertheless, because we have not yet made any
    investments, we do not know whether any of our transactions
    would be reportable transactions.
Interest on Underpayments.
The interest that
    taxpayers must pay for underpayment of federal taxes is the
    federal short-term rate plus three percentage points, compounded
    daily. The federal short-term rate is set quarterly by the
    Treasury Department based on the yield of U.S. obligations
    with maturities of three years or less.
Penalty for Substantial Understatements or Understatements
    Attributable to Reportable Transactions.
The tax
    code also contains a penalty for substantial understatement of
    federal income tax liability equal to 20% of the amount of the
    understatement; and a penalty on the understatement of tax
    attributable to a
76
Table of Contents
reportable transaction equal to 20% of the understatement (30%
    if the transaction is not disclosed) whether or not the
    taxpayer's total understatement is substantial. An
    understatement occurs if the correct tax for the year (as
    finally determined after all administrative and judicial
    proceedings) exceeds the tax liability actually shown on the
    taxpayer's returns for the year. An understatement on an
    individual's return will be considered substantial for
    purposes of the penalty if it exceeds both (a) 10% of the
    correct tax and (b) $5,000. The imposition of this penalty
    may be avoided however if, in the case of any item that is not
    attributable to a reportable transaction, (a) there was
    substantial authority for the taxpayer's treatment of the
    item, or (b) the relevant facts affecting the item's
    tax treatment were adequately disclosed in the taxpayer's
    return, provided that the taxpayer had a "reasonable
    basis" for the tax treatment of such item. In the case of
    an item that is attributable to a reportable transaction, the
    penalty may be avoided if (a) all the relevant facts
    affecting the tax treatment of the item are adequately disclosed
    on the foregoing return, (b) there was substantial
    authority for the taxpayer's treatment of the item and
    (c) the taxpayer reasonably believed that his treatment of
    the item on the return was more likely than not the proper
    treatment.
If any of our transactions constitute reportable transactions,
    you may receive from us a copy of Form 8886, which is used
    to disclose such transactions to the IRS. You should consult
    with your own tax advisor as to the reporting on your own tax
    returns of that form and the information that it contains.
    Failure of a limited partner to report such information may
    result in a penalty for that limited partner.
State and
    Local Taxation
In addition to the federal income tax consequences described
    above, you should consider potential State and local tax
    consequences of this investment. Your share of our taxable
    income or loss generally will be included in determining
    reportable income for State or local tax purposes in the
    jurisdiction where you reside. In addition, other states in
    which we own assets or do business may require you to file State
    income tax returns and may impose taxes on your pro rata share
    of our income derived from that State. Any tax losses generated
    by our operations in such States may not be available to offset
    income from other sources in other States. To the extent that
    you pay tax to a State by virtue of our operations within that
    State, you may be entitled to a deduction or credit against tax
    owed to your State of residence with respect to the same income.
    If you itemize deductions for federal income tax purposes, your
    payment of State and local taxes will constitute a deduction for
    federal income tax purposes. We advise you to consult your own
    tax advisor to determine the effect of State and local taxes,
    including gift and death taxes as well as income taxes, which
    may be payable in connection with this investment.
Tax
    Treatment of Certain Trusts and Estates
The tax treatment of trusts and estates can differ from the tax
    treatment of individuals. Investors who are trusts and estates
    should consult with their tax advisors regarding the
    applicability of the tax rules discussed in this section.
Taxation
    of Tax-Exempt Organizations
Charitable and other tax-exempt organizations, including
    qualified pension plans and individual retirement accounts, are
    subject to the unrelated business income tax. Under the Code, a
    charitable remainder trust that has unrelated business taxable
    income is subject to an excise tax equal to 100% of such income.
    Tax-exempt investors will be deemed to be engaged in the
    business carried on by us and will be subject to the unrelated
    business income tax. Income from our leasing activities will
    constitute UBTI. In addition, to the extent that we are
    considered to have financed our lending activities with borrowed
    funds, our income from such activities also will constitute
    UBTI. We do not expect to finance our lending activities with
    borrowed funds; however, the test linking a partnership's
    debt with an activity is broad and is subject to a facts and
    circumstances test. For example, the IRS has taken the position
    that a partnership that has invested all of its cash and then
    needs to finance its working capital has debt-financed income
    for purposes of the UBTI rules. Thus, even though we do not
    intend to borrow to finance our lending activities, future
    operations could give rise to an IRS challenge that we have
    generated debt-financed income. Further, to the extent that the
    IRS could successfully assert that a portion of the money we
    borrowed to finance our leasing activities should instead be
    attributed to our
77
Table of Contents
lending activities, the portion of our income that constitutes
    UBTI would be increased. This is because rental income, such as
    the income we derive from the leasing of personal property,
    constitutes UBTI whether we finance it from our capital or from
    borrowings. However, interest income we derive from our lending
    activities constitutes UBTI only if we generate it using
    borrowed funds. Thus, our UBTI increases proportionately with
    the amount of any increase to the amount of our debt allocated
    to our lending activities. Because the proper tax treatment will
    depend upon the specific terms and conditions of our future
    borrowings and the uses of the cash from borrowings, our counsel
    cannot render an opinion on this issue. Such investors should
    consult with their tax advisors regarding the tax consequences
    to them of investing in our units. In addition, exempt investors
    that are required to distribute a certain portion of their
    assets every year, such as IRAs and 401(k) plans subject to the
    mandatory distribution requirements, should consider the fact
    that there will not be any market for our units when determining
    their ability to satisfy such mandatory distribution
    requirements.
Corporate
    Investors
The federal income tax consequences to investors that are
    corporations may differ materially from the tax consequences
    discussed in this section, particularly as they relate to the
    alternative minimum tax. Such investors should consult with
    their tax advisors as to the tax consequences to them of this
    investment.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
    INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
    DEPENDING UPON A PROSPECTIVE INVESTOR'S PARTICULAR
    SITUATION. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX
    ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
    OWNERSHIP AND DISPOSITION OF THE UNITS, INCLUDING THE TAX
    CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
78
Table of Contents
INVESTMENT
    BY QUALIFIED PLANS AND IRAS
Fiduciaries
    under ERISA
Under the federal law commonly known as ERISA, fiduciaries of
    certain employee benefit plans (generally tax qualified plans)
    must act solely for the benefit of the plan's participants
    and beneficiaries. A fiduciary must:
•
perform its duties with the skill, prudence and diligence of a
    prudent person;
•
diversify the plan's investments so as to minimize the risk
    of large losses; and
•
act in accordance with the plan's governing documents.
Fiduciaries include anyone who exercises any control over the
    management of the Funds or other property of the plan. In
    addition, a plan participant who exercises control over his or
    her individual account in the qualified plan under a
    self-directed investment arrangement will generally be held
    responsible for the consequences of his or her investment
    decisions. Although IRAs generally are not subject to
    ERISA's fiduciary duty rules, they, as well as IRAs and
    self-directed accounts, are subject to the IRS's prohibited
    transaction rules, which are discussed below.
We urge each fiduciary of an IRA or a qualified plan to
    consider these rules in the context of the particular
    circumstances of the IRA or the qualified plan before purchasing
    our units.
Prohibited
    Transactions
ERISA and the Code prohibit qualified plans and IRAs from
    engaging in certain transactions involving their assets, which
    are referred to as "prohibited transactions," with
    certain parties, which are referred to as "parties in
    interest" or "disqualified persons,"
    respectively. For purposes of this discussion, such persons will
    be referred to as "disqualified persons" only.
    Disqualified persons generally include:
•
fiduciaries or other service providers of the qualified plan or
    IRA;
•
an employer whose employees are covered by the Plan's IRA;
•
certain employers, officers, directors, certain shareholders and
    other owners of the company sponsoring the qualified
    plan; and
•
persons and legal entities sharing certain family or ownership
    relationships with other disqualified persons.
In addition, the beneficiary of an IRA is generally considered
    to be a disqualified person for purposes of the prohibited
    transaction rules. Types of prohibited transactions include; for
    example:
•
sale, exchange or leasing of property between a plan and a
    disqualified individual;
•
direct or indirect transfers of a qualified plan's or IRAs
    assets to, or use by or for the benefit of, a disqualified
    person;
•
the use of a qualified plan's or IRAs assets by a fiduciary
    for his or her personal benefit; and
•
a fiduciary receiving cash or other consideration for his or her
    own benefit from a third-party in connection with a transaction
    involving the assets of the qualified plan or the IRA.
Under ERISA, a fiduciary person that engages in a prohibited
    transaction must return any profits to the plan and pay back any
    losses to the plan. Also, the Code imposes excise taxes on a
    disqualified person that engages in a prohibited transaction.
    These prohibited transactions generally must be undone by the
    disqualified person to avoid additional penalties. In addition,
    if a taxpayer engages in a prohibited transaction with an IRA in
    which he or she is a beneficiary, the IRA will cease being an
    IRA and all of its assets will be treated as if they had been
    distributed to the taxpayer in the year in which the prohibited
    transaction occurred, which may result in additional penalties
    to the taxpayer.
79
Table of Contents
Subject to the rules discussed below, in order to avoid a
    prohibited transaction under the Code or ERISA, our units may
    not be purchased by a qualified plan or an IRA with funds or
    other assets for which we or any of our affiliates are
    fiduciaries or other disqualified persons.
Plan
    Assets
In some circumstances, ERISA applies a look-through rule under
    which the assets of an entity in which a qualified plan or IRA
    has invested are deemed to be the assets of the qualified plan
    or the IRA itself. If our assets were determined to be plan
    assets, then fiduciaries of the qualified plans and IRA's
    that purchase our units might be subject to liability for
    actions that we take. In addition, some of the transactions
    described in this prospectus in which we might engage, including
    transactions with our affiliates, may be prohibited
    transactions. Moreover, fiduciaries of qualified plans or
    IRA's subject to ERISA's fiduciary duty rules that
    purchase our units might be deemed to have improperly delegated
    their fiduciary responsibilities to us. ERISA, however, exempts
    certain investments from the look-through rule. Under the
    Department of Labor's current regulations, our assets will
    not be treated as plan assets of a qualified plan or IRA limited
    partner if:
•
our units are publicly offered, which means that among other
    things our units must be "freely transferable" and
    part of a class of units that is "widely held" as
    those terms are defined by ERISA;
•
less than 25% of the value of any class of our units are owned
    by qualified plans, IRA's, and certain other employee
    benefit investors; or
•
we are an operating company.
We cannot be certain that our units will be deemed to be freely
    transferable or that they will be widely held under the
    regulation, or that we will be deemed to be an operating
    company, because those issues involve factual determinations.
    Therefore, we will rely on the "less than 25%"
    ownership exemption, and we will ensure that qualified plans,
    IRA's, and certain other employee benefit plan investors at
    all times own less than 25% of the total value of each class of
    our outstanding units. In making this determination, we will, as
    provided in the Department of Labor's regulations,
    disregard the value of any units held by (i) our General
    Partner or our Investment Manager or other person (other than a
    benefit plan investor), who has discretionary authority or
    control with respect to our assets, (ii) any person who
    provides investment advice for a fee with respect to our assets,
    and (iii) any affiliate of those persons.
Other
    ERISA Considerations
In addition to the considerations described above in connection
    with the "plan asset" issue, a fiduciary's
    decision to cause a qualified plan or IRA to purchase our units
    should involve, among other factors, considerations that include
    whether:
•
the purchase is prudent in light of the illiquid nature of our
    units and potential minimum required distributions from the plan
    or IRA;
•
the investment will provide sufficient cash distributions in
    light of required benefit payments and other needs for liquidity;
•
the evaluation of the investment has properly taken into account
    the potential costs of determining and paying any amounts of
    federal income tax that may be owed on unrelated business
    taxable income derived from us; and
•
the fair market value of our units will be sufficiently
    ascertainable, and with sufficient frequency, to enable the
    qualified plan or IRA to value its assets in accordance with the
    rules and policies applicable to the qualified plan or IRA.
80
Table of Contents
MANAGEMENT'S
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
We will depend on our offering proceeds to carry on our proposed
    activities. We intend to use the offering proceeds, after paying
    the fees and expenses associated with our organization and this
    offering and to fund a capital reserve, to invest in
    business-essential, revenue-producing (or cost-saving) equipment
    and other physical assets with substantial economic lives and,
    in many cases, associated revenue streams. Many of our
    investments will be structured as full payout or operating
    leases. In addition, we intend to invest by way of participation
    agreements and residual sharing agreements where we would
    acquire an interest in a pool of equipment or other assets, or
    rights to those equipment or other assets, at a future date. We
    also may structure investments as project financings that are
    secured by, among other things, essential use equipment
and/or
assets. Finally, we may use other investment structures that our
    Investment Manager believes will provide us the appropriate
    level of security, collateralization, and flexibility to
    optimize our return on investment while protecting against
    downside risk. In most cases, the structure will include us
    holding title to or a priority position in the equipment or
    other asset.
In connection with transactions that have an associated revenue
    stream, we may sell such revenue stream on a discounted,
    non-recourse basis if our Investment Manager believes a sale of
    such revenue stream would increase our return on the investment
    while decreasing our exposure to the underlying investment and
    increase the proceeds available for additional investments.
Initially, we intend to establish working capital reserves of
    approximately 1.0% of our offering proceeds, which we believe
    will be sufficient to satisfy our liquidity requirements.
    However, our operating costs will adversely affect our liquidity
    and to the extent that our working capital reserves are
    insufficient to satisfy our cash requirements, we will increase
    our reserve requirements.
Fluctuations in prevailing interest rates will affect us,
    because the cost of capital as reflected in interest rates is a
    significant factor in determining the market rate for our
    leases. Higher interest rates will:
•
reduce our yield on leveraged investments; and
•
reduce the amount of financing we may be able to obtain because
    of a reduction in value of our fixed-rate leases and secured
    financings.
Interest rate changes generally will result in corresponding
    changes in rates on new leases as well as variable rate
    financing or new financing. Except as discussed above, interest
    rate fluctuations would generally have little or no effect on
    amounts payable under existing leases as their rates would
    generally be fixed.
81
Table of Contents
SUMMARY
    OF OUR PARTNERSHIP AGREEMENT
The following is a brief summary of the material provisions
    of our partnership agreement that are not covered elsewhere in
    this prospectus. The partnership agreement sets out the terms
    and conditions on which we will conduct our business and
    affairs, including the rights and obligations of you and our
    other limited partners. A copy of our partnership agreement is
    included as Appendix A to this prospectus. You should read
    the entire partnership agreement carefully before purchasing our
    units.
General
We are a Delaware limited partnership formed with SQN AIF III
    GP, LLC as our General Partner. Our registered office in
    Delaware is
c/o The
Company Corporation, 2711 Centerville Road, Suite 400,
    Wilmington, Delaware 19998. We may change our registered office
    place of business by written notice to you. Our General
    Partner's offices are located at 48 Wall Street,
    24th Floor, New York, New York 10005.
Our term began when we filed a certificate of limited
    partnership with the Delaware Secretary of State on
    March 10, 2010. Under our partnership agreement, we will
    terminate at midnight on December 31, 2034, or earlier if a
    dissolution event occurs as described in "— Events
    Causing Dissolution," below. However, our General Partner
    anticipates that our actual term before we cease operations as a
    limited partnership and liquidate our assets will be much
    shorter, approximately seven years after the date of this
    prospectus.
Capital
    Contributions
Our General Partner contributed $100 in cash as its capital
    contribution to us in exchange for a 1% interest in our income,
    losses and cash distributions. Each limited partner and our
    General Partner and its affiliates will contribute $1,000 to our
    capital for each unit purchased. You and our other limited
    partners are not obligated to make additional capital
    contributions to us, except as described below under
    "— Limited Liability of Limited Partners."
Powers of
    our General Partner
Except as otherwise specifically provided in our partnership
    agreement, our General Partner will have complete and exclusive
    discretion in the management of our business. You will not be
    permitted to participate in our management. Except to the extent
    limited by Delaware law, our General Partner may delegate any or
    all of its duties under the partnership agreement to another
    person, including any of its affiliates or independent
    third-parties. The partnership agreement designates our General
    Partner as our tax matters partner and directs it to represent
    us and you and our other limited partners in all examinations
    and proceedings of our affairs by tax authorities, and to expend
    our funds in doing so.
Liability
    of Our General Partner
Our General Partner will be liable for all of our general
    obligations to the extent we do not pay them. However, our
    General Partner will not have any personal liability for:
•
obligations that are specifically nonrecourse to us; or
•
the repayment of your capital contribution.
Limited
    Liability of Limited Partners
Our units are not assessable, and you will not have any personal
    liability for any of our obligations or liabilities. You will
    only be liable for our obligations and liabilities to the extent
    of your capital contribution and your pro rata share of our
    undistributed profits and other assets. However, if you
    participate in the management or control of our affairs, you may
    be deemed under Delaware law to be acting as a general partner
    and you may lose your limited liability as against third-parties
    who reasonably believe, in doing business with us, that you are
    a general partner. In addition, Delaware law provides that you
    may be liable to
82
Table of Contents
us for a distribution we make to you if, after giving effect to
    the distribution, our liabilities exceed the fair value of our
    assets.
Withdrawal
    or Removal of Our General Partner
Our General Partner may not voluntarily withdraw as our General
    Partner without:
•
60 days' advance written notice to you and our other
    limited partners;
•
obtaining an opinion of counsel that the withdrawal will not
    cause our termination as a limited partnership or materially and
    adversely affect our federal tax status as a
    partnership; and
•
the selection of a substitute general partner by limited
    partners owning a majority of our units.
Our General Partner may be removed by limited partners owning a
    majority of our units. Neither our General Partner nor any of
    its affiliates may participate in any vote by our limited
    partners to remove our General Partner as general partner or
    appoint a substitute general partner.
Consequences
    of Withdrawal or Removal of Our General Partner
On the withdrawal or removal of our General Partner, we must pay
    our General Partner the fair market value of its partnership
    interest, plus or minus, as the case may be, accrued but unpaid
    fees owed to our General Partner by us and the difference
    between any other amounts owed to our General Partner by us and
    any amounts owed to us by our General Partner. The method of
    payment must be fair and protect our solvency and liquidity. The
    method of payment is deemed fair if:
•
in a voluntary withdrawal, it provides for a non-interest
    bearing unsecured promissory note with principal payable only
    from distributions from us that our General Partner otherwise
    would have received; or
•
in an involuntary removal, it provides for a rate of interest
    equal to the lesser of the rate we would obtain from an
    unrelated bank lender for an unsecured
60-month
loan or the "Prime Rate" of interest published in the
    Money Rates section of the Wall Street Journal, plus 4%, and
    provides for payment of principal and interest in 60 equal
    monthly installments.
Liability
    of Withdrawn or Removed General Partner
After the withdrawal or removal of our General Partner as our
    General Partner, it will remain liable for all obligations and
    liabilities incurred by it or by us while it was acting as our
    General Partner and for which it was liable as our General
    Partner. Our General Partner will be free of any obligation or
    liability arising from our activities after the time its
    withdrawal or removal becomes effective.
Transfer
    of Units
There is no public or secondary market for our units, and we do
    not expect that a market will develop. Generally, you may
    transfer or assign your units to any person, whom we call an
    assignee, only if you satisfy the following conditions:
•
you and the assignee sign a document that our General Partner
    reasonably determines satisfies the following:
–
states your intention that the assignee is to become a
    substitute limited partner, if that is the case;
–
shows that there is a legal transfer and binds the assignee to
    all of the terms and provisions of our partnership agreement;
–
includes a representation by both you and the assignee that the
    assignment or transfer complies with all applicable laws,
    including the applicable minimum investment and investor
    suitability requirements under state securities laws; and
•
the assignee pays us a fee that will not exceed $150 for our
    expenses.
83
Table of Contents
Also, unless our General Partner consents, no units may be
    assigned:
•
to a minor or incompetent unless a guardian, custodian or
    conservator has been appointed for the person;
•
to any person if, in our counsel's opinion, the assignment
    would terminate our taxable year or adversely affect our status
    as a limited partnership for federal income tax purposes;
•
to any person if, in our counsel's opinion, the assignment
    would affect our existence or qualification as a limited
    partnership under Delaware law or the laws of any other
    jurisdiction in which we conduct business;
•
to any person not permitted, in our counsel's opinion, to
    be an assignee under applicable law, including federal and state
    securities laws;
•
if the assignment is for less than 25 units unless the
    assignment is for all of your units;
•
if the assignment would result in your keeping a portion of your
    units that is less than the greater of:
–
25 units; or
–
the minimum number of units required to be purchased under the
    minimum investment standards applicable under the state
    securities laws to your initial purchase of units; or
•
if, in our counsel's opinion, the effect of the assignment
    would be to cause the equity participation in us by certain
    benefit plan and IRA investors to equal or exceed 25% of the
    value of any class of our total outstanding units at any time.
Any attempt to assign or transfer units in violation of our
    partnership agreement or applicable law will be ineffective. We
    will recognize assignments of units as of the last day of the
    month in which all conditions to the assignment have been
    satisfied, and we will amend our partnership agreement at least
    quarterly to effect the substitution of substitute limited
    partners.
In addition, our partnership agreement provides that so long as
    there are adverse federal income tax consequences from being
    treated as a publicly traded partnership, in our counsel's
    opinion, we will not permit any interest in a unit to be
    assigned or sold which does not meet at least one of the
    "secondary market" safe harbors set forth in the
    Treasury Regulations. Under these rules, for example, any
    transfer that would cause the total of all unit transfers or
    assignments in a taxable year (including any redemptions of
    units by us) to exceed 2% of our total capital or profits
    interests, excluding exempted private transfers, would be
    prohibited. We anticipate that the "private transfers"
    and the 2% "lack of actual trading" safe harbors will
    be the only safe harbors potentially available to you and our
    other limited partners. For a more detailed summary of these
    safe harbors, see the "Material U.S. Federal Income
    Tax Consequences — Publicly Traded Partnership"
    section of this prospectus. If we determine that a purported
    transfer or assignment of a unit was effected on a secondary
    market, we have the right to refuse to recognize the proposed
    transfer or assignment and take any action we deem necessary or
    appropriate so that the proposed transfer or assignment is not
    in fact recognized. Also, you must provide us with all
    information with regard to any transfer or assignment of your
    units (or any proposed transfer or assignment of your units)
    that we deem necessary to determine whether it occurred or will
    occur on a secondary market.
Redemption
    of Units
We are permitted by the partnership agreement to redeem your
    units on your request at any time. However, any redemption of
    units is in our General Partner's sole discretion. For a
    more complete discussion of the redemption of units, you should
    read the "Redemption of Units" section of this
    prospectus.
Books and
    Records
We will maintain our books and records at our General
    Partner's principal office. You or your representative will
    have the right, on written request, subject to reasonable notice
    and at your own expense, to inspect and copy, at our General
    Partner's principal office, any partnership books and
    records that we
84
Table of Contents
maintain. You also will have the right to have a copy of a list
    of our limited partners (the "Participant List"
    described below) mailed to you for a reasonable copying charge.
    However, you must first certify that the list will not be:
•
reproduced and sold to another party;
•
used for any commercial purpose unrelated to your interest in
    partnership matters; or
•
used for an unlawful purpose.
The Participant List is an alphabetical list of the names,
    addresses, and business telephone numbers of our limited
    partners along with the number of units held by each of them.
    The Participant List is maintained as part of our books and
    records, and will be updated at least quarterly to reflect
    changes in the information it contains.
If we or our General Partner neglect or refuse to exhibit,
    produce, or mail a copy of the Participant List as requested,
    our General Partner will be liable to any limited partner
    requesting the list for the costs, including attorneys'
    fees, incurred by that limited partner for compelling the
    production of the Participant List, and for actual damages
    suffered by any limited partner by reason of such refusal or
    neglect. It is a defense that the actual purpose and reason for
    the request for inspection or for a copy of the Participant List
    is to secure the Participant List or other information for the
    purpose of selling the list or copies of the list, or using the
    list or other information for a commercial purpose other than in
    the interest of the applicant as a limited partner relative to
    our affairs. Thus, our General Partner will require the limited
    partner requesting the Participant List to first represent that
    the list is not being requested for a commercial purpose
    unrelated to the limited partner's interest in us. The
    remedies provided to our limited partners requesting copies of
    the Participant List are in addition to, and do not in any way
    limit, other remedies available to our limited partners under
    federal law or the laws of any state.
Meetings
    of Limited Partners
There will be no annual or other periodic meetings of the
    limited partners. However, a meeting of our limited partners
    must be called by our General Partner following its receipt of
    written request(s), either in person or by registered mail, for
    a meeting on any matter on which our limited partners may vote
    from limited partners holding 10% or more of the then
    outstanding units. Every request by our limited partners for a
    meeting must state with reasonable specificity the purpose(s)
    for which the meeting is to be held and the text of any matter,
    resolution or action proposed to be voted on by our limited
    partners at the meeting. Within 10 days following the
    receipt of the request, our General Partner will give notice to
    all limited partners of the meeting, and the time and place of
    the meeting in the manner specified in our partnership
    agreement. In addition, our General Partner may, and if so
    requested by our limited partners in the manner described above,
    must, submit the proposed matter, resolution or action for
    action by consent of our limited partners, in lieu of a meeting.
    Also, our General Partner may call meetings of our limited
    partners at any time. However, in lieu of a meeting, any matter
    that could be voted on at a meeting of our limited partners may
    be submitted by our General Partner for action by consent of our
    limited partners.
Voting
    Rights of Limited Partners
Limited partners owning a majority of our units may take action
    on any of the following matters without our General
    Partner's concurrence:
•
an amendment of our partnership agreement, subject to certain
    limitations discussed in "— Amendment by Limited
    Partners Without Our General Partner's Concurrence,"
    below;
•
our dissolution;
•
the removal of our General Partner and the election of one or
    more substitute general partners;
•
the sale of all or substantially all of our assets, except in
    connection with securitization financings or sales in the
    ordinary course of liquidating our investments after the
    Operating Period; and
85
Table of Contents
•
the cancellation of any contract for services to us with our
    General Partner or its affiliates, subject to certain
    exceptions, such as the Management, Origination and Servicing
    Agreement, without penalty on 60 days notice.
Our General Partner and its affiliates may not vote or consent
    on matters submitted to our limited partners regarding the
    removal of our General Partner and the election of a substitute
    general partner or regarding any transaction between us and our
    General Partner or any of its affiliates. In determining the
    requisite percentage of units necessary to approve a matter on
    which our General Partner or its affiliates may not vote or
    consent, any units owned by our General Partner or its
    affiliates cannot be included in either the numerator or the
    denominator.
Limited partners who dissent from any matter approved by limited
    partners owning a majority of our units are bound by the vote
    and do not have a right to appraisal or automatic repurchase of
    their units.
Amendment
    by Limited Partners Without Our General Partner's
    Concurrence
Amendments of our partnership agreement by our limited partners
    without our General Partner's concurrence may not allow our
    limited partners to take part in the control or management of us
    or our business, or contract away our General Partner's
    fiduciary duties to our limited partners. In addition, any
    proposed amendment of the partnership agreement that would:
•
change how our partnership agreement can be amended, will
    require the consent of all of our limited partners;
•
alter the rights, powers, duties or obligations of our General
    Partner, will require our General Partner's consent; or
•
adversely affect any partner's share of our cash
    distributions will require the consent of each partner affected
    by the change.
Amendment
    by Our General Partner Without the Consent of the Limited
    Partners
Our General Partner may, without the consent of you and our
    other limited partners, amend our partnership agreement for the
    benefit or protection of you and our other limited partners,
    including any one or more of the following:
•
adding to our General Partner's duties or obligations, or
    surrendering any of its rights or powers;
•
curing any ambiguity in, or correcting or supplementing any
    provision of, our partnership agreement;
•
preserving our status as a limited partnership for federal
    income tax purposes;
•
deleting or adding any provision that the SEC or any other
    regulatory body or official requires to be deleted or
    added; or
•
changing our name or the location of our principal office.
Events
    Causing Dissolution
We will dissolve when any of the following events occurs:
•
withdrawal or removal of our General Partner if a substitute
    general partner has not been admitted;
•
our dissolution is approved on a vote of limited partners owning
    a majority of our units;
•
the sale of all or substantially all of our assets other than in
    connection with a financing transaction, such as a
    securitization;
•
the expiration of our term; or
•
any other event which would cause us to dissolve under Delaware
    law.
86
Table of Contents
Liquidation
When a dissolution event occurs, we will liquidate our
    investments and other assets and distribute the proceeds, after
    we pay our debts and expenses, to our partners in accordance
    with their percentage ownership in us. Our existence will
    terminate once we have paid all our debts and expenses and made
    final distributions to our partners. You are not guaranteed the
    return of, or a return on, your investment in us as a result of
    any of these distributions.
Roll-Up
Transactions
We may enter into a
"roll-up"
transaction only on the vote or consent of limited partners
    owning a majority of our units and on satisfaction of certain
    other conditions described below. A
"roll-up"
transaction generally is a transaction involving the
    acquisition, merger, conversion or consolidation of us, as a
    partnership, with an entity created by, or surviving, the
    transaction (the
"roll-up
entity"), and the issuance of securities by the
roll-up
entity. The term
"roll-up"
does not cover specified transactions, including our conversion
    into a different legal form, if there will be no significant
    adverse change in unit voting rights, our term, the compensation
    we pay our General Partner and its affiliates, our investment
    objectives or the federal income tax consequences of owning a
    unit.
•
In order for us to enter into a proposed
roll-up
transaction, the additional conditions set forth below must be
    met. All of our assets must be appraised by a competent,
    independent expert, which our partnership agreement defines as a
    person with no material current or prior business or personal
    relationship with our General Partner or its affiliates who is
    engaged to a substantial extent in the business of rendering
    appraisals and who is qualified to perform the work. If the
    appraisal will be included in a prospectus used to offer the
    securities of a
roll-up
entity, the appraisal must be filed with the SEC and the states
    as an exhibit to the registration statement for the offering.
    Our assets must be appraised on a consistent basis, and the
    appraisal must be based on an evaluation of all relevant
    information and indicate the value of our assets as of a date
    immediately prior to the announcement of the proposed
roll-up
transaction. The appraisal must assume an orderly liquidation of
    our assets over a 12 month period. The terms of the
    engagement of the independent expert must clearly state that the
    engagement is for the benefit of us and our limited partners. A
    summary of the independent appraisal, indicating all material
    assumptions underlying the appraisal, must be included in a
    report to our limited partners in connection with the proposed
roll-up
transaction.
•
The sponsor of the proposed
roll-up
transaction must offer to our limited partners who vote
    "no" on the proposal the option of either:
•
accepting the
roll-up
securities; or
•
one of the following:
-
remaining as limited partners in us on the same terms and
    conditions as existed previously; or
-
receiving cash equal to the limited partner's pro rata
    share of the appraised value of our net assets.
•
We may not participate in any proposed
roll-up
transaction that would result in our limited partners having
    voting rights that are less than those provided for under our
    partnership agreement. If the
roll-up
entity is a limited partnership, the voting rights of our
    limited partners must correspond to the voting rights provided
    for in our partnership agreement to the greatest extent possible.
•
We may not participate in any proposed
roll-up
transaction that includes provisions that would operate to
    materially impede or frustrate the accumulation of units by any
    purchaser of the securities of the
roll-up
entity (except to the minimum extent necessary to preserve the
    tax status of the
roll-up
entity). We may not participate in any proposed
roll-up
transaction that would limit the ability of a limited partner to
    exercise the voting rights of that limited partner's units
    of the
roll-up
entity on the basis of the number of our units held by that
    limited partner.
87
Table of Contents
•
We may not participate in any proposed
roll-up
transaction in which our limited partners' rights of access
    to the records of the
roll-up
entity would be less than those provided for under our
    partnership agreement.
•
We may not participate in any proposed
roll-up
transaction in which any of the costs of the transaction would
    be borne by us if the
roll-up
transaction is not approved by our limited partners.
REDEMPTION OF
    UNITS
Redemption Price
    of Units
Your units are illiquid and can be redeemed by us only if the
    redemption provisions in our partnership agreement, which are
    summarized below, are met. If we do redeem your units, which may
    include a reasonable administrative fee charged to you and is in
    our General Partner's sole discretion, the redemption price
    for your units will depend on when you present your units for
    redemption. If you present your units for redemption:
•
during the Offering Period and Operating Period, the redemption
    price will equal not less than $850 per unit, less distributions
    previously paid to you; or
•
during the Liquidation Period, the redemption price will equal
    the equity for one unit as set forth on our balance sheet in our
    most recent periodic report filed with the SEC before your
    redemption request, less distributions paid to you since the
    date of the balance sheet.
We will not establish any specific reserves for the redemption
    of units. Redemptions may be made from our operating income,
    general reserves, additional limited partner capital
    contributions or any other sources not prohibited by our
    partnership agreement.
The redemption price for your units is unlikely to reflect the
    fair market value of your units at the time of redemption,
    particularly during the Liquidation Period. You may realize a
    greater return by holding on to your units for the duration of
    our term.
Procedure
    for Redemption of Units
To redeem your units, you must send us a written request in a
    form satisfactory to us. The request must be signed by all of
    the owners of the units. We will consider redemption requests to
    have been made on the earlier of the date the request is
    personally delivered with receipt acknowledged, or mailed by
    certified mail, return receipt requested, postage prepaid, at
    our General Partner's address set forth in this prospectus.
    We will accept or deny redemption requests quarterly.
Restrictions
    on Redemption of Units
We have no obligation to redeem your units, and will do so only
    in our General Partner's sole discretion. Beginning when
    you are admitted as a limited partner and at any time
    thereafter, you may request that we redeem your units. In any
    calendar year, we will not redeem any units that, in the
    aggregate, together with all other transfers of units made to
    date during the calendar year, subject to certain exceptions,
    exceed 2% of our total capital or profits interests, or that we
    reasonably believe might exceed 2% of our total capital or
    profits interests, as of the last day of the calendar year. This
    limitation is required so that we will not be treated as a
    publicly traded partnership for tax purposes. If we believe that
    the 2% limitation may be reached before year-end, we may redeem
    only a portion, or none, of the units for which redemption is
    sought, and we may decide to allocate, at the date of request or
    later in the year, redemption capacity based on the financial
    hardship of the limited partners requesting redemption.
In addition, we will not redeem units if, in our General
    Partner' s sole discretion, we do not have sufficient cash
    on hand. We intend to reinvest a substantial portion of our
    revenues during the Operating Period, which begins with the
    initial closing date in this offering and ends three years
    later. Also, we will not redeem units if the redemption would
    impair our capital or our operations, which our General Partner
    will
88
Table of Contents
decide in its sole discretion. Cash used to redeem units will
    reduce our cash available for making investments, reinvestments
    and distributions to our remaining limited partners. If we
    receive requests to redeem more units than there are funds
    available to redeem, we expect to give priority:
•
first, to hardship redemptions (e.g., requests arising from
    death, major medical expense, family emergency, disability, a
    material loss of family income, etc.);
•
second, to provide liquidity for IRA's or qualified plans
    to meet required distributions; and
•
third, to all other redemption requests.
Additionally, we will not redeem any units that would result in
    25% or more of the value of any of the remaining units of any
    class being held be qualified plans, IRAs or other benefit plan
    investors (as defined for purposes of ERISA).
Consequences
    of Redemption of Units
If we redeem all of your units, then you will no longer be a
    limited partner and you will have no interest in us. However, a
    redemption of all of your units will not release you from
    liability to us to the extent of any distributions, including
    any return of or on your investment, made to you in violation of
    Delaware law. Also, any gain realized by you on the redemption
    of your units, if you held them as a capital asset and held them
    for more than one year, generally will be a capital gain, but
    your gain may be treated as ordinary income to the extent of
    your share of:
•
recapture of your cost recovery deductions on our equipment and
    other assets leased to others under operating leases;
•
our substantially appreciated inventory items; and
•
our unrealized receivables.
See the "Material U.S. Federal Income Tax
    Consequences — Sale or Other Disposition of
    Units" section of this prospectus.
You are urged to seek advice based on your particular
    circumstances from an independent tax advisor with respect to
    the tax consequences to you of a redemption of your units.
89
Table of Contents
REPORTS
    TO LIMITED PARTNERS
Tax
    Reports
As soon as practicable each year we will send you a statement on
Form K-1
of your share of our income, gains, losses, deductions and other
    tax items for the previous calendar year just ended to enable
    you to prepare your income tax returns.
Annual
    Reports
Within 90 days after the end of each year, we will send you
    an annual report that will include:
•
Our audited financial statements for the fiscal year prepared in
    accordance with GAAP, including a balance sheet and related
    statements of operations, cash flows and changes in
    partners' equity, accompanied by an auditor's report
    containing an opinion of our independent accountants.
•
A breakdown, by source, of distributions made during the year to
    you and to our General Partner.
•
A status report with respect to each item of equipment and other
    assets that individually represent at least 10% of the aggregate
    purchase price of our investments at the end of the year, if
    any, including information relevant to the condition and use of
    the equipment and other assets.
•
A detailed statement of:
-
the services rendered and compensation paid or reimbursed to our
    General Partner and its affiliates; and
-
a summary of the terms and conditions of any contract with our
    General Partner or its affiliates that was not filed as an
    exhibit to the registration statement of which this prospectus
    forms a part.
•
Our General Partner's allocation of costs and expenses
    reimbursed by us to our General Partner and its affiliates will
    be included within the scope of our annual audit by our
    independent public accountants.
•
Information regarding investments made by us during the fiscal
    year, until all of the capital contributions to us by you and
    our other limited partners have been invested, reinvested or
    committed to investment and reserves, used to pay permitted fees
    or returned to you and our other limited partners in accordance
    with our partnership agreement.
•
A customer account statement.
Quarterly
    Reports
Within 45 days after the end of each of the first three
    quarters in each year, we will send you an interim report for
    the quarter that will include:
•
Our unaudited financial statements for the quarter, including a
    balance sheet and related statements of operations, cash flows
    and changes in partners' equity; or if our units are
    registered under Section 12(g) of the Securities Exchange
    Act of 1934, which we anticipate, a copy of our Quarterly Report
    on
Form 10-Q
filed by us with the SEC.
•
A detailed statement of:
-
the services rendered and compensation paid, and any expenses
    reimbursed, to our General Partner or its affiliates, and
-
a summary of the terms and conditions of any contract with our
    General Partner or its affiliates that was not filed as an
    exhibit to the registration statement of which this prospectus
    forms a part.
•
Information regarding investments made by us during the quarter,
    until all of the capital contributions to us by you and our
    other limited partners have been invested, reinvested or
    committed to investment
90
Table of Contents
and reserves, used to pay permitted fees or returned to you and
    our other limited partners in accordance with our partnership
    agreement.
Reports
    to State Securities Laws Administrators
Our General Partner will submit to all state securities law
    administrators, including Arizona, California and Ohio, any
    information concerning us that the administrators require,
    including, but not limited to:
•
reports and statements required by our partnership agreement to
    be distributed to you and our other limited partners; and
•
reports required to be filed with the administrators under the
    applicable state securities laws, regulations or policies, which
    may include copies of our SEC filings under the Securities
    Exchange Act of 1934, as amended.
91
Table of Contents
PLAN OF
    DISTRIBUTION
Our units will be offered on a "best efforts" basis by
    SQN Securities, LLC, an affiliate of our General Partner and our
    Investment Manager, acting as the exclusive selling agent of
    this offering. SQN Securities, LLC was formed for the purpose of
    serving as the selling agent of partnerships sponsored by its
    affiliates and became a FINRA member firm
    in      2010. Best efforts generally
    means that the selling agent will not guarantee that a certain
    number of units will be sold in this offering.
The offering is made on a minimum/maximum basis. We must receive
    a minimum of $1.2 million in offering proceeds before we
    will admit subscribers as limited partners. Persons who
    subscribe for units prior to the time that we admit limited
    partners will deposit their funds in an escrow account held
    by           .
    If the amount of proceeds raised by January 1, 2011 are
    insufficient to constitute the minimum offering, all
    subscription proceeds deposited by the subscribers into the
    escrow account will be returned, together with any interest
    earned thereon and without deduction for fees, commissions, or
    expenses, to those subscribers.
Compensation
    of the Selling Agent
We will pay Distribution Expenses of 2.0% of the gross offering
    proceeds to the selling agent. The offering price of each unit
    is $1,000. We will not pay distribution expenses for units sold
    to our General Partners or its affiliates.
The maximum amount of compensation that we may pay to the
    selling agent in this offering is $998,000, assuming our General
    Partner or its affiliates purchase 100 units at a purchase
    price of $1,000 per unit and all other units are sold by the
    selling agent.
This offering will be made in compliance with FINRA Conduct
    Rule 2310, and all compensation paid to the selling agent,
    including diligence expenses, will be limited to 2.0% of our
    gross offering proceeds.
Total organization and offering expenses, which include the
    Distribution Expense, selling commissions, due diligence
    reimbursements and the organization and offering expense
    allowance payable to our General Partner and its affiliates will
    not exceed 4.0% of the gross offering proceeds. See the
    "Management Compensation" section of this prospectus
    beginning on page 10.
Indemnification
The selling agent is an underwriter as that term is defined in
    the Securities Act of 1933, as amended and the distribution
    expenses will be deemed underwriting compensation. Our General
    Partner and the selling agent will agree to indemnify each other
    against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended.
92
Table of Contents
THE
    OFFERING
Terms of
    this Offering and the Offering Period
The minimum amount of offering proceeds that we must receive in
    order to break escrow and hold the Initial Closing is
    $1.2 million (1,200 units), and the maximum amount of
    offering proceeds that we can accept in this offering is
    $50.0 million (50,000 units). The amount of our
    minimum required offering proceeds excludes units subscribed for
    by Pennsylvania residents and units subscribed for by our
    General Partner and its affiliates, as discussed in "-
    Escrow Arrangements," below.
Your minimum subscription amount is 25 units ($25,000).
Your subscription to purchase our units will be effective only
    when it is accepted by our General Partner, which reserves the
    right to reject your subscription in whole or in part, without
    liability to you. The subscription agreement provided to you for
    execution must be accompanied by a copy of this prospectus. You
    have the right to cancel your subscription before it has been
    accepted by our General Partner by giving written notice of your
    intent to cancel, in a form that is satisfactory to us and is
    signed by you and every other person who signed your
    subscription agreement as an investor, if any, to SQN AIF III
    GP, LLC, Investor Relations, 48 Wall Street, 24th Floor, New
    York, New York 10005. We will not complete a sale of units to
    you until at least five business days after the date you receive
    a final prospectus.
This offering will end not later than two years from the date of
    this prospectus. Some states or jurisdictions may require
    renewal, requalification or other consents in order for us to
    continue this offering after the end of one year from the date
    of this prospectus. In addition, we may end this offering at any
    time. If we do not receive and accept subscriptions for a
    minimum of $1.2 million (1,200 units) before
    January 1, 2011, we will promptly return all of the
    subscription proceeds we have received together with any
    interest earned on them and without deduction for any fees.
Escrow
    Arrangements
Until we receive subscriptions for the minimum offering proceeds
    of $1.2 million (1,200 units) and admit the initial
    subscribers as limited partners, the subscription proceeds will
    be held in an escrow account
    at          .
    Subscription proceeds held in the escrow account will be
    invested in interest-bearing savings or bank money market
    accounts so long as they are not mutual funds. Subscribers may
    not withdraw their subscription proceeds from the escrow
    account. On the earlier of the termination of this offering or
    the satisfaction of the escrow condition and the initial closing
    in this offering, any interest that accrues on the funds held in
    escrow will be distributed to the subscribers whose funds were
    held in escrow and allocated among them based on the amounts of
    their respective subscriptions and the number of days that those
    amounts were on deposit in the escrow account.
Pennsylvania Investors.
Because the minimum
    closing amount is less than $20 million, you are cautioned
    to carefully evaluate our ability to fully accomplish our stated
    objectives and to inquire as to the current dollar volume of
    Fund subscriptions.
Subscriptions received from residents of Pennsylvania will be
    placed in a separate escrow account and will not be counted
    toward satisfaction of our minimum offering proceeds of
    $1.2 million (1,200 units). Instead, if you are a
    Pennsylvania or Iowa resident, we must hold your subscription
    proceeds in escrow until we receive and accept subscriptions for
    at least $7,500,000 units ($7,500 million) including
    your subscription. In addition, we must offer you the
    opportunity to rescind your subscription if we have not received
    subscriptions for 7,500 units within 120 days of the
    date the escrow agent receives your subscription proceeds.
    Subsequently, we must repeat this offer to you every
    120 days during the Offering Period until we have received
    and accepted subscriptions for 7,500 units. On the earlier
    of the termination of this offering or the satisfaction of the
    escrow condition, any interest that accrues on the funds held in
    the escrow account or the subscription account will be
    distributed to the subscribers whose funds were held in the
    escrow account and allocated among them based on the amounts of
    their respective subscriptions and the number of days that those
    amounts were on deposit in the escrow account.
93
Table of Contents
Offering proceeds will be transferred to us from escrow any time
    after we receive and accept the minimum offering proceeds of
    $1.2 million (1,200 units), other than subscriptions
    from Pennsylvania residents and subscriptions from our General
    Partner and its affiliates. Subject to the foregoing,
    subscribers whose subscription proceeds have been held in the
    escrow account will be admitted as limited partners in the
    initial closing in this offering within 15 days after we
    have received the minimum offering proceeds of $1.2 million
    and broken escrow. Subsequent subscriptions will be held in a
    separate interest-bearing subscription account pending our
    General Partner's acceptance or rejection of the
    subscriptions, and no interest will be paid to those subscribers
    on their subscription amounts if our General Partner accepts
    their subscriptions.
Our General Partner will accept or reject subsequent
    subscriptions within 60 days after receipt. Investors whose
    subscriptions are accepted by our General Partner will be
    admitted as limited partners promptly after their subscriptions
    are accepted, but in any event no later than the last day of the
    month following the date the subscription was accepted. We will
    promptly return rejected subscription proceeds together with any
    interest earned and without deduction for any fees. If our
    General Partner accepts your subscription, either we or an agent
    of ours will give you prompt written confirmation of your
    admission as one of our limited partners.
Our offering proceeds from each closing will be kept in our
    partnership account and will not be commingled with the funds of
    any other person or entity. Our General Partner will have
    fiduciary responsibility for the safekeeping and use of all of
    our funds and assets, whether or not in its immediate possession
    or control. Also, our General Partner will not employ, nor
    permit any other person to employ, our funds or assets in any
    manner except for our exclusive benefit.
The escrow agent's sole role in this offering is that of
    escrow holder. As the escrow agent, it has not reviewed any of
    our offering materials and it makes no representations
    whatsoever as to the nature of this offering or the compliance
    of this offering with any applicable state or federal laws,
    rules or regulations. The escrow agent neither endorses,
    recommends nor guarantees the purchase, value, repayment or any
    other aspect of an investment in us. The escrow agent does not
    represent the interests of you or the other potential investors.
    Its duties are limited as expressly set forth in the escrow
    agreement. Interested persons may request a copy of the escrow
    agreement from our General Partner.
94
Table of Contents
HOW TO
    SUBSCRIBE
If you are investing in us as a natural person, and not as a
    business or investment entity, you must complete and personally
    sign the subscription agreement included in Appendix C to
    this prospectus and deliver it, together with a check for your
    subscription amount, to a registered representative of the
    selling agent. Except as discussed below, your minimum
    investment amount is 25 units ($25,000). In the case of an
    IRA or qualified plan, both the owner and the plan fiduciary, if
    any, must sign the subscription agreement. In the case of donor
    trusts or other trusts in which the donor is the fiduciary, the
    donor must sign the subscription agreement in the donor's
    fiduciary capacity (e.g. trustee), or both the donor and the
    fiduciary must sign the subscription agreement. In the case of
    other fiduciary accounts in which the donor neither exercises
    control over the account nor is a fiduciary of the account, the
    plan fiduciary alone may sign the subscription agreement.
Until we receive and accept offering proceeds of
    $1.2 million (1,200 units), excluding units subscribed
    for by our General Partner and its affiliates and by residents
    of Pennsylvania, checks for the purchase of units should be made
    payable to
    "          
    ." After the initial closing date in this offering, checks
    for the purchase of units should be made payable to "SQN
    Alternative Investment Fund III, L.P. Subscription
    Account."
The selling agent must forward these subscription checks to the
    escrow agent promptly. Our General Partner will promptly review
    each subscription and either will accept or decline your
    subscription as a limited partner.
95
Table of Contents
SUPPLEMENTAL
    SALES LITERATURE
In addition to this prospectus, our General Partner intends to
    use the following sales material with the offering of our units:
•
a brochure entitled "SQN Alternative Investment
    Fund III, L.P.;"
•
a slide show presentation and script entitled "SQN
    Alternative Investment Fund III, L.P.;" and
•
possibly other supplementary materials.
We anticipate that the supplemental materials will include
    information relating to this offering and our General Partner
    and its affiliates. Our supplemental materials also may include
    audio visual materials and taped presentations highlighting and
    explaining various features of this offering. We also may
    respond to specific questions from the selling agent and
    prospective investors. We may send business reply cards,
    introductory letters and seminar invitations to the selling
    agent for customer use, and other materials relating to this
    offering may be made available to them for their internal use.
Except as described above, our General Partner has not
    authorized the use of any other sales material and the offering
    of our units is made only by means of this prospectus. All sales
    materials authorized by us for use in this offering are subject
    to the following conditions:
•
they must be preceded or accompanied by this prospectus;
•
they do not include all of the information set forth in this
    prospectus;
•
they will not contain any material information that is not also
    set forth in this prospectus; and
•
they should not be considered a part of, or incorporated into,
    this prospectus or the registration statement of which this
    prospectus is a part.
In addition, supplementary materials, including prepared
    presentations for group meetings, must be submitted by us to the
    administrators of applicable state securities laws before they
    are used, and their use must be preceded or accompanied by this
    prospectus. Also, all advertisements of, and oral or written
    invitations to, "seminars" or other group meetings at
    which our units are to be described, offered, or sold will
    clearly indicate the following:
•
that the purpose of the meeting is to offer our units for sale;
•
the minimum purchase price of our units; and
•
the name of the selling agent selling our units.
Also, no cash, merchandise, or other items of value may be
    offered as an inducement to you or any other prospective
    investor to attend the meeting.
You should rely only on the information contained in this
    prospectus in making your investment decision. No one is
    authorized to provide you with information that is
    different.
LEGAL
    MATTERS
The legality of the units has been passed upon and the
    statements under the caption "Material U.S. Federal
    Income Tax Consequences" as they relate to federal income
    tax matters have been reviewed and passed upon by Troutman
    Sanders LLP, Atlanta, Georgia.
EXPERTS
The balance sheet of SQN Alternative Investment Fund III,
    L.P. as of March 31, 2010 included in the registration
    statement and this prospectus has been so included in reliance
    upon the report of Holtz Rubenstein Reminick LLP, an independent
    registered public accounting firm upon the authority of said
    firm as experts in accounting and auditing in giving such report.
96
Table of Contents
The balance sheet of SQN AIF III GP, LLC as of and for the year
    ended December 31, 2010 included in the registration
    statement and this prospectus has been so included in reliance
    upon the report of Holtz Rubenstein Reminick LLP, an independent
    registered public accounting firm upon the authority of said
    firm as experts in accounting and auditing in giving such report.
FORECASTS
The use of forecasts in this offering is prohibited. Any
    representations to the contrary and any predictions, written or
    oral, as to the amount or certainty of any present or future
    cash benefit or tax consequence that you may receive from the
    purchase of our units is not permitted.
WHERE YOU
    CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form S-1
under the Securities Act of 1933, as amended, with respect to
    the units offered in this prospectus. This prospectus, filed as
    part of the registration statement, does not contain all of the
    information set forth in the registration statement and its
    exhibits and schedules, portions of which have been omitted as
    permitted by the rules and regulations of the SEC. For further
    information about us and our units, we refer you to the
    registration statement and to its exhibits and schedules.
    Statements in this prospectus about the contents of any
    contract, agreement or other document are not necessarily
    complete and, in each instance, we refer you to the copy of the
    contract, agreement or document filed as an exhibit to the
    registration statement.
Anyone may inspect the registration statement and its exhibits
    and schedules without charge at the public reference facilities
    the SEC maintains at 100 F Street, N.E.,
    Washington, D.C. 20549. You may obtain copies of all or any
    part of these materials from the SEC upon the payment of certain
    fees prescribed by the SEC. You may obtain further information
    about the operation of the SEC's Public Reference Room by
    calling the SEC at
1-800-SEC-0330.
You also may inspect these reports and other information without
    charge at the website maintained by the SEC. The address of this
    website is
http://www.sec.gov.
Upon effectiveness of the registration statement, we will become
    subject to the informational requirements of the Exchange Act
    and will be required to file reports and other information with
    the SEC. You will be able to inspect and copy these reports and
    other information at the public reference facilities maintained
    by the SEC at the address noted above. You also will be able to
    obtain copies of this material from the Public Reference Room as
    described above or inspect them without charge at the SEC's
    website.
97
Table of Contents
GLOSSARY
The following terms used in this prospectus shall generally have
    the following respective meanings as set forth in
    Section 1.1 of our partnership agreement, which is attached
    as Appendix A to this prospectus.
(1)
"Acquisition Expenses"
means expenses
    (other than Acquisition Fees) incurred and paid to any Person
    which are attributable to the selection and acquisition of
    Investments, whether or not acquired, including, but not limited
    to:
(i) legal fees and expenses;
(ii) travel and communication expenses;
(iii) costs of credit reports, appraisals and reference
    materials used to evaluate transactions;
(iv) non-refundable option payments on Investments not
    acquired;
(v) accounting fees and expenses;
(vi) insurance costs;
(vii) initial direct costs, as that term is defined under
    United States generally accepted accounting principles
    ("GAAP"), which includes any origination fees paid by
    our Investment Manager or its Affiliates to any Person,
    including its or its Affiliates' employees, with respect to
    acquiring and holding Investments on a temporary basis before
    they are purchased from our Investment Manager or its Affiliates
    by us; and
(viii) miscellaneous other expenses, however designated.
(2)
"Acquisition Fees"
means all fees and
    commissions paid by any party in connection with the initial
    purchase or funding of any Investment, including fees payable to
    finders and brokers that are not Affiliates of our General
    Partner. Also, included in the computation of such fees or
    commissions shall be any commission, selection fee, financing
    fee, non-recurring management fee, or any fee of a similar
    nature, however designated.
(3)
"Administrator"
means the official or
    agency administering the securities laws of a state or other
    political subdivision of the United States.
(4)
"Affiliate"
means, with respect to any
    Person:
(i) any other Person directly or indirectly controlling,
    controlled by or under common control with such Person;
(ii) any other Person owning or controlling 10% or more of
    the outstanding voting securities of such Person;
(iii) any officer, director or partner of such
    Person; and
(iv) if such Person is an officer, director or partner, any
    other Person for which such Person acts in such capacity.
(5)
"Affiliated Program"
means any Program
    formed by our General Partner or any Affiliate of our General
    Partner or in which our General Partner or any of its Affiliates
    has an interest.
(6)
"Capital Contribution"
means:
(i) as to our General Partner, its initial $100
    contribution to the capital of us plus any additional amounts as
    may be contributed to the capital of us by our General
    Partner; and
(ii) as to any Limited Partner, including Affiliated
    Limited Partners, the gross amount of investment in us actually
    paid by the Limited Partner, i.e. the Unit Price, without
    deduction for Front-End Fees (whether payable by us or not);
but excluding Net Disposition Proceeds reinvested in additional
    Investments under Section 9.1(b)(xxv) of our partnership
    agreement.
98
Table of Contents
(7)
"Cash Flow"
means our Gross Revenues,
    without deduction for depreciation, but after deducting the our
    cash funds used to pay all our other expenses, debt payments,
    capital improvements and replacements (other than cash funds
    withdrawn from Reserves).
(8)
"Code"
means the Internal Revenue Code
    of 1986, as amended, or corresponding provisions of subsequent
    laws.
(9)
"Cumulative Return"
means, as to any
    Limited Partner, an amount equal to an 8% annual cumulative
    return, compounded annually, on the Limited Partner's
    Capital Contribution calculated from a date not later than the
    last day of the calendar quarter in which the Capital
    Contribution of the Limited Partner as to which the Cumulative
    Return is being calculated was made.
(10)
"Distribution Expenses"
means the
    fees payable to the Selling Agent in an amount equal to 2% of
    the Unit Price per Unit sold, in the aggregate, in the Offering
    (excluding any Units sold to our General Partner or its
    Affiliates).
(11)
"Distributable Cash"
means Cash Flow
    plus any amounts released from Reserves by our General Partner,
    less amounts allocated to Reserves by our General Partner.
(12)
"Effective Date"
means the date the
    Registration Statement is declared effective by the Commission.
(13)
"Equipment"
means any new, used or
    reconditioned equipment or revenue stream associated therewith
    acquired by us, or in which we have acquired a direct or
    indirect interest (including, but not limited to, residual
    interests), and shall also be deemed to include such equipment
    which at any time is subject to, or serves as the collateral
    for, a Lease.
(14)
"Final Closing Date"
means the last
    closing date in the Offering on which a limited partner (other
    than a substitute limited partner) is admitted to us, which
    shall be as soon as practicable following the Offering
    Termination Date.
(15)
"Financing Transaction"
means:
(i) any extension of credit or loan of money to us or our
    subsidiaries that is secured by a security interest in our
    Investments or our other tangible or intangible personal
    property or any Lease of any such property;
(ii) any notes issued in connection with a securitization
    of Investments, or receivables therefrom; or
(iii) any transaction in which our Investments are sold to
    a Person for purposes of securitization and with customary
    retained rights or interests.
(16)
"Front-End Fees"
means fees and
    expenses paid by any Person for any services rendered during our
    organizational and offering or acquisition phases, including
    Distribution Expenses, Organization and Offering Expense
    Allowances, Leasing or Financing Fees, Acquisition Fees and
    Acquisition Expenses (other than any Acquisition Fees or
    Acquisition Expenses paid by a manufacturer of equipment to any
    of its employees unless such Persons are Affiliates of our
    General Partner) and all other similar fees however designated.
(17)
"Full Payout Lease"
means any lease
    under which the aggregate noncancellable rental payments due
    during the initial term of the lease, on a net present value
    basis, are at least sufficient to permit us to recover the
    entire purchase price of the Equipment subject to the lease.
(18)
"Gross Revenues"
means our gross cash
    receipts from whatever source (including our share of Gross
    Revenues from our indirect Investments), excluding capital
    contributions.
(19)
"Initial Closing Date"
means the
    first closing date for us on which limited partners with units
    equal to, or greater than, the Minimum Offering are admitted to
    us.
(20)
"Investment in Equipment"
means the
    aggregate amount of capital contributions and Financial
    Transactions actually paid or allocated to the purchase,
    manufacture or renovation of Investments acquired by
99
Table of Contents
us, together with other cash payments such as interest, taxes
    and Reserves allocable thereto (to the extent that Reserves do
    not exceed 3% of Capital Contributions), but excluding Front-End
    Fees.
(21)
"Investments"
means our portfolio,
    from time to time, of Equipment, Other Physical Assets and
    Leases, whether we own the portfolio directly or indirectly.
(22)
"Lease"
means any Full Payout Lease,
    any Operating Lease and any residual value interest therein or
    any other agreement directly or indirectly collateralized by
    Investments.
(23)
"Liquidation Period"
means the period
    commencing on the first day following the end of the Operating
    Period and continuing for the period deemed necessary by our
    General Partner for the orderly termination of our operations
    and affairs and the liquidation or disposition of our
    Investments.
(24)
"Management, Origination and Servicing
    Agreement"
means the agreement entered into between us
    and our Investment Manager, substantially in the form of the
    Management, Origination and Servicing Agreement filed as an
    exhibit to the Registration Statement, as amended and
    supplemented from time to time as permitted by its terms.
(25)
"Maximum Offering"
means the receipt
    and acceptance by us of subscriptions for not more than 50,000
    Units ($50,000,000), excluding the 1 unit subscribed for by
    the Original Limited Partner, on or before the Final Closing
    Date.
(26)
"Minimum Offering"
means the receipt
    and acceptance by us of subscriptions for not less than 1,200
    Units ($1,200,000), excluding the 1 unit subscribed for by
    the Original Limited Partner and any units subscribed for by our
    General Partner or its officers, directors, employees or other
    Affiliates, or Pennsylvania subscribers.
(27)
"Net Disposition Proceeds"
means the
    proceeds realized by us from the sale, refinancing or other
    disposition of our Investments, including insurance proceeds or
    lessee or borrower indemnity payments arising from the loss or
    destruction of the Equipment, less all our liabilities.
(28)
"Net Offering Proceeds"
means the
    Gross Offering Proceeds minus the Distribution Expenses and the
    Organization and Offering Expense Allowance payable by us.
(29)
"Net Worth"
means, for any Person
    subscribing for units, the excess of total assets over total
    liabilities as determined by GAAP, but excluding home, home
    furnishings and automobiles. Provided, however, that with
    respect to our General Partner, "Net Worth" means the
    excess of total assets over total liabilities as determined by
    GAAP. However, if any of our General Partner's assets have
    been depreciated, then the amount of depreciation relative to
    any particular asset may be added to the depreciated cost of the
    asset to compute our General Partner's total assets, but
    only o the extent that does not exceed the fair market value of
    the asset.
(30)
"Offering"
means the offering of
    units pursuant to this prosepctus.
(31)
"Offering Period"
means the period
    from the Effective Date to the Offering Termination Date.
(32)
"Offering Termination Date"
means the
    earliest of:
(i) the date on which the Maximum Offering has been sold;
(ii) two years after the Effective Date (subject to the
    renewal, requalification or consent of each Administrator
    requiring the renewal, requalification or consent of the
    Offering with respect to the extension of the Offering Period
    beyond one year following the Effective Date in the
    Administrator's jurisdiction); or
(iii) any earlier date after the Effective Date as may be
    determined by our General Partner in its sole discretion.
(33)
"Operating Lease"
means a lease under
    which the aggregate noncancellable rental payments during the
    original term of the lease, on a net present value basis, are
    not sufficient to recover the entire Purchase Price of the
    Equipment subject to the lease.
100
Table of Contents
(34)
"Operating Period"
means the period
    commencing on the Initial Closing Date and ending three years
    after the Initial Closing Date, unless extended by our General
    Partner, in its sole discretion.
(35)
"Organization and Offering Expense
    Allowance"
means an amount equal to 2% of the our Gross
    Offering Proceeds, to reimburse our General Partner
and/or
its
    Affiliates for Organizational and Offering Expenses incurred by
    it
and/or
its Affiliates.
(36)
"Organization and Offering Expense"
means:
(i) all costs and expenses incurred in connection with, and
    in preparing us for, qualification under federal and state
    securities laws and the securities laws of any other
    jurisdiction in which units may be offered or sold and
    subsequently offering and distributing the units to the public
    (except Distribution Expenses) including, without limitation:
(A) printing costs;
(B) registration and filing fees;
(C) attorneys', accountants' and other
    professional fees; and
(ii) the direct costs of salaries to, and expenses
    (including costs of travel) of, officers and directors of our
    General Partner or any Affiliate of our General Partner while
    engaged in organizing us and registering, offering and selling
    the units, but shall not include amounts that are included
    within the 10% underwriting compensation limit as defined in
    FINRA Conduct Rule 2810(4)(b)(i).
(37)
"Other Physical Assets"
means any
    new, used or reconditioned physical asset or revenue stream
    associated therewith acquired by us, or in which we have
    acquired a direct or indirect interest (including, but not
    limited to, residual interests), and shall also be deemed to
    include such physical asset which at any time is subject to, or
    serves as the collateral for, a Lease or other agreement.
(38)
"Person"
means any natural person,
    partnership, trust, corporation, limited liability company,
    association or other legal entity.
(39)
"Promotional Interest"
means the
    allocable share of all Distributable Cash payable to our General
    Partner pursuant to Sections 11.1(b)(i) and 11.1(b)(ii) of
    our partnership agreement.
(40)
"Purchase Price"
means, with respect
    to any Investment, the price paid by, or on behalf of, us for or
    in connection with the purchase, acquisition or funding of the
    Investment, including the amount of the related:
(i) Acquisition Fees;
(ii) Acquisition Expenses; and
(iii) all liens and encumbrances on the Investment, but
    excluding points and prepaid interest.
"Purchase Price" also includes, with respect to
    options to acquire an Investment, the sum of the exercise price
    and the price paid to acquire the option.
(41)
"Reserves"
means reserves established
    and maintained by us for working capital, contingent liabilities
    and the acquisition of Investments.
(42)
"Sponsor Fee Limit"
means the limit
    on the payment of Front-End Fees, Management Fees and
    Promotional Interest calculated pursuant to Section 9.4(e)
    of our partnership agreement.
101
INDEX
    TO FINANCIAL STATEMENTS
SQN AIF III GP, LLC
Report of Independent Registered Public
    Accounting Firm
F-2
Balance Sheet
F-3
Notes to Balance Sheet
F-4
SQN ALTERNATIVE INVESTMENT FUND III,
    L.P.
Report of Independent Registered Public
    Accounting Firm
F-6
Balance Sheet
F-7
Notes to Balance Sheet
F-8
F-1
Table of Contents
Report of
    Independent Registered Public Accounting Firm
To the Members
SQN AIF III GP, LLC
We have audited the accompanying balance sheet of SQN AIF III
    GP, LLC as of March 31, 2010. SQN AIF III GP, LLC's
    management is responsible for this financial statement. Our
    responsibility is to express an opinion on this financial
    statement based on our audit.
We conducted our audit in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company is not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audit included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company's internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statement and assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents
    fairly, in all material respects, the financial position of SQN
    AIF III GP, LLC as of March 31, 2010, in conformity with
    accounting principles generally accepted in the United States of
    America.
/s/  Holtz
    Rubenstein Reminick LLP
Holtz Rubenstein Reminick LLP
New York, New York
April 20, 2010
F-2
Table of Contents
SQN AIF
    GP III, LLC
Balance Sheet
March 31,
    2010
ASSETS
Cash
$
100
Investment in Limited Partnership
100
Total Assets
$
200
LIABILITIES AND MEMBER'S EQUITY
Equity
$
200
Total Liabilities and Member's Equity
$
200
F-3
Table of Contents
SQN AIF
    III GP, LLC
Notes to Balance Sheet
March 31, 2010
1.
Organization
    and Nature of Operations
SQN AIF III GP, LLC (the "Company") is a wholly-owned
    subsidiary of SQN Capital Management LLC, a Delaware limited
    liability company ("Capital" or "Parent").
    The primary activity of the Company is to sponsor, manage and
    act as the general partner of SQN Alternative Investment
    Fund III L.P. (the "Managed Fund"), a publicly
    registered equipment leasing and finance fund in the United
    States of America.
The Company was formed on March 8, 2010 as a Delaware
    limited liability company. The Company, through the Parent,
    manages and controls the business affairs of the Managed Fund.
    The Managed Fund is in the process of filing a registration
    statement
(Form S-1)
with the Securities Exchange Commission and will operate as a
    publicly registered equipment leasing and finance fund for the
    purpose of investing in a diverse pool of business-essential
    equipment and physical assets.
The Company will be entitled to 1% of the Managed Fund's
    profits, losses, cash distributions and liquidation proceeds.
The Company's fiscal year ends on December 31.
2.
Summary
    of Significant Accounting Policies
Basis of presentation
— The accompanying
    balance sheet of the Company has been prepared in accordance
    with U.S. generally accepted accounting principles
    ("US GAAP").
Cash and cash equivalents
— Cash and cash
    equivalents include cash maintained in checking and savings
    accounts at financial institutions and highly liquid investments
    with original maturity dates of three months or less.
Revenue recognition
— The Company's only
    source of revenue is expected to be from its investment in the
    Managed Fund. The Company is entitled to 1% of the Managed
    Fund's profits, losses, cash distributions and liquidation
    proceeds. In addition, the Company and its affiliates may be
    reimbursed for administrative expenses incurred based upon an
    allocation of the time its and their affiliate's employees
    spend working on the Managed Fund's operations.
Income taxes
— The Company is taxed as a
    partnership for federal and state income tax purposes. No
    provision for income taxes has been recorded since the liability
    for such taxes is that of each of the members rather than the
    Company. The Company's income tax returns are subject to
    examination by the federal and state taxing authorities, and
    changes, if any, could adjust the individual income tax of the
    members.
Uncertain tax positions
— The Company follows
    the provisions of Accounting for Uncertainty in Income Taxes
    ("Uncertain Tax Position"). Uncertain Tax Position
    prescribes recognition thresholds that must be met before a tax
    position is recognized in the financial statements and provides
    guidance on de-recognition, classification, interest and
    penalties, accounting in interim periods, disclosure, and
    transition. Under Uncertain Tax Position, an entity may only
    recognize or continue to recognize tax positions that meet a
    "more likely than not" threshold. The Company has
    evaluated its tax position at March 31, 2010, and does not
    expect a material adjustment to be made.
Use of estimates
— The preparation of financial
    statements in conformity with US GAAP requires the Company to
    make estimates and assumptions that affect the reported amounts
    of assets and liabilities and the disclosure of contingent
    assets and liabilities as of the date of the balance sheet.
    Actual results could differ from those estimates.
Subsequent events
— The Company has evaluated
    events and transactions that occurred between April 1, 2010
    and April 20, 2010, which is the date the financial
    statement was issued, for possible disclosure and
F-4
Table of Contents
SQN AIF
    III GP, LLC
Notes to Balance Sheet — (Continued)
recognition in the financial statement. No events or
    transactions were identified during this period that required
    disclosure or recognition.
3.
Capital
    Contribution Agreement with the Parent
The Parent has entered into a Capital Contribution Agreement
    with the Company pursuant to which the Parent has agreed to
    contribute, from time to time, an aggregate amount of up to
    $1,000,000 to the capital of the Company. There are no
    restrictions or covenants associated with this agreement that
    would preclude the Company from receiving any or all of the
    aggregate amount of capital contributions provided for in the
    agreement, except that the Parent is under no obligation to
    provide any additional funding to the Company once it has
    contributed $1,000,000 to the capital of the Company.
4.
Transactions
    with Related Parties
As discussed in Note 2, the Company may be reimbursed for
    expenses incurred on behalf of the Managed Fund for the
    organization and offering of the Managed Fund, and is entitled
    to 1% of the Managed Fund's profits, losses, cash
    distributions and liquidation proceeds and reimbursement for
    administrative expenses incurred in relation to the Managed
    Fund's operations.
The Company entered into an agreement with the Parent pursuant
    to which the Parent has agreed to contribute up to $1,000,000 of
    additional capital to the Company (See Note 3).
At March 31, 2010, the Company has a $100 investment in
    limited partnership, which represents the general partnership
    interest the Company owns in the Managed Fund (See Note 1).
F-5
Table of Contents
Report of
    Independent Registered Public Accounting Firm
To the Members
SQN Alternative Investment Fund III, LP
We have audited the accompanying balance sheet of SQN
    Alternative Investment Fund III, LP as of March 31,
    2010. SQN Alternative Investment Fund III, LP's
    management is responsible for this financial statement. Our
    responsibility is to express an opinion on this financial
    statement based on our audit.
We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audits to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company is not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audit included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company's internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statement and assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
    presents fairly, in all material respects, the financial
    position of SQN Alternative Investment Fund III, LP as of
    March 31, 2010, in conformity with accounting principles
    generally accepted in the United States of America.
/s/  Holtz
    Rubenstein Reminick LLP
Holtz Rubenstein Reminick LLP
New York, New York
April 20, 2010
F-6
Table of Contents
SQN
    ALTERNATIVE INVESTMENT FUND III, L.P.
Balance Sheet
March 31,
    2010
ASSETS
Cash
$
100
Total Assets
$
100
LIABILITIES AND PARTNERS' EQUITY
Equity — General Partner
$
100
Equity — Limited Partner
1,000
Less: Subscriptions Receivable
(1,000
)
Total Liabilities and Partners' Equity
$
100
F-7
Table of Contents
SQN
    ALTERNATIVE INVESTMENT FUND III, L.P.
Notes
    to Balance Sheet
March 31,
    2010
1.
Organization
    and Nature of Operations
Nature of business
— SQN Alternative Investment
    Fund III, L.P. (the "Partnership") was formed on
    March 10, 2010 as a Delaware limited partnership. The
    initial capitalization of the Partnership was $100. The
    Partnership is offering limited partnership interests on a
    "best efforts" basis with the intention of raising up
    to $50,000,000 of capital, consisting of 50,000 limited
    partnership units. Upon raising a minimum of $1,200,000 in
    capital, limited partners will be admitted.
With the proceeds from the sale of limited partnership units,
    the Partnership intends to invest in equipment leases, acquire
    diversified portfolios of equipment, other equipment
    related-investments, and establish a cash reserve. The general
    partner of the Partnership is SQN AIF III GP, LLC (the
    "General Partner"), a Delaware limited liability
    company. The Investment Manager will make investments on behalf
    of and manage the business of the Partnership. The Partnership
    will generate income through the collection of lease rentals and
    other revenues and through the sale of leased equipment and
    other portfolio investments.
The Partnership's fiscal year ends on December 31.
2.
Summary
    of Significant Accounting Policies
Basis of presentation
— The accompanying
    balance sheet of the Partnership has been prepared in accordance
    with U.S. generally accepted accounting principles
    ("US GAAP").
Cash and cash equivalents
— Cash and cash
    equivalents include cash maintained in checking and savings
    accounts at financial institutions and highly liquid investments
    with original maturity dates of three months or less.
Deferred charges
— Pursuant to the terms of the
    partnership agreement of the Partnership, the costs of
    organizing the Partnership and offering the limited partnership
    units are capitalized by the Partnership and amortized over the
    estimated offering period, generally two years from the
    effective date of the registration statement. Following the
    commencement of operations, the unamortized balance of these
    costs will be reflected in the balance sheet as deferred charges.
Income taxes
— The Partnership is taxed as a
    partnership for federal and state income tax purposes. No
    provision for income taxes has been recorded since the liability
    for such taxes is that of each of the members rather than the
    Partnership. The Partnership's income tax returns are
    subject to examination by the federal and state taxing
    authorities, and changes, if any, could adjust the individual
    income tax of the members.
Uncertain tax positions
— The Partnership
    follows the provisions of Accounting for Uncertainty in Income
    Taxes ("Uncertain Tax Position"). Uncertain Tax
    Position prescribes recognition thresholds that must be met
    before a tax position is recognized in the financial statements
    and provides guidance on de-recognition, classification,
    interest and penalties, accounting in interim periods,
    disclosure, and transition. Under Uncertain Tax Position, an
    entity may only recognize or continue to recognize tax positions
    that meet a "more likely than not" threshold. The
    Partnership has evaluated its tax position at March 31,
    2010, and does not expect a material adjustment to be made.
Use of estimates
— The preparation of financial
    statements in conformity with US GAAP requires the Partnership
    to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and the disclosure of
    contingent assets and liabilities as of the date of the balance
    sheet. Actual results could differ from those estimates.
Subsequent events
— The Partnership has
    evaluated events and transactions that occurred between
    April 1, 2010 and April 20, 2010, which is the date
    the financial statement was issued, for possible disclosure and
F-8
Table of Contents
SQN
    ALTERNATIVE INVESTMENT FUND III, L.P.
Notes to
    Balance Sheet — (Continued)
recognition in the financial statement. No events or
    transactions were identified during this period that required
    disclosure or recognition.
3.
Capital
    Contributions
The General Partner has made an initial capital contribution of
    $100 to the Partnership. In addition, an initial limited partner
    has subscribed to a capital contribution of $1,000 to the
    Partnership. The initial limited partner is SQN Capital
    Management, LLC a Delaware limited liability company and the
    investment manager of the Partnership (the "Investment
    Manager") and parent of the General Partner.
4.
Transactions
    with Related Parties
The Partnership has entered into certain agreements with the
    General Partner, the Investment Manager and SQN Securities LLC,
    an affiliate of the General Partner that is acting as exclusive
    sales agent for the offering of the Partnership's limited
    partnership units, whereby the Partnership pays certain fees and
    reimbursements to these parties.
Pursuant to the terms of the partnership agreement of the
    Partnership, the General Partner is entitled to 1% of the
    Partnership's profits, losses, cash distributions and
    liquidation proceeds. In addition, the General Partner and its
    affiliates will be reimbursed for organizational and offering
    expenses incurred in connection with the Partnership's
    organization and offering of limited partnership units and
    certain administrative expenses incurred in connection with the
    Partnership's operations.
F-9
Table of Contents
APPENDIX A
AMENDED
    AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP
OF
SQN ALTERNATIVE INVESTMENT FUND III, L.P.
Table of Contents
TABLE OF
    CONTENTS
ARTICLE I — DEFINITIONS
A-1
1.1
Defined Terms
A-1
ARTICLE II — FORMATION OF PARTNERSHIP
A-11
2.1
Formation of Partnership
A-11
ARTICLE III — NAME
A-11
3.1
Name
A-11
ARTICLE IV — PLACES OF BUSINESS
A-11
4.1
Principal Place of Business
A-11
4.2
Other Places of Business
A-12
4.3
Registered Office and Registered Agent
A-12
ARTICLE V — NAMES AND ADDRESSES OF PARTNERS
A-12
5.1
Names and Addresses of Partners
A-12
ARTICLE VI — PURPOSES AND OBJECTIVES
A-12
6.1
Purposes
A-12
6.2
Investment Objectives
A-12
ARTICLE VII — TERM
A-12
7.1
Term
A-12
ARTICLE VIII — PARTNERS AND CAPITAL
A-12
8.1
General Partner
A-12
8.2
Original Limited Partner
A-12
8.3
Limited Partners and Maximum Offering
A-12
8.4
Subscription Documents and Suitability
A-13
8.5
Payment of Subscription Price of Units
A-13
8.6
Minimum Subscription Amount
A-13
8.7
Subscriptions for Units by General Partner and its Affiliates
A-13
8.8
Partnership Closings
A-13
8.9
Acceptance of Units
A-13
8.10
Admission to Partnership as Limited Partners
A-13
8.11
Escrow Account and Subscription Account
A-14
8.12
Separate Escrow Account for Residents of Pennsylvania
A-14
8.13
Partnership Capital
A-14
8.14
Capital Accounts
A-15
8.15
Limitations on Additional Capital Contributions
A-16
8.16
Loans by Partners
A-16
ARTICLE IX — POWERS, RIGHTS AND DUTIES OF GENERAL
    PARTNER
A-16
9.1
Extent of Powers and Duties
A-16
9.2
Limitations on the Exercise of Powers of General Partner
A-19
9.3
Limitation on Liability of General Partner and its Affiliates;
    Indemnification
A-22
9.4
Compensation of General Partner and its Affiliates
A-24
9.5
Other Interests of the General Partner and its Affiliates
A-25
9.6
Minimum Requirement for Investments/Maximum Front-End Fees
A-26
ARTICLE X — OWNERS AND LIABILITIES OF LIMITED
    PARTNERS
A-27
10.1
Absence of Control Over Partnership Business
A-27
10.2
Limited Liability
A-27
A-i
Table of Contents
ARTICLE XI — DISTRIBUTIONS AND ALLOCATIONS
A-27
11.1
Distribution of Distributable Cash
A-27
11.2
Allocations of Income and Loss
A-27
11.3
Distributions and Allocations Among the Limited Partners
A-29
11.4
Tax Allocations: Code Section 704(c); Revaluations
A-30
11.5
Return of Uninvested Capital Contribution
A-30
11.6
No Distributions in Kind
A-30
11.7
Partnership Entitled to Withhold Taxes
A-31
ARTICLE XII — WITHDRAWAL OF GENERAL PARTNER
A-31
12.1
Voluntary Withdrawal
A-31
12.2
Involuntary Withdrawal
A-31
12.3
Consequences of Withdrawal
A-31
12.4
Liability of Withdrawn General Partner
A-32
12.5
Notice of Withdrawal; Admission of Substitute General Partner;
    Dissolution if No Substitute General Partner Approved
A-32
ARTICLE XIII — TRANSFER OF UNITS
A-32
13.1
Withdrawal of a Limited Partner
A-32
13.2
Assignment
A-33
13.3
Substitution
A-34
13.4
Status of an Assigning Limited Partner
A-34
13.5
Limited Right of Presentment for Redemption of Units
A-34
ARTICLE XIV — DISSOLUTION AND
WINDING-UP
A-36
14.1
Events Causing Dissolution
A-36
14.2
Winding Up of the Partnership; Capital Contribution by the
    General Partner On Dissolution
A-36
14.3
Application of Liquidation Proceeds On Dissolution
A-37
14.4
No Recourse Against Other Partners
A-38
ARTICLE XV — FISCAL MATTERS
A-38
15.1
Title to Property and Bank Accounts
A-38
15.2
Maintenance of and Access to Basic Partnership Documents
A-38
15.3
Financial Books and Accounting
A-39
15.4
Fiscal Year
A-39
15.5
Reports
A-39
15.6
Tax Returns and Tax Information
A-41
15.7
Accounting Decisions
A-41
15.8
Federal Tax Elections
A-41
15.9
Tax Matters Partner
A-42
ARTICLE XVI — MEETINGS AND VOTING RIGHTS OF THE
    LIMITED PARTNERS
A-43
16.1
Meetings of the Limited Partners
A-43
16.2
Voting Rights of the Limited Partners
A-44
16.3
Limitations on Action by the Limited Partners
A-45
ARTICLE XVII — AMENDMENTS
A-45
17.1
Amendments by the General Partner
A-45
ARTICLE XVIII — POWER OF ATTORNEY
A-46
18.1
Appointment of
Attorney-in-Fact
A-46
18.2
Amendments to Agreement and Certificate of Limited Partnership
A-46
A-ii
Table of Contents
18.3
Power Coupled With an Interest
A-46
ARTICLE XIX — GENERAL PROVISIONS
A-47
19.1
Notices, Approvals and Consents
A-47
19.2
Further Assurances
A-47
19.3
Captions
A-47
19.4
Binding Effect
A-47
19.5
Severability
A-47
19.6
Integration
A-47
19.7
Applicable Law
A-47
19.8
Counterparts
A-47
19.9
Creditors
A-48
19.10
Successors and Assigns
A-48
19.11
Waiver of Action for Partition
A-48
A-iii
Table of Contents
AMENDED
    AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
SQN ALTERNATIVE INVESTMENT FUND III, L.P.
This Amended and Restated Agreement of Limited Partnership is
    made and entered into by and among SQN AIF III GP, LLC, a
    Delaware limited liability company, as the General Partner, SQN
    Capital Management, LLC, a Delaware limited liability company,
    as the "Original Limited Partner," and such other
    persons who may be admitted to the Partnership from time to time
    as Limited Partners.
ARTICLE I —
    DEFINITIONS
1.1
Defined Terms.
Defined terms used in
    this Agreement shall have the meanings specified below. Certain
    additional defined terms are set forth elsewhere in this
    Agreement. Unless the context otherwise requires, the singular
    shall include the plural and the masculine gender shall include
    the feminine and neuter, and vice versa, and "Article"
    and "Section" references are references to the
    Articles and Sections of this Agreement.
(1)
"Accountants"
means any firm of
    independent certified public accountants that may be engaged
    from time to time by the General Partner on behalf of the
    Partnership.
(2)
"Acquisition Expenses"
means expenses
    (other than Acquisition Fees) incurred and paid to any Person
    which are attributable to the selection and acquisition of
    Investments, whether or not acquired, including, but not limited
    to:
(i) legal fees and expenses;
(ii) travel and communication expenses;
(iii) costs of credit reports, appraisals and reference
    materials used to evaluate transactions;
(iv) non-refundable option payments on Investments not
    acquired;
(v) accounting fees and expenses;
(vi) insurance costs;
(vii) initial direct costs, as that term is defined under
    United States generally accepted accounting principles
    ("GAAP"), which includes any origination fees paid by
    the Investment Manager or its Affiliates to any Person,
    including its or its Affiliates' employees, with respect to
    acquiring and holding Investments on a temporary basis before
    they are purchased from the Investment Manager or its Affiliates
    by the Partnership; and
(viii) miscellaneous other expenses, however designated.
(3)
"Acquisition Fees"
means all fees and
    commissions paid by any party in connection with the initial
    purchase or funding of any Investment, including fees payable to
    finders and brokers that are not Affiliates of the General
    Partner. Also, included in the computation of such fees or
    commissions shall be any commission, selection fee, financing
    fee, non-recurring management fee, or any fee of a similar
    nature, however designated.
(4)
"Adjusted Capital Account Deficit"
means with respect to any Capital Account as of the end of
    any taxable year, the amount by which the balance in the Capital
    Account is less than zero. For this purpose, a Partner's
    Capital Account balance shall be:
(i) reduced for any items described in Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)(4),
(5), and (6);
(ii) increased for any amount which the Partner is
    obligated to restore, because of a promissory note to the
    Partnership or otherwise, or is deemed obligated to restore
    pursuant to the penultimate sentence in each of Regulations
Sections 1.704-2(g)(1)(ii)
and 1.704-2(i)(5) (relating to Partnership Minimum Gain and
    Partner Nonrecourse Debt Minimum Gain, respectively).
A-1
Table of Contents
(5)
"Adjusted Capital Contribution"
means,
    as to any Limited Partner, as determined from time to time, the
    Limited Partner's Capital Contribution reduced, but not
    below zero, by:
(i) all distributions previously made to the Limited
    Partner by the Partnership which are deemed by the General
    Partner to reduce the Limited Partner's Capital
    Contribution under Section 11.3(d)(ii); and
(ii) all payments previously made to the Limited Partner in
    Redemption of a portion or all of the Limited Partner's
    Units under Section 13.5.
(6)
"Administrator"
means the official or
    agency administering the securities laws of a state or other
    political subdivision of the United States.
(7)
"Affiliate"
means, with respect to any
    Person:
(i) any other Person directly or indirectly controlling,
    controlled by or under common control with such Person;
(ii) any other Person owning or controlling 10% or more of
    the outstanding voting securities of such Person;
(iii) any officer, director or partner of such
    Person; and
(iv) if such Person is an officer, director or partner, any
    other Person for which such Person acts in such capacity.
(8)
"Affiliated Limited Partner"
means any
    of the following Persons who purchase Units and are admitted to
    the Partnership as Limited Partners:
(i) the General Partner and its Affiliates;
(ii) the Selling Agent and any registered representative or
    principal of the Selling Agent;
(iii) registered investment advisors and their
    clients; and
(iv) investors who buy Units through the officers and
    directors of the General Partner.
(9)
"Affiliated Program"
means any Program
    formed by the General Partner or any Affiliate of the General
    Partner or in which the General Partner or any of its Affiliates
    has an interest.
(10)
"Agreement"
means this Amended and
    Restated Agreement of Limited Partnership, as it may hereafter
    be amended, supplemented or restated from time to time.
(11)
"Assessments"
means additional
    amounts of capital which may be mandatorily required of, or paid
    at the option of, a Limited Partner beyond his subscription
    commitment.
(12)
"Assignee"
means any Person to whom
    any Unit or Partnership Interest, or part thereof, has been
    Assigned, in whole or in part, in a manner permitted by
    Section 13.2.
(13)
"Assignment"
means, with respect to
    any Unit or Partnership Interest, or any part thereof, the sale,
    assignment, transfer, gift or other disposition of such Unit or
    Partnership Interest, whether voluntarily or by operation of
    law, except that in the case of a bona fide pledge or other
    hypothecation, no Assignment shall be deemed to have occurred
    unless and until the secured party has exercised his right of
    foreclosure with respect thereto.
(14)
"Capital Account"
means the capital
    account maintained for each Partner under Section 8.14.
(15)
"Capital Contribution"
means:
(i) as to the General Partner, its initial $100
    contribution to the capital of the Partnership plus any
    additional amounts as may be contributed to the capital of the
    Partnership by the General Partner; and
(ii) as to any Limited Partner, including Affiliated
    Limited Partners, the gross amount of investment in the
    Partnership actually paid by the Limited Partner, i.e. the Unit
    Price, without deduction for Front-End Fees (whether payable by
    the Partnership or not);
A-2
Table of Contents
but excluding Net Disposition Proceeds reinvested in additional
    Investments under Section 9.1(b)(xxv).
(16)
"Cash Flow"
means the
    Partnership's Gross Revenues, without deduction for
    depreciation, but after deducting the Partnership's cash
    funds used to pay all other Partnership expenses, debt payments,
    capital improvements and replacements (other than cash funds
    withdrawn from Reserves).
(17)
"Closing"
means the admission of
    Limited Partners to the Partnership in accordance with
    Section 8.3.
(18)
"Closing Date"
means any date on
    which any Limited Partner is admitted to the Partnership, and
    includes the Initial Closing Date, any subsequent Closing Date
    and the Final Closing Date.
(19)
"Code"
means the Internal Revenue
    Code of 1986, as amended, or corresponding provisions of
    subsequent laws.
(20)
"Commission"
means the Securities and
    Exchange Commission.
(21)
"Consent"
means, as the context may
    require:
(i) consent given by vote at a meeting called and held in
    accordance with the provisions of Section 16.1;
(ii) the written consent without a meeting of any Person to
    do the act or thing for which the consent is solicited; or
(iii) the act of granting the consent.
(22)
"Controlling Person"
means, with
    respect to the General Partner or any Affiliate of the General
    Partner, any of the following Persons:
(i) its chairmen, directors, presidents, or other executive
    or senior officers;
(ii) any holder of a 5% or greater equity interest in the
    General Partner or its Affiliate; or
(iii) any Person having the power to direct or cause the
    direction of the General Partner or its Affiliate, whether
    through the ownership of voting securities, by contract or
    otherwise.
(23)
"Counsel"
means any law firm that may
    be engaged from time to time by the General Partner on behalf of
    the Partnership.
(24)
"Cumulative Return"
means, as to any
    Limited Partner, an amount equal to an 8% annual cumulative
    return, compounded annually, on the Limited Partner's
    Capital Contribution calculated from a date not later than the
    last day of the calendar quarter in which the Capital
    Contribution of the Limited Partner as to which the Cumulative
    Return is being calculated was made.
(25)
"Distribution Expenses"
means the
    fees payable to the Selling Agent in an amount equal to 2% of
    the Unit Price per Unit sold, in the aggregate, in the Offering
    (excluding any Units sold to the General Partner or its
    Affiliates).
(26)
"Delaware Act"
means the Delaware
    Revised Uniform Limited Partnership Act, as amended, and any
    successor thereto.
(27)
"Distributable Cash"
means Cash Flow
    plus any amounts released from Reserves by the General Partner,
    less amounts allocated to Reserves by the General Partner.
(28)
"Effective Date"
means the date the
    Registration Statement is declared effective by the Commission.
(29)
"Equipment"
means any new, used or
    reconditioned equipment or revenue stream associated therewith
    acquired by the Partnership, or in which the Partnership has
    acquired a direct or indirect interest (including, but not
    limited to, residual interests), and shall also be deemed to
    include such equipment which at any time is subject to, or
    serves as the collateral for, a Lease.
A-3
Table of Contents
(30)
"Escrow Account"
means an
    interest-bearing account established and maintained by the
    Partnership, the General Partner and the Selling Agent with the
    Escrow Agent in accordance with the terms of the Escrow
    Agreement for the purpose of holding, pending the distribution
    thereof in accordance with the terms of the Escrow Agreement and
    this Agreement, any subscription funds received from Persons who
    may be admitted to the Partnership as Limited Partners on the
    Initial Closing Date.
(31)
"Escrow Agent"
means a United States
    banking institution with at least $50 million in assets,
    which shall be selected by the General Partner to serve in such
    capacity pursuant to the Escrow Agreement.
(32)
"Escrow Agreement"
means the Escrow
    Agreement among the Partnership, the General Partner, the
    Selling Agent and the Escrow Agent, substantially in the form of
    the Escrow Agreement filed as an exhibit to the Registration
    Statement, as amended and supplemented from time to time as
    permitted by its terms.
(33)
"Final Closing Date"
means the last
    Closing Date in the Offering on which a Limited Partner (other
    than a Substitute Limited Partner) is admitted to the
    Partnership, which shall be as soon as practicable following the
    Offering Termination Date.
(34)
"Financing Transaction"
means:
(i) any extension of credit or loan of money to the
    Partnership or its subsidiaries that is secured by a security
    interest in the Partnership's Investments or other tangible
    or intangible personal property of the Partnership or any Lease
    of any such property;
(ii) any notes issued in connection with a securitization
    of Investments, or receivables therefrom; or
(iii) any transaction in which the Partnership's
    Investments are sold to a Person for purposes of securitization
    and with customary retained rights or interests.
(35)
"FINRA"
means the Financial Industry
    Regulatory Authority, Inc.
(36)
"Fiscal Period"
means any interim
    accounting period within a Fiscal Year established by the
    General Partner.
(37)
"Fiscal Quarter"
means, for each
    Fiscal Year, the 3-calendar-month period which commences on the
    first day of such Fiscal Year and each additional
    3-calendar-month period commencing on the first day of the first
    month following the end of the preceding such period within such
    Fiscal Year (or such shorter period ending on the last day of a
    Fiscal Year).
(38)
"Fiscal Year"
means the
    Partnership's annual accounting period established pursuant
    to Section 15.4.
(39)
"Front-End Fees"
means fees and
    expenses paid by any Person for any services rendered during the
    Partnership's organizational and offering or acquisition
    phases, including Distribution Expenses, Organization and
    Offering Expense Allowances, Leasing or Financing Fees,
    Acquisition Fees and Acquisition Expenses (other than any
    Acquisition Fees or Acquisition Expenses paid by a manufacturer
    of equipment to any of its employees unless such Persons are
    Affiliates of the General Partner) and all other similar fees
    however designated.
(40)
"Full Payout Lease"
means any lease
    under which the aggregate noncancellable rental payments due
    during the initial term of the lease, on a net present value
    basis, are at least sufficient to permit the Partnership to
    recover the entire Purchase Price of the Equipment subject to
    the lease.
(41)
"GAAP"
means United States generally
    accepted accounting principles.
(42)
"General Partner"
means SQN AIF III
    GP, LLC, and its successors or permitted assigns, as general
    partner of the Partnership.
(43)
"Gross Asset Value"
means, with
    respect to any asset of the Partnership, the asset's
    adjusted tax basis, except that:
(i) the initial Gross Asset Value of any asset contributed
    by a Partner to the Partnership shall be the gross fair market
    value of such asset at the time of such contribution;
A-4
Table of Contents
(ii) the Gross Asset Values of all Partnership assets shall
    be adjusted to equal their respective gross fair market values
    at the time specified in Treas. Reg. Section
    1.704-1(b)(2)(iv)(f)(5) if the Partnership so elects;
(iii) the Gross Asset Value of any Partnership asset
    distributed to any Partner shall be the gross fair market value
    of such asset on the date of distribution;
(iv) to the extent not otherwise reflected in the
    Partners' Capital Accounts, the Gross Asset Values of
    Partnership assets shall be increased (or decreased) to
    appropriately reflect any adjustments to the adjusted basis of
    such assets pursuant to Code Section 734(b) or Code
    Section 743(b); and
(v) if on the date of contribution of an asset or a
    revaluation of an asset in accordance with clauses (ii)
    through (iv), above, the adjusted tax basis of such asset
    differs from its fair market value, the Gross Asset Value of
    such asset shall thereafter be adjusted by reference to the
    depreciation method described in Treas. Reg.
Section 1.704-1(b)(2)(iv)(g)(3).
(44)
"Gross Offering Proceeds"
means the
    gross amount of Capital Contributions, before deduction of
    Front-End Fees, of all Limited Partners admitted to the
    Partnership.
(45)
"Gross Revenues"
means gross cash
    receipts of the Partnership from whatever source (including its
    share of Gross Revenues from its indirect Investments),
    excluding Capital Contributions.
(46)
"Unit Price"
means $1,000 per Unit.
(47)
"Income"
or
"Loss"
means, for any Fiscal Year, the Partnership's taxable
    income or loss for such Fiscal Year, determined in accordance
    with Code Section 703(a) (for this purpose, all items of
    income, gain, loss or deduction required to be stated separately
    pursuant to Code Section 703(a)(1) shall be included in
    taxable income or loss), with the following adjustments:
(i) any income of the Partnership that is exempt from
    federal income tax and not otherwise taken into account in
    computing Income or Loss shall be applied to increase such
    taxable income or reduce such loss;
(ii) any expenditure of the Partnership described in Code
    Section 705(a)(2)(B), or treated as such pursuant to Treas.
    Reg.
Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Income or
    Loss, shall be applied to reduce such taxable income or increase
    such loss;
(iii) gain or loss resulting from a taxable disposition of
    any asset of the Partnership shall be computed by reference to
    the Gross Asset Value of such asset and the special depreciation
    calculations described in Treas. Reg. Section
    1.704-1(b)(2)(iv)(g), notwithstanding that the adjusted tax
    basis of such asset may differ from its Gross Asset Value;
(iv) in lieu of the depreciation, amortization, and other
    cost recovery deductions taken into account in computing such
    taxable income or loss for such Fiscal Year, there shall be
    taken into account depreciation, amortization or other cost
    recovery deductions determined pursuant to the method described
    in Treas. Reg. Section 1.704-1(b)(2)(iv)(g)(3);
(v) in the event the Gross Asset Value of any Partnership
    asset is adjusted pursuant to clause (ii) of
    Section 1.1(43), the amount of such adjustment shall be
    taken into account as gain or loss from the disposition of such
    asset for purposes of computing Income or Loss; and
(vi) any items which are specially allocated pursuant to
    Section 11.2(b), (c), (d), (e), (f), (g) or
    (h) shall not be taken into account in computing Income or
    Loss.
(48)
"Indebtedness"
means, with respect to
    any Person as of any date, all obligations (other than capital,
    surplus, deferred income taxes and, to the extent not
    constituting obligations, other deferred credits and reserves)
    that could be classified as liabilities (exclusive of accrued
    expenses and trade accounts payable incurred with respect to
    property purchased in the ordinary course of business that are
    not overdue or are being contested in good faith by appropriate
    proceedings and are not required to be classified as debt on a
    balance sheet of the Person that is prepared in accordance with
    GAAP as of that date).
A-5
Table of Contents
(49)
"Independent Expert"
means a Person
    with no material current or prior business or personal
    relationship with the General Partner or its Affiliates, who is
    engaged to a substantial extent in the business of rendering
    appraisals regarding the value of assets of the type held by the
    Partnership and who is qualified to perform the work.
(50)
"Initial Closing Date"
means the
    first Closing Date for the Partnership on which Limited Partners
    with Units equal to, or greater than, the Minimum Offering are
    admitted to the Partnership.
(51)
"Investment in Equipment"
means the
    aggregate amount of Capital Contributions and Financial
    Transactions actually paid or allocated to the purchase,
    manufacture or renovation of Investments acquired by the
    Partnership, together with other cash payments such as interest,
    taxes and Reserves allocable thereto (to the extent that
    Reserves do not exceed 3% of Capital Contributions), but
    excluding Front-End Fees.
(52)
"Investment Committee"
means a
    committee of certain of the General Partner's or its
    Affiliates' officers
and/or
directors, as determined in the sole discretion of the General
    Partner, that shall do the following on behalf of the
    Partnership:
(i) approve significant transactions and transactions which
    differ from the standards and procedures the Investment
    Committee has established;
(ii) pursuant to Section 9.5, resolve conflicts in
    allocating Investments among Affiliated Programs; and
(iii) consider any other matter submitted to the Investment
    Committee for its review by the General Partner.
(53)
"Investment Manager"
means SQN
    Capital Management, LLC, an Affiliate of the General Partner, or
    its successor pursuant to the Management, Origination and
    Servicing Agreement.
(54)
"Investments"
means the
    Partnership's portfolio, from time to time, of Equipment,
    Other Physical Assets and Leases, whether the Partnership owns
    the portfolio directly or indirectly.
(55)
"IRA"
means an Individual Retirement
    Account.
(56)
"IRS"
means the Internal Revenue
    Service or any successor agency thereto.
(57)
"Lease"
means any Full Payout Lease,
    any Operating Lease and any residual value interest therein or
    any other agreement directly or indirectly collateralized by
    Investments.
(58)
"Leasing or Financing Fee"
means the
    total of all fees and commissions paid by any Person in
    connection with the initial lease or initial financing of
    Equipment and Other Physical Assets acquired by the Partnership
    or an Affiliated Program.
(59)
"Lender"
means any Person that lends
    cash or cash equivalents to the Partnership or its subsidiaries,
    including any Person that acquires by purchase, assignment, or
    otherwise, an interest in:
(i) the future amounts payable under any Lease and in the
    related Equipment or Other Physical Assets; or
(ii) payments due under any Financing Transaction and in
    any property securing the Financing Transaction.
(60)
"Lessee"
means a lessee under a Lease.
(61)
"Limited Partner"
means:
(i) any Person who owns at least a portion of a Unit and
    who has been admitted to the Partnership as a Limited Partner,
    including Affiliated Limited Partners; and
(ii) any Person who becomes a Substitute Limited Partner in
    accordance with this Agreement;
including the General Partner and its Affiliates to the extent
    they purchase Units.
A-6
Table of Contents
(62)
"Liquidation Period"
means the period
    commencing on the first day following the end of the Operating
    Period and continuing for the period deemed necessary by the
    General Partner for the orderly termination of the
    Partnership's operations and affairs and the liquidation or
    disposition of the Partnership's Investments.
(63)
"Majority"
or
"Majority
    Interest"
means Limited Partners owning more than 50%
    of the aggregate outstanding Units from time to time.
(64)
"Management Fees"
means, for any
    month, an amount equal to the greater of (i) 1.975% per
    annum of the Gross Offering Proceeds or (ii) $60,000, which
    shall be payable monthly to the Investment Manager, or an
    Affiliate designated by the Investment Manager.
(65)
"Management, Origination and Servicing
    Agreement"
means the agreement entered into between the
    Partnership and the Investment Manager, substantially in the
    form of the Management, Origination and Servicing Agreement
    filed as an exhibit to the Registration Statement, as amended
    and supplemented from time to time as permitted by its terms.
(66)
"Maximum Offering"
means the receipt
    and acceptance by the Partnership of subscriptions for not more
    than 50,000 Units ($50,000,000), excluding the 1 Unit subscribed
    for by the Original Limited Partner, on or before the Final
    Closing Date.
(67)
"Minimum Offering"
means the receipt
    and acceptance by the Partnership of subscriptions for not less
    than 1,200 Units ($1,200,000), excluding the 1 Unit subscribed
    for by the Original Limited Partner and any Units subscribed for
    by the General Partner or its officers, directors, employees or
    other Affiliates, or Pennsylvania subscribers.
(68)
"NASAA Guidelines"
means the North
    American Securities Administrators Association, Inc. Statement
    of Policy concerning Equipment Programs, as amended through
    May 7, 2007, as in effect as of the initial effective date
    of the Partnership's public offering of its Units.
(69)
"Net Disposition Proceeds"
means the
    proceeds realized by the Partnership from the sale, refinancing
    or other disposition of Partnership Investments, including
    insurance proceeds or lessee or borrower indemnity payments
    arising from the loss or destruction of the Equipment, less all
    Partnership liabilities.
(70)
"Net Lease Provisions"
means
    contractual arrangements under which the lessee assumes
    responsibility for, and bears the cost of, insurance, taxes,
    maintenance, repair and operation of the leased asset and where
    the non-cancellable rental payments under the lease are net to
    the lessor. Notwithstanding, a lease may be deemed to contain
    net lease provisions even if some minor costs or
    responsibilities remain with the lessor or if the lessor retains
    the option to require and pay for a higher standard of care or a
    greater level of maintenance or insurance than would be imposed
    on the lessee under the terms of the lease.
(71)
"Net Offering Proceeds"
means the
    Gross Offering Proceeds minus the Distribution Expenses and the
    Organization and Offering Expense Allowance payable by the
    Partnership.
(72)
"Net Worth"
means, for any Person
    subscribing for Units, the excess of total assets over total
    liabilities as determined by generally accepted accounting
    principles, but excluding home, home furnishings and
    automobiles. Provided, however, that with respect to the General
    Partner, "Net Worth" means the excess of total assets
    over total liabilities as determined by GAAP. However, if any of
    the General Partner's assets have been depreciated, then
    the amount of depreciation relative to any particular asset may
    be added to the depreciated cost of the asset to compute the
    General Partner's total assets, but only to the extent that
    does not exceed the fair market value of the asset.
(73)
"Notice"
means a writing containing
    the information required by this Agreement to be communicated to
    any Person and delivered as follows:
(i) personally delivered to the Person;
(ii) sent by registered, certified or regular mail, postage
    prepaid or by a national recognized courier to such Person at
    the last known address of the Person; or
A-7
Table of Contents
(iii) sent by facsimile, with receipt confirmed by
    telephone during normal business hours.
(74)
"Offering"
means the offering of
    Units pursuant to the Prospectus.
(75)
"Offering Period"
means the period
    from the Effective Date to the Offering Termination Date.
(76)
"Offering Termination Date"
means the
    earliest of:
(i) the date on which the Maximum Offering has been sold;
(ii) two years after the Effective Date (subject to the
    renewal, requalification or consent of each Administrator
    requiring the renewal, requalification or consent of the
    Offering with respect to the extension of the Offering Period
    beyond one year following the Effective Date in the
    Administrator's jurisdiction); or
(iii) any earlier date after the Effective Date as may be
    determined by the General Partner in its sole discretion.
(77)
"Operating Lease"
means a lease under
    which the aggregate noncancellable rental payments during the
    original term of the lease, on a net present value basis, are
    not sufficient to recover the entire Purchase Price of the
    Equipment subject to the lease.
(78)
"Operations"
means all operations and
    activities of the Partnership except Sales.
(79)
"Operating Period"
means the period
    commencing on the Initial Closing Date and ending three years
    after the Initial Closing Date, unless extended by the General
    Partner, in its sole discretion.
(80)
"Organization and Offering Expense
    Allowance"
means an amount equal to 2% of the
    Partnership's Gross Offering Proceeds, to reimburse the
    General Partner
and/or
its
    Affiliates for Organizational and Offering Expenses incurred by
    it
and/or
its Affiliates.
(81)
"Organization and Offering Expense"
means:
(i) all costs and expenses incurred in connection with, and
    in preparing the Partnership for, qualification under federal
    and state securities laws and the securities laws of any other
    jurisdiction in which Units may be offered or sold and
    subsequently offering and distributing the Units to the public
    (except Distribution Expenses) including, without limitation:
(A) printing costs;
(B) registration and filing fees;
(C) attorneys', accountants' and other
    professional fees; and
(ii) the direct costs of salaries to, and expenses
    (including costs of travel) of, officers and directors of the
    General Partner or any Affiliate of the General Partner while
    engaged in organizing the Partnership and registering, offering
    and selling the Units, but shall not include amounts that are
    included within the 10% underwriting compensation limit as
    defined in FINRA Conduct Rule 2810(4)(b)(i).
(82)
"Other Physical Assets"
means any
    new, used or reconditioned physical asset or revenue stream
    associated therewith acquired by the Partnership, or in which
    the Partnership has acquired a direct or indirect interest
    (including, but not limited to, residual interests), and shall
    also be deemed to include such physical asset which at any time
    is subject to, or serves as the collateral for, a Lease or other
    agreement.
(83)
"Participant"
means the holder of a
    Unit or Partnership Interest.
(84)
"Participant List"
means a list, in
    alphabetical order by name, setting forth the name, address and
    business or home telephone number of, and number of Units held
    by, each Limited Partner. The list shall be printed on white
    paper in a readily readable type size (in no event smaller than
    10-point type) and shall be updated at least quarterly to
    reflect any changes in its information.
A-8
Table of Contents
(85)
"Partner"
means the General Partner
    (including any Substitute General Partner) and any Limited
    Partner or Affiliated Limited Partner (including the Original
    Limited Partner and any Substitute Limited Partner).
(86)
"Partner Nonrecourse Debt"
means any
    Partnership nonrecourse liability for which any Partner bears
    the economic risk of loss within the meaning of Treas. Reg.
Section 1.704-2(b)(4).
(87)
"Partner Nonrecourse Debt Minimum
    Gain"
has the meaning specified in Treas. Reg.
    Section 1.704-2(i)(3), and such additional amount as shall
    be treated as Partner Nonrecourse Minimum Gain pursuant to
    Treas. Reg.
Section 1.704-2(j)(1)(iii).
(88)
"Partner Nonrecourse Deductions"
consist of those deductions and in those amounts specified in
    Treas. Reg.
Sections 1.704-2(i)(2)
and (j).
(89)
"Partnership"
means SQN Alternative
    Investment Fund III, L.P.
(90)
"Partnership Interest"
means the
    Units owned by a Limited Partner or the percentage interest in
    the Partnership held by the General Partner.
(91)
"Partnership Loan"
means any loan
    made to the Partnership by the General Partner or any Affiliate
    of the General Partner in accordance with Section 9.2(c).
(92) "Partnership Minimum Gain"
has the
    meaning specified in Treas. Reg.
Sections 1.704-2(b)(2)
and (d) and such additional amount as shall be treated as
    Partnership Minimum Gain pursuant to Treas. Reg.
Section 1.704-
2(j)(1)(iii).
(93)
"Partnership Nonrecourse Deductions"
consist of those deductions and in those amounts specified in
    Treas. Reg.
Sections 1.704-2(c)
and (j).
(94)
"Payout"
means the time when the
    aggregate amount of cash distributions to a Limited Partner
    pursuant to this Agreement equals the sum of the amount of the
    Limited Partner's Capital Contribution plus the Cumulative
    Return from a date not later than the last day of the calendar
    quarter in which the Limited Partner was admitted to the
    Partnership as a Limited Partner, and includes an amount of
    Distributable Cash resulting from Sales and refinancings of the
    Partnership's Investments, if any, sufficient for the
    Limited Partners to pay their federal, state and local income
    taxes resulting from those Sales assuming the Limited Partners
    are in a 30% tax bracket.
(95)
"Person"
means any natural person,
    partnership, trust, corporation, limited liability company,
    association or other legal entity.
(96)
"Program"
means a limited or general
    partnership, joint venture, unincorporated association or
    similar unincorporated organization formed and operated for the
    primary purpose of investment in, and the operation of, or gain
    from, an interest in equipment, leases or related instruments.
(97)
"Promotional Interest"
means the
    allocable share of all Distributable Cash payable to the General
    Partner pursuant to Sections 11.1(b)(i) and 11.1(b)(ii).
(98)
"Prospectus"
means the prospectus
    included as part of the Registration Statement, as supplemented
    or amended.
(99)
"Purchase Price"
means, with respect
    to any Investment, the price paid by, or on behalf of, the
    Partnership for or in connection with the purchase, acquisition
    or funding of the Investment, including the amount of the
    related:
(i) Acquisition Fees;
(ii) Acquisition Expenses; and
(iii) all liens and encumbrances on the Investment, but
    excluding points and prepaid interest.
"Purchase Price" also includes, with respect to
    options to acquire an Investment, the sum of the exercise price
    and the price paid to acquire the option.
A-9
Table of Contents
(100)
"Qualified Plan"
means a pension,
    profit-sharing or stock bonus plan, including Keogh Plans,
    meeting the requirements of Sections 401 et seq. of the
    Code, and its related trust.
(101)
"Redemption"
means the purchase of a
    portion or all of any Limited Partner's Units by the
    Partnership under Section 13.5.
(102)
"Registration Statement"
means the
    Registration Statement on
Form S-1
filed by the Partnership with the Commission under the
    Securities Act in the form in which the Registration Statement
    is declared to be effective for the offer and sale of the
    Partnership's Units.
(103)
"Reserves"
means reserves
    established and maintained by the Partnership for working
    capital, contingent liabilities and the acquisition of
    Investments.
(104)
"Roll-Up"
means any transaction involving the acquisition, merger,
    conversion or consolidation, either directly or indirectly, of
    the Partnership with, and the issuance of securities of, a
Roll-Up
Entity. The term does not include:
(i) a transaction involving securities of the Partnership
    if they have been listed on a national securities exchange or
    traded through the NASDAQ Stock Market (National Market System)
    for at least 12 months; or
(ii) a transaction involving only the conversion of the
    Partnership to corporate, trust or association form if, as a
    consequence of the transaction, there will be no significant
    adverse change in:
(A) Limited Partners' voting rights;
(B) the term of existence of the Partnership;
(C) the compensation of the General Partner or its
    Affiliates from the Partnership;
(D) the Partnership's investment objectives; or
(E) the income taxation of the Partnership or the Limited
    Partners.
(105)
"Roll-Up
Entity"
means any partnership, corporation, trust, or
    other entity that is created by, or surviving after, the
    successful completion of a proposed
Roll-Up
transaction.
(106)
"Sale"
means the sale, exchange,
    involuntary conversion, foreclosure, condemnation, taking,
    casualty (other than a casualty followed by refurbishing or
    replacement), or other disposition of an Investment.
(107)
"Securities Act"
means the
    Securities Act of 1933, as amended.
(108)
"Selling Agent"
means SQN
    Securities, LLC, an Affiliate of the General Partner, the
    selling agent which will conduct the offer and sale of the Units
    in all states and other jurisdictions in the Offering.
(109)
"Selling Agent Agreement"
means the
    agreement entered into between the General Partner, the
    Partnership and the Selling Agent, substantially in the form of
    the Selling Agent Agreement filed as an exhibit to the
    Registration Statement, as amended and supplemented from time to
    time as permitted by its terms.
(110)
"Specified Equipment Program"
means
    a Program where, at the time a securities registration is
    ordered effective, at least 75% of the net proceeds from the
    sale of program interests are allocable to the purchase or
    renovation of identified equipment or one specified type of
    identified equipment. Reserves shall not be included in the 75%.
(111)
"Sponsor"
means any person directly
    or indirectly instrumental in organizing, wholly or in part, a
    program or any person who will manage or participate in the
    management of a program, and any affiliate of any such person.
    Sponsor does not include a person whose only relation with the
    program is that of an independent equipment manager and whose
    only compensation is as such. Sponsor does not include wholly
    independent third parties such as attorneys, accountants, and
    underwriters whose only compensation is for professional
    services rendered in connection with the offering of program
    interests.
A-10
Table of Contents
(112)
"Sponsor Fee Limit"
means the limit
    on the payment of Front-End Fees, Management Fees and
    Promotional Interest calculated pursuant to Section 9.4(e)
    of this Agreement.
(113)
"SQN I"
means SQN Alternative
    Investment Fund I, LLC, an Affiliated Program.
(114)
"SQN II"
means SQN Alternative
    Investment Fund II, LLC, an Affiliated Program.
(115)
"Subscription Account"
means the
    interest-bearing account established and maintained by the
    Partnership for the purpose of holding subscription funds
    received from Persons who may be admitted to the Partnership as
    Limited Partners on any Closing Date subsequent to the Initial
    Closing Date, pending the acceptance or rejection of their
    subscriptions by the General Partner.
(116)
"Subscription Agreement"
means the
    subscription agreement substantially in the form filed as an
    exhibit to the Prospectus.
(117)
"Substitute General Partner"
means
    any Assignee of, or successor to, the General Partner admitted
    to the Partnership in accordance with Section 12.5.
(118)
"Substitute Limited Partner"
means
    any Assignee of Units who is admitted to the Partnership as a
    Limited Partner under Section 13.3.
(119)
"Treasury Regulation" or "Treas.
    Reg."
means final or temporary regulations issued by
    the United States Treasury Department pursuant to the Code.
(120)
"Unit" or "Partnership Interest of
    a Limited Partner"
means a unit of Limited Partner
    interest in the Partnership held by any Limited Partner,
    including rights to profits, losses, income, gain, credits,
    deductions, cash distributions, returns of capital, voting
    rights and other attributes of the Units all as provided by, and
    subject to the terms and provisions of, this Agreement.
(121)
"Unpaid Cumulative Return"
means, as
    to any Limited Partner, the unpaid amount of the Limited
    Partner's Cumulative Return calculated through the date as
    of which the Unpaid Cumulative Return is being calculated,
    reduced (but not below zero) by the aggregate distributions
    previously made to the Limited Partner by the Partnership that
    are deemed by the General Partner to be a reduction of the
    Limited Partner's Unpaid Cumulative Return under
    Section 11.3(d)(i).
ARTICLE II —
    FORMATION OF PARTNERSHIP
2.1
Formation of Partnership.
The General
    Partner and the Original Limited Partner have previously formed
    the Partnership as a limited partnership under the Delaware Act.
    The General Partner and the Original Limited Partner hereby
    amend and restate in its entirety the original Agreement of
    Limited Partnership of the Partnership and agree that this
    Amended and Restated Agreement of Limited Partnership shall
    govern the rights and liabilities of the Partners, except as
    otherwise expressly provided in this Agreement.
ARTICLE III —
    NAME
3.1
Name.
The business of the Partnership
    shall be conducted under the name "SQN Alternative
    Investment Fund III, L.P." or such other name as the
    General Partner shall hereafter designate in writing to the
    Limited Partners.
ARTICLE IV —
    PLACES OF BUSINESS
4.1
Principal Place of Business.
The
    principal office and place of business of the Partnership is
c/o SQN
AIF III GP, LLC, 48 Wall Street, 24th Floor, New York, New
    York 10005. The General Partner may from time to time change the
    Partnership's principal place of business and, in that
    event, the General Partner shall notify the Limited Partners of
    the change in writing no later than 60 days following the
    effective date of the change.
A-11
Table of Contents
4.2
Other Places of Business.
The
    Partnership may maintain other offices and places of business
    within or outside the State of Delaware as the General Partner
    deems advisable.
4.3
Registered Office and Registered
    Agent.
The registered office of the Partnership
    shall be at 2711 Centerville Road, Suite 400, Wilmington
    (New Castle County), Delaware 19808. The name of its registered
    agent at such address shall be The Company Corporation. The
    General Partner may from time to time change the registered
    office and the registered agent of the Partnership, and, in that
    event, the General Partner shall notify the Limited Partners of
    the change in writing no later than 60 days following the
    effective date of the change.
ARTICLE V —
    NAMES AND ADDRESSES OF PARTNERS
5.1
Names and Addresses of Partners.
The
    name and address of the General Partner shall be as set forth in
    Section 19.1, and the names and addresses of the Limited
    Partners shall be as set forth in their respective Subscription
    Agreements, as supplemented or amended from time to time. Any
    Partner may change the Partner's place of business or
    residence, as the case may be, by giving Notice of the change to
    the Partnership (and, in the case of the General Partner, by
    also giving Notice of the change to all Limited Partners. The
    Notice shall become effective on receipt by the Partnership, or
    the date the Notice is given by the General Partner.
ARTICLE VI —
    PURPOSES AND OBJECTIVES
6.1
Purposes.
The purposes and business
    of the Partnership are to:
(i) acquire, invest in, purchase, own, hold, lease,
    re-lease, finance, refinance, loan, borrow, manage, maintain,
    operate, improve, upgrade, modify, exchange, assign, encumber,
    create or receive security interests in, pledge, sell, transfer
    or otherwise dispose of, and in all respects otherwise deal in
    or with, Investments of all kinds; and
(ii) engage in any and all businesses and to do any and all
    things permitted to a limited partnership under the Delaware Act.
6.2
Investment Objectives.
The investment
    objectives of the Partnership shall be those set forth in the
    Prospectus.
ARTICLE VII —
    TERM
7.1
Term.
The term of the Partnership
    began with the filing of its Certificate of Limited Partnership
    with the Secretary of State of the State of Delaware on
    March 10, 2010 and will end at midnight on
    December 31, 2034, unless sooner dissolved or terminated as
    provided in Article XIV of this Agreement.
ARTICLE VIII —
    PARTNERS AND CAPITAL
8.1
General Partner.
The General Partner
    has contributed $100 in cash as its Capital Contribution to the
    Partnership as consideration for its Partnership Interest.
8.2
Original Limited Partner.
The
    Original Limited Partner has made a capital contribution of
    $1,000 to the Partnership as consideration for 1 Unit purchased
    by it. By its execution of this Agreement, the Original Limited
    Partner agrees to withdraw as Original Limited Partner, and the
    parties agree to return its capital contribution, retire its
    original 1 Unit and restore its original 1 Unit to the Maximum
    Offering on the Initial Closing Date when additional Limited
    Partners are admitted to the Partnership.
8.3
Limited Partners and Maximum
    Offering.
From and after the Initial Closing Date
    there shall be one class of Limited Partners, which includes
    Affiliated Limited Partners. The General Partner is hereby
    authorized to obtain capital for the Partnership through the
    offer and sale of up to 50,000 Units ($50,000,000) to the
    Limited Partners.
A-12
Table of Contents
8.4
Subscription Documents and
    Suitability.
Any Person desiring to become a
    Limited Partner shall execute and deliver to the General Partner
    a Subscription Agreement and all other documents as the General
    Partner reasonably requests. These documents shall be in form
    and substance reasonably satisfactory to the General Partner.
    Among other things, each Person shall, subject to acceptance of
    his subscription by the General Partner, agree to be bound by
    all of the terms, provisions and conditions of this Agreement.
    Units shall be sold only to Persons:
(i) who represent that they have either:
(A) an annual gross income of at least $70,000 and a Net
    Worth of at least $70,000; or
(B) a Net Worth of at least $250,000; or
(ii) who satisfy the suitability standards applicable in
    the state or other jurisdiction of their residence or domicile
    as set forth in the Prospectus if those standards are more
    stringent than the standards described in clause (i) above.
8.5
Payment of Subscription Price of
    Units.
At the time of subscribing each Limited
    Partner, including Affiliated Limited Partners, shall make a
    Capital Contribution, in cash, in an amount equal to the Unit
    Price for each Unit, or portion of a Unit, purchased.
8.6
Minimum Subscription Amount.
Each
    Limited Partner must purchase a minimum of 25 Units ($25,000)
    unless a greater minimum number of Units is required by the
    Administrator of the Limited Partner's state or other
    jurisdiction of residence. Notwithstanding the foregoing, the
    General Partner, in its sole discretion, may accept
    subscriptions for fewer than 25 Units, except as may be required
    by the Administrator of the subscriber's state or other
    jurisdiction of residence.
8.7
Subscriptions for Units by General Partner and its
    Affiliates.
The General Partner and its
    Affiliates shall subscribe for an aggregate of 100 Units at the
    Unit Price, in the aggregate, for their own account for
    investment purposes only.
8.8
Partnership Closings.
No subscribers
    shall be admitted to the Partnership unless and until the
    Minimum Offering shall be achieved. After the General Partner
    has determined that the Minimum Offering has been achieved, it
    shall set the Initial Closing Date. Following the Initial
    Closing Date, Closings will be held on such dates as determined
    by the General Partner in its sole discretion.
8.9
Acceptance of Units.
Subscriptions
    for Units shall promptly be accepted or rejected by the General
    Partner after their receipt by the Partnership (but in any event
    not later than 30 days thereafter) and a confirmation of
    acceptance shall be sent by the General Partner to each
    subscriber admitted to the Partnership as a Limited Partner. The
    General Partner shall have the unconditional right to refuse to
    admit any subscriber as a Limited Partner, without liability.
    Also, each subscriber shall have the right to cancel his or her
    subscription before it has been accepted by the General Partner
    by providing written notice to the General Partner, signed by
    each Person who signed the subscriber's Subscription
    Agreement, of their intent to cancel their subscription, in a
    form satisfactory to the General Partner. The Partnership may
    not complete a sale of Units to subscriber for Units until at
    least five business days after the date the subscriber received
    a final Prospectus.
8.10
Admission to Partnership as Limited
    Partners.
Each Person whose subscription is
    accepted by the General Partner shall be admitted to the
    Partnership as a Limited Partner and shall for all purposes of
    this Agreement be treated as a Limited Partner not later than
    15 days after the Initial Closing Date or, if the
    Person's subscription is accepted after the Initial Closing
    Date, the last day of the calendar month following the date the
    subscription was accepted by the Partnership. The amount of each
    Limited Partner's Capital Contribution shall be set forth
    on the Partnership's books and records, which shall be
    supplemented or amended from time to time promptly following
    each Closing Date, to reflect the name, address and Capital
    Contribution of each Limited Partner admitted to the Partnership
    as a result of the Closing; provided that any failure so to
    attend to the books and records following any Closing Date shall
    not in any way affect the admission of any Limited Partner to
    the Partnership for all purposes of this Agreement if the
    Limited Partner was admitted to the Partnership at that Closing.
A-13
Table of Contents
8.11
Escrow Account and Subscription
    Account.
The General Partner shall establish the
    Escrow Account and the Subscription Account. From the date to,
    but not including, the Initial Closing Date, all subscription
    funds shall be deposited in the Escrow Account. From and after
    the Initial Closing Date, except as provided in
    Section 8.12, all subscription funds shall be held by the
    Partnership in the Subscription Account until the General
    Partner either accepts or rejects the subscription as described
    below.
On the Initial Closing Date and any subsequent Closing Date, all
    Gross Offering Proceeds then held in the Escrow Account or
    Subscription Account with respect to Units purchased by any
    Person admitted to the Partnership on the Initial Closing Date
    or such subsequent Closing Date, together with interest earned,
    if any, shall be released to the Partnership. With respect to
    Limited Partners admitted to the Partnership on the Initial
    Closing Date, the Partnership shall pay the foregoing interest,
    if any, to such Limited Partners based on the amounts of their
    respective subscriptions and the number of days that those
    amounts were held in the Escrow Account within at least
    60 days after the Initial Closing Date. With respect to
    Limited Partners admitted to the Partnership on any subsequent
    Closing Date, the Partnership shall retain the foregoing
    interest, if any, and not pay the interest to such Limited
    Partners, except to the extent provided in Section 8.12.
    Subscription funds deposited by any Person whose subscription is
    rejected by the General Partner shall be promptly returned to
    that Person, together with interest earned, if any, and without
    deduction for any fees. In no event shall any Gross Offering
    Proceeds be held in the Escrow Account or the Subscription
    Account beyond the Offering Termination Date before either being
    released to the Partnership at a Closing or, if the Minimum
    Offering has not been achieved or the subscriber has been
    rejected as a Limited Partner by the General Partner, returned
    to the subscriber with interest earned, if any, and without
    deduction for any fees.
8.12
Separate Escrow Account for Residents of
    Pennsylvania.
Notwithstanding any provision to
    the contrary in this Agreement, subscription funds received from
    residents of Pennsylvania shall be held in a separate escrow
    account by the Escrow Agent on the terms set forth in the Escrow
    Agreement, and shall not be used in computing the Minimum
    Offering. If subscriptions for 7,500 Units ($7,500,000) have
    been received and accepted by the Partnership, including the
    subscription funds of Pennsylvania residents whose subscriptions
    have been accepted by the General Partner, the subscription
    funds of the Pennsylvania residents whose subscriptions have
    been accepted shall be released from such escrow account to the
    Partnership, together with interest earned, if any, and those
    Pennsylvania residents shall be admitted to the Partnership as
    Limited Partners. The Partnership shall pay the interest to the
    Pennsylvania Limited Partners based on the amounts of their
    respective subscriptions and the number of days that those
    amounts were held in such escrow account within at least
    60 days after the applicable Closing Date.
8.13
Partnership Capital
(a)
No Interest Paid on Capital
    Contributions.
No Person shall be paid interest
    on the Person's Capital Contribution, except interest
    earned on subscription funds deposited in the Escrow Account
    prior to the Initial Closing Date as provided in
    Section 8.11 and interest earned on subscription funds
    deposited in the escrow account established for residents of
    Pennsylvania as provided in Section 8.12.
(b)
No Limited Partner Right to
    Withdraw.
In addition to the redemption of the
    Original Limited Partner's Units, the Partnership may
    Redeem Units presented by Limited Partners for Redemption
    pursuant to Section 13.5 in the General Partner's sole
    discretion. No Limited Partner shall have the right to otherwise
    withdraw or receive any return of the Limited Partner's
    Capital Contribution except as specifically provided in this
    Agreement, and no Capital Contribution shall be returned by the
    Partnership to any Limited Partner in the form of any property
    other than cash.
(c)
No Limited Partner Priority.
Except
    as otherwise specifically provided in this Agreement, no Limited
    Partner shall have priority over any other Limited Partner as to:
(i) the return of the Limited Partner's Capital
    Contribution or Capital Account;
(ii) the Limited Partner's share of Income or Loss or
    items thereof or any amounts required to be specially
    allocated; or
A-14
Table of Contents
(iii) the Limited Partner's share of Distributable
    Cash.
(d)
No General Partner Personal Liability for
    Repayment.
The General Partner and its Affiliates
    shall not have any personal liability for the repayment of the
    Capital Contribution of any Limited Partner.
8.14
Capital Accounts
(a)
Separate Capital Account.
A separate
    Capital Account shall be established and maintained for the
    General Partner and for each Limited Partner.
(b)
General Partner's Initial Capital
    Account.
The Capital Account of the General
    Partner initially shall be $100.
(c)
Limited Partner's Initial Capital
    Account.
The Capital Account of each Limited
    Partner, including Affiliated Limited Partners, initially shall
    be the Limited Partner's Capital Contribution.
(d)
Increases to Capital Account.
The
    Capital Account of each Partner shall be increased by:
(i) the amount of any additional money contributed by the
    Partner to the Partnership;
(ii) the fair market value of any property contributed by
    the Partner to the Partnership (net of liabilities secured by
    the contributed property that the Partnership is considered to
    assume under Code Section 752); and
(iii) allocations to the Partner of Income (or items
    thereof), including, but not limited to, items of income and
    gain specially allocated pursuant to Section 11.2(b), (c),
    (d), (e), (f), (g) or (h).
(e)
Decreases to Capital Account.
The
    Capital Account of each Partner shall be decreased by:
(i) the amount of money distributed to or on behalf of the
    Partner by the Partnership;
(ii) the fair market value of any property distributed to
    or on behalf of the Partner by the Partnership (net of
    liabilities secured by the distributed property that the Partner
    is considered to assume under Code Section 752); and
(iii) allocations to the Partner of Loss (or items
    thereof), including but not limited to items of loss and
    deduction specially allocated pursuant to Section 11.2(b),
    (c), (d), (e), (f), (g) or (h).
(f)
General Partner's Limited Partner Capital
    Account.
For purposes of this Agreement, a
    General Partner who also owns Units as a Limited Partner will be
    treated as a limited partner with respect to the purchased
    Interests.
(g)
Succession to Capital Account.
If the
    Partnership Interest of a General Partner or a Unit is sold or
    otherwise transferred, the Capital Account of the transferor
    with respect to the Partnership Interest or the Unit transferred
    shall carry over to the transferee in accordance with Treas.
    Reg.
Section 1.704-1(b)(2)(iv)(l).
However, if the transfer causes a termination of the Partnership
    under Code Section 708(b)(1)(B), the Capital Account that
    carries over to the transferee shall be adjusted in accordance
    with the constructive contribution and liquidation rules under
    Treas. Reg.
Section 1.708-1.
(h)
Section 754 Election.
For any
    taxable year in which the Partnership has a Code
    Section 754 election in effect, the Capital Accounts shall
    be maintained in accordance with Treas. Reg.
Section 1.704-1(b)(2)(iv)(m).
The Partnership shall not be required to make any elections
    pursuant to Code Section 754.
(i)
Revaluation.
Upon the occurrence of
    the events specified in Treas. Reg.
Section 1.704-1(b)(2)(iv)(f),
the Partners' Capital Accounts shall be adjusted and
    thereafter maintained to reflect the revaluation of Partnership
    assets on the books of the Partnership in accordance with Treas.
    Reg.
Sections 1.704-1(b)(2)(iv)(f)
through (h).
(j)
Capital Accounts Maintained in Accordance with
    Treasury Regulations.
Notwithstanding anything in
    this Agreement to the contrary, the Partners' Capital
    Accounts shall at all times be maintained in the manner required
    by Treas. Reg.
Section 1.704-1(b)(2)(iv),
and any questions or ambiguities arising under this
A-15
Table of Contents
Agreement shall be resolved by reference to those Treasury
    Regulations. Further, those Treasury Regulations shall govern
    the maintenance of the Capital Accounts to the extent this
    Agreement does not provide for the treatment of a particular
    item. If Treas. Reg.
Section 1.704-1(b)(2)(iv)
does not provide for a particular item, the Capital Account
    adjustments shall be made in a manner that is consistent with
    the underlying economic arrangement of the Partners based,
    wherever practicable, on federal tax accounting principles.
8.15
Limitations on Additional Capital
    Contributions
(a)
Additional Capital Contributions of General
    Partner.
The General Partner shall not be
    required to make any Capital Contribution in addition to its
    initial Capital Contribution except pursuant to, and in
    accordance with, Section 8.7 and Section 14.2(c)(ii).
(b)
Additional Capital Contributions of Limited
    Partners.
No Limited Partner shall be required to
    make any Capital Contribution in addition to the Capital
    Contribution required under Section 8.3.
8.16
Loans by Partners.
Except as
    provided otherwise in Section 14.2(c)(ii), no loan by any
    Partner or any Affiliate of any Partner to the Partnership
    (including, without limitation, any Partnership Loan) shall
    constitute a Capital Contribution to the Partnership or increase
    the Capital Account balance of any Partner, but shall be
    treated, for all purposes, as Indebtedness of the Partnership
    payable or collectible only out of the assets of the Partnership
    in accordance with the terms and conditions on which the loan
    was made.
ARTICLE IX —
    POWERS, RIGHTS AND DUTIES OF GENERAL PARTNER
9.1
Extent of Powers and Duties
(a)
General.
Except as expressly limited
    by the provisions of this Agreement, the General Partner shall
    have complete and exclusive discretion to manage and control the
    affairs and business of the Partnership and may employ all
    powers necessary, convenient or appropriate to carry out the
    purposes, conduct the business and exercise the powers of the
    Partnership.
The General Partner shall have fiduciary responsibility for the
    safekeeping and use of all funds and assets of the Partnership,
    whether or not in the General Partner's immediate
    possession or control.
(b)
Powers and Duties.
Pursuant to the
    authority granted in this Section 9.1, and subject only to
    the limitations otherwise provided in this Agreement, the
    General Partner's powers and duties shall include, but not
    be limited to, the following:
(i) to acquire, invest in (directly or indirectly),
    purchase, own, hold, lease, re-lease, finance, refinance,
    borrow, loan, manage, maintain, operate, improve, upgrade,
    modify, exchange, assign, encumber, create and receive security
    interests in, pledge, sell, transfer or otherwise dispose of,
    and in all respects otherwise deal in or with, Investments and
    other tangible or intangible property (including securities,
    debt instruments, contract rights, lease rights, equity
    interests and, to the extent permitted by
    Section 9.1(b)(xviii), joint ventures), and to contract
    with others to do the same on behalf of the Partnership;
(ii) to select and supervise the activities of any
    Equipment and Other Physical Asset management agents for the
    Partnership;
(iii) to assure the proper application of revenues of the
    Partnership;
(iv) to maintain proper books of account for the
    Partnership and to prepare reports of operations and tax returns
    required to be furnished to the Partners pursuant to this
    Agreement or to taxing bodies or other governmental agencies,
    including Administrators, in accordance with applicable laws and
    regulations;
(v) to enter into the Selling Agent Agreement with the
    Selling Agent to provide for the offer and sale of Units;
A-16
Table of Contents
(vi) to enter into the Management, Origination and
    Servicing Agreement with the Investment Manager to provide for
    the services described therein;
(vii) to invest any and all funds held by the Partnership;
(viii) to designate depositories of the Partnership's
    funds, and establish the terms and conditions of the deposits
    and drawings on the deposits;
(ix) without the Consent of a Majority Interest under
    Section 9.2(i), to enter into Financing Transactions and
    otherwise to borrow money or procure extensions of credit for
    the Partnership (except that neither the Partnership nor the
    General Partner shall borrow money solely for the purpose of
    making Cash Distributions during the Operating Period that the
    Partnership would otherwise be unable to make) and, in
    connection therewith, to execute, seal, acknowledge and deliver
    agreements, promissory notes, guarantees and other written
    documents evidencing Financing Transactions or constituting
    obligations or evidences of Indebtedness and to pledge,
    hypothecate, mortgage, assign, transfer or convey mortgages or
    security interests in Investments or any other assets of the
    Partnership as security for Financing Transactions;
(x) to hold all or any portion of the Investments and other
    assets of the Partnership in the name of one or more trustees,
    nominees, or other entities or agents of or for the Partnership;
(xi) to acquire and enter into any contract that the
    General Partner deems necessary or appropriate for the
    protection of the Partnership and (subject to
    Sections 9.2(b), 9.2(c) and 9.2(g)) the General Partner,
    for the conservation of Partnership assets, or for any other
    purpose convenient or beneficial to the Partnership;
(xii) to employ agents, employees, managers, accountants,
    attorneys, consultants and other persons in the operation and
    management of the business of the Partnership including, but not
    limited to, Affiliates of the General Partner, supervisory
    managing agents, management agents, and lease, loan or
    securities brokers, on terms and for compensation as the General
    Partner shall determine, provided, however, that, with respect
    to services provided by the General Partner or its Affiliates,
    compensation for those services shall be limited as specifically
    set forth in this Agreement;
(xiii) to cause the Partnership to make or revoke any of
    the elections referred to in Sections 108, 732, 754 and
    1017 of the Code or any similar provisions enacted in lieu of
    those elections;
(xiv) to select as the accounting year for the Partnership
    the calendar year or any other fiscal year as may be permitted
    under the Code or Treasury Regulations or approved by the IRS;
(xv) to determine the accounting method or methods to be
    used by the Partnership (the Partnership intends, at least
    initially to use the accrual method of accounting in maintaining
    its books and records) in accordance with the Code or Treasury
    Regulations;
(xvi) to require in all Partnership obligations to any
    Person other than a Limited Partner, acting as a Limited
    Partner, that the General Partner shall not have any personal
    liability on those obligations, and that the person or entity
    contracting with the Partnership must look solely to the
    Partnership and its assets for satisfaction;
(xvii) to invest the Gross Offering Proceeds and Net
    Offering Proceeds temporarily in short term, highly liquid
    investments where there is appropriate safety of principal,
    before the funds are used to make or acquire Investments;
(xviii) to execute or sign, individually or jointly, a
    check or certificate on behalf of the Partnership;
(xix) to cause the Partnership to invest in a joint venture
    to own one or more Investments with any one or more Affiliated
    Programs if the General Partner determines, in its sole
    discretion, that:
(A) doing so would be in the best interest of the
    Partnership and the Affiliated Program;
A-17
Table of Contents
(B) the Partnership and the Affiliated Program would have
    substantially identical investment objectives;
(C) there would be no duplicate fees;
(D) the compensation of the sponsor of the Affiliated
    Program would be substantially identical to the compensation of
    the General Partner from the Partnership;
(E) the Partnership would have the right of first refusal
    to purchase any Investment jointly owned with the Affiliated
    Program that the Affiliated Program wishes to sell;
(F) the respective investments in the Investment by the
    Partnership and the Affiliated Program would be on substantially
    the same terms and conditions; and
(G) the joint venture would be entered into either for the
    purpose of effecting appropriate diversification for the
    Partnership and the Affiliated Program, or for the purpose of
    relieving the General Partner or its Affiliates from a
    commitment entered into pursuant to Section 9.2(b);
(xx) to pay, extend, renew, modify, adjust, submit to
    arbitration, prosecute, defend or compromise, on any terms as it
    may determine and on any evidence as it deems sufficient, any
    obligation, suit, liability, cause of action or claim, including
    those relating to federal, state or local taxation, either in
    favor of or against the Partnership;
(xxi) to establish and maintain Reserves, and to increase
    or reduce the amounts of the Reserves, as it deems appropriate
    from time to time, but initially the Partnership's Reserves
    shall not be less than an amount equal to approximately 1% of
    the Gross Offering Proceeds;
(xxii) subject to Section 8.3, to do all things
    necessary or advisable, in its sole discretion, to effect the
    admission of the Limited Partners, including, but not limited
    to, registering the Units under the Securities Act and effecting
    the qualification of, or obtaining exemptions from the
    qualification of, the Units for sale with Administrators, and
    determining that the purchase of Units is a suitable and
    appropriate investment for each Limited Partner, based on
    information provided by each Limited Partner regarding his
    financial situation and investment objectives;
(xxiii) to enter into the Escrow Agreement on behalf of the
    Partnership and provide for compensation to the Escrow Agent
    that the General Partner deems reasonable under the
    circumstances;
(xxiv) to cause the Partnership to Redeem, or not Redeem,
    Units, in its sole discretion, if a Limited Partner requests the
    Partnership to Redeem a portion or all of the Limited
    Partner's Units as provided in Section 13.5;
(xxv) to cause the Partnership to obtain and pay the
    premiums with respect to insurance policies covering all risks
    the General Partner deems reasonably necessary to protect the
    interests of the Partnership; provided that the General Partner,
    its Affiliates and their respective employees and agents may be
    named as additional insured parties under the insurance policies
    only if doing so does not increase the cost of premiums payable
    by the Partnership or if the additional cost, if any, is paid by
    the General Partner and its Affiliates; and provided further,
    that the Partnership shall not incur or assume the cost of any
    portion of any insurance which insures any party against any
    liability the indemnification of which is prohibited by
    Section 9.3(b);
(xxvi) subject to the limitations and requirements of
    Section 11.1(b), (A) to reinvest all or a substantial
    portion of the Net Disposition Proceeds in additional
    Investments during the Operating Period, and (B) to
    reinvest Net Disposition Proceeds in additional Investments
    during the Liquidation Period if, in the Investment
    Manager's sole discretion, such reinvestment would be in
    the best interests of the Limited Partners;
(xxvii) to manage and supervise all marketing and investor
    relations matters;
(xxviii) subject to Section 9.2(m), to enter into on
    behalf of the Partnership arrangements with itself or its
    Affiliates to provide services for the Partnership, if
    necessary, in addition to those provided for
A-18
Table of Contents
under this Agreement or the Management, Origination and
    Servicing Agreement, which additional arrangements must meet the
    following criteria:
(A) the compensation, price or fee charged for providing
    the services must be comparable and competitive with the
    compensation, price or fee of any other Person who is rendering
    comparable services or selling or leasing comparable goods and
    materials which could reasonably be made available to the
    Partnership;
(B) the fees and other terms of the contract shall be fully
    disclosed to the Limited Partners; and
(C) the General Partner or its Affiliate providing the
    services must be independently engaged in the business of
    providing those services to Persons other than Affiliates of the
    General Partner; and
(xxix) to take all actions and execute all documents and
    other instruments as the General Partner may deem necessary,
    convenient or advisable to accomplish or further the purposes or
    objectives of the Partnership or to protect and preserve
    Partnership assets.
(c)
Delegation of Powers.
Except as
    otherwise provided under this Agreement or by law, the General
    Partner may, in its sole discretion, delegate all or any of its
    duties under this Agreement to, and may elect, employ, contract
    or deal with, any Person, including any Affiliate of the General
    Partner, provided, however, the delegation shall not relieve the
    General Partner of responsibility for any of its obligations or
    duties under this Agreement. The General Partner shall have the
    authority to enter into, on behalf of the Partnership, the
    Management, Origination and Servicing Agreement, pursuant to
    which the Investment Manager will, on behalf of the Partnership,
    originate Investments, temporarily make Investments, service the
    Investments, including, but not limited to, performing credit
    analysis and underwriting, receivables management, portfolio
    management, accounting and financial and tax reporting,
    remarketing and marketing services.
(d)
Reliance by Third-Parties.
No Person
    dealing with the Partnership or its Investments or other assets,
    whether as assignee, lessee, purchaser, borrower, mortgagee,
    grantee or otherwise, shall be required to investigate the
    authority of the General Partner in selling, assigning, leasing,
    mortgaging, conveying or otherwise dealing with a portion or all
    of any Investments or other assets, nor shall any assignee,
    lessee, purchaser, mortgagee, grantee or other Person entering
    into a contract with the Partnership be required to inquire as
    to whether the approval of the Partners for the assignment,
    lease, sale, mortgage, transfer or other transaction has been
    first obtained. Any Person dealing with the Partnership shall be
    conclusively protected in relying on a certificate of authority
    or of any other material fact signed by the General Partner, or
    in accepting any instrument signed by the General Partner in the
    name and on behalf of the Partnership or the General Partner.
9.2
Limitations on the Exercise of Powers of General
    Partner.
The General Partner shall have no power
    to take any action prohibited by this Agreement or by the
    Delaware Act. Furthermore, the General Partner shall be subject
    to Sections 9.2(a) through 9.2(m) in the administration of
    the Partnership's business and affairs:
(a)
Investment Company Status.
The
    General Partner shall use its best efforts to assure that the
    Partnership is not deemed to be an "investment
    company" within the meaning of the Investment Company Act
    of 1940, as amended.
(b)
Sales and Leases of Investments from or to the
    General Partner and its Affiliates.
The
    Partnership shall neither purchase nor lease Investments from,
    nor sell or lease Investments to, the General Partner, any
    Affiliate of the General Partner or any Affiliated Program
    (including any Investment in which the General Partner or any of
    its Affiliates has an interest) except as provided in this
    Section 9.2(b). Notwithstanding the foregoing, the
    Partnership may purchase Investments from the General Partner or
    any of its Affiliates (but not including an Affiliated Program)
    if:
(i) the General Partner determines, in its sole discretion,
    that making the Investment is in the best interests of the
    Partnership;
A-19
Table of Contents
(ii) the Investment is purchased by the Partnership at a
    Purchase Price that does not exceed the sum of:
(A) the cost to the General Partner or the Affiliate of
    acquiring and holding the Investment (as determined under GAAP
    and as adjusted for any income received, capital or investment
    returned and reasonable and necessary expenses paid or incurred
    while holding the Investment); plus
(B) any compensation to which the General Partner and any
    Affiliate of the General Partner is entitled to under this
    Agreement;
(iii) there is no difference in the interest terms of any
    Indebtedness secured by the Investment at the time it is
    acquired by the General Partner or its Affiliate and the time
    the Investment is acquired by the Partnership, although there
    may be different interest terms if the applicable financing is
    provided through a different credit facility or different lender;
(iv) neither the General Partner nor any Affiliate of the
    General Partner receives any other benefit, other than
    compensation permitted by this Agreement, as a result of the
    Partnership purchasing the Investment; and
(v) at the time of transfer of the Investment to the
    Partnership, the General Partner or its Affiliate had held the
    Investment on a temporary or interim basis (generally not longer
    than 6 months) for the purposes of:
(A) facilitating the acquisition of the Investment by the
    Partnership; or
(B) any other lawful purpose related to the business of the
    Partnership.
(c) Loans to or from the General Partner and its
    Affiliates.
No loans may be made by the
    Partnership to the General Partner or any Affiliate of the
    General Partner. The General Partner or any Affiliate of the
    General Partner may loan or advance funds to the Partnership
    provided that:
(i) any interest or other financing charges or fees payable
    by the Partnership in connection with the loan shall not exceed
    the lesser of the following:
(A) the rate of interest and other amounts paid or payable
    by the General Partner or the Affiliate in connection with the
    loan (if the General Partner or the Affiliate borrowed money for
    the specific purpose of making the loan); or
(B) the rate of interest and other amounts that would be
    charged to the Partnership (without reference to the General
    Partner's or the Affiliate's financial abilities or
    guarantees) by unrelated lending institutions on a comparable
    loan for the same purpose in the same geographic area (if
    neither the General Partner nor the Affiliate borrowed money to
    make the loan); and
(ii) all payments of principal and interest on the loan
    must be due and payable within 12 months after the date on
    which the loan is made.
If the General Partner or any Affiliate of the General Partner
    purchases an Investment in its own name and with its own funds
    in order to facilitate the ultimate purchase of the Investment
    by the Partnership, the General Partner or the Affiliate, as the
    case may be, shall be deemed to have made a loan to the
    Partnership in the amount of the Purchase Price and shall be
    entitled to receive interest on that amount in accordance with
    clause (i) above.
However, any advances made by the General Partner or any
    Affiliate of the General Partner for the purpose of paying
    Organization and Offering Expenses shall not constitute a loan
    to the Partnership. Instead, those advances shall be reimbursed
    to the General Partner or the Affiliate (to the extent possible)
    from the General Partner's Organization and Offering
    Expense Allowance, without interest, in accordance with, and to
    the extent provided in, Section 9.4(c).
A-20
Table of Contents
(d)
No Exchange of Partnership Units for
    Investments.
The Partnership shall not acquire
    any Investments in exchange for Units.
(e)
Roll-Ups.
Any
    proposal that the Partnership enter into a
Roll-Up
shall require the Consent of a Majority Interest. Any proposed
Roll-Up
shall also be subject to the following:
(i) An appraisal of all Partnership assets shall be
    obtained from a competent Independent Expert. If the appraisal
    will be included in a prospectus used to offer the securities of
    a
Roll-Up
Entity, the appraisal shall be filed with the Commission and
    applicable Administrators as an exhibit to the registration
    statement for the offering. Partnership assets shall be
    appraised on a consistent basis. The appraisal shall be based on
    an evaluation of all relevant information, and shall indicate
    the value of the Partnership's assets as of a date
    immediately prior to the announcement of the proposed
Roll-Up
transaction. The appraisal shall assume an orderly liquidation
    of Partnership assets over a
12-month
period. The terms of the engagement of the Independent Expert
    shall clearly state that the engagement is for the benefit of
    the Partnership and its Limited Partners. A summary of the
    independent appraisal, indicating all material assumptions
    underlying the appraisal, shall be included in a report to the
    Limited Partners in connection with a proposed
Roll-Up
transaction.
(ii) The Person sponsoring the
Roll-Up
transaction shall offer to Limited Partners who vote
    "no" on the proposal the choice of:
(A) accepting the securities offered in the proposed
Roll-Up
transaction; or
(B) one of the following:
(1) remaining as Limited Partners, and preserving their
    Units in the Partnership on the same terms and conditions as
    existed previously; or
(2) receiving cash in an amount equal to the Limited
    Partners' pro-rata share of the appraised value of the net
    assets of the Partnership.
(iii) The Partnership shall not participate in any proposed
Roll-Up
transaction that would result in Limited Partners having voting
    rights which are less than those provided for under this
    Agreement. If the
Roll-Up
Entity is a limited partnership, the voting rights of Limited
    Partners shall correspond to the voting rights provided for in
    this Agreement to the greatest extent possible. If the
Roll-Up
Entity is a corporation, then the democracy rights of Limited
    Partners shall correspond to the democracy rights provided for
    in this Agreement to the greatest extent possible.
(iv) The Partnership shall not participate in any proposed
Roll-Up
transaction that includes provisions which would operate to
    materially impede or frustrate the accumulation of shares by any
    purchaser of the securities of the
Roll-Up
Entity (except to the minimum extent necessary to preserve the
    tax status of the entity). The Partnership shall not participate
    in any proposed
Roll-Up
transaction that would limit the ability of a Limited Partner to
    exercise the voting rights of the securities of the
Roll-Up
Entity on the basis of the number of Units held by that Limited
    Partner.
(v) The Partnership shall not participate in any proposed
Roll-Up
transaction in which Limited Partners' rights of access to
    the records of the
Roll-Up
Entity will be less than those provided for under this Agreement.
(vi) The Partnership shall not reimburse the sponsor of a
    proposed
Roll-Up
for
    the costs of its proxy contest, nor bear any other costs of the
    transaction if the
Roll-Up
is
    not approved by a Majority Interest.
(f)
No Exclusive Listings.
No exclusive
    listing for the sale of Investments, or of any other Partnership
    assets, shall be granted to the General Partner or any Affiliate
    of the General Partner.
(g)
Other Transactions Involving the General Partner and
    its Affiliates.
(i) Except as specifically permitted by this Agreement and
    the Management, Origination and Servicing Agreement, the
    Partnership shall not enter into any agreements, contracts or
    arrangements with
A-21
Table of Contents
the General Partner, any Affiliate of the General Partner or any
    Affiliated Program not otherwise discussed in this Agreement or
    the Prospectus.
(ii) Except as permitted by Section 9.4, the General
    Partner and its Affiliates shall not receive, directly or
    indirectly, a commission or fee in connection with the
    reinvestment of Net Disposition Proceeds in new Investments.
(iii) Neither the General Partner nor any of its Affiliates
    may receive any rebates or
"give-ups,"
nor may the General Partner or any of its Affiliates participate
    in any reciprocal business arrangements that could have the
    effect of circumventing any of the provisions of this Agreement.
(h)
Payments to Investor
    Advisors.
Neither the General Partner nor any
    Affiliate of the General Partner shall, directly or indirectly,
    pay or award any commissions or other compensation to any Person
    engaged by a potential investor as an investment advisor as an
    inducement to such Person to advise the potential investor
    concerning the Units. Provided, however, this
    Section 9.2(h) shall not prohibit the payment to any such
    Person of the Distribution Expenses in accordance with the terms
    of this Agreement and the Selling Agent Agreement.
(i)
Sale of All or Substantially All Assets;
    Dissolution.
During the Operating Period, the
    General Partner may not dissolve the Partnership or sell or
    otherwise dispose of all or substantially all of the assets of
    the Partnership without the Consent of a Majority Interest.
(j)
No Investments in or Underwriting of Interests of
    Other Programs.
The Partnership shall not invest
    in or underwrite the equity interests of any other Program;
    provided, however, that nothing in this Agreement shall preclude
    the Partnership from making investments in joint ventures to the
    extent and in the manner provided in Section 9.1(b)(xviii).
(k)
Use of Partnership's Assets.
The
    General Partner shall not employ, nor permit any other Person to
    employ, the Partnership's funds or assets in any manner
    except for the exclusive benefit of the Partnership.
(l)
Fiduciary Duty to Limited
    Partners.
Neither the General Partner nor any
    Affiliate shall permit a Limited Partner to contract away the
    fiduciary duty owed to the Limited Partner by the General
    Partner or its Affiliates under Delaware law and, to the extent
    applicable, common law.
(m)
Contracts for Goods and Services.
All
    services or goods for which the General Partner or any of its
    Affiliates are to receive compensation that are not otherwise
    described or specifically authorized in this Agreement or the
    Management, Origination and Servicing Agreement shall be subject
    to the following provisions:
(i) a written contract shall precisely describe the
    services to be rendered and all compensation to be paid;
(ii) the contract may be modified only by a Majority vote
    of the Limited Partners, and the contract shall contain a clause
    allowing its termination without penalty by a Majority vote of
    the Limited Partners on 60 days' notice to the General
    Partner or its Affiliates, as the case may be;
(iii) the compensation, price or fee charged for providing
    the services must be comparable and competitive with the
    compensation, price or fee of any other Person who is rendering
    comparable services or selling or leasing comparable goods and
    materials which could reasonably be made available to the
    Partnership;
(iv) the fees and other terms of the contract shall be
    fully disclosed to the Limited Partners; and
(v) the General Partner or its Affiliate must be
    independently engaged in the business of providing the services
    to Persons other than Affiliates of the General Partner and at
    least 75% of its gross revenue from providing the services must
    be derived from Persons other than the General Partner or its
    Affiliates.
9.3
Limitation on Liability of General Partner and its
    Affiliates; Indemnification.
Any amounts payable
    pursuant to this Section 9.3 shall be recoverable solely
    out of the assets of the Partnership and not from the Limited
    Partners.
A-22
Table of Contents
(a)
Limitation on General Partner's
    Liability.
Neither the General Partner nor any
    Affiliate of the General Partner shall have any liability to the
    Partnership or to any Limited Partner for any loss suffered by
    the Partnership or the Limited Partners that arises out of any
    action or inaction of the General Partner or its Affiliates if:
(i) the General Partner and its Affiliates determined in
    good faith that the course of conduct was in the best interest
    of the Partnership;
(ii) the General Partner and its Affiliates were acting
    within the scope of authority on behalf of, or performing
    services for, the Partnership; and
(iii) the course of conduct did not constitute negligence
    or misconduct of the General Partner or its Affiliates.
(b)
Indemnification of General
    Partner.
The General Partner and its Affiliates
    shall be indemnified by the Partnership against any losses,
    judgments, liabilities, expenses, and amounts paid in settlement
    of any claims sustained by them in connection with the
    Partnership, provided that:
(i) the General Partner and its Affiliates determined in
    good faith that the course of conduct that caused the loss or
    liability was in the best interest of the Partnership;
(ii) the General Partner and its Affiliates were acting
    within the scope of authority on behalf of, or performing
    services for, the Partnership; and
(iii) the course of conduct was not the result of
    negligence or misconduct of the General Partner or its
    Affiliates.
(c)
Securities Act
    Liability.
Notwithstanding the above, the General
    Partner and its Affiliates, including the Selling Agent, and any
    Person acting as a broker/dealer, shall not be indemnified by
    the Partnership for any losses, liabilities or expenses arising
    from or out of an alleged violation of federal or state
    securities laws unless:
(i) there has been a successful adjudication on the merits
    of each count involving securities law violations as to the
    particular indemnitee and a court of competent jurisdiction has
    approved indemnification of the litigation costs; or
(ii) the claims have been dismissed with prejudice on the
    merits by a court of competent jurisdiction as to the particular
    indemnitee and a court of competent jurisdiction has approved
    indemnification of the litigation costs; or
(iii) a court of competent jurisdiction approves a
    settlement of the claims against a particular indemnitee and a
    court of competent jurisdiction has found that indemnification
    of the settlement and related costs should be made.
In any claim for indemnification for federal or state securities
    law violations, the party seeking indemnification shall apprise
    the court of the position of the Commission and, if a position
    be taken by it, the Administrator in any jurisdiction in which
    Units have been sold, with respect to the issue of
    indemnification for securities law violations before seeking the
    court's approval for the indemnification.
(d)
Insurance.
The Partnership shall not
    incur the cost of that portion of any insurance which insures
    any party against any liability the indemnification of which is
    prohibited in this Agreement; provided, however, that with
    respect to public liability insurance obtained by the
    Partnership in connection with any Investment or operations of
    the Partnership, the General Partner shall be permitted to add
    itself and its Affiliates as an additional insured thereunder so
    long as and to the extent that the General Partner pays for any
    incremental premium costs resulting from their being added as an
    additional insured.
For purposes of this Section 9.3, "public liability
    insurance" shall include insurance that would cover damage
    to property or personal injury to non-affiliated Persons
    incurred during the performance of services related to the
    Partnership and its operations.
A-23
Table of Contents
9.4
Compensation of General Partner and its
    Affiliates.
Neither the General Partner nor any
    of its Affiliates shall receive any compensation except in
    accordance with this Section 9.4, Section 9.1(b),
    Section 9.2(m), Section 14.2, and Section 15.9.
(a)
Allocations and Distributions.
The
    General Partner shall be entitled to receive the allocations and
    distributions provided in Article XI and Article XIV
    with respect to its Partnership Interest.
(b)
Distribution Expenses.
Distribution
    Expenses shall be paid by the Partnership to the Selling Agent
    for each Unit sold, but no Distribution Expenses shall be
    payable by the Partnership for any Units sold to the General
    Partner or its Affiliates.
(c)
Organization and Offering Expense
    Allowance.
The Partnership shall pay to the
    General Partner and its Affiliates, immediately following each
    Closing Date, the Organization and Offering Expenses actually
    incurred by the General Partner and its Affiliates without
    deduction for Distribution Expenses payable by the Partnership,
    up to an aggregate amount of all Organization and Offering
    Expenses paid by the Partnership equal to the Organization and
    Offering Expense Allowance. The General Partner shall bear any
    Organization and Offering Expenses incurred by the General
    Partner or its Affiliates (including, without limitation, the
    Selling Agent) in excess of the Organization and Offering
    Expense Allowance.
(d)
Management Fees.
For management
    services rendered, the Partnership shall pay the Management Fees
    to the Investment Manager or its designated Affiliate each month
    in advance following the Initial Closing Date. The amount of the
    Management Fee payable in any year will be reduced for that year
    to the extent that it, together with the Promotional Interest,
    would otherwise exceed the Sponsor Fee Limit, as provided in
    Section 9.4(e). Any such reduction in the Management Fee
    would be deferred until any subsequent period during which it
    could be paid without exceeding the Sponsor Fee Limit, as
    provided in Section 9.4(e).
(e)
Sponsor Fee Limit.
The Sponsor Fee
    Limit will be calculated each year during the Partnership's
    term by calculating the maximum amount of fees that would be
    payable to the General Partner, the Investment Manager and their
    Affiliates from the Initial Closing through the end of the year
    in question under Article IV, Sections C through G of
    the NASAA Guidelines. For purposes of the application of the
    NASAA Guidelines, all Investments will be deemed
    "Equipment" as defined in the NASAA Guidelines. To the
    extent that the total amount paid to the General Partner, the
    Investment Manager and their Affiliates through the end of such
    year as Front-End Fees, Management Fees and Promotional Interest
    would cause the total compensation to exceed the aggregate
    amount of fees that would have been payable as calculated under
    the NASAA Guidelines through the end of that year, the
    Management Fee
and/or
the
    Promotional Interest, as determined by the General Partner, in
    its sole discretion, for that year will be reduced to equal the
    maximum aggregate fees that would have been payable under the
    NASAA Guidelines. To the extent any such fees are reduced, the
    amount of such reduction will be accrued and deferred, and such
    accrued and deferred compensation would be paid to the
    Investment Manager, the General Partner, or their Affiliates, as
    the case may be, in a subsequent period, but only to the extent
    that the deferred compensation would be within the Sponsor Fee
    Limit as calculated through that later period. The limitations
    set forth in this Section 9.4(e) will be subject to
    adjustment pursuant to the limitations imposed under
    Section 9.6 relating to the Minimum Investment in
    Equipment. Under Section 9.6, a separate calculation will
    be performed upon completion of the offering of Units, final
    commitment of Net Offering Proceeds to acquisition of
    Investments and establishment of final levels of permanent
    portfolio debt encumbering such Investments, and applied to the
    then current and all prior years, and then such calculation will
    be performed annually as of the end of each fiscal year
    thereafter and applied to the immediately preceding fiscal year.
    To the extent required under the provisions of Section 9.6,
    the maximum amount of fees payable under the NASAA Guidelines
    will be adjusted as provided therein.
(f)
Partnership Expenses.
(i) Except as otherwise provided in this
    Section 9.4(f), Partnership expenses (including Acquisition
    Expenses) other than those reimbursed in accordance with
    Sections 9.4(b) through (d) of this Section 9.4
    shall be billed directly to and paid by the Partnership.
A-24
Table of Contents
(ii) Subject to clause (iv), the General Partner and its
    Affiliates may be reimbursed for the actual cost of goods,
    materials and services used for or by the Partnership and
    obtained by it or them from non-Affiliates of the General
    Partner.
(iii) Subject to clause (iv), the General Partner and its
    Affiliates may be reimbursed for the administrative services
    reasonably necessary, convenient or advisable, in the discretion
    of the General Partner
and/or
the
    Investment Manager, to the prudent operation of the Partnership
    (including, without limitation, legal, accounting, remarketing
    and agency expenses) provided that the reimbursement shall not
    exceed the lesser of:
(A) its or their actual cost; or
(B) the amount the Partnership would be required to pay to
    non-Affiliates for comparable administrative services in the
    same geographic location; and
provided, further, that there shall be no reimbursement for
    their services if the General Partner or its Affiliates are
    entitled to compensation in the form of a separate fee pursuant
    to other provisions of this Section 9.4.
(iv) The General Partner and its Affiliates shall not be
    reimbursed by the Partnership for amounts expended by them with
    respect to the following:
(A) salaries, fringe benefits, travel expenses or other
    administrative items incurred by or allocated to any Controlling
    Person of the General Partner or its Affiliates; or
(B) rent, depreciation, utilities, capital equipment or,
    subject to clause (iii), other administrative items.
9.5
Other Interests of the General Partner and its
    Affiliates
(a)
General Partner's Right to Pursue Other
    Activities.
The General Partner shall be required
    to devote only such time to the affairs of the Partnership as
    the General Partner, in its sole discretion, determines in good
    faith to be necessary for the business and operations of the
    Partnership. The General Partner and its Affiliates may engage
    in, or possess an interest in, business ventures (other than the
    Partnership) of every kind and description, independently or
    with others, including, but not limited to, serving as sponsor
    or general partner of other Programs and participating in the
    equipment leasing or financing business, whether or not those
    business ventures are competitive with the business or
    Investments of the Partnership; provided, however, that the
    General Partner and its Affiliates may not offer for sale
    interests in another Program before the Offering Termination
    Date unless the other Programs have investment objectives that
    are different from the Partnership's or the other Programs
    are Specified Equipment Programs.
The Partnership and the Limited Partners shall have no rights in
    or to the General Partner's and its Affiliates'
    independent ventures or the related income or profits resulting
    from them.
Except as set forth in the Prospectus, the General Partner and
    its Affiliates shall not be obligated to present any particular
    investment opportunity to the Partnership. The General Partner
    and its Affiliates shall have the right to invest in equipment,
    portfolios of equipment subject to existing equipment leases,
    equipment financing, and in leasing and re-leasing opportunities
    on its or their own behalf or on behalf of other Programs. The
    General Partner and its Affiliates shall have the right, subject
    only to the provisions of Section 9.5(b), to take for their
    own account (individually or otherwise), or to recommend to any
    Affiliated Program, any particular investment opportunity.
(b)
Resolving Conflicts.
Any conflicts in
    determining and allocating Investments between the General
    Partner and its Affiliated Programs, on the one hand, and the
    Partnership, on the other hand, shall be resolved by the
    Investment Committee, which will evaluate the suitability of all
    prospective Investments. If the Investments available from time
    to time to the Partnership and to other Affiliated Programs are
    less than the aggregate amount of the Investments then sought by
    them, an available Investment shall be allocated by the
A-25
Table of Contents
General Partner to an Affiliated Program (including the
    Partnership) after taking into consideration at least the
    following factors:
(i) which Affiliated Program has been seeking Investments
    or reinvesting Cash Flow from its Investments for the longest
    period of time;
(ii) whether the Affiliated Program has the cash required
    for the Investment;
(iii) whether the amount of debt to be incurred with
    respect to the Investment is acceptable for the Affiliated
    Program;
(iv) the effect the Investment would have on the Affiliated
    Program's cash flow;
(v) whether the Investment would further diversify, or
    unduly concentrate, the Affiliated Program's Investments in
    a particular lessee, class or type of equipment, location,
    industry, etc.; and
(vi) whether the term of the Investment is within the term
    of the Affiliated Program.
If conflicts arise between the Partnership and one or more
    Affiliated Program, which may be seeking to realize on
    investments in similar Investments at the same time, the first
    opportunity to realize on such investments or Investments shall
    generally be allocated by the General Partner or its Affiliates
    to the Affiliated Program (including the Partnership) whose
    investments are closer to maturity and, in the case of
    investments with the same maturity, the oldest investment.
    However, the General Partner or its Affiliates, in their
    discretion, may make exceptions to this general policy where an
    Investment is subject to remarketing commitments which provide
    otherwise or in cases in which, in the General Partner's
    judgment, other circumstances make the application of such
    policy inequitable or not economically feasible for a particular
    Affiliated Program (including the Partnership). If the financing
    available from time to time to two or more Affiliated Programs
    (including the Partnership) is less than the aggregate amount
    then sought by them, the available financing generally shall be
    allocated to the Affiliated Program (including the Partnership)
    that has been seeking financing for the longest period of time.
9.6
Minimum Requirement for Investments/Maximum
    Front-End Fees.
Under the NASAA Guidelines, the
    Partnership is required to commit a minimum percentage of the
    Gross Offerings Proceeds to Investment in Equipment, which shall
    be deemed to be Investments for the purposes of this Agreement,
    calculated as the greater of: (i) 80% of the Gross
    Offerings Proceeds reduced by 0.0625% for each 1% of
    indebtedness encumbering the Partnership's Investments; or
    (ii) 75% of such Gross Offerings Proceeds. The maximum
    amounts to be paid under the terms of this Agreement are subject
    to the application of the Sponsor Fee Limit provided in
    Section 9.4(e), which limits the annual amount payable to
    the General Partner, the Investment Manager and their Affiliates
    as the Management Fee and the Promotional Interest to an
    aggregate not to exceed the maximum amount of fees that would be
    payable to the General Partner, the Investment Manager and their
    Affiliates under specified provisions of the NASAA Guidelines.
    Upon completion of the offering of Units, final commitment of
    Net Offering Proceeds to acquisition of Investments and
    establishment of final levels of permanent portfolio debt
    encumbering such Investments, the General Partner shall
    calculate the maximum front-end fees, carried interest and
    promotional interest payable to the General Partner, the
    Investment Manager and their Affiliates under the NASAA
    Guidelines and compare such total permitted fees to the total of
    the Management Fee and Promotional Interest to be paid pursuant
    to this Agreement. If and to the extent that the fees exceed the
    Sponsor Fee Limit provided in Section 9.4(e), the fees
    payable to the General Partner and the Investment Manager shall
    be reduced as described herein. In such event,
    Section 9.4(e) of this Agreement shall be amended
    immediately to reduce the amounts calculated as the Promotional
    Interest by an amount sufficient to cause the total of such
    compensation to comply with the limitations in the NASAA
    Guidelines on the aggregate of promotional interests and carried
    interests. A comparison of the Front-End Fees, Management Fees
    and Promotional Interest actually paid by the Partnership to the
    General Partner, the Investment Manager and their Affiliates and
    the NASAA Guideline maximums shall be repeated, and any required
    adjustments shall be made, at least annually thereafter.
A-26
Table of Contents
ARTICLE X —
    OWNERS AND LIABILITIES OF LIMITED PARTNERS
10.1
Absence of Control Over Partnership
    Business.
The Limited Partners hereby consent to
    the exercise by the General Partner of the powers conferred on
    the General Partner by this Agreement. No Limited Partner shall
    have any of the following rights:
(i) the right to participate in or have any control over
    the Partnership's business;
(ii) the right or authority to act for, or to bind or
    otherwise obligate, the Partnership (except if the Limited
    Partner also is a General Partner, and then only in its capacity
    as a General Partner);
(iii) the right to have the Partnership dissolved and
    liquidated, except as provided in Section 16.2 through the
    Consent or vote of the Majority Interest of the Limited
    Partners; or
(iv) the right to have all or any part of the Limited
    Partner's Capital Contribution or Capital Account returned,
    except as provided in this Agreement.
10.2
Limited Liability.
The liability of
    each Limited Partner, in his capacity as a Limited Partner,
    shall be limited to the amount of the Limited Partner's
    Capital Contribution and pro rata share of any undistributed
    Income, Cash Flow and other assets of the Partnership. Except as
    may otherwise be required by law or by this Agreement, after a
    Limited Partner pays his entire Capital Contribution to the
    Partnership as set forth on his Subscription Agreement for the
    purchase of his Units, the Limited Partner shall not:
(i) have any further obligations to the Partnership;
(ii) be subject to any additional Assessment; or
(iii) be required to make any additional Capital
    Contribution to, or to loan any funds to, the Partnership.
ARTICLE XI —
    DISTRIBUTIONS AND ALLOCATIONS
11.1
Distribution of Distributable Cash
(a)
Distributions Prior to the Admission of Limited
    Partners.
Prior to the admission to the
    Partnership of any Limited Partners, distributions of
    Distributable Cash shall be made 1% to the General Partner and
    99% to the Original Limited Partner.
(b)
Distributions After the Admission of Limited
    Partners.
Subject to 9.4(b), beginning with the
    admission to the Partnership of any Limited Partner on the
    Initial Closing Date, provided that sufficient Distributable
    Cash is available and subject to the General Partner's
    right to reinvest all or any portion of Net Disposition Proceeds
    pursuant to Section 9.1(b)(xxv), the General Partner shall,
    in its sole discretion, distribute Distributable Cash to the
    Partners in the following order of priority:
(i) first, prior to Payout, 1% to the General Partner and
    99% to the Limited Partners; and
(ii) thereafter, 20% to the General Partner and 80% to the
    Limited Partners.
Subject to this Section 11.1(b), distributions of
    Distributable Cash, if any, shall be made to the Partners at
    such times and in such amounts as determined by the General
    Partner, in its sole discretion, based on the amount of the
    Partnership's then available Distributable Cash and other
    funds of the Partnership and the General Partner's estimate
    of the Partnership's total Distributable Cash for the
    Fiscal Year. During the Operating Period, the General Partner
    intends, but is not required, to make distributions
    semi-annually in aggregate amounts equal to 6% per annum of the
    Capital Contributions of the Partners.
11.2
Allocations of Income and Loss
(a)
Income and Loss.
Except as otherwise
    provided herein, Income, Loss and, to the extent necessary,
    individual items of income, gain, loss or deduction of the
    Partnership shall be allocated among the Capital Accounts of the
    Partners in a manner that as closely as possible gives economic
    effect to the provisions of Articles IX, XI, XIV and the
    other relevant provisions of this Agreement.
A-27
Table of Contents
(b)
Special Allocations.
The following
    special allocations shall, except as otherwise provided, be made
    prior to allocations in Sections 11.2(a) in the following
    order:
(i)
Minimum Gain
    Charge-Back.
Notwithstanding any other provision
    of this Article XI, if there is a net decrease in Partnership
    Minimum Gain or in any Partner Nonrecourse Debt Minimum Gain
    during any Fiscal Period, before any other allocation under this
    Article XI each Partner shall be specially allocated items
    of Partnership Income and gain for the Fiscal Period (and, if
    necessary, subsequent Fiscal Periods) in an amount and manner
    required by Treas. Reg.
Sections 1.704-2(f)
and 1.704-2(i)(4) or any successor provisions. The items to be
    so allocated shall be determined in accordance with Treas. Reg.
    Section 1.704-2(j)(2) or any successor provision.
(ii)
Partnership Nonrecourse
    Deductions.
Partnership Nonrecourse Deductions
    for any Fiscal Period shall be allocated 99% to the Limited
    Partners and 1% to the General Partner.
(iii)
Partner Nonrecourse
    Deductions.
Partner Nonrecourse Deductions for
    any Fiscal Period shall be allocated to the Partner who made or
    guaranteed or is otherwise liable with respect to the loan to
    which the Partner Nonrecourse Deductions are attributable in
    accordance with the principles of Treas. Reg.
Section 1.704-2(i)
or any successor provision.
(iv)
Qualified Income Offset.
If in any
    Fiscal Period, any Partner has an Adjusted Capital Account
    Deficit, whether resulting from an unexpected adjustment,
    allocation or distribution described in Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) or otherwise, the Partner shall be
    allocated items of Partnership Income (consisting of a pro rata
    portion of each item of Partnership Income for the Fiscal
    Period, including gross income and gain for such Fiscal Period)
    sufficient to eliminate the Adjusted Capital Account Deficit as
    quickly as possible, to the extent required by Treas. Reg.
Section 1.704-1(b)(2)(ii)(d).
It is the intention of the parties that this allocation
    provision constitute a "qualified income offset"
    within the meaning of Treas. Reg.
Section 1.704-1(b)(2)(ii)(d).
(v)
Curative Allocations.
The special
    allocations provided for in Section 11.2(e) and in
    Sections 11.2(b)(i) through (iv) are intended to
    comply with Treas. Reg.
Sections 1.704-1
and 1.704- 2. To the extent that any of those special
    allocations have been made, subsequent allocations of Income,
    Loss and items thereof ("curative allocations") shall
    be made as soon as possible and in a manner so as to cause, to
    the extent possible without violating the requirements of Treas.
    Reg.
Sections 1.704-1
and 1.704-2, the Partners' Capital Account balances to be
    as nearly as possible in the same proportions in which they
    would have been had the special allocations not occurred. In
    making these curative allocations, due regard shall be given to
    the character of the Income and Loss and items thereof that were
    originally allocated under the provisions of
    Section 11.2(a) and Sections 11.2(b)(i) through
    (iv) in order to put the Partners as nearly as possible in
    the positions in which they would have been had those special
    allocations not occurred.
(c)
Misallocated Items.
If the General
    Partner determines, after consultation with Counsel, that the
    allocation of any item of Income or Loss is not specified in
    this Article XI (an "unallocated item"), or that
    the allocation of any item of Income or Loss under this
    Article XI is clearly inconsistent with the Partners'
    economic interests in the Partnership determined by reference to
    this Agreement, the general principles of Treas. Reg.
Section 1.704-1(b)
and the factors set forth in Treas. Reg.
Section 1.704-1(b)(3)(ii)
(a "misallocated item"), then the General Partner may
    allocate the unallocated items, and reallocate the misallocated
    items, to reflect the Partners' economic interests in the
    Partnership.
(d)
Special Allocation of State, Local and Foreign
    Taxes.
Any state, local or foreign taxes imposed
    on the Partnership by reason of a Partner being a citizen,
    resident or national of a state, locality or foreign
    jurisdiction, including any item(s) of Income or Loss resulting
    therefrom, shall be specially allocated to that Partner.
(e)
Transactions with Partnership.
If,
    and to the extent that, any Partner is deemed to recognize any
    item of Income or Loss as a result of any transaction between
    the Partner and the Partnership pursuant to Code
    Sections 482, 483,
1272-1274,
7872 or any similar provision of the Code now or hereafter in
    effect, any
A-28
Table of Contents
corresponding Income or Loss or items thereof shall be allocated
    to the Partner who was charged with that item.
(f)
Fees and Commissions Paid to General
    Partner.
It is the intent of the Partnership that
    any amount paid or deemed paid to the General Partner or
    Affiliates as a fee or other payment described in
    Section 9.4 shall be treated as a "guaranteed
    payment" or a payment to a partner not acting in his
    capacity as a partner pursuant to Section 707(c) of the
    Code to the extent possible. If a fee or payment is deemed to be
    a distribution to the General Partner, and not a guaranteed
    payment or a payment to a partner not acting in his capacity as
    a partner, the General Partner shall be allocated an amount of
    Partnership gross ordinary income equal to the payment.
(g)
Distribution Expenses, Acquisition Fees and
    Organization and Offering Expense
    Allowance.
Distribution Expenses, Acquisition
    Fees and the Organization and Offering Expense Allowance shall
    be allocated 100% to the Limited Partners. Organization and
    Offering Expenses in excess of the Organization and Offering
    Expense Allowance shall be allocated 100% to the General Partner.
(h)
Tax-Exempt Entities.
Notwithstanding
    any other provision of this Agreement, if it is determined that
    the tax-exempt use property rules of Section 168(h)(6) of
    the Code apply to the Partnership, because any Limited Partner
    is a tax-exempt entity (as defined by the Code
    Section 168(h)(2)), so that any portion of the
    Partnership's depreciation or cost recovery deductions is
    reduced, suspended or otherwise adversely affected, the
    resulting depreciation adjustments shall be specially allocated
    100% to (i.e., borne by) such tax-exempt entity Limited Partners
    and shall be shared among such Limited Partners in proportion to
    their respective number of Units unless otherwise allocated
    among them by this Agreement or the Code.
11.3
Distributions and Allocations Among the Limited
    Partners
(a)
In General.
Except to the extent
    otherwise provided in this Agreement, all distributions of
    Distributable Cash and all allocations of Income and Loss and
    items thereof for any Fiscal Year or Fiscal Period shall be
    distributed or allocated, as the case may be, among the Limited
    Partners in proportion to their respective numbers of Units.
    Each distribution of Distributable Cash shall be made to the
    Limited Partners (or their respective assignees) of record as of
    the last day of the month next preceding the date on which the
    distribution is made.
(b)
Initial Year of Admission.
All
    distributions of Distributable Cash and all allocations of
    Income and Loss or items thereof for any Fiscal Year in which
    any Limited Partners are admitted to the Partnership shall be
    allocated among the Limited Partners as follows:
(i) first, the Operations and Sales of the Partnership
    shall be deemed to have occurred ratably over the Fiscal Year,
    irrespective of the actual results of Operations or Sales of the
    Partnership;
(ii) second, all Income and Loss for the Fiscal Year shall
    be allocated among the Limited Partners in the ratio that the
    number of Units held by each Limited Partner multiplied by the
    number of days in the Fiscal Year that the Units were held by
    the Limited Partner bears to the sum of that calculation for all
    Limited Partners; and
(iii) third, all semi-annual distributions of cash made to
    the Limited Partners under Section 11.1 shall be
    distributed among the Limited Partners in the ratio that the
    number of Units held by each Limited Partner multiplied by the
    number of days in the semi-annual period preceding the
    semi-annual period in which the distribution is made that the
    Units were held by the Limited Partner bears to the sum of that
    calculation for all Limited Partners. If the General Partner
    determines at any time that the sum of the semi-annual period
    distributions made to any Limited Partner during or with respect
    to a Fiscal Year does not (or will not) properly reflect the
    Limited Partner's share of the total distributions made or
    to be made by the Partnership for the Fiscal Year, the General
    Partner shall, as soon as practicable, make a supplemental
    distribution to the Limited Partner, or withhold from a
    subsequent distribution that otherwise would be payable to the
    Limited Partner, an amount that will cause the total
    distributions to the Limited Partner for the Fiscal Year to be
    the proper amount.
A-29
Table of Contents
(c)
Transfer.
In the event of a transfer
    of a Unit during a Fiscal Year in accordance with
    Article XIII, the transferor and transferee shall be
    allocated a ratable share of Income and Loss for the Fiscal Year
    based on the number of days in the Fiscal Year that each held
    the transferred Unit.
(d)
Application of Distributions.
Solely
    for purposes of calculating a Limited Partner's Cumulative
    Return, each distribution made to a Limited Partner under
    Sections 11.1, 11.5 or 14.3, and any interest earned on a
    Limited Partner's subscription funds while held in an
    Escrow Account before the admission of the Limited Partner to
    the Partnership and subsequently paid to the Limited Partner
    under Section 8.11 or while held in the escrow account
    established for residents of Pennsylvania before the admission
    of the Limited Partner to the Partnership and subsequently paid
    to the Limited Partner under Section 8.12, shall be deemed
    to be applied as follows:
(i) first, in reduction of the Limited Partner's
    Unpaid Cumulative Return, to the extent thereof, as determined
    immediately before the distribution; and
(ii) thereafter, in reduction of the Limited Partner's
    Adjusted Capital Contribution, as determined immediately before
    the distribution.
11.4
Tax Allocations: Code Section 704(c);
    Revaluations
(a)
Contribution of Property.
In
    accordance with Section 704(c) of the Code and the Treasury
    Regulations thereunder, Income, Loss and items thereof with
    respect to any property contributed to the capital of the
    Partnership shall, solely for tax purposes, be allocated among
    the Partners so as to take account of any variation between the
    adjusted basis of the property to the Partnership for federal
    income tax purposes and its initial Gross Asset Value.
(b)
Adjustments.
In the event the Gross
    Asset Value of any Partnership asset is adjusted pursuant to
    clause (ii) of Section 1.1(43), subsequent allocations
    of Income, Loss, and items thereof with respect to the asset
    shall take account of any variation between the adjusted basis
    of the asset for federal income tax purposes and its Gross Asset
    Value in a manner consistent with the requirements of Treas.
    Reg.
Section 1.704-3(a)(6).
(c)
Elections.
Any elections or other
    decisions relating to the allocations required by
    subsections (a) and (b), above, shall be made in a manner
    that reasonably reflects the purpose and intention of this
    Agreement. Allocations under this subsection (c) are solely
    for purposes of federal, state, and local income taxes and shall
    not affect, or in any way be taken into account in computing,
    any Partner's Capital Account or share of Income or Loss
    under any provision of this Agreement.
11.5
Return of Uninvested Capital
    Contribution.
If 100% of the Partnership's
    Net Offering Proceeds has not been used to make Investments,
    committed to Reserves (to the extent Reserves have been
    established and maintained for the acquisition of Investments)
    or used to pay permitted Front-End Fees within 24 months
    from the date of the Prospectus, the amount of the uninvested
    Net Offering Proceeds shall be promptly distributed by the
    Partnership to the Limited Partners, pro rata based on their
    respective number of Units, as a return of capital, without
    interest. Funds shall be deemed to have been committed to
    investment and need not be returned to the Limited Partners to
    the extent written agreements in principle, commitment letters,
    letters of intent or understanding, option agreements or any
    similar contracts are executed and not terminated during the
    applicable
24-month
period described above, if the investments are ultimately
    consummated within a further period of 12 months. Funds
    deemed committed which are not actually so invested within the
    12 month period shall be promptly distributed, without
    interest, to the Limited Partners on a pro rata basis, as a
    return of capital, except that Investments using funds from Ohio
    Limited Partners must be completed within a three-month period
    or those funds must be returned to the Ohio Limited Partners.
11.6
No Distributions in
    Kind.
Distributions in kind shall not be
    permitted except on dissolution and liquidation of the
    Partnership's assets and then only to a liquidating trust
    established for the purpose of liquidating the assets
    transferred to it and distributing the net cash proceeds of the
    liquidation in cash to the Partners in accordance with the
    provisions of this Agreement.
A-30
Table of Contents
11.7
Partnership Entitled to Withhold
    Taxes.
The Partnership shall at all times be
    entitled to withhold or make payments to any governmental
    authority with respect to any federal, state, local or foreign
    tax liability of any Partner or former Partner arising as a
    result of the Partner's participation in the Partnership.
    Each amount so withheld or paid shall be deemed to be a
    distributed to such Partner for all purposes of this Agreement.
    To the extent that the amount of withholdings or payments made
    with respect to any Partner exceeds the amount to which the
    Partner is then entitled as a distribution, the excess shall be
    treated as a demand loan, bearing interest at a rate equal to
    12% per annum simple interest from the date of the payment or
    withholding until the excess is repaid to the Partnership either
    by deduction from any distributions subsequently payable to the
    Partner under this Agreement or earlier payment of the excess
    and interest by the Partner to the Partnership.
The excess withholdings or payments, together with interest
    thereon, shall, in any case, be payable not less than
    30 days after demand therefor by the General Partner.
    However, the General Partner shall demand payment only if it
    determines that the Partner is not likely to be entitled to
    distributions within 12 months from the date of the
    withholding or payment by the Partnership in an amount
    sufficient to pay the excess and interest.
ARTICLE XII —
    WITHDRAWAL OF GENERAL PARTNER
12.1
Voluntary Withdrawal
.  The General
    Partner may not voluntarily withdraw as a General Partner from
    the Partnership unless:
(i) the Limited Partners have received 60 days'
    advance written notice of the General Partner's intention
    to withdraw;
(ii) the Partnership has received an opinion of Counsel to
    the effect that the withdrawal will not constitute a termination
    of the Partnership as a limited partnership under the Delaware
    Act or otherwise materially adversely affect the status of the
    Partnership for federal income tax purposes; and
(iii) a Substitute General Partner has been selected, and
    the Substitute General Partner has:
(A) consented to its admission as General Partner;
(B) received the written Consent of a Majority Interest to
    its admission as General Partner; and
(C) a Net Worth sufficient, in the opinion of Counsel, for
    the Partnership to continue to be classified as a partnership
    for federal income tax purposes and to satisfy the Net Worth
    requirements for "sponsors" under applicable laws,
    rules, regulations and policies of Administrators.
12.2
Involuntary Withdrawal
.  The General
    Partner shall be deemed to have involuntarily withdrawn as a
    General Partner from the Partnership on the removal of the
    General Partner pursuant to the Consent of the Majority Interest
    or on the occurrence of any other event that constitutes an
    event of withdrawal under the Delaware Act as then in effect.
    For purposes of this Section 12.2 and Article XVI,
    neither the General Partner nor any Affiliate of the General
    Partner may participate in any vote by the Limited Partners to
    involuntarily remove the General Partner.
12.3
Consequences of Withdrawal
(a)
Upon Withdrawal.
On the withdrawal of
    the General Partner as such from the Partnership:
(i) the Partnership shall pay to the withdrawn General
    Partner the fair market value of the Partnership Interest then
    held by the General Partner, calculated in the manner set forth
    in subsection (b), below, and payable as set forth in subsection
    (c), below; and
(ii) an amount equal to the difference between any fees
    accrued but not yet paid to the General Partner, plus all other
    amounts due and owing to the General Partner by the Partnership,
    minus any amounts due and owing by the General Partner to the
    Partnership, which shall be payable in cash within 30 days
    of the date of withdrawal, by the debtor party to the creditor
    party.
A-31
Table of Contents
(b)
Determination of Fair Market
    Value.
For purposes of this Section 12.3,
    the fair market value of the withdrawn General Partner's
    Partnership Interest shall be determined, in good faith, by the
    withdrawn General Partner and the Substitute General Partner,
    or, if they cannot agree, by arbitration in accordance with the
    then current rules of the American Arbitration Association. The
    expense of arbitration shall be borne equally by the withdrawn
    General Partner and the Partnership, provided, however, that
    each party shall bear its own attorneys fees.
(c)
Method of Payment.
The method of
    payment to the General Partner on withdrawal, whether voluntary
    or involuntary, must be fair and must protect the solvency and
    liquidity of the Partnership. When the withdrawal is voluntary,
    the method of payment will be presumed to be fair if it provides
    for a non-interest-bearing, unsecured promissory note of the
    Partnership, with principal payable, if at all, from
    distributions that the withdrawn General Partner otherwise would
    have received under the Partnership Agreement had the General
    Partner not withdrawn.
When the withdrawal is involuntary, unless otherwise agreed by
    the withdrawn General Partner and the Partnership, the method of
    payment shall be a promissory note providing for repayments of
    principal thereunder in 60 equal monthly installments, together
    with accrued but unpaid interest, bearing interest on the
    outstanding principal amount thereof at the lesser of:
(i) the rate of interest (inclusive of any points or other
    loan charges) that the Partnership would be required to pay to
    an unrelated bank or commercial lending institution for an
    unsecured, 60 month loan of like amount; or
(ii) the "Prime Rate" of interest published in
    the Money Rates section of the Wall Street Journal, plus 4%.
12.4
Liability of Withdrawn General
    Partner
.  If the business of the Partnership is
    continued after withdrawal of the General Partner, the General
    Partner, or its estate, successors or legal representatives,
    shall remain liable for all obligations and liabilities incurred
    by it or by the Partnership while it was acting in the capacity
    of General Partner and for which it was liable as General
    Partner, but they shall be free of any obligation or liability
    incurred on account of or arising from the activities of the
    Partnership from and after the time the withdrawal became
    effective.
12.5
Notice of Withdrawal; Admission of Substitute
    General Partner; Dissolution if No Substitute General Partner
    Approved.
If the General Partner voluntarily
    withdraws from the Partnership, the General Partner, or its
    estate, successors or legal representatives, shall deliver to
    the Limited Partners a Notice that includes the effective date
    of its withdrawal. Within 90 days following a voluntary or
    involuntary withdrawal, a Majority Interest may agree in writing
    to continue the business of the Partnership and elect, effective
    as of the date of the withdrawn General Partner's
    withdrawal, a Substitute General Partner. The Substitute General
    Partner shall execute a counterpart of this Agreement. If this
    action is not taken within 90 days following the date of
    the General Partner's withdrawal, then the Partnership
    shall dissolve.
ARTICLE XIII —
    TRANSFER OF UNITS
13.1
Withdrawal of a Limited Partner
.  A
    Limited Partner may withdraw from the Partnership only by
    Assigning or having the Partnership Redeem all Units owned by
    the Limited Partner in accordance with this Article XIII.
    The withdrawal of a Limited Partner shall not dissolve or
    terminate the Partnership. If a Limited Partner withdraws
    because of death, legal incompetence, dissolution or other
    termination, the estate, legal representative or successor of
    the Limited Partner shall be deemed to be the Assignee of the
    Limited Partner's Units and may become a Substitute Limited
    Partner on compliance with the provisions of Section 13.3.
A-32
Table of Contents
13.2
Assignment
(a)
Assignment by a Limited
    Partner.
Subject to the provisions of
    subsections (b) and (c), below, and Section 13.3, any
    Limited Partner may Assign all or any portion of his Units to an
    Assignee if:
(i) the Limited Partner and the Assignee each execute a
    written Assignment, which:
(A) sets forth the terms of the Assignment;
(B) in the case of Assignments other than by operation of
    law, states the intention of the Limited Partner that the
    Assignee shall become a Substitute Limited Partner and, in all
    cases, evidences the acceptance by the Assignee of all of the
    terms and provisions of this Agreement; and
(C) includes a representation by both the Limited Partner
    and the Assignee that the Assignment was made in accordance with
    all applicable laws and regulations (including, without
    limitation, the minimum investment and investor suitability
    requirements as may then be applicable under state securities
    laws); and
(ii) the Assignee pays to the Partnership an aggregate
    amount, not exceeding $150, for expenses reasonably incurred by
    the Partnership in connection with processing the Assignment.
(b)
General Partner Must Consent to the
    Withdrawal.
Notwithstanding the foregoing, unless
    the General Partner specifically Consents, no Units may be
    Assigned:
(i) to a minor or incompetent (unless a guardian, custodian
    or conservator has been appointed to handle the affairs of that
    Person);
(ii) to any Person if, in the opinion of Counsel, the
    Assignment would result in the termination of the
    Partnership's taxable year or its status as a partnership
    for federal income tax purposes, provided that the Partnership
    may permit the Assignment to become effective if and when, in
    the opinion of Counsel, the Assignment would no longer result in
    the termination of the Partnership's taxable year or its
    status as a partnership for federal income tax purposes;
(iii) to any Person if the Assignment, in the opinion of
    Counsel, would affect the Partnership's existence or
    qualification as a limited partnership under the Delaware Act or
    the applicable laws of any other jurisdiction in which the
    Partnership is then conducting business;
(iv) to any Person not permitted, in the opinion of
    Counsel, to be an Assignee under applicable law, including,
    without limitation, applicable federal and state securities laws;
(v) if the Assignment would result in the transfer of less
    than 25 Units (unless the Assignment includes all of the Units
    owned by the Limited Partner);
(vi) if the Assignment would result in the retention by the
    Limited Partner of a portion of his Units representing less than
    the greater of 25 Units or the minimum number of units required
    to be purchased under the minimum investment standards
    applicable under state securities laws to applicable Limited
    Partner's initial purchase of the Units; or
(vii) if, in the opinion of Counsel, the effect of the
    Assignment would be to cause the "equity
    participation" in the Partnership by "benefit plan
    investors" (within the meaning of Department of Labor Reg.
Section 2510.3-101(f))
and possibly other tax-exempt investors (as determined by the
    General Partner after consultation with Counsel) to equal or
    exceed 25% of the Partnership's total outstanding Units.
Any attempt to make any Assignment of Units in violation of this
    Section 13.2(b) shall be without force or effect.
(c)
Publicly Traded Partnership
    Prohibition.
The General Partner shall not permit
    any interest in a Unit to be Assigned (including Redemptions of
    Units under Section 13.5) on a "secondary market or
    substantial equivalent thereof" as within the meaning of
    Treas. Reg.
Section 1.7704-1(c)
(a "Secondary Market"). For purposes of this
    Section 13.2(c), any Assignment that fails to meet one or
    more of the secondary market "safe-
A-33
Table of Contents
harbor" provisions of Treas. Reg.
Section 1.7704-1
or any substitute safe-harbor provisions that subsequently may
    be established by Treasury Regulations or published notices of
    the IRS, shall be treated as an Assignment on a Secondary Market
    under this Section 13.2(c).
If the General Partner determines, pursuant to an opinion of
    Counsel, that an Assignment was or will be effected on a
    Secondary Market, the Partnership and the General Partner shall
    not recognize the Assignment and shall not admit the transferee
    as a Substitute Limited Partner, nor recognize any rights of the
    transferee in the Partnership, such as the right to receive
    distributions of Distributable Cash or any interest in
    Partnership capital or profits. Each Limited Partner agrees to
    provide to the General Partner all information with regard to
    any Assignment by the Limited Partner, whether proposed or
    purportedly completed, that the General Partner deems necessary
    in order to determine whether the Assignment by the Limited
    Partner occurred or will occur on a Secondary Market.
(d)
Effectiveness of
    Assignment.
Assignments made in accordance with
    this Section 13.2 shall be considered effective on the last
    day of the month on which all of the conditions of this
    Section 13.2 have been satisfied. Distributions to the
    Assignee shall begin the month following effectiveness of the
    Assignment.
13.3
Substitution
(a)
Condition on Substitution.
An
    Assignee of a Limited Partner shall be admitted to the
    Partnership as a Substitute Limited Partner only if:
(i) the General Partner has reasonably determined that all
    of the conditions specified in Section 13.2 have been
    satisfied and no adverse effect to the Partnership will result
    from the admission; and
(ii) the Assignee has executed a transfer agreement and the
    other forms, including a power of attorney to the effect
    required by Article XVIII, as the General Partner
    reasonably may require to comply with this Article XIII.
(b)
Effect of Assignment Without
    Substitution.
An Assignee of Units who does not
    become a Substitute Limited Partner in accordance with this
    Section 13.3 and who desires to make a further Assignment
    of his Units shall be subject to all of the provisions of
    Sections 13.2, 13.3 and 13.4 to the same extent and in the
    same manner as a Limited Partner desiring to make an Assignment
    of his Units. Failure or refusal of the General Partner to admit
    an Assignee as a Substitute Limited Partner, if the Assignment
    otherwise complies with Section 13.2, and
    subsection (c) thereof in particular, shall not affect the
    right of the Assignee to receive Distributable Cash and the
    share of Income or Loss to which his predecessor in interest
    would have been entitled in accordance with Article XI and
    Article XIV.
(c)
Amendment of Records.
The Partnership
    shall amend its records at least once each calendar quarter, to
    the extent necessary, to effect the substitution of Substitute
    Limited Partners.
13.4
Status of an Assigning Limited
    Partner
.  If a Limited Partner Assigns all of his
    Units to an Assignee who becomes a Substitute Limited Partner,
    the assignor Limited Partner shall cease to be a Limited Partner
    in the Partnership and shall no longer have any of the rights or
    privileges of a Limited Partner.
13.5
Limited Right of Presentment for Redemption of
    Units
(a)
Limited Right to Redeem
    Units.
Subject to the limitations set forth
    below, beginning with the admission of a Limited Partner to the
    Partnership, each Limited Partner (other than the General
    Partner or its Affiliates if they own Units) may request that
    the Partnership Redeem, for cash, up to 100% of the Limited
    Partner's Units. This right of presentment shall be subject
    to the limitations set forth below.
(i) The Partnership shall never be required to Redeem any
    Units of any Limited Partner and shall do so only with the prior
    Consent of the General Partner, which is in the sole discretion
    of the General Partner. In this regard, the General Partner may
    take into consideration the time of year during which a
    Redemption request is made, and the effect making a Redemption
    would have on the Partnership's compliance with the 2%
    limitation described in clause (ii), below.
A-34
Table of Contents
(ii) The Partnership shall not, in any calendar year,
    Redeem Units that, in the aggregate with all Units otherwise
    transferred in that calendar year, would exceed 2% of the
    Partnership's total capital or profits interests as of the
    last day of that year.
(iii) No Reserves shall be established by the Partnership
    for the Redemption of Units. The availability of funds for the
    Redemption of any Unit shall be subject to the availability of
    sufficient Cash Flow. Furthermore, Units may be Redeemed only if
    the Redemption would not impair the capital or the Operations of
    the Partnership and would not result in the termination under
    the Code of the Partnership's taxable year or its federal
    income tax status as a partnership, all as determined in the
    sole discretion of the General Partner.
(iv) The Partnership may charge a reasonable administrative
    fee as determined by the General Partner in its sole discretion.
(b)
Applicable Redemption Price.
The
    Redemption price for a Limited Partner's Units (the
    "Applicable Redemption Price") will depend on
    when the Limited Partner presents his Units for Redemption and
    shall be determined as set forth below. If a Limited Partner
    presents his Units for Redemption:
(i) during the Offering Period and Operating Period, the
    Redemption price will equal not less than $850.00 per Unit, less
    100% of previous distributions paid to the Limited Partner per
    Unit; or
(ii) during the Liquidation Period, the Redemption price
    will equal the equity per Unit as set forth on the
    Partnership's balance sheet in its most recent periodic
    report filed with the Securities and Exchange Commission before
    the Redemption request, less 100% of any distributions paid to
    the Limited Partner per Unit since the date of the balance sheet.
(c)
Procedure for Presentment.
A Limited
    Partner desiring to have a portion or all of his Units Redeemed
    shall submit a written request to the General Partner on a form
    approved by the General Partner and duly signed by all owners on
    the books of the Partnership of the Units to be Redeemed.
    Redemption requests shall be deemed given on the earlier of the
    date they are:
(i) personally delivered with receipt acknowledged; or
(ii) mailed by certified mail, return receipt requested,
    postage prepaid, to the General Partner's address set forth
    in this Agreement.
Requests arising from death, major medical expense and family
    emergency related to disability or a material loss of family
    income, collectively "Hardship Redemptions," shall be
    treated as having been received at 12:01 A.M. EST on
    the day of receipt and all other Redemption requests shall be
    deemed received with the start of the business day during which
    received.
(d)
Priority of
    Redemption Requests.
If the General Partner
    receives requests for the Partnership to redeem more Units than
    there are funds sufficient to redeem, the General Partner shall
    use its reasonable efforts to honor requests for Redemptions of
    Units with the same request date first as to Hardship
    Redemptions, second so as to provide liquidity for IRAs or
    Qualified Plans to meet required distributions and finally as to
    all other Redemption requests.
(e)
Notice and Closing of Redemption of
    Units.
Redemption requests shall be accepted or
    rejected quarterly following the date on which the General
    Partner receives a written request from any Limited Partner to
    Redeem the Limited Partner's Units, and the General Partner
    shall deliver a written notice to the Limited Partner (the
    "Notice"):
(i) stating the number, if any, of the Units to be
    Redeemed; and
(ii) if appropriate:
(A) stating the date of the Redemption of the Units, which
    shall be a date within 30 days following the date of the
    Notice;
(B) stating the Applicable Redemption Price with
    respect to the Units to be Redeemed; and
A-35
Table of Contents
(C) advising the Limited Partner that not less than
    10 days before the Redemption date stated in the Notice
    (the "Delivery Date") the Limited Partner must duly
    execute and deliver to the Partnership all transfer instruments
    and other documents requested by the Partnership to evidence the
    Redemption of the Units. In the General Partner's
    discretion, these transfer instruments and documents may be
    prepared by the Partnership for execution by the Limited Partner
    and enclosed with the Notice.
On or before the Redemption date stated in the Notice, the
    Partnership shall pay the Applicable Redemption Price to
    the Limited Partner for each Unit Redeemed if:
(i) all of the Limited Partner's transfer instruments
    and other documents requested by the Partnership are duly
    executed and returned to the Partnership no later than the
    Delivery Date stated in the Notice; and
(ii) the transfer instruments and other documents are in
    good order and acceptable to the General Partner, in its sole
    discretion.
(f)
Effect of Redemption.
If all of the
    Units owned by a Limited Partner are Redeemed by the
    Partnership, then the Limited Partner shall cease to be a
    Limited Partner in the Partnership and shall no longer have any
    of the rights or privileges of a Limited Partner in the
    Partnership.
ARTICLE XIV —
    DISSOLUTION AND
WINDING-UP
14.1
Events Causing Dissolution
. The Partnership
    shall be dissolved on the happening of any of the following
    events (each a "Dissolution Event"):
14.1(a).
Withdrawal of General
    Partner.
The withdrawal of the General Partner,
    whether voluntarily or involuntarily, unless a Substitute
    General Partner has been admitted to the Partnership in
    accordance with Section 12.5.
14.1(b).
Voluntary Dissolution.
The
    voluntary dissolution of the Partnership either by:
(i) the General Partner with the Consent of a Majority
    Interest;
(ii) the Consent of a Majority Interest without action by
    the General Partner.
(iii) the Sale of all or substantially all of the assets of
    the Partnership not constituting a Financing Transaction, but
    only with the vote or Consent of the Majority Interest;
(iv) the expiration of the Partnership's term as set
    forth in Section 7.1; or
(v) any other event that causes the dissolution or
winding-up
of the Partnership under the Delaware Act.
14.2
Winding Up of the Partnership; Capital Contribution
    by the General Partner On Dissolution
14.2(a).
Effectiveness of
    Dissolution.
Dissolution of the Partnership shall
    be effective on the day on which the Dissolution Event occurs,
    but the Partnership shall not terminate until a certificate of
    termination has been filed in accordance with the Delaware Act
    and the assets of the Partnership have been distributed as
    provided in Section 14.3. Notwithstanding the dissolution
    of the Partnership as provided above, its business and the
    affairs of the Partners, as such, shall continue to be governed
    by this Agreement until the Partnership is terminated.
14.2(b).
Liquidation.
On dissolution of
    the Partnership, the General Partner (or any other Person
    effecting the
winding-up)
shall liquidate the assets of the Partnership and apply and
    distribute the proceeds as set forth in Section 14.3.
    Notwithstanding anything to the contrary contained in this
    Article XIV, if the General Partner (or any other Person
    effecting the
winding-up)
determines that an immediate sale of part or all of the
    Partnership assets would cause undue loss to the Partners, the
    General Partner (or any other Person effecting the
winding-up),
in order to avoid the loss, may, after having notified all of
    the Limited Partners, to
A-36
Table of Contents
the extent not then prohibited by law, defer liquidation of, and
    withhold from distribution for a reasonable time, any assets of
    the Partnership except those necessary to satisfy the
    Partnership's debts and obligations.
14.2(c).
Procedures on Liquidation.
In
    connection with the dissolution of the Partnership:
(i) all Income or Loss or items thereof, and all amounts
    required to be specially allocated for the period before final
    termination, shall be allocated among the Capital Accounts of
    the Partners in accordance with Article XI;
(ii) if after all requirements of clause (i) of this
    Section 14.2(c) have been accomplished, the General Partner
    has a deficit balance in its Capital Account, then within
    30 days the General Partner shall contribute the amount of
    the deficit balance to the Partnership as a Capital
    Contribution, provided that for this purpose, any payments made
    by the General Partner as co-signatory or guarantor of any
    Indebtedness of the Partnership that has not yet been reimbursed
    to the General Partner by the Partnership at the time of
    dissolution of the Partnership, and any amounts due and unpaid
    to the General Partner with respect to any Partnership Loans at
    the time of dissolution, shall be deemed to be Capital
    Contributions by the General Partner to the Partnership and any
    obligation of the Partnership to reimburse or repay those
    amounts to the General Partner shall then cease;
(iii) the proceeds from Sales or other dispositions of all
    other assets of the Partnership shall be applied and distributed
    in liquidation of the Partnership as provided in
    Section 14.3; and
(iv) the General Partner (or any other Person effecting the
winding-up)
shall file all certificates and other documents as may be
    required by the Delaware Act, the Code and any other applicable
    laws to terminate the Partnership.
14.2(d).
Fees for
Winding-Up.
Whether
    the
winding-up
of the Partnership is effected by the General Partner or any
    other Person (whether selected by the Majority Interest or as
    required by law), either the General Partner or the other
    Person, as the case may be, shall be compensated for its
    services in connection therewith in an amount not in excess of
    the amount customarily paid to non-affiliated third-parties
    rendering similar services in respect of similar entities in the
    same geographic location.
14.3
Application of Liquidation Proceeds On
    Dissolution.
Following the occurrence of any
    Dissolution Event, the proceeds of liquidation Sales and the
    Sale or other disposition of the other assets of the Partnership
    shall be applied as follows and in the following order of
    priority:
(i) first, to the payment of creditors of the Partnership
    in the order of priority as provided by law, except obligations
    to Partners or their Affiliates;
(ii) next, to setting up any Reserve that the General
    Partner (or any other Person effecting the
winding-up)
determines is reasonably necessary for any contingent or
    unforeseen liability or obligation of the Partnership or the
    General Partner; the Reserve may, in the sole discretion of the
    General Partner (or the other Person effecting the
winding-up)
be deposited with an escrow agent selected by it to be held in
    escrow for the purpose of disbursing the Reserve in payment of
    any of the aforementioned contingencies, and at the expiration
    of the period that the General Partner (or the other Person
    effecting the
winding-up)
deems advisable, to distribute the remaining balance as provided
    in subsections (iii) through (vi), below;
(iii) next, to the payment of all obligations to the
    Partners in proportion to, and to the extent of, advances made
    by them to the Partnership under the provisions of this
    Agreement;
(iv) next, to the payment of all reimbursements to which
    the General Partner and its Affiliates may be entitled under
    this Agreement;
(v) next, to the Limited Partners pro rata in proportion to
    their respective Adjusted Capital Contributions;
(vi) next, prior to Payout, 1% to the General Partner and
    99% to the Limited Partners; and
(vii) thereafter, 20% to the General Partner and 80% to the
    Limited Partners.
A-37
Table of Contents
14.4
No Recourse Against Other
    Partners
.  Each Limited Partner shall look solely
    to the assets of the Partnership for the return of, and any
    return on, the Limited Partner's Capital Contribution
    (whether before or after a Dissolution Event). If, after the
    complete payment and discharge of all debts, liabilities and
    other obligations of the Partnership, the assets of the
    Partnership are insufficient to provide the return of, or a
    return on, the Capital Contribution of any Limited Partner, the
    Limited Partner shall have no recourse against any other Limited
    Partner, the Partnership or the General Partner, except to the
    extent that the General Partner is obligated to make an
    additional Capital Contribution to the Partnership under
    Section 14.2.
ARTICLE XV —
    FISCAL MATTERS
15.1
Title to Property and Bank
    Accounts.
Unless trustees, nominees or other
    agents are used as permitted under this Agreement, all
    Investments and other assets of the Partnership shall be held in
    the name of the Partnership or its subsidiaries. The funds of
    the Partnership shall be deposited in the name of the
    Partnership in any bank account or accounts as are designated by
    the General Partner, and withdrawals therefrom shall be made on
    the signature of the General Partner or any Person or Persons as
    may be designated in writing by the General Partner. The funds
    of the Partnership shall not be commingled with the funds of any
    other Person.
15.2
Maintenance of and Access to Basic Partnership
    Documents
15.2(a).
Maintenance of Documents.
The
    General Partner shall maintain at the General Partner's
    principal office, on behalf of the Partnership, the following
    documents:
(i) the Participant List;
(ii) a copy of the certificate of limited partnership and
    all amendments thereto, together with executed copies of any
    powers of attorney under which the certificate or any amendment
    thereto has been executed;
(iii) copies of this Agreement and any amendments hereto;
(iv) copies of the audited financial statements of the
    Partnership for the three most recently completed Fiscal Years,
    including, in each case, the balance sheet and related
    statements of operations, cash flows and changes in
    Partners' equity at or for those Fiscal Years, together
    with the reports of the Partnership's independent auditors
    with respect thereto;
(v) copies of the Partnership's federal, state and
    local income tax returns and reports, if any, for its three most
    recently completed Fiscal Years;
(vi) records as required by applicable tax authorities,
    including those specifically required to be maintained by
    "reportable transactions," if so required of the
    Partnership; and
(vii) investor suitability records for Units sold for a
    period of no less than six years.
15.2(b).
Access to Records.
Each Limited
    Partner and his designated representative shall be given access
    to the records specified in Section 15.2(a)(i) through
    (vi) and any other records of the Partnership that relate
    to the business affairs and financial condition of the
    Partnership, other than records under Section 15.2(a)(vii)
    relating to other Limited Partners, and may inspect the same and
    make copies of the same during normal business hours, subject to
    the following:
(i) a reasonable copying charge;
(ii) providing reasonable advance written notice to the
    General Partner that states the date and time of the intended
    visit and identifies with reasonable specificity the documents
    that the Limited Partner or his representative wishes to examine
    or copy; and
(iii) in the case of copying the Participant List,
    compliance with Section 15.2(c).
15.2(c).
Maintenance of Participant
    List.
The General Partner shall mail a copy of
    the Participant List to any Limited Partner or his
    representative within 10 days of the Partnership's
    receipt of the Limited Partner's
A-38
Table of Contents
written request therefor and a check in payment of the
    reasonable copying charge permitted under
    Section 15.2(b)(i); provided that, in connection with any
    request for a copy of the Participant List, the Limited Partner
    shall provide the certification required in the penultimate
    sentence of Section 15.2(d).
15.2(d).
General Partner's Refusal to Provide
    Participant List.
If the General Partner refuses
    or neglects to:
(i) permit a Limited Partner or his representative to
    examine the Participant List at the General Partner's
    principal office during normal business hours and with
    reasonable notice to the General Partner; or
(ii) mail a copy of the Participant List to the Limited
    Partner or his representative as required by
    Section 15.2(c);
the General Partner shall be liable to the Limited Partner who
    requested the Participant List for the costs, including
    reasonable attorneys' fees, incurred by the Limited Partner
    to compel production of the Participant List, and for the actual
    damages (if any) suffered by the Limited Partner by reason of
    the General Partner's refusal or neglect.
It shall be a defense that the requesting Limited Partner failed
    or refused to provide the General Partner with the certification
    called for in the next sentence or that the actual purpose and
    reason for a request to inspect or copy the Participant List is
    to secure the Participant List or other information for the
    purpose of the sale, reproduction or other use thereof for a
    commercial purpose other than in the interest of the Limited
    Partner relative to the affairs of the Partnership. The General
    Partner shall require a Limited Partner requesting the
    Participant List to certify that the Participant List is not
    being requested for the purpose of the sale, reproduction or
    other use thereof for a commercial purpose unrelated to the
    Limited Partner's interest in the Partnership or for any
    unlawful purpose. The remedies provided under this
    Section 15.2(d) to Limited Partners requesting to inspect
    or copy the Participant List are in addition to, and shall not
    in any way limit, other remedies available to Limited Partners
    under federal law or the laws of any state.
15.3
Financial Books and Accounting.
The
    General Partner shall keep, or cause to be kept, complete and
    accurate financial books and records with respect to the
    business and affairs of the Partnership. Except to the extent
    otherwise required by the accounting methods adopted by the
    Partnership for federal income tax purposes, the books and
    records shall be kept on an accrual basis and all financial
    statements of the Partnership shall be prepared for each Fiscal
    Year in accordance with GAAP.
15.4
Fiscal Year.
Except as may otherwise
    be determined from time to time by the General Partner (in a
    manner which is consistent with the Code and the Treasury
    Regulations thereunder or as consented to by the IRS), the
    Fiscal Year of the Partnership for both federal income tax and
    financial reporting purposes shall end on December 31 of each
    year.
15.5
Reports
15.5(a).
Quarterly Reports.
Within
    45 days after the end of each of the first three Fiscal
    Quarters of each Fiscal Year, the General Partner shall send to
    each Person who was a Limited Partner at any time during the
    Fiscal Quarter the following written materials:
(i) a report containing the same financial information as
    is contained in the Partnership's quarterly report on
Form 10-Q
filed with the Commission under the Securities Exchange Act of
    1934, as amended;
(ii) a detailed statement identifying any services rendered
    or to be rendered to the Partnership by the General Partner or
    any of its Affiliates and the compensation received therefor and
    summarizing the terms and conditions of any contract that was
    not filed as an exhibit to the Registration Statement; and the
    requirement for this statement shall not be circumvented by
    lump-sum payments to non-Affiliates who then disburse the funds
    to, or for the benefit of, the General Partner or its
    Affiliates; and
(iii) until all Capital Contributions have been invested or
    committed to investment in Investments and Reserves, used to pay
    permitted Front-End Fees or returned to the Limited Partners (as
    provided in
A-39
Table of Contents
Section 11.5), a special report concerning all Investments
    made during the Fiscal Quarter which shall include:
(A) a description of the types of Investments made;
(B) the total Purchase Price paid for each category of
    Investment;
(C) the amounts of cash used to acquire the Investments;
(D) the Acquisition Fees and Acquisition Expenses paid,
    identified by party, in connection therewith; and
(E) the amount of Capital Contributions, if any, that
    remain unexpended and uncommitted to pending Investments as of
    the end of the Fiscal Quarter.
15.5(b).
Annual Reports.
Within
    90 days after the end of each Fiscal Year, the General
    Partner shall send to each Person who was a Limited Partner at
    any time during the Fiscal Year the following written materials:
(i) financial statements for the Partnership for the Fiscal
    Year, including a balance sheet as of the end of the Fiscal Year
    and related statements of operations, cash flows and changes in
    Partners' equity, which shall be prepared in accordance
    with Section 15.3 and shall be accompanied by an
    auditor's report containing an opinion of the Accountants;
(ii) an analysis prepared by the General Partner (which
    need not be audited, but shall be reviewed by the Accountants)
    of distributions made to the General Partner and the Limited
    Partners during the Fiscal Year, separately identifying the
    portion (if any) of the distributions from:
(A) Cash Flow during the period;
(B) Cash Flow from prior periods that had been held as
    Reserves;
(C) Cash Flow
and/or
Distributable Cash from Sales and refinancings; and
(D) Capital Contributions originally used to establish a
    Reserve;
(iii) a status report with respect to each Investment that
    individually represents at least 10% of the aggregate Purchase
    Price of the Partnership's Investments held at the end of
    the Fiscal Year, which report shall state:
(A) the condition of the Equipment and each material item
    thereof and of any collateral securing any Investment to which
    the report applies;
(B) how the Equipment or collateral was being used as of
    the end of the Fiscal Year (e.g., leased, operated directly by
    the Partnership, or held for lease, repair or Sale);
(C) the projected or intended use of the Equipment or
    collateral during the next following Fiscal Year (e.g., renew
    lease, lease, retire or Sale);
(D) the remaining term of the Investment; and
(E) such other information as may be relevant to the value
    or use of the Equipment or collateral as the General Partner, in
    good faith, deems appropriate, including a description of the
    method used or basis for valuation;
(iv) a breakdown of all fees and other compensation paid,
    and all costs and expenses reimbursed, to the General Partner or
    its Affiliates by the Partnership during the Fiscal Year
    identified (and properly allocated) as to type and amount:
(A) in the case of any fees and other compensation, the
    breakdown shall provide the information required under
    Section 15.5(a)(ii); and
A-40
Table of Contents
(B) in the case of reimbursed costs and expenses, the
    General Partner shall also prepare an allocation of the total
    amount of all those items in accordance with this Agreement. The
    cost and expense allocation shall be reviewed by the Accountants
    in connection with their audit of the financial statements of
    the Partnership for the Fiscal Year in accordance with the
    American Institute of Certified Public Accountants United States
    Auditing standards relating to special reports and such
    Accountants shall state that, in connection with the performance
    of the audit, they reviewed, at a minimum, the time records of,
    and the nature of the work performed by, individual employees of
    the General Partner or its Affiliates, the cost of whose
    services were reimbursed. The additional costs of the special
    review required by this clause shall be itemized by the
    Accountants on a Program by Program basis and shall be
    reimbursed to the General Partner by the Partnership only to the
    extent that the reimbursement, when added to the cost for
    administrative services rendered, does not exceed the amount the
    Partnership would be required to pay independent third-parties
    for comparable administrative services in the same geographic
    location; and
(v) a special report containing the information required by
    Section 15.5(a)(iii).
15.5(c).
Reports to State Securities Law
    Administrators.
The General Partner shall submit
    to all state securities law Administrators, including Arizona,
    California and Ohio, if applicable, any information which the
    Administrator requires, including, but not limited to:
(i) reports and statements required by this Agreement to be
    distributed to Limited Partners; or
(ii) reports required to be filed with the Administrator by
    state securities laws, regulations or policies.
15.6
Tax Returns and Tax Information.
The
    General Partner shall:
(i) prepare, or cause the Accountants to prepare, in
    accordance with applicable laws and regulations, the
    Partnership's tax returns (federal, state, local and
    foreign, if any) for each Fiscal Year within 75 days after
    the end of the Fiscal Year; and
(ii) deliver to each Partner by March 15 following each
    Fiscal Year a
Schedule K-1
or other statement permitted under the Code or by the IRS
    setting forth the Partner's share of the Partnership's
    Income or Loss for the Fiscal Year.
15.7
Accounting Decisions.
All decisions
    as to accounting matters, except as specifically provided to the
    contrary in this Agreement, shall be made by the General Partner
    in accordance with the accounting methods adopted by the
    Partnership for federal income tax purposes or otherwise in
    accordance with GAAP. Such decisions must be acceptable to the
    Accountants, and the General Partner may rely on the advice of
    the Accountants as to whether its decisions are in accordance
    with the methods adopted by the Partnership for federal income
    tax purposes or GAAP.
15.8
Federal Tax Elections.
The
    Partnership, in the sole discretion of the General Partner, may
    make elections for federal tax purposes as follows:
15.8(a).
Elections Under Section 754 of the
    Code.
In case of a transfer of all or part of a
    General Partner's Partnership Interest or a Limited
    Partner's Units, the Partnership may timely elect under
    Section 754 of the Code (or corresponding provisions of
    future law), and under similar provisions of applicable state or
    local income tax laws, to adjust the basis of the assets of the
    Partnership. In that event, any basis adjustment attributable to
    the election shall be allocated solely to the transferee.
15.8(b).
Other Elections.
All other
    elections, including but not limited to the adoption of
    accelerated depreciation and cost recovery methods, required or
    permitted to be made by the Partnership under the Code shall be
    made by the General Partner in a manner that will, in the
    opinion of the General Partner (as advised by Counsel or the
    Accountants as the General Partner deems necessary), be most
    advantageous to the Limited Partners as a group. The Partnership
    shall, to the extent permitted by applicable law and
    regulations, elect to treat as an expense for federal income tax
    purposes all amounts incurred by it for state and local taxes,
    interest and other charges that may, in accordance with
    applicable law and regulations, be considered to be expenses.
A-41
Table of Contents
15.8(c).
Elections Regarding Partnership Interests
    Issued for Services.
The Partnership, the General
    Partner and each Limited Partner hereby agree to be legally
    bound by the provisions of this Section 15.8(c) and further
    agree that, in the General Partner's sole discretion, the
    Partnership and all of its Partners may elect a safe harbor
    (that is the same or substantially similar to the safe harbor
    set forth in Internal Revenue Service Notice
2005-43
,
2005-24
I.R.B. 1221 and Proposed Treasury Regulations
Section 1.83-3(l)
[REG-105346-03]) under which the fair market value of a
    Partnership Interest that is transferred in connection with the
    performance of services is treated as being equal to the
    liquidation value of that interest for transfers on or after the
    date final regulations providing the safe harbor are published
    in the Federal Register. If the General Partner determines that
    the Partnership and all of its Partners will elect the safe
    harbor, which determination may be made solely in the best
    interests of the General Partner, then the Partnership, the
    General Partner and each Limited Partner further agree that:
(i) the Partnership shall be authorized and directed to
    elect the safe harbor;
(ii) the Partnership and each of its Partners (including
    any Person to whom a Partnership Interest is transferred in
    connection with the performances of services) shall comply with
    all requirements of the safe harbor with respect to all
    Partnership Interests transferred in connection with the
    performance of services while the election remains
    effective; and
(iii) the General Partner, in its sole discretion, may
    cause the Partnership to terminate the safe harbor election,
    which determination may be made in the best interests of the
    General Partner.
15.9
Tax Matters Partner
15.9(a). Designation of Tax Matters
    Partner.
The General Partner is hereby designated
    the Partnership's "Tax Matters Partner" under
    Section 6231(a)(7) of the Code, and may hereafter designate
    its successor as Tax Matters Partner, to manage administrative
    and judicial tax proceedings conducted at the Partnership level
    by the IRS with respect to Partnership matters. The Limited
    Partners shall not act independently with respect to tax audits
    or tax litigation affecting the Partnership, and actions taken
    by the General Partner as Tax Matters Partner in connection with
    tax audits of the Partnership shall be binding in all respects
    on the Limited Partners, except as provided below.
15.9(b).
Duties of Tax Matters
    Partner.
The Tax Matters Partner shall have the
    following duties:
(i) to the extent and in the manner required by applicable
    law and regulations, the Tax Matters Partner shall furnish the
    name, address, number of Units and taxpayer identification
    number of each Limited Partner to the Secretary of the Treasury
    or his delegate (the "Secretary"); and
(ii) to the extent and in the manner required by applicable
    law and regulations, the Tax Matters Partner shall keep each
    Limited Partner informed of administrative and judicial
    proceedings for the adjustment at the Partnership level of any
    item required to be taken into account by a Limited Partner for
    income tax purposes (these judicial proceedings are referred to
    hereinafter as "judicial review").
15.9(c).
Indemnification of Tax Matters
    Partner.
Subject to Section 9.3, the
    Partnership shall indemnify and reimburse the Tax Matters
    Partner for all expenses, including legal and accounting fees,
    claims, liabilities, losses and damages incurred in connection
    with any administrative or judicial proceeding with respect to
    the tax liability of the Partners. The payment of all of these
    expenses shall be made before any distributions are made from
    Distributable Cash. Neither the General Partner nor any
    Affiliate or other Person, except the Partnership, shall have
    any obligation to provide funds for this purpose. The taking of
    any action and the incurring of any expense by the Tax Matters
    Partner in connection with any of these proceedings, except to
    the extent required by law, shall be in the sole discretion of
    the Tax Matters Partner. The provisions on limitations of
    liability of the General Partner and indemnification set forth
    in Section 9.3 shall be fully applicable to the General
    Partner acting in its capacity as Tax Matters Partner.
A-42
Table of Contents
15.9(d).
Authority of Tax Matters
    Partner.
The Tax Matters Partner is hereby
    authorized, but not required:
(i) to enter into any settlement with the IRS with respect
    to any tax audit or judicial review of the Partnership, in which
    agreement the Tax Matters Partner may expressly state that the
    agreement shall bind the other Partners, except that the
    settlement agreement shall not bind any Partner who (within the
    time prescribed pursuant to Section 6224(c)(3) of the Code
    and regulations thereunder) files a statement with the IRS
    providing that the Tax Matters Partner does not have authority
    to enter into a settlement agreement on the behalf of the
    Partner;
(ii) if a notice of a final administrative adjustment at
    the Partnership level of any item required to be taken into
    account by a Partner for tax purposes (a "final
    adjustment") is mailed to the Tax Matters Partner, to seek
    judicial review of the final adjustment, including the filing of
    a petition for readjustment with the Tax Court, the District
    Court of the United States for the district in which the
    Partnership's principal place of business is located, the
    United States Court of Claims or any other appropriate forum;
(iii) to intervene in any action brought by any other
    Partner for judicial review of a final adjustment relating to
    the Partnership;
(iv) to file a request for an administrative adjustment
    relating to the Partnership with the IRS at any time and, if any
    part of the request is not allowed by the IRS, to file a
    petition for judicial review with respect to the request;
(v) to enter into an agreement with the IRS to extend the
    period for assessing any tax which is attributable to any item
    of the Partnership required to be taken in to account by a
    Partner for tax purposes, or an item affected by the
    item; and
(vi) to take any other action on behalf of the Partners or
    the Partnership in connection with any administrative or
    judicial tax proceeding to the extent permitted by applicable
    law or regulations.
ARTICLE XVI —
    MEETINGS AND VOTING RIGHTS OF THE LIMITED PARTNERS
16.1
Meetings of the Limited Partners
16.1(a). Procedure for Limited Partner
    Meetings.
A meeting of the Limited Partners for
    any purpose(s) may be called by the General Partner. A meeting
    of the Limited Partners shall be called by the General Partner
    following its receipt of written request(s), either in person or
    by registered mail, for a meeting on any matter on which the
    Limited Partners may vote as set forth in this Article XVI
    from Limited Partners holding 10% or more of the then
    outstanding Units. Every request for a meeting shall state with
    reasonable specificity the purpose(s) for which the meeting is
    to be held and the text of any matter, resolution or action
    proposed to be voted on by the Limited Partners at the meeting.
    Within 10 days following the receipt of the request, the
    General Partner shall give Notice to all Limited Partners of the
    meeting in the manner and at a time and place as specified in
    Section 16.1(b), below. In addition, the General Partner
    may, and if so requested by the Limited Partners in the manner
    described above, shall, submit the proposed matter, resolution
    or action for action by Consent of the Limited Partners in lieu
    of a meeting.
16.1(b).
Delivery of Notice.
A Notice of
    any meeting or action by written Consent of the Limited Partners
    shall be given to all Limited Partners either:
(i) personally or by certified mail (if a meeting is being
    called or a Consent action is being solicited, by the General
    Partner on the request of the Limited Partners); or
(ii) by regular mail (if a meeting is being called or a
    Consent action is being solicited, by the General Partner).
A meeting called pursuant to a Notice shall be held, or Consent
    action taken, not less than 15 days nor more than
    60 days after the date a Notice is distributed, subject to
    extension to the extent necessary to comply with applicable
    requirements of the Commission and Administrators. The Notice
    shall be delivered or mailed
A-43
Table of Contents
to each Limited Partner at his record address, or at any other
    address as he may have furnished in writing to the General
    Partner as his address for receipt of Notices and, with respect
    to meetings, shall state the place, date and time of the meeting
    (which shall be the place, date and time specified in the
    request for the meeting or, if none, any other place, date and
    time as the General Partner determines to be reasonable and
    convenient to the Limited Partners) and, with respect both to
    meetings or solicitations of Consent actions, shall state the
    purpose(s) for which the meeting is to be held or the Consent
    action is requested.
If any meeting of the Limited Partners is properly adjourned to
    another time or place, and if any announcement of the
    adjournment of time or place is made at the meeting, it shall
    not be necessary to give notice of the adjourned meeting. The
    presence in person or by proxy of a Majority Interest shall
    constitute a quorum at all meetings of the Limited Partners;
    provided, however, that, if there is no quorum, holders of a
    majority of the Units so present or so represented may adjourn
    the meeting from time to time without further notice, until a
    quorum has been obtained. No Notice of any meeting of Limited
    Partners need be given to any Limited Partner who attends in
    person or is represented by proxy (except when a Limited Partner
    attends a meeting for the express purpose of objecting at the
    beginning of the meeting to the transaction of any business on
    the ground that the meeting is not lawfully called or convened)
    or to any Limited Partner otherwise entitled to Notice who has
    executed and filed with the records of the meeting, either
    before or after the time thereof, a written waiver of Notice.
16.1(c).
Record Date for Voting.
For the
    purpose of determining the Limited Partners entitled to vote on
    any matter submitted to the Limited Partners at any meeting of
    the Limited Partners, or to take action by Consent in lieu
    thereof, or any adjournment thereof, the General Partner or the
    Limited Partners requesting the meeting may fix, in advance, a
    date as the record date, which shall be a date not more than
    60 days nor less than 10 days prior to the meeting (or
    Consent action), for the purpose of that determination.
16.1(d).
Proxies.
Any Limited Partner may
    authorize any Person or Persons to act for such Limited Partner
    by proxy in respect of all matters as to which the Limited
    Partner is entitled to participate, including matters proposed
    for actions by Consent. Every proxy must be signed by a Limited
    Partner or his attorney-in- fact. No proxy shall be valid after
    the expiration of eleven months from the date thereof unless
    otherwise provided in the proxy. Every proxy shall be revocable
    at the pleasure of the Limited Partner executing it.
16.1(e).
Procedure at Meeting.
At each
    meeting of the Limited Partners, the Limited Partners present or
    represented by proxy may adopt rules for the conduct of the
    meeting as they deem appropriate, provided that the rules shall
    not be inconsistent with the provisions of this Agreement.
16.2
Voting Rights of the Limited
    Partners.
Subject to Section 16.3, the
    Limited Partners, acting by Consent of the Majority Interest, or
    by the vote of the Majority Interest at a meeting duly called
    for that purpose, may take the following actions without the
    concurrence of the General Partner:
(i) amend this Agreement;
(ii) dissolve the Partnership;
(iii) remove the General Partner and elect one or more
    Substitute General Partners;
(iv) approve or disapprove of the Sale or series of Sales
    of all, or substantially all, of the assets of the Partnership,
    except any Sale or series of Sales that is in connection with a
    Financing Transaction or in the ordinary course of liquidating
    the Partnership's Investments after the Operating
    Period; and
(v) modify or terminate on 60 days' notice any
    contract or arrangement with the General Partner or any of its
    Affiliates to provide goods or services for the Partnership
    other than this Agreement, the Management, Origination and
    Servicing Agreement and all other contracts specifically
    authorized under this Agreement.
The General Partner and its Affiliates may not vote or Consent
    on matters submitted to the Limited Partners regarding the
    removal of the General Partner or regarding any transaction
    between the Partnership and the General Partner or any of its
    Affiliates. In determining the requisite percentage of Units
    necessary to
A-44
Table of Contents
approve a matter on which the General Partner or its Affiliates
    may not vote or Consent, any Units owned by the General Partner
    or its Affiliates shall not be included in either the numerator
    or the denominator.
16.3
Limitations on Action by the Limited
    Partners.
This Agreement may not be amended by
    the Limited Partners to do the following:
(i) allow the Limited Partners to take part in the control
    or management of the Partnership's business or otherwise
    subject a Limited Partner to liability as a general partner
    under the Delaware Act or under the laws of any other
    jurisdiction in which the Partnership may be qualified or own an
    Investment;
(ii) alter the rights, powers, duties or obligations of the
    General Partner without the Consent of the General Partner;
(iii) contract away the fiduciary duty owed to any Limited
    Partner by the General Partner;
(iv) except in connection with the offer and sale of the
    Units as provided in this Agreement, alter the interest of any
    Partner in any item of Income or Loss or in distributions
    without the consent of each affected Partner; or
(v) Without the consent of all of the Limited Partners,
    amend the provisions of this Agreement relating to how this
    Agreement may be amended.
ARTICLE XVII —
    AMENDMENTS
17.1
Amendments by the General
    Partner.
In addition to any amendments by the
    Limited Partners under Section 16.2, as limited by
    Section 16.3, this Agreement may be amended, at any time
    and from time to time, by the General Partner without the
    Consent of a Majority Interest:
(i) to add to the representations, duties or obligations of
    the General Partner or to surrender any right or power granted
    to the General Partner in this Agreement;
(ii) to cure any ambiguity in this Agreement, to correct or
    supplement any provision in this Agreement that may be
    inconsistent with any other provision in this Agreement, or to
    add any provision to this Agreement with respect to matters or
    questions arising under this Agreement that is not inconsistent
    with the other provisions of this Agreement;
(iii) to preserve the status of the Partnership as a
    partnership for federal income tax purposes, or as a limited
    partnership under the Delaware Act or any comparable law of any
    other state in which the Partnership may be required to be
    qualified;
(iv) to delete any provision of this Agreement, or add any
    provision to this Agreement, required to be so deleted or added
    by the staff of the Commission, by any other federal or state
    regulatory body or other agency (including, without limitation,
    any "blue sky" commission), or by any Administrator or
    similar such official;
(v) to permit the Units to fall within any exemption from
    the definition of "plan assets" contained in
Section 2510.3-101
of Title 29 of the Code of Federal Regulations or any
    successor regulation or law;
(vi) if the Partnership is advised by Counsel, the
    Accountants or the IRS that any allocation of Income, Loss or
    distribution provided for in this Agreement is unlikely to be
    respected for federal income tax purposes, the General Partner
    may amend the allocation provisions of this Agreement, in
    accordance with that advice to the minimum extent necessary to
    comply with federal income tax requirements and still effect, as
    nearly as practicable, the original plan of allocations and
    distributions set forth in this Agreement; and
(vii) to change the name of the Partnership or the location
    of its principal office.
A-45
Table of Contents
ARTICLE XVIII —
    POWER OF ATTORNEY
18.1
Appointment of
Attorney-in-Fact.
By
    subscribing for Units and being admitted as a Limited Partner of
    the Partnership under this Agreement, each Limited Partner
    makes, constitutes and appoints the General Partner, each
    authorized officer of the General Partner and each Person who
    thereafter becomes a Substitute General Partner during the term
    of the Partnership, with full power of substitution, the true
    and lawful attorney-in-fact of, and in the name, place and stead
    of, the Limited Partner, with the power from time to time to
    make, execute, sign, acknowledge, swear to, verify, deliver,
    record, file and publish:
(i) this Agreement, the Partnership's certificate of
    limited partnership and any amendment of any thereof, including,
    without limitation, amendments reflecting the addition of any
    Person as a Partner or any admission or substitution of other
    Partners (or the Capital Contribution made by any Person or by
    any Partner) and any other document, certificate or instrument
    required to be executed and delivered, at any time, in order to
    reflect the admission of any Partner (including, without
    limitation, any Substitute General Partner and any Substitute
    Limited Partner) to the Partnership;
(ii) any other document, certificate or instrument required
    to reflect any action of the Partners duly taken in the manner
    provided for in this Agreement, whether or not the Limited
    Partner voted in favor of or otherwise Consented to the action;
(iii) any other document, certificate or instrument that
    may be required by any regulatory body or other agency or the
    applicable laws of the United States, any state or any other
    jurisdiction in which the Partnership is doing or intends to do
    business or that the General Partner deems advisable;
(iv) any certificate of dissolution or cancellation of the
    certificate of limited partnership that may be reasonably
    necessary to effect the termination of the Partnership; and
(v) any instrument or documents required to continue or
    terminate the business of the Partnership under
    Section 12.5 and Article XIV; provided that no
    attorney-in-fact shall take any action as attorney-in-fact for
    any Limited Partner if the action could in any way increase the
    liability of the Limited Partner beyond the liability expressly
    set forth in this Agreement or alter the rights of the Limited
    Partner under Article XI, unless (in either case) the Limited
    Partner has given a power of attorney to the attorney-in-fact
    expressly for that purpose.
18.2
Amendments to Agreement and Certificate of Limited
    Partnership.
If, under this Agreement, any
    action, adoption proposal, right, power or authority requires
    the Consent, vote, ratification or approval of fewer than all of
    the Limited Partners, then, on the satisfaction of that
    requirement, the Consent, vote, ratification or approval shall
    be deemed, and each Limited Partner hereby agrees that it shall
    constitute, that of all of the Limited Partners for all
    purposes, including unanimity requirements under the Delaware
    Act. Limited Partners who did not respond in connection with the
    proposed Consent, vote, ratification or approval, if any, shall
    be deemed to have abstained for all purposes under this
    Agreement.
18.3
Power Coupled With an Interest.
The
    grant of authority by each Limited Partner in Section 18.1:
(i) is a special power of attorney coupled with an interest
    in favor of the attorney-in-fact and shall be irrevocable and
    shall survive the death, incapacity, insolvency, dissolution or
    termination of the Limited Partner;
(ii) may be exercised for the Limited Partner by a
    signature of the attorney-in-fact or by listing or referring to
    the names of all of the Limited Partners, including that Limited
    Partner, and executing any instrument with a single signature of
    any one of the attorneys-in-fact acting as attorney-in-fact for
    all of them; and
(iii) shall survive the Assignment by any Limited Partner
    of all or any portion of the Limited Partner's Units,
    provided that, if any Assignee of all of a Limited
    Partner's Units has furnished to the General Partner a
    power of attorney complying with the provisions of
    Section 18.1 and the admission to the Partnership of the
    Assignee as a Substitute Limited Partner has been approved by
    the General Partner, this power of attorney shall survive the
    Assignment with respect to the assignor Limited Partner for the
A-46
Table of Contents
sole purpose of enabling the attorneys-in-fact to execute,
    acknowledge and file any instrument necessary to effect the
    Assignment and admission and shall thereafter terminate with
    respect to the assignor Limited Partner.
ARTICLE XIX —
    GENERAL PROVISIONS
19.1
Notices, Approvals and Consents.
All
    Notices, approvals, Consents or other communications under this
    Agreement shall be in writing and signed by the party giving the
    same and, except as otherwise specifically provided in this
    Agreement, shall be deemed to have been delivered when the same
    are deposited in the United States mail and sent by first class
    or certified mail, postage prepaid; hand delivered; sent by
    overnight courier; or sent by facsimile and confirmed by
    telephone during normal business hours.
In each case, delivery shall be made to the parties at the
    addresses set forth below or at any other addresses as the
    parties may designate by Notice to the Partnership as specified
    in Section 5.1:
(i) if to the Partnership: SQN Alternative Investment
    Fund III, L.P.,
c/o SQN
AIF III GP, LLC, 48 Wall Street, 24th Floor, New York, New
    York 10005; Telephone Number:
212-422-2166;
Fax Number:
877-214-1425.
(ii) if to the General Partner: SQN AIF III GP, LLC, 48
    Wall Street, 24th Floor, New York, New York 10005;
    Telephone Number:
212-422-2166;
Fax Number:
877-214-1425.
(iii) if to any Limited Partner, at the address set forth
    in the Limited Partner's Subscription Agreement unless a
    different address has been provided to the Partnership under
    Section 5.1.
19.2
Further Assurances.
The Partners
    agree to execute, acknowledge and deliver all further
    instruments and do all further acts and things as may reasonably
    be necessary to carry out the intent and purpose of this
    Agreement.
19.3
Captions.
Captions contained in this
    Agreement are inserted only as a matter of convenience and do
    not define, limit, extend or describe the scope of this
    Agreement or the intent of any provision of this Agreement.
19.4
Binding Effect.
Except to the extent
    required under the Delaware Act and for fees, rights to
    reimbursement and other compensation provided as such, none of
    the provisions of this Agreement shall be for the benefit of, or
    be enforceable by, any creditor of the Partnership.
19.5
Severability.
If one or more of the
    provisions of this Agreement or any application thereof shall be
    invalid, illegal or unenforceable in any respect, the validity,
    legality and enforceability of the remaining provisions of this
    Agreement and any other application thereof shall not be
    affected or impaired in any way thereby, and the remaining
    provisions shall be interpreted consistently with the omission
    of the invalid, illegal or unenforceable provision or applicable
    thereof.
19.6
Integration.
This Agreement
    constitutes the entire agreement among the parties pertaining to
    the subject matter of this Agreement and supersedes all prior
    and contemporaneous agreements and understandings of the parties
    in connection with the subject matter of this Agreement that
    conflict with the express terms of this Agreement. No covenant,
    representation or condition not expressed in this Agreement
    shall affect or be effective to interpret, change or restrict
    the express provisions of this Agreement.
19.7
Applicable Law.
This Agreement shall
    be construed and enforced in accordance with, and governed by,
    the laws of the State of Delaware, including, without
    limitation, the Delaware Act (except and solely to the extent
    that provisions of the laws of any other jurisdiction are stated
    to be applicable in any section of this Agreement), without
    giving effect to the conflict of laws provisions thereof that
    would apply the laws of another jurisdiction.
19.8
Counterparts.
This Agreement may be
    signed by each party to this Agreement on a separate counterpart
    (including, in the case of a Limited Partner, a separate
    Subscription Agreement or signature page
A-47
Table of Contents
executed by one or more the Partners), but all counterparts,
    when taken together, shall constitute but one and the same
    instrument.
19.9
Creditors.
No creditor who makes a
    loan to the Partnership shall have or acquire at any time, as a
    result of making the loan, any direct or indirect interest in
    the profits, capital or property of the Partnership other than
    as a secured creditor.
19.10
Successors and Assigns.
Each and
    every covenant, term, provision and agreement contained in this
    Agreement shall be binding on and inure to the benefit of the
    successors and assigns of the respective parties to this
    Agreement. In furtherance of, and not in limitation of, the
    foregoing, the General Partner may assign, as collateral
    security or otherwise, any items of compensation payable to it
    under the terms of this Agreement. Notwithstanding the
    assignment, if any, however, the General Partner, and not the
    assignee, shall remain solely liable for the General
    Partner's obligations under this Agreement.
9.11
Waiver of Action for Partition.
Each
    of the parties to this Agreement irrevocably waives during the
    term of the Partnership any right that he may have to maintain
    any action for partition with respect to the Partnership's
    Investments and other property and assets.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
    as of this  day
    of          ,
    201 .
GENERAL PARTNER:
SQN AIF III GP, LLC
By:
Name:
­
    ­
Its:
­
    ­
ORIGINAL LIMITED PARTNER:
SQN CAPITAL MANAGEMENT, LLC
By:
Name:
­
    ­
Its:
­
    ­
LIMITED PARTNERS:
By: SQN AIF III GP, LLC, as Attorney in Fact
By:
Name:
­
    ­
Its:
­
    ­
A-48
Table of Contents
APPENDIX B
PRIOR
    PERFORMANCE TABLES
Table I:
    Experience in Raising and Investing Funds (on a percentage
    basis)
March 31, 2010
(Unaudited)
The following table sets forth certain information as of
    March 31, 2010, concerning the experience of SQN Capital
    Management, LLC in raising and investing funds in all prior
    direct participation programs. The prior programs have been
    private programs with the same investment strategy and target
    investment community as SQN Alternative Investment
    Fund III, LP. As private programs, the prior programs have
    been limited to 100 accredited investors. This limitation does
    not apply to a publicly registered offering. SQN II is still in
    the Offering Period and will continue to raise equity through
    May 15, 2010. SQN II is therefore not yet fully invested.
Program Name
SQN I
SQN II
% of Dollar
% of Dollar
Amount Raised
Amount Raised
Dollar amount offered
$
15,000,000.00
$
15,000,000.00
Dollar amount raised
$
7,007,500.00
100
%
$
5,593,500.00
100
%
Less Offering Expenses:
Selling commissions and discounts retained by affiliates
$
—
0.00
%
$
—
0.00
%
Organizational and offering expenses
$
140,186.00
2.00
%
$
148,553.00
2.66
%
Reserves
$
50,000.00
0.71
%
$
50,000.00
0.89
%
Offering proceeds available for investment
$
6,817,314.00
97.29
%
$
5,444,947.00
97.34
%
Total assets acquired
$
32,357,000.00
461.75
%
$
4,438,799.09
79.36
%
Acquisition costs*:
Acquisition fees
$
—
0.00
%
$
—
0.00
%
Legal fees
$
—
0.00
%
$
—
0.00
%
Appraisal costs
$
—
0.00
%
$
—
0.00
%
Total acquisition cost
$
—
0.00
%
$
—
0.00
%
Percent leverage**
$
—
0.00
%
$
—
Date offering began
12-Feb-08
15-Apr-09
Length of offering (in months)
13
13
Months to invest 90% of amount available for investment
13
Still in Offering Period
*
When applicable, Acquisition Costs are passed off to
    counterparties and financed as part of the investment.
    Appraisals on transactions not consummated have been voluntarily
    paid by the Investment Manager.
**
The SQN Funds do not use traditional leverage. The funds sell
    the receivable streams on certain investments on a non-recourse
    basis to offset a portion of the original investment cost. Under
    this method, there is no cross-collateralization and the
    respective fund retains title to the underlying asset(s).
B-1
Table of Contents
Table II:
    Compensation to SQN Capital Management LLC and Affiliates
March 31, 2010
(Unaudited)
The following table sets forth certain information as of
    March 31, 2010, concerning the compensation received by SQN
    Capital Management LLC and its Affiliates from all prior
    programs. The prior programs have been private programs with the
    same investment strategy and target investment community as SQN
    Alternative Investment Fund III, LP. It is anticipated
    that, as a publicly registered program, SQN Alternative
    Fund III, LP will have more associated expenses than the
    private programs.
Program Name
SQN I
SQN II
Date offering commenced
2/12/2008
4/15/2009
Dollar amount raised
$
7,007,500.00
$
5,593,500.00
Amount paid to SQN Capital Management LLC and Affiliates:
Underwriting fees
$
—
$
—
Organizational and offering expenses
$
140,186.00
$
148,553.00
Dollar amount of cash generated from operations before deducting
    payments to sponsor
$
1,380,833.69
$
189,967.30
Amount paid to sponsor from operations:
Management fees
$
605,988.25
$
346,000.00
Acquisition fees
$
—
$
—
Debt placement fees
$
—
$
—
Remarketing fees
$
—
$
—
Administrative expense reimbursements
$
—
$
—
Other fees
$
—
$
—
B-2
Table of Contents
Table
    III: Operating Results of Prior Programs
SQN I and SQN II are each still in their Operating Period and
    have limited results from operations. As Equipment Leasing
    Programs, SQN I and SQN II, and as anticipated for SQN
    Alternative Investment Fund III, LP, will generate book
    losses during the Operating Periods while making distributions
    to investors. See Table 5 for individual investment performance.
B-3
Table of Contents
Table IV:
    Sales or Disposals of Assets — SQN I
March 31, 2010
(Unaudited)
The following table summarizes the sales and dispositions of
    equipment for SQN I. SQN II has not sold or disposed of any
    equipment. The table does not include transactions that have
    reached their initial maturity dates and have been extended and
    continue to produce revenue.
Total
Type of
Year
Year
Total
Sale/Disposition
Profit
Investment
Asset
Asset Acquired
Asset Sold
Acquisition Cost
Proceeds
(Loss)
Term (Months)
Industrial Equipment
2008
2010
$
3,435.49
$
4,691.04
$
1,255.55
25
IT Infrastructure
2008
2008
$
14,275.72
$
15,122.00
$
846.28
6
IT Infrastructure
2008
2008
$
6,232.82
$
7,717.00
$
1,484.18
10
IT Infrastructure
2008
2008
$
103,506.45
$
110,812.50
$
7,306.05
5
IT Infrastructure
2008
2008
$
175,270.93
$
187,568.63
$
12,297.70
6
IT Infrastructure
2008
2009
$
41,208.32
$
95,279.84
$
54,071.52
15
IT Infrastructure
2008
2010
$
30,137.23
$
69,195.76
$
39,058.53
27
IT Infrastructure
2008
2008
$
8,438.07
$
10,777.23
$
2,339.16
7
B-4
Table of Contents
Table V:
    Sales or Disposals of Assets — SQN II
SQN II has
    not sold or disposed of any assets
B-5
Table of Contents
Table
    VI:  Acquisition of Assets by Programs
The following table sets forth the aggregate equipment
    acquisition information of SQN Capital Management LLC for all
    prior programs. The prior programs have been private programs
    with the same investment strategy as SQN Alternative Investment
    Fund III, LP.
SQN I
Lessee
Type of Asset
Year Acquired
Acquisition Cost*
A.R.G. Electrodesign Limited
Industrial Equipment
2008
$
3,435.49
Biwater Treatment Limited
IT Infrastructure
2008
$
14,275.72
Biwater Treatment Limited
IT Infrastructure
2008
$
6,232.82
Chandler Chicco (UK) Limited
IT Infrastructure
2008
$
8,558.93
Crosby Capital Partners Limited
IT Infrastructure
2008
$
550,044.75
Crosby Capital Partners Limited
Furniture and Fixtures
2008
$
152,267.19
Crosby Capital Partners Limited
IT Infrastructure
2008
$
481,093.37
Hartpury College
Modular Accommodations
2008
$
239,036.18
Killik & Co.
IT Infrastructure
2008
$
19,470.56
Killik & Co.
IT Infrastructure
2008
$
1,043.65
Killik & Co.
IT Infrastructure
2008
$
4,729.24
Killik & Co.
IT Infrastructure
2008
$
12,080.86
Killik & Co.
IT Infrastructure
2008
$
33,834.78
Killik & Co.
IT Infrastructure
2008
$
11,890.09
Killik & Co.
IT Infrastructure
2008
$
15,222.74
Littlewoods Finance Company Limited
IT Infrastructure
2008
$
103,506.45
Littlewoods Limited
IT Infrastructure
2008
$
175,270.93
Nearby Stores Limited
IT Infrastructure
2008
$
4,030.50
Nearby Stores Limited
IT Infrastructure
2008
$
1,627.40
OMX Securities Limited
IT Infrastructure
2008
$
41,208.32
OMX Securities Limited
IT Infrastructure
2008
$
30,137.23
Pall Mall Partners Limited
IT Infrastructure
2008
$
19,722.98
Pall Mall Partners Limited
IT Infrastructure
2008
$
3,064.50
Princes Limited
IT Infrastructure
2008
$
8,438.07
Robert Gordon University
Modular Accommodations
2008
$
275,083.15
Whipps Cross University Hospital NHS Trust
Medical Equipment
2008
$
14,820.92
Pro Buyer Homes Inc.
IT Infrastructure
2008
$
54,500.00
Tidel Engineering Inc.
Retail Equipment
2008
$
114,998.00
Solihull Borough Council
Modular Accommodations
2008
$
162,021.69
Hodge Hill Girls School
Modular Accommodations
2008
$
39,641.40
Vets4Pets Limited
Medical Equipment
2008
$
231,384.77
Well Pict European
Agricultural Equipment
2008
$
370,107.85
Unilever Best Foods North America
Transportation Equipment
2008
$
3,514,470.00
Velocity Express Inc.
IT Infrastructure
2008
$
46,992.00
Vets4Pets Limited
Medical Equipment
2009
$
84,899.87
Vets4Pets Limited
Medical Equipment
2009
$
84,141.30
BOSHire Limited
Modular Accommodations
2010
$
221,937.62
*
The total Acquisition Cost in SQN I is greater than the Offering
    Proceeds Available for Investment in Table 1 as a result of
    reinvestment of lease, sale, and disposition proceeds.
B-6
Table of Contents
Table VI:
    Acquisition of Assets by Programs (continued)
SQN II
Lessee
Type of Asset
Year Acquired
Acquisition Cost
WellPict
Agricultural
2009
$
336,709.03
Falcon
IT Infrastructure
2009
$
266,133.00
Cabin Centre
Furniture and Fixtures
2009
$
655,940.54
Arbis
IT Infrastructure
2009
$
79,067.54
Business Environment
Furniture and Fixtures
2009
$
648,301.48
BOSHire
Modular Accommodation
2010
$
1,109,688.08
Sandwell
Modular Accommodation
2010
$
1,342,959.42
B-7
Table of Contents
APPENDIX C
SUBSCRIPTION
    AGREEMENT
SQN Alternative Investment Fund III, L.P.
INSTRUCTIONS FOR COMPLETING THE SUBSCRIPTION
    AGREEMENT
Consult with your registered representative or financial
    planner regarding suitability requirements and subscriber
    representations.
1. INVESTMENT
•   Complete all of the information
    requested in section 1 hereof.
•   Each unit costs $1,000.
•   The minimum initial
    investment is 25 units ($25,000).
2. REGISTRATION INFORMATION
•   Complete all of the information
    requested in sections 2(a) through (c) hereof. If you are not a
    United States citizen, please specify the country of which you
    are a citizen.
•   Complete section 2(d) hereof only if you
    are investing in us as an IRA, Qualified Plan, Keogh plan or
    trust.
3. FORM OF OWNERSHIP
•   Mark only one box in section 3 hereof.
•   Consult your registered representative
    or investment advisor with any questions about designating the
    form of ownership.
4. DIRECT DEPOSIT AND ALTERNATIVE PAYEES ELECTION
•   All subscribers except IRAs should
    complete section 4 hereof if you wish to have our distributions
    to you sent to an address different from the address shown in
    section 2(a) hereof, and you should complete this section if you
    want direct deposit.
5. SIGNATURES AND INITIALS
•   All investors must sign and initial the
    various items in section 5 hereof to the extent applicable as
    indicated in the form. The signature of an authorized partner,
    manager or officer is required for a partnership, limited
    liability company or corporation investor.
6. SUBSCRIPTION CHECKS, MAILING INSTRUCTIONS AND
    CONFIRMATIONS
•   If your registered representative or
    investment advisor notifies you that the sale of
    1,200 units
    (or          units
    in the case of residents of Pennsylvania) has not been
    completed, checks should be made payable to
    "          ."
    Otherwise, checks should be made payable to
    "          ."
    Wire transfer instructions are available on request. Mailing:
•   IRAs, Qualified Plans and
    Keogh plan investors should mail all of their subscription
    documents with their check and transfer instructions to their
    designated custodian.
•   All other investors should
    mail all their subscription documents with their check and
    transfer instructions to their investment advisor, or the
    Selling Agent at the address below:
SQN Securities, LLC
48 Wall Street, 24th Floor
New York, New York 10005
Telephone: (800) 258-6610
Fax: (877) 214-1475
•   Mail your signed Subscription Agreement
    as set forth above. We will send you a confirmation letter for
    your records after your subscription to purchase units in us has
    been approved by our general partner and we will return a copy
    of the signed Subscription Agreement to you for your records.
YOUR SUBSCRIPTION AGREEMENT WILL NOT BE PROCESSED BY US
    UNLESS IT IS FULLY COMPLETED AND ACCOMPANIED BY PAYMENT IN FULL.
    ANY SUBSCRIPTION PAYMENT THAT IS DISHONORED WILL CAUSE THE
    SUBSCRIPTION AND ANY NOTICE OF
C-1
Table of Contents
ACCEPTANCE OF THE SUBSCRIPTION BY OUR GENERAL PARTNER TO BE
    VOID AS OF THE SUBSCRIPTION DATE AND SHALL OBLIGATE THE
    SUBSCRIBER TO PAY ALL COSTS AND CHARGES ASSOCIATED WITH THE
    DISHONORED PAYMENT.
If you have any questions about completing this Subscription
    Agreement, please call SQN Securities, LLC, Investor Services at
(800) 258-6610.
IMPORTANT
    INFORMATION FOR POTENTIAL SUBSCRIBER(S)
•
No offer to sell our units to you may be made except by means of
    this Prospectus.
•
You should not rely on any oral statements made by any person,
    or on any written information other than this Prospectus or
    supplements to this Prospectus in deciding whether or not to
    purchase our units.
•
An investment in our units involves certain risks including,
    without limitation, the matters set forth in this Prospectus
    under the captions "Risk Factors," "Conflicts of
    Interest and Fiduciary Responsibilities," "Investment
    Objectives and Strategies," and "Material
    U.S. Federal Income Tax Consequences."
•
The representations you make in the "Investor Suitability
    Requirements and Subscriber Representations" section hereof
    are not a waiver of any of your rights under the Delaware
    Revised Uniform Limited Partnership Act or applicable federal
    and state securities laws.
•
Our units are subject to substantial restrictions on
    transferability.
•
There will be no public market for our units.
•
It may not be possible for you to readily liquidate your units,
    if at all, even in the event of an emergency.
•
Any transfer of units is subject to our approval and must comply
    with the terms of Article XIII of our partnership agreement.
Important
    Information for Residents of Certain States
•
Alabama Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and similar equipment leasing programs may
    not exceed 10% of your liquid net worth.
•
California Investors.
You must have either
    (1) a liquid net worth of not less than $100,000 and a
    gross annual income of not less than $75,000, or (2) a
    liquid net worth of $250,000, in both instances exclusive of
    your home, home furnishings and automobiles.
You will receive units that have certain additional restrictions
    on transfer as summarized by the following legend:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
    SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
    CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
    COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
    AS PERMITTED IN THE COMMISSIONER'S RULES.
•
Connecticut Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
Florida Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
C-2
Table of Contents
•
Illinois Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Iowa Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliates may not exceed 10% of
    your net worth, calculated exclusive of your home, home
    furnishings and automobiles.
•
Kansas Investors.
Under suitability guidelines
    of the Office of the Kansas Securities Commissioner, you are
    cautioned to carefully evaluate whether your aggregate
    investment in us and other similar investments should exceed 10%
    of your liquid net worth. Liquid net worth is that portion of
    your total net worth, or total assets minus total liabilities,
    that is comprised of cash, cash equivalents and readily
    marketable securities. Readily marketable securities may include
    investments in an IRA or other retirement plan that can be
    liquidated within a short time, less any income tax or other
    penalties that may apply for early distribution.
•
Kentucky Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth.
•
Maryland Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Michigan Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and our affiliated programs may not exceed
    10% of your liquid net worth.
•
Missouri Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
•
New Jersey Investors.
You must have
    (i) an annual gross income of at least $60,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $60,000 in excess of your invested capital; or
    (ii) have a net worth (determined with the same exclusions)
    of at least $225,000 in excess of your invested capital. It is
    recommended by the New Jersey Office of the Attorney General
    that New Jersey investors not invest, in the aggregate,
    more than 10% of their Liquid Net Worth in this and similar
    direct participation investments. Liquid Net Worth is defined as
    that portion of Net Worth which consists of cash, cash
    equivalents and readily marketable securities.
•
New York Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
North Carolina Investors.
You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
•
Ohio Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us and in affiliated programs may not exceed
    10% of your liquid net worth, calculated exclusive of your home,
    home furnishings and automobiles.
•
Oklahoma Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us may not exceed 10% of your net worth,
    calculated exclusive of your home, home furnishings and
    automobiles.
•
Oregon Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
C-3
Table of Contents
•
Pennsylvania Investors.
Because the minimum
    offering amount is less than $5,000,000, which represents 10% of
    the maximum offering amount, you are cautioned to carefully
    evaluate the program's ability to fully accomplish its
    stated objectives and to inquire as to the current dollar volume
    of program subscriptions. In addition, subscription proceeds of
    Pennsylvania investors will be held in an escrow account until
    we receive and accept subscriptions for at least $7,500,000 in
    offering proceeds. We must offer you the opportunity to rescind
    your subscription if we have not received subscriptions for
    $7,500,000 within 120 days of the date the escrow agent
    receives your subscription proceeds. We must repeat this offer
    to you every 120 days during the Offering Period until we
    have received and accepted subscriptions for $7,500,000.
•
Rhode Island Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
South Carolina Investors.
You must have
    (i) an annual gross income of at least $45,000 and a net
    worth (exclusive of home, home furnishings and automobiles) of
    at least $45,000 in excess of your invested capital; or
    (ii) a net worth (determined with the same exclusions) of
    at least $150,000.
•
Texas Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    in no event may you invest more than 10% of your net worth,
    calculated exclusive of home, home furnishings and automobiles.
•
Tennessee Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your investment in us must not exceed 10% of your liquid net
    worth.
•
Vermont Investors.
You must meet the general
    investor suitability requirements set forth above. In addition,
    your maximum investment in us and our affiliates may not exceed
    10% of your net worth.
•
Virginia Investors.
You must have (i) an
    annual gross income of at least $45,000 and a net worth
    (exclusive of home, home furnishings and automobiles) of at
    least $45,000 in excess of your invested capital; or (ii) a
    net worth (determined with the same exclusions) of at least
    $150,000.
•
Washington Investors.
You must meet the
    general investor suitability requirements set forth above. In
    addition, in no event may you invest more than 10% of your net
    worth, calculated exclusive of home, home furnishings and
    automobiles.
C-4
Table of Contents
SUBSCRIPTION
    AGREEMENT
SQN ALTERNATIVE INVESTMENT FUND III, L.P.
A Delaware Limited Partnership
1.
Initial
Investment:
(Please complete
the blanks)
Initial Subscription Amount:
    $          ($25,000
    minimum)
No. of Initial Units ($1,000 per
    Unit):          (25 units
    minimum)
No. of Additional Units ($1,000 per
    Unit):          (No
    minimum)
2.
Registration
Information:
(Please type or
print clearly)
(a)
Subscriber Information
Name(s)
­
    ­
Tax I.D. No.(s) or Social Security
    No.(s)
­
    ­
Residential Street
    Address
­
    ­
City
­
    ­
State
­
    ­
Zip
    Code
­
    ­
Telephone No. (Day)
­
    ­
Date of
    Birth
­
    ­
Email
    Address
­
    ­
(b)
Citizenship
o
U.S.
    Citizen
o
U.S. Resident Alien
(check
    one)
o
Non-Resident of U.S. (Specify
    Country:          )
(c)
Investment Advisor Firm
(d)
If applicable: Trustee, Custodial IRA's,
    Qualified Plans, SEP, Keogh, etc.)
Trustee
    Name(s)
­
    ­
Tax I.D.
    No.
­
    ­
Date Trust
    Established
­
    ­
Grantor's
    Name(s)
­
    ­
Street
    Address
­
    ­
City
­
    ­
State
­
    ­
Zip
    Code
­
    ­
Name of
    Contact
­
    ­
Telephone No. of
    Contact
­
    ­
(e)  Custodian
    Name
­
    ­
Custodian Acct.
    No.
­
    ­
3.
Form of
Ownership:
(check only one)
o
Individual
o
S
    Corporation
o
Joint
    Tenants
o
Limited
    Liability
o
Spouses
    as Community
o
Profit
    Sharing Plan
o
Tenants
    in Common
o
Trust
o
Custodial
    Agent
o
IRA,
    SEP, Keogh
o
Partnership
o
Other
­
    ­
Note to Corporations:
Please attach a copy of the corporate resolution to purchase
    units and articles of incorporation and by-laws, as amended
Note to Partnerships:
Please attach a copy of the current partnership agreement, as
    amended
Note to Trusts:
Please attach a copy of the instrument creating the trust, as
    amended
Note to Estates:
Please attach a copy of the will and current letters testamentary
Note to LLCs:
Please attach a copy of the limited liability company resolution
    to purchase units and articles of organization and operating
    agreement, as amended
C-5
Table of Contents
4.
Direct Deposit
and Alternative
Payee Elections:
Check if:
o
You
    want your distributions sent to your custodial account indicated
    in Section 2(e).
o
You
    want your distributions sent to you by direct deposit, or to a
    different Payee and Address. Complete the following section:
Payee
    Name
­
    ­
ABA (Routing)
    No.
­
    ­
Account
    No.
­
    ­
Account
    Type
­
    ­
Account
    Holder
­
    ­
Street
    Address
­
    ­
City
­
    ­
State
­
    ­
Zip
­
    ­
o
You
    want to split your distributions between one or more Payees. If
    you elect this alternative you must request from your registered
    representative or investment advisor and complete a Special
    Payment Instruction Form. Split distributions are available only
    for direct deposit by Automated Clearing House (ACH), a
    financial network run by the Federal Reserve to transfer funds
    electronically. This option is not available for IRAs or Keogh
    plans.
5.
Initials and Signatures:
The undersigned confirms that he/she/it:
•   Received the Prospectus at least 5
    business days prior and has read this Subscription Agreement.
(Initial          )
    (Initial          )
•   Makes the representations contained in
    the section entitled "Investor Suitability Requirements and
    Subscriber Representations" hereof.
(Initial          )
    (Initial          )
•   Acknowledges that an investment in us is
    not liquid.
(Initial          )
    (Initial          )
•   Declares that, to the best of
    his/her/its knowledge, all applicable information in this
    Subscription Agreement is accurate and may be relied on by our
    general partner.
(Initial          )
    (Initial          )
•   Appoints our general partner as
    his/her/its attorney-in-fact as described in Paragraph 2 under
    the section entitled "Investor Suitability Requirements and
    Subscriber Representations" hereof.
(Initial          )
    (Initial          )
•   Meets the minimum income and net worth
    standards set forth in the Prospectus
AND
if he/she/it
    resides in a state for which more stringent suitability
    standards are required, as described in the Prospectus,
    he/she/it meets such applicable standards.
(Initial          )
    (Initial          )
•   Is purchasing the units for his/her/its
    own account and not with a view to distribution.
(Initial          )
    (Initial          )
•   Will inform us of any change in
    residence.
(Initial          )
    (Initial          )
Your Subscription
cannot be accepted
without your
initials and signature(s)
Sign
X
­
    ­
Sign
X
­
    ­
Here
Authorized Signature     Date
(If entity:
Here
Authorized Signature     Date
(If entity:
Custodian/Trustee/Officer/Partner)
Custodian/Trustee/Officer/Partner)
Print
    Name
Print
    Name
C-6
Table of Contents
6.
Investment Check
and Subscription
Agreement:
Return the completed Subscription Agreement, your Taxpayer
    Identification Certification, with a check for your initial
    subscription amount as set forth in Section 1 hereof made
    payable as indicated in Section 6 of the Instructions for
    Completing the Subscription Agreement to your registered
    representative or investment advisor.
Acceptance of Subscription Agreement by General Partner of
    SQN Alternative Investment Fund III, L.P.
SQN AIF III GP, LLC, General Partner
By:
­
    ­
Authorized
    Signature               Date
C-7
Table of Contents
INVESTOR
    SUITABILITY REQUIREMENTS AND SUBSCRIBER
    REPRESENTATIONS
1.
Subscription
    for Units.
•
I, by signing my name in Section 5 hereof:
(a) subscribe for the number of units and dollar
    subscription amount set forth in Section 1 hereof;
(b) agree to become a limited partner of SQN Alternative
    Investment Fund III, L.P. ("SQN III") on the
    acceptance of my subscription by SQN AIF III GP, LLC, the
    general partner of SQN III (the "General
    Partner"); and
(c) adopt and agree to be bound by each and every provision
    of SQN III's partnership agreement (the "Partnership
    Agreement") and my Subscription Agreement.
•
I am tendering good funds with my Subscription Agreement in full
    payment for the units I have subscribed for (if I am required to
    do so under Section 1 hereof) at the per unit subscription
    price applicable to me.
2.
Appointment
    of the General Partner as the Subscriber's
Attorney-in-Fact.
•
By signing my name in Section 5 hereof (and effective on my
    admission as a limited partner of SQN III), I hereby make,
    constitute and appoint the General Partner, each authorized
    officer of the General Partner and each person who may
    thereafter become a substitute general partner of SQN III, with
    full power of substitution, as my true and lawful
    attorney-in-fact, in my name, place and stead, to the full
    extent and for the purposes and duration set forth in
    Article XVIII of the Partnership Agreement (all of the
    terms of which are hereby incorporated in this Subscription
    Agreement by this reference).
•
Such purposes include, without limitation, the power to make,
    execute, sign, acknowledge, swear to, verify, deliver, record,
    file and publish any of the following:
(a)
the Partnership Agreement, certificates of limited partnership
    and any amendment thereof, including amendments reflecting the
    admission or substitution of any general partner or limited
    partner (or their capital contributions) and any other document,
    certificate or instrument required to reflect the admission of
    any partner (including any substitute general partner and any
    substitute limited partner);
(b)
any other document, certificate or instrument required to
    reflect any action of the partners provided for in the
    Partnership Agreement (whether or not I voted in favor of or
    otherwise consented to the action);
(c)
any other document, certificate or instrument that may be
    required by any regulatory body or other agency or the
    applicable laws of the United States, any state or any other
    jurisdiction in which SQN III is doing or intends to do business
    or that the General Partner deems advisable;
(d)
any certificate of dissolution or cancellation of the
    certificate of limited partnership that may be reasonably
    necessary to effect the termination of SQN III; and
(e)
any instrument or papers required to continue or terminate the
    business of SQN III under Section 12.5 or Article XIV
    of the Partnership Agreement; provided that no such
    attorney-in-fact shall take any action as attorney-in-fact for
    me if the action could in any way increase my liability beyond
    the liability expressly set forth in the Partnership Agreement
    or alter my rights under Article XI of the Partnership
    Agreement, unless (in either case) I have given a power of
    attorney to the attorney-in-fact expressly for that purpose.
•
The foregoing appointment shall not in any way limit the
    authority of the General Partner as my attorney-in-fact under
    Article XVIII of the Partnership Agreement. The power of
    attorney hereby granted is coupled with an interest, is
    irrevocable and shall survive my death, incapacity, insolvency,
    dissolution or termination or my delivery of any assignment of
    all or any portion of my units.
C-8
Table of Contents
The above representations do not constitute a waiver of any
    rights that I may have under federal or state law.
3.
General
    Subscriber Representations.
•
As a condition to my being admitted as a limited partner of SQN
    III, I represent and warrant to the General Partner and SQN III
    that I:
(a)
either:
(i)
have annual gross income of at least $70,000, plus a net worth
    of at least $70,000 (exclusive of my investment in SQN III, home
    furnishings, automobiles and equity in my home), or a net worth
    of at least $250,000 (determined in the same manner); or
(ii)
meet any higher investor gross income
and/or
net
    worth standards applicable to residents of my State, as set
    forth in the "Investor Suitability" section of the
    Prospectus (which begins on page 1 of the Prospectus);
(b)
if I am investing as an IRA, Qualified Plan, HR-10 (Keogh) plan
    or other benefit plan or trust, I have accurately been
    identified as such in Section 2(d) hereof and
    Section 3 hereof;
(c)
have been accurately identified in Section 2(b) hereof as
    either a U.S. Citizen or a
non-U.S. Citizen; and
(d)
am not less than 21 years of age.
•
If I am investing in a fiduciary or representative capacity, the
    investment is being made for one or more persons, entities or
    trusts, all of which meet the applicable suitability
    requirements described above.
4.
Additional
    Fiduciary and Entity Representations.
•
If the person signing this Subscription Agreement is doing so on
    behalf of another person or entity who is the subscriber,
    including, without limitation, a corporation, a partnership, an
    IRA, a Qualified Plan, a Keogh plan, or a trust (other than a
    Qualified Plan or Keogh plan), the signatory, by signing
    his/her/its name in Section 5 hereof, represents and
    warrants to the General Partner and SQN III that:
(a)
he or she is duly authorized to:
(i)
execute and deliver this Subscription Agreement;
(ii)
make the representations contained in this Subscription
    Agreement on behalf of the Subscriber; and
(iii)
bind the Subscriber by signing this Subscription
    Agreement; and
(b)
this investment is an authorized investment for the Subscriber
    under applicable documents
and/or
agreements (articles of incorporation or corporate bylaws or
    action, partnership agreement, trust indenture, etc.) and
    applicable law.
[THE REST
    OF THIS PAGE INTENTIONALLY LEFT BLANK.]
C-9
Table of Contents
Taxpayer Identification Number Certification — You
    should check the first box below, unless you are a foreign
    investor or you are investing as a U.S. grantor trust.
Note:  If there is a change in circumstances that
    makes any of the information provided by you in the
    certification below incorrect, then you are under a continuing
    obligation so long as you own units in SQN III to notify the
    General Partner and furnish the General Partner a new
    certificate within thirty (30) days of the change.
o
Under penalties of perjury, you certify that:
(1)
the number provided in this Subscription Agreement is your
    correct "TIN" ( i.e. , social security number or
    taxpayer identification number);
(2)
you are not subject to backup withholding because (a) you
    are exempt from backup withholding under §3406(g)(1) of the
    Internal Revenue Code and the related regulations, or
    (b) you have not been notified by the Internal Revenue
    Service (IRS) that you are subject to backup withholding as a
    result of failure to report all interest or dividends, or
    (c) the IRS has notified you that you are no longer subject
    to backup withholding; and
(3)
you are a U.S. person (which includes U.S. citizens,
    resident aliens, entities or associations formed in the
    U.S. or under U.S. law, and U.S. estates and
    trusts.)
(Note: You must cross out item (2) above if you have been
    notified by the IRS that you are currently subject to backup
    withholding because you have failed to report all interest and
    dividends on your tax return.)
o
Foreign Partner. You are at least 21 years of age and you
    have provided SQN III with the appropriate
Form W-8
certification or, if a joint account, each joint account owner
    has provided SQN III the appropriate
Form W-8
certification, and if any one of the joint account owners has
    not established foreign status, that joint account owner has
    provided SQN III with a certified TIN.
o
U.S. Grantor Trusts. Under penalties of perjury, I certify
    that:
(1)
the trust designated as the Subscriber on the Subscription
    Agreement is a United States grantor trust that the person(s)
    designated as the grantor(s) of the trust on the Subscription
    Agreement can amend or revoke while living;
(2)
under subpart E of subchapter J of the Internal Revenue Code
    (check only one of the boxes below):
o
(a) 100% of the trust is treated as owned by the grantor;
o
(b) the trust is treated as owned in equal shares by the
    grantor and the grantor's spouse; or
o
(c)     % of the trust is treated as
    owned
    by          ,
    and the remainder is treated as
    owned     % by the grantor
    and     % by the grantor's
    spouse); and
(3)
each grantor or other owner of any portion of the trust has
    provided SQN III with the appropriate
Form W-8
or
Form W-9
certification.
Note:  If you check the box in (2)(c), you must insert
    the information called for by the blanks.
The Internal Revenue Service does not require your consent to
    any provision of this document other than the certifications
    required to avoid backup withholding.
ON YOUR EXECUTION OF THIS SUBSCRIPTION AGREEMENT AND ITS
    ACCEPTANCE BY THE GENERAL PARTNER, SECTIONS 1 THROUGH 7 OF
    THIS SUBSCRIPTION AGREEMENT WILL BECOME A PART OF THE
    PARTNERSHIP AGREEMENT.
C-10
Table of Contents
CONSENT
    TO ELECTRONIC DELIVERY OF OFFERING MATERIALS
SQN Alternative Investment Fund III, L.P. ("SQN
    III") can deliver offering materials to investors
    electronically. By signing the consent provided below you can
    choose to have SQN III electronically deliver offering materials
    to you, including:
•
prospectuses;
•
prospectus supplements;
•
prospectus amendments;
•
annual, quarterly and periodic reports;
•
notices: and
•
supplemental sales literature (collectively "Offering
    Materials").
SQN III may accomplish electronic delivery via:
•
posting Offering Materials to the SQN Capital Management, LLC
    Internet Website
(
http://www.sqncapital.com
)
,
    whereby investors will be notified that such materials are
    available for viewing on the Website by
e-mail,
physical mail or telephone;
•
sending
e-mails
to
    investors containing Offering Materials (including portable
    document format (.pdf) of such material); and
•
sending CD-ROMs to investors containing Offering Materials
    (including portable document format (.pdf) of such material).
You should note that electronic delivery may impose costs on you
    that you would not bear with traditional, physical mailing. You
    may incur Internet online costs for accessing
e-mail.
At the same time, you may need to download a .pdf document
    viewer, such as Adobe
    Acrobat
®
in order to view Offering Materials sent as a .pdf file. You can
    download the Adobe
    Acrobat
®
software free of charge at
http://www.adobe.com/products/acrobat/readermain.html.
The general partner of SQN III (the "General Partner")
    will try to provide assistance to investors in connection with
    electronic delivery of Offering Materials free of charge. If you
    are in need of such assistance, you should contact the General
    Partner at
(212) 422-2166.
The undersigned hereby consents to electronic delivery of all
    Offering Materials by SQN III in any or all of the manners
    described above. Information provided below as to the
    undersigned's
e-mail
address will be used by SQN III in lieu of different
    instructions from the undersigned.
The undersigned understands that he or she may revoke this
    consent at any time by providing timely notice of revocation to
    the General Partner. Revocation of such consent will act to
    revoke consent as to all future electronic deliveries of
    Offering Materials by SQN III.
The undersigned also understands that he or she may elect to
    receive paper copies of Offering Materials at any time upon
    request, with or without revoking this consent.
The undersigned also understands that this Consent to Electronic
    Delivery of Offering Materials is optional and is not a part of
    the SQN III Subscription Agreement, which must be executed in
    accordance with the instructions hereof.
Print Name
Signature
Date
E-mail
Address (please print, and include domain extension [.com, .net,
    etc.])
C-11
Table of Contents
No person is authorized to give any information or make any
    representation that is not contained in this prospectus. You
    must not rely on any unauthorized representations or
    information. This prospectus is an offer to sell only the units
    of limited partnership interest offered by this prospectus, and
    only under circumstances and in jurisdictions where it is lawful
    to do so. The information contained in this prospectus is
    current only as of its date.
SQN ALTERNATIVE INVESTMENT
    FUND III, L.P.
Units of Limited Partnership
    Interest
$1,000 per unit
PROSPECTUS
,
    2010
No one has been authorized to give any information or make any
    representations other than those contained in this prospectus in
    connection with this offering. If given or made, you should not
    rely on such information or representations as having been
    authorized by the General Partner. The delivery of this
    prospectus does not imply that its information is correct as of
    any time after its date. This prospectus is not an offer to sell
    these securities in any state to any person where the offer and
    sale is not permitted.
    Until          
    2010, all dealers that effect transactions in these securities,
    whether or not participating in this offering, may be required
    to deliver a prospectus. This is in addition to the
    dealers' obligation to deliver a prospectus when acting as
    underwriters and with respect to their unsold allotments of
    subscriptions.
Table of Contents
PART II
INFORMATION
    NOT REQUIRED IN PROSPECTUS
Item 13.
Other
    Expenses of Issuance and Distribution
Set forth below are the expenses (other than distribution
    expenses) expected to be paid by the registrant in connection
    with the issuance and distribution of the securities registered
    hereby. With the exception of the Securities and Exchange
    Commission's registration fee and FINRA's filing fee,
    the amounts set forth below are estimated.
Securities and Exchange Commission registration fee
$
3,565
State Blue Sky registration fees (excluding legal fees)
50,000
*
FINRA filing fee
5,500
Printing and engraving expenses
125,000
*
Legal fees (including Blue Sky) and expenses
600,000
*
Accounting fees and expenses
50,000
Miscellaneous
1,163,935
*
Total
$
1,998,000
*
Estimated
Item 14.
Indemnification
    of Directors and Officers
Section 17-108
of the Delaware Revised Uniform Limited Partnership Act states:
    "Subject to such standards and restrictions, if any, as are
    set forth in its partnership agreement, a limited partnership
    may, and shall have the power to, indemnify and hold harmless
    any partner or other person from and against any and all claims
    and demands whatsoever."
Section 9.3 of the partnership agreement of the registrant,
    included in the prospectus as Appendix A, provides for
    indemnification of the registrant's general partner, SQN
    AIF III GP, LLC (the "General Partner"), its
    affiliates and individual officers under certain circumstances.
    Reference is made to such section of the partnership agreement
    and to "Summary of Our Partnership Agreement."
The above discussion of the registrant's partnership
    agreement is not intended to be exhaustive and is qualified in
    its entirety by the registrant's partnership agreement.
Item 15.
Recent
    Sales of Unregistered Securities
The registrant has recently been formed but has not issued any
    securities other than the General Partner's interest in the
    registrant, for a capital contribution of $100. This sale
    occurred on March 10, 2010 in reliance upon the exemption
    from registration contained in Section 4(2) of the
    Securities Act of 1933, as amended. This sale was for the
    purpose of organizing the registrant as a limited partnership
    and for investment purposes and not with a view to the
    distribution of such securities.
Item 16.
Exhibits
    and Financial Statements Schedules
(a) Exhibits:
Exhibit
Number
Description
1
.1
Form of Selling Agent Agreement with SQN Securities, LLC
3
.1
Certificate of Limited Partnership of SQN Alternative Investment
    Fund III, L.P.
3
.3
Amended and Restated Agreement of Limited Partnership of SQN
    Alternative Investment Fund III, L.P. (included as
    Appendix A to the prospectus)
II-1
Table of Contents
Exhibit
Number
Description
5
.1
Opinion of Troutman Sanders LLP as to the legality of the units
    being registered
8
.1
Opinion of Troutman Sanders LLP relating to tax matters*
10
.1
Form of Escrow Agreement
10
.2
Form of Subscription Agreement (included as Appendix C to
    the prospectus)
10
.3
Form of Management, Origination and Servicing Agreement
23
.1
Consent of Holtz Rubenstein Reminick LLP — SQN AIF III
    GP, LLC
23
.2
Consent of Holtz Rubenstein Reminick LLP — SQN
    Alternative Investment Fund III, L.P.
23
.3
Consent of Troutman Sanders LLP (contained in Exhibits 5.1)
23
.4
Consent of Troutman Sanders LLP (contained in Exhibits 8.1)*
24
.1
Power of Attorney (included on the signature page to this
    Registration Statement)
*
To be Filed by Amendment.
(b) Financial Statement Schedules
SQN AIF
    III GP, LLC.
See Index to Financial Statements at
page F-1
of the prospectus included in Part I of this Registration
    Statement.
SQN Alternative Investment Fund III, L.P.
See Index to Financial Statements at
page F-1
of the prospectus included in Part I of this Registration
    Statement.
Item 17.
Undertakings
The registrant hereby undertakes:
(a) (1) To file, during any period in which offers or
    sales are being made, a post-effective amendment to this
    registration statement:
(i) To include any prospectus required by
    section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
    arising after the effective date of the registration statement
    (or the most recent post-effective amendment thereof) which,
    individually or in the aggregate, represent a fundamental change
    in the information set forth in the registration statement.
    Notwithstanding the foregoing, any increase or decrease in
    volume of securities offered (if the total dollar value of
    securities offered would not exceed that which was registered)
    and any deviation from the low or high end of the estimated
    maximum offering range may be reflected in the form of
    prospectus filed with the Commission pursuant to
    Rule 424(b) ( § 230.424(b
)
of this
    chapter) if, in the aggregate, the changes in volume and price
    represent no more than 20% change in the maximum aggregate
    offering price set forth in the "Calculation of
    Registration Fee" table in the effective registration
    statement; and
(iii) To include any material information with respect to
    the plan of distribution not previously disclosed in the
    registration statement or any material change to such
    information in the registration statement.
(2) That, for the purpose of determining any liability
    under the Securities Act of 1933, each such post-effective
    amendment shall be deemed to be a new registration statement
    relating to the securities offered therein, and the offering of
    such securities at that time shall be deemed to be the initial
    bona fide offering thereof.
II-2
Table of Contents
(3) To remove from registration by means of a
    post-effective amendment any of the securities being registered
    which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability of the
    registrant under the Securities Act of 1933 to any purchaser in
    the initial distribution of the securities, the registrant
    hereby undertakes that in a primary offering of securities of
    the registrant pursuant to this registration statement,
    regardless of the underwriting method used to sell the
    securities to the purchaser, if the securities are offered or
    sold to such purchaser by means of any of the following
    communications, the registrant will be a seller to the purchaser
    and will be considered to offer or sell such securities to such
    purchaser:
(i) Any preliminary prospectus or prospectus of the
    undersigned registrant relating to the offering required to be
    filed pursuant to Rule 424 (§230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering
    prepared by or on behalf of the undersigned registrant or used
    or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
    relating to the offering containing material information about
    the undersigned registrant or its securities provided by or on
    behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
    offering made by the undersigned registrant to the purchaser.
(5) That all such post-effective amendments will comply
    with the applicable forms, rules and regulations of the
    Securities and Exchange Commission in effect at the time such
    post-effective amendments are filed.
(b) Insofar as indemnification for liabilities arising
    under the Securities Act of 1933 may be permitted to
    directors, officers and controlling persons of the registrant
    pursuant to the foregoing provisions, or otherwise, the
    registrant has been advised that in the opinion of the
    Securities and Exchange Commission such indemnification is
    against public policy as expressed in the Act and is, therefore,
    unenforceable. In the event that a claim for indemnification
    against such liabilities (other than the payment by the
    registrant of expenses incurred or paid by a director, officer
    or controlling person of the registrant in the successful
    defense of any action, suit or proceeding) is asserted by such
    director, officer or controlling person in connection with the
    securities being registered, the registrant will, unless in the
    opinion of its counsel the matter has been settled by
    controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is
    against public policy as expressed in the Act and will be
    governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
    Securities Act of 1933, the information omitted from the form of
    prospectus filed as part of this registration statement in
    reliance upon Rule 430A and contained in a form of
    prospectus filed by the registrant pursuant to
    Rule 424(b)(1) or (4) or 497(h) under the Securities
    Act shall be deemed to be part of this registration statement as
    of the time it was declared effective.
(2) For the purpose of determining any liability under the
    Securities Act of 1933, each post-effective amendment that
    contains a form of prospectus shall be deemed to be a new
    registration statement relating to the securities offered
    therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
The registrant undertakes to send to each limited partners at
    least on an annual basis a detailed statement of any
    transactions with the general partner or its affiliates, and of
    fees, commissions, compensation and other benefits paid, or
    accrued to the general partner or its affiliates for the fiscal
    year completed, showing the amount paid or accrued to each
    recipient and the services performed.
The registrant undertakes to provide to the limited partners the
    financial statements required by
Form 10-K
for the first full fiscal year of operations of the registrant.
II-3
Table of Contents
The registrant undertakes to file a sticker supplement pursuant
    to Rule 424(c) under the Securities Act during the
    distribution period describing each lease transaction not
    identified in the prospectus at such time as there arises a
    reasonable probability that such property will be acquired and
    to consolidate all such stickers into a post-effective amendment
    filed at least once every three months, with the information
    contained in such amendment provided simultaneously to the
    existing limited partners. Each sticker supplement should
    disclose all compensation and fees received by the general
    partner and its affiliates in connection with any such
    acquisition. The post-effective amendment shall include audited
    financial statements meeting the requirements of
Rule 3-14
of
Regulation S-X
only for properties acquired during the distribution period.
The registrant undertakes to file, after the end of the offering
    period, a current report on
Form 8-K
containing the financial statements and any additional
    information required by
Rule 3-14
of
Regulation S-X,
to reflect each commitment made after the end of the offering
    period involving the use of 10% or more (on a cumulative basis)
    of the net proceeds of the offering and to provide the
    information contained in such report to the members at least
    once each quarter after the offering period has ended.
II-4
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
    amended, the registrant has duly caused this Registration
    Statement on
Form S-1
to be signed on its behalf by the undersigned, thereunto duly
    authorized, in New York, New York on April 20, 2010.
SQN ALTERNATIVE INVESTMENT FUND III, L.P.
By:
SQN AIF III GP, LLC
its General Partner
/s/  Jeremiah
    J. Silkowski
Name:     Jeremiah J. Silkowski
Title:
President and Chief Executive Officer
The undersigned hereby constitute and appoint Neil Roberts and
    Jeremiah J. Silkowski and each of them with full power to act
    without the other and with full power of substitution and
    resubstitution, our true and lawful attorneys-in-fact with full
    power to execute in our name and behalf in the capacities
    indicated below this Registration Statement on
Form S-1
and any and all amendments thereto, including post-effective
    amendments to this Registration Statement and to sign any and
    all additional registration statements relating to the same
    offering of securities as this Registration Statement that are
    filed pursuant to Rule 462(b) of the Securities Act, and to
    file the same, with all exhibits thereto and other documents in
    connection therewith, with the Securities and Exchange
    Commission and hereby ratify and confirm that all such
    attorneys-in-fact, or any of them, or their substitutes shall
    lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
    amended, this Registration Statement has been signed below by
    the following persons on behalf of the registrant and in the
    capacities for the general partner and on the dates indicated
    below.
Signature
Title
Date
/s/  Neil
    A. Roberts
Neil
    A. Roberts
Chairman
April 20, 2010
/s/  Jeremiah
    J. Silkowski
Jeremiah
    J. Silkowski
President and Chief Executive Officer (Principal Executive
    Officer)
April 20, 2010
/s/  David
    C. Wright
David
    C. Wright
Chief Financial Officer (Principal Financial and Accounting
    Officer)
April 20, 2010
II-5
Table of Contents
INDEX TO
    EXHIBITS
Exhibit
Number
Description
1
.1
Form of Selling Agent Agreement with SQN Securities, LLC
3
.1
Certificate of Limited Partnership of SQN Alternative Investment
    Fund III, L.P.
3
.3
Amended and Restated Agreement of Limited Partnership of SQN
    Alternative Investment Fund III, L.P. (included as
    Appendix A to the prospectus)
5
.1
Opinion of Troutman Sanders LLP as to the legality of the units
    being registered
8
.1
Opinion of Troutman Sanders LLP relating to tax matters*
10
.1
Form of Escrow Agreement
10
.2
Form of Subscription Agreement (included as Appendix C to
    the prospectus)
10
.3
Form of Management, Origination and Servicing Agreement
23
.1
Consent of Holtz Rubenstein Reminick LLP — SQN AIF III
    GP, LLC
23
.2
Consent of Holtz Rubenstein Reminick LLP — SQN
    Alternative Investment Fund III, L.P.
23
.3
Consent of Troutman Sanders LLP (contained in Exhibits 5.1)
23
.4
Consent of Troutman Sanders LLP (contained in Exhibits 8.1)*
24
.1
Power of Attorney (included on the signature page to this
    Registration Statement)
*
To be Filed by Amendment