BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
CENTURY EAST APARTMENTS II LIMITED PARTNERSHIP
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of December 1, 1996, by CENTURY EAST
APARTMENTS II LIMITED PARTNERSHIP, a North Dakota limited partnership
(the
"Operating Partnership");R.S., INC., a North Dakota Corporation (the
"Operating
General Partner"); and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Original Withdrawing
Limited
Partner") for the benefit of BOSTON CAPITAL TAX CREDIT FUND IV, L.P., a
Delaware limited partnership (the "Investment Partnership"), and BOSTON
CAPITAL
ASSOCIATES IV, L.P. a Delaware limited partnership, (collectively
hereinafter
referred to as "Boston Capital"), ▇▇▇▇▇ & ▇▇▇▇▇, P.C. and certain other
persons
or entities described herein.
WHEREAS, the Operating Partnership proposes to admit the Investment
Part-
nership as a limited partner thereof pursuant to a Second Amended and
Restated
Agreement of Limited Partnership of the Operating Partnership dated as
of
December 1, 1996 (the "Operating Partnership Agreement"), in accordance
with
which the Investment Partnership will make substantial capital
contributions to
the Operating Partnership;
WHEREAS, the Investment Partnership and Boston Capital have relied upon
certain information and representations described herein in evaluating
the
merits of investment by the Investment Partnership in the Operating
Partner-
ship; and
WHEREAS, ▇▇▇▇▇ & ▇▇▇▇▇, P.C. as counsel for the Investment Partnership,
will rely upon such information and representations in connection with
its
delivery of certain opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Operating Partnership Agreement and become a limited partner of the
Operating
Partnership, and for $1.00 and other good and valuable consideration,
the
receipt and adequacy of which are hereby acknowledged, the Operating
Partner-
ship, the Operating General Partner and the Withdrawing Original Limited
Partner hereby agree as follows for the benefit of the Investment
Partnership,
Boston Capital, ▇▇▇▇▇ & ▇▇▇▇▇, P.C. and certain other persons
hereinafter
described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the Operating General
Partners
The Operating Partnership and the Operating General Partner
jointly and severally represent, warrant and certify to the Investment
Partnership, Boston Capital, and ▇▇▇▇▇ & ▇▇▇▇▇, P.C. that, with
respect to the Operating Partnership, as of the date hereof:
1.01 The Operating Partnership is duly organized
and in good standing as a limited partnership pursuant to the laws of
the state of its formation with full power and authority to own its
apartment complex (the "Apartment Complex") and conduct its business;
the Operating Partnership, the Operating General Partner and the
Withdrawing Original Limited Partner have the power and authority to
enter into and perform this Certification and Agreement; the execution
and delivery of this Certification and Agreement by the Operating
Partnership, the Operating General Partner and the Withdrawing
Original Limited Partner have been duly and validly authorized by all
necessary action; the execution and delivery of this Certification and
Agreement, the fulfillment of its terms and consummation of the
transactions contemplated hereunder do not and will not conflict with
or result in a violation, breach or termination of or constitute a
default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of
time or both) any other agreement, indenture or instrument by which
the Operating Partnership or any Operating General Partner or
Withdrawing Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Operating Partnership or
any Operating General Partner or any Withdrawing Original Limited
Partner or any of their respective properties; this Certification and
Agreement constitutes the valid and binding agreement of the Operating
Partnership, the Operating General Partner and the Withdrawing
Original Limited Partner, enforceable against each of them in
accordance with its terms.
1.02 The Operating General Partner has delivered to
the Investment Partnership, Boston Capital or their affiliates all
documents and information requested, and to General Partner's
knowledge, there is no other information which would be material to a
prudent investor in deciding whether to invest in the Operating
Partnership. All factual information, including without limitation the
information set forth in Exhibit A hereto, provided to the Investment
Partnership, Boston Capital or their affiliates either in writing or
orally, did not, at the time given, and does not, on the date hereof,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they are made. Since the date of the financial statements for
the Operating General Partner previously delivered, there has been no
material adverse change in the financial position of the Operating
General Partner. The estimates of occupancy rates, operating
expenses, cash flow, depreciation and tax credits set forth on Exhibit
A are reasonable in light of the knowledge and experience of the
Operating General Partner.
1.03 As of the date hereof, each of the
representations contained in Exhibit B attached hereto is true,
accurate and complete as to each of the Operating Partnership, the
Operating General Partner and the Withdrawing Original Limited Partner
and as to any of their affiliates, any of their predecessors and their
affiliates' predecessors, any of their directors, officers, general
partners and/or beneficial owners of ten percent (10%) or more of any
class of their equity securities (beneficial ownership meaning the
power to vote or direct the vote and/or the power to dispose or direct
the disposition of such securities), as the case may be, and any
promoters presently connected with them in any capacity.
1.04 Each of the representations and warranties
contained in the Operating Partnership Agreement is true and correct
as of the date hereof.
1.05 Each of the covenants and agreements of the
Operating Partnership and the Operating General Partner contained in
the Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required on or
prior to the date hereof.
1.06 All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have been
satisfied.
1.07 No default has occurred and is continuing
under the Operating Partnership Agreement or any of the Project
Documents (as said term is defined in the Operating Partnership
Agreement) for the Operating Partnership.
1.08 The Operating General Partner agrees to take
all actions necessary to claim the Projected Credit, including,
without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
1.09 No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
1.10 The Operating Partnership has the sole
responsibility to pay all maintenance and operating costs, including
all taxes levied and all insurance costs, attributable to the
Apartment Complex.
1.11 The Operating Partnership, except to the
extent it is protected by insurance and excluding any risk borne by
lenders, bears the sole risk of loss if the Apartment Complex is
destroyed or condemned or there is a diminution in the value of the
Apartment Complex.
1.12 No person or entity except the Operating
Partnership has the right to any proceeds, after payment of all
indebtedness, from the sale, refinancing, or leasing of the Apartment
Complex.
1.13 No Operating General Partner is related in any
manner to the Investment Partnership, nor is any Operating General
Partner acting as an agent of the Investment Partnership.
1.14 The Apartment Complex contains no substance
known to be hazardous, such as hazardous waste, lead-based paint,
asbestos, methane gas, urea formaldehyde insulation, oil, toxic
substances, underground storage tanks, polychlorinated biphenyls
(PCBs), and radon; the Apartment Complex is not affected by the
presence of oil, toxic substances, or other pollutants that could be a
detriment to the Apartment Complex nor is the Operating Partnership in
violation of any local, state, or federal law or regulation; and no
violation of the Clean Air Act, Clean Water Act, Resource Conservation
and Recovery Act, Toxic Substance Control Act, Safe Drinking Water
Control Act, Comprehensive Environmental Resource Compensation and
Liability Act, or Occupational Safety and Health Act has occurred or
is continuing. Neither the Operating Partnership, any Operating
General Partner, any Withdrawing Original General Partner nor any
Withdrawing Original Limited Partner has received any notice from any
source whatsoever of the existence of any such hazardous condition
relating to the Apartment Complex or of any violation of any local,
state or federal law or regulation with respect to the Apartment
Complex.
1.15 The fair market value of the Apartment Complex
exceeds the total amount of indebtedness encumbering the Apartment
Complex and is expected to continue to do so throughout the term of
such indebtedness.
2. Indemnification
2.01 The Operating General Partner (for purposes of
this Section 2.01, the "Indemnifying Parties" or, individually, an
"Indemnifying Party") agrees to indemnify and hold harmless the
Investment Partnership and Boston Capital (for purposes of this
Section 2.01, the "Indemnified Parties" or, individually, an
"Indemnified Party") and each officer, director, employee and person,
if any, who controls any party against any losses, claims, damages or
liabilities (collectively, "Liabilities"), joint or several, to which
any Indemnified Party or such officer, director, employee or
controlling person may become subject, insofar as such Liabilities or
actions in respect thereof arise out of or are based upon (i) a breach
by such Indemnifying Party of any of his representations, warranties
or covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this Certification
and Agreement or (ii) liability under any statute, regulation,
ordinance, or other provision of federal, state, or local law or any
civil action pertaining to the protection of the environment or
otherwise pertaining to public health or employee health and safety,
including, without limitation, protection from hazardous waste, lead--
based paint, asbestos, methane gas, urea formaldehyde insulation, oil,
toxic substance, underground storage tanks, polychlorinated biphenyls
(PCBs), and radon; and to reimburse each such Indemnified Party and
each such officer, director, employee or controlling person for any
legal or other expenses reasonably incurred by it or them in
connection with investigating or defending against any such Liability
or action; provided, however, that the Indemnifying Party shall not be
required to indemnify any Indemnified Party or any such officer,
director, employee or controlling person for any payment made to any
claimant in settlement of any Liability or action unless such payment
is approved by the Indemnifying Party or by a court having
jurisdiction of the controversy. This indemnity agreement shall remain
in full force and effect notwithstanding any investigation made by any
party hereto, shall survive the termination of any agreement which
refers to this indemnity and shall be in addition to any liability
which the Indemnifying Party may otherwise have.
2.02 No Indemnifying Party shall be liable under
the indemnity agreements contained in Section 2.01 unless the
Indemnified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any such of
its officers, directors, employees or controlling persons, but failure
to notify an Indemnifying Party of any such claim shall not relieve it
from any liability which it may have to the Indemnified Party or any
such of its officers, directors, employees or controlling persons
against whom action is brought otherwise than on account of its
indemnity agreement contained in Section 2.01. In case any action is
brought against any Indemnified Party or any such of its officers,
directors, employees or controlling persons upon any such claim, and
it notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to participate at
its own expense in the defense, or, if it so elects, in accordance
with arrangements satisfactory to the any Indemnifying Party or
parties similarly notified, to assume the defense thereof, with
counsel who shall be satisfactory to such Indemnified Party or any
such of its officers, directors, employees or controlling persons and
any other Indemnified Parties who are defendants in such action; and
after notice from the Indemnifying Party to such Indemnified Party or
any such of its officers, directors, employees or controlling persons
of its election so to assume the defense thereof and the retaining of
such counsel by the Indemnifying Party, the Indemnifying Party shall
not be liable to such Indemnified Party or any such of its officers,
directors, employees or controlling persons for any legal or other
expenses subsequently incurred by such Indemnified Party or any such
of its officers, directors, employees or controlling persons in
connection with the defense thereof, other than the reasonable costs
of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made
solely for the benefit of the Operating Partnership, the Operating
General Partner, Boston Capital, ▇▇▇▇▇ & ▇▇▇▇▇, P.C., and the
Investment Partnership (and, to the extent provided in Section 2, the
officers, directors, partners, employees and controlling persons
referred to therein), and their respective successors and assigns, and
no other person shall acquire or have any right under or by virtue of
this Agreement.
3.02 This Certification and Agreement may be
executed in several counterparts, each of which shall be deemed to be
an original, all of which together shall constitute one and the same
instrument.
3.03 Terms defined in the Operating Partnership
Agreement and used but not otherwise defined herein shall have the
meanings given to them in the Operating Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP:
CENTURY EAST APARTMENTS II LIMITED PARTNERSHIP
By: R.S., INC.,
its general partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
OPERATING GENERAL PARTNER:
R.S., INC.,
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
ORIGINAL WITHDRAWING LIMITED PARTNER:
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CENTURY EAST APARTMENTS II LIMITED PARTNERSHIP
Exhibit A
FACT SHEET
1. Sources and Uses of Funds
A. Sources
Permanent Mortgage $549,008 (58%)
General Partner
Capital $3,750 ( 1%)
I.L.P. Capital $371,183 (41%)
Total $923,940 (100%)
B. Uses
Total Construction
Cost $795,000 (86%)
Total Soft Costs $58,940 ( 6%)
Land $70,000 ( 8%)
Total $923,940 (100%)
2. Construction Financing
A. Lender: Northwestern
Savings Bank, f.s.b.
B. Principal Amount: $550,000
C. Term:
D. Date of Note:
E. Interest Rate:
F. Guarantors:
3. Permanent Financing
A. Lender: Northwestern Savings Bank,f.s.b.
B. Principal Amount: $550,000
C. Term: 30 years
D. Amortization: 30 years
E. Interest Rate: 8.559% as one year
adjustable to be 350 basis points
over 11th District Cost of Funds
4. Eligible Basis: $839,915
5. Qualified Basis: $839,915
6. GP Capital Contribution: $3,750
7. Type of Credit: 8.89%
8. Rent-up Schedule: 100% by January 31, 1995
9. Projected Credit to the
Investment Partnership: $618,638
A. $30,626 for 1996;
B. $73,502 per annum for each of the years 1997 through
2004;
10. Total Projected Credit to the
Operating Partnership: $624,887
A. $30,935 for 1996;
B. $74,244 per annum for each of the years 1997 through
2004;
11. Tax Credit Approval:
Application
1. Date October 26, 1992
2. Amount: $74,925
Reservation
1. Date December 28, 1992
2. Credit Amount Reserved $74,244
12. Apartment Complex:
A. Name: Century East Apartments II
B. Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
C. County: Burleigh
D. Type of Project: Family
13. Area Median Income: $41,300
14. Type of Apartments:
24 units Unit Basic Utility
Number Sq. Ft. Rent Allowance
1-Bedroom 1 635 $360 $19
2-Bedroom 2 920 $435 $25
2-Bedroom 3 920 $420 $25
3-Bedroom 4 920 $445 $25
2-Bedroom 8 920 $395 $25
3-Bedroom 2 1,035 $490 $31
3-Bedroom 4 1,035 $500 $31
15. Annual Operating Expenses
(beginning 1996): $52,382
(plus approx. 3% annual increase)
16. Reserve Accounts:
Replacement Reserves
(beginning 1996): $4,800 per annum
17. Amount of Asset Management Fee
to Boston Capital:
(beginning 1996) $3,000
18. Amount of Annual Partnership
Management Fee: $3,000
(beginning 1996)
19. Amount of Total Depreciable
Base Allocated to Personal
Property: $27,718 (3.30%)
20. Projected Completion Date:
21. Total Capital Contribution of
Investment Partnership: $371,183
22. Schedule of Capital Contributions
A. $185,592 on the latest to occur of (i) Admission Date, (ii) Tax
Credit Set Aside, (iii) Permanent Mortgage Commitment, or (iv)
Construction Mortgage Closing;
B. $ 92,796 on upon the latest to occur of (i) the Completion
Date, (ii) Cost Certification, (iii) receipt of an updated title
insurance policy satisfactory to the Investment Limited Partner, (iv)
compliance with Due Diligence Recommendations satisfactory to the
Investment Limited Partner, (v) receipt of full and final lien waiver
accompanied by a payoff letter from General Contractor stating that
all amounts payable to it have been paid in full and that the
Partnership has complied with the terms of the Construction Contract,
or (vi) receipt by the Investment Limited Partner of an estoppel
letter from each Lender satisfactory to it; (vii) State Designation;
(vii) Carryover Certification; or (ix) receipt by the Partnership of a
"carryover allocation" conforming to the requirements of Section 42
(h)(1)(E) of the Code.
C. $ 74,236 on the latest to occur of (i) the Initial 100%
Occupancy Date, (ii) commencement of the Permanent Mortgage Loan,
(iii) Rental Achievement or (iv) satisfaction of all of the conditions
to the payment of the First Installment; and
D. $ 18,559 upon receipt of a tax return and audited financial
statement for the year in which Rental Achievement occurs.
23. Fees and Other Items to be paid from Capital Contributions
Financing Shortfall: $371,183
24. General Partners: R.S., Inc.
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
25. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating
General Partner: 1% 50% 80%
Investment
Partnership: 99% 49.999% 20%
Special Limited
Partner: 0% .001% 0%
26. Management Agent: Valley Rental Service
Contact Person: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Amount of Fees: 5% of net income
27. Builder: Valley Realty, Inc.
Contact Person: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Amount of Compensation: $795,000
Builder's Profit: $2-3%
29. Architect: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Architect
Amount of Fee: $30,000
30. Auditor: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
31. Tax Return Preparer: (See Auditor)
32. Federal Taxpayer ID Number: ▇▇-▇▇▇▇▇▇▇
33. Building ID Numbers: ND 92-00015
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partner and Original Limited
Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partner and its
Withdrawing Original Limited Partner (as identified on the
Certification and Agreement to which this Certificate is attached as
Exhibit B) hereby represent to you that neither (i) the Operating
Partnership, (ii) any predecessor of the Operating Partnership, (iii)
any of the Operating Partnership's affiliates ("affiliate" meaning a
person that controls or is controlled by, or is under common control
with, the Operating Partnership), (iv) any sponsor (meaning any person
who (1) is directly or indirectly instrumental in organizing the
Operating Partnership or (2) will directly or indirectly manage or
participate in the management of the Operating Partnership or (3) will
regularly perform, or select the person or entity who will regularly
perform, the primary activities of the Operating Partnership), (v) any
officer, director, principal or general partner of the Operating
Partnership or of any sponsor, (vi) any officer, director, principal,
promoter or general partner of the Operating General Partner, (vii)
any beneficial owner of ten percent or more of any class of the equity
securities of the Operating Partnership or of any sponsor (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities), (viii)
any promoter of the Operating Partnership (meaning any person who,
acting alone or in conjunction with one or more other persons,
directly or indirectly has taken, is taking or will take the
initiative in founding and organizing the business of the Operating
Partnership or any person who, in connection with the founding and
organizing of the business or enterprise of the Operating Partnership,
directly or indirectly receives in consideration of services or
property, or both services and property, ten percent or more of any
class of securities of the Operating Partnership or ten percent or
more of the proceeds from the sale of any class of such securities;
provided, however, a person who receives such securities or proceeds
either solely as underwriting commissions or solely in consideration
of property shall not be deemed a promoter if such person does not
otherwise take part in founding and organizing the enterprise)
presently connected with the Operating Partnership in any capacity:
(1) Has filed a registration statement which is the subject of
any pending proceeding or examination under the securities laws of any
jurisdiction, or which is the subject of any refusal order or stop
order thereunder entered within five years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere to a misde-
▇▇▇▇▇▇ or felony or, within the last ten years, been held liable in a
civil action by final judgment of a court based upon conduct showing
moral turpitude in connection with the offer, purchase or sale of any
security, franchise or commodity (which term, for the purposes of this
Certificate shall hereinafter include commodity futures contracts) or
any other aspect of the securities or commodities business, or
involving racketeering, the making of a false filing or a violation of
Sections 1341, 1342 or 1343 of Title 18 of the United States Code or
arising out of the conduct of the business of an issuer, underwriter,
broker, dealer, municipal securities dealer, or investment adviser, or
involving theft, conversion, misappropriation, fraud, breach of
fiduciary duty, deceit or intentional wrongdoing including, but not
limited to, forgery, embezzlement, obtaining money under false
pretenses, larceny fraudulent conversion or misappropriation of
property or conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five years of a misdemeanor or felony
which is a criminal violation of statutes designed to protect
consumers against unlawful practices involving insurance, securities,
commodities, real estate, franchises, business opportunities, consumer
goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof entered or
issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"), the
Commodities Futures Trading Commission or the U.S. Postal Service, or
to (b) any administrative order or judgment, arising out of the
conduct of the business of an underwriter, broker, dealer, municipal
securities dealer, or investment adviser, or involving deceit, theft,
fraud or fraudulent conduct, or breach of fiduciary duty, or which is
based upon a state banking, insurance, real estate or securities law
or (c) has been the subject of any administrative order, judgment or
decree in any state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of material
fact or omitting to state material facts, was found;
(4) Is subject to any pending proceeding in any jurisdiction
relating to the exemption from registration of any security or
offering, or to any order, judgment or decree in which registration
violations were found or which prohibits, denies or revokes the use of
any exemption from registration in connection with the offer, purchase
or sale of securities, or to an SEC censure or other order based on a
finding of false filing;
(5) Is subject to any order, judgment or decree of any court or
regulatory authority of competent jurisdiction entered within five
years prior to the date hereof, temporarily, preliminarily or
permanently restraining or enjoining such persons from engaging in or
continuing any conduct or practice in connection with any aspect of
the securities or commodities business or involving the making of any
false filing or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or which restrains or enjoins such person from
activities subject to federal or state statutes designed to protect
consumers against unlawful or deceptive practices involving insurance,
banking, commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States Postal
Service false representation order entered within five years prior to
the date hereof, or is subject to a temporary restraining order or
preliminary injunction with respect to conduct alleged to have
violated section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code;
(6) Is suspended or expelled from membership in, or suspended or
barred from association with a member of, an exchange registered as a
national securities exchange, an association registered as a national
securities association, or any self-regulatory organization registered
pursuant to the Securities Exchange Act of 1934, or a Canadian
securities exchange, or association or self-regulatory organization
operating under the authority of the Commodity Futures Trading
Commission, or is subject to any currently effective order or order
entered within the past five years of the SEC, the Commodity Futures
Trading Commission or any state securities administrator denying
registration to, or revoking or suspending the registration of, such
person as a broker-dealer, agent, futures commission merchant,
commodity pool operator, commodity trading adviser or investment
adviser or associated person of any of the foregoing, or prohibiting
the transaction of business as a broker-dealer or agent;
(7) Has, in any application for registration or in any report
required to be filed with, or in any proceeding before the SEC or any
state securities commission or any regulatory authority willfully made
or caused to be made any statement which was at the time and in the
light of the circumstances under which it was made false or misleading
with respect to any material fact, or has willfully omitted to state
in any such application, report or proceeding any material fact which
is required to be stated therein or necessary in order to make the
statements made, in the light of the circumstances under which they
are made, not misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or statement
in a timely manner;
(8) Has willfully violated any provision of the Securities Act
of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act
of 1939, the Investment Advisers Act of 1940, the Investment Company
Act of 1940, the Commodity Exchange Act of 1974 or the securities laws
of any state, or any predecessor law, or of any rule or regulation
under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded, induced
or procured the violation by any other person of any of the statutes
or rules or regulations referred to in subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if he is a
broker-dealer, or his employees, if he is an investment adviser, but
no person shall be deemed to have failed in such supervision if there
have been established procedures, and a system for applying such
procedures, which would reasonably be expected to prevent and detect,
insofar as practicable, any violation of statutes, rules or orders
described in subsection (8) and if such person has reasonably
discharged the duties and obligations incumbent upon him by reason of
such procedures and system without reasonable cause to believe that
such procedures and system were not being complied with;
(11) Is subject to a currently effective state administrative
order or judgment procured by a state securities administrator within
five years prior to the date hereof or is subject to a currently
effective United States Postal Service fraud order or has engaged in
dishonest or unethical practices in the securities business or has
taken unfair advantage of a customer or is the subject of sanctions
imposed by any state or federal securities agency or self-regulatory
agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his obligations
as they mature, or is in such financial condition that he cannot
continue his business with safety to his customers, or has not
sufficient financial responsibility to carry out the obligations
incident to his operations or has been adjudged a bankrupt or made a
general assignment for the benefit of creditors; or
(13) Is selling or has sold, or is offering or has offered for
sale, in any state securities through any unregistered agent required
to be registered under the Pennsylvania Securities Act of 1972, as
amended (the "Pennsylvania Act") or for any broker-dealer or issuer
with knowledge that such broker-dealer or issuer had not or has not
complied with the Pennsylvania Act.
If the Operating Partnership is subject to the requirements of
Section 12, 14 or 15(d) of the Securities Exchange Act of 1934, then
the Operating Partnership has filed all reports required by those
Sections to be filed during the 12 calendar months preceding the date
hereof (or for such shorter period that the Operating Partnership was
required to file such reports).
12150_1
