BOSTON CAPITAL TAX CREDIT FUND IV, X.X.
XXXXXXX HOUSING, L.P.
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of April 1, 1996, by SHANNON
HOUSING, L.P., a Mississippi limited partnership (the "Operating
Partnership"); Intervest Development Corporation (the "Operating
General Partner") and Intervest Corporation (the "Original Limited
Partner") for the benefit of BOSTON CAPITAL TAX CREDIT FUND IV, L.P.,
a Delaware limited partnership (the "Investment Partnership"), BOSTON
CAPITAL ASSOCIATES IV, L.P., a Delaware limited partnership ("Boston
Capital"), XXXXX & XXXXX, P.C. and certain other persons or entities
described herein.
WHEREAS, the Operating Partnership proposes to admit the
Investment Partnership as a limited partner thereof pursuant to an
Amended and Restated Agreement & Certificate of Limited Partnership of
the Operating Partnership dated as of April 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 Partnership; and
WHEREAS, Xxxxx & Xxxxx, 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 Partnership, the Operating General Partner
and the Original Limited Partner hereby agree as follows for the
benefit of the Investment Partnership, Boston Capital, Xxxxx & Xxxxx,
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 Xxxxx & Xxxxx, 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
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 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 the Operating General Partner or Original
Limited Partner are bound or any law, regulation, judgment, decree or
order applicable to the Operating Partnership or the Operating General
Partner or the 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 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 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, if any, 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,
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 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 per cent (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 any of them in any capacity.
1.04 Each of the representations and warranties
contained in the Operating Partnership Agreement is true and correct
in all material respects as of the date hereof.
1.05 Each of the material 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 material 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 nor the Operating
General Partner or Original Limited Partner have 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") agree 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 other 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, the Original Limited Partner, Boston Capital, Xxxxx &
Xxxxx, 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:
XXXXXXX HOUSING, L.P.
By: Intervest Development Corporation,
Its general partner
By: /s/ J. Stephen Nail
J. Stephen Nail, its duly
authorized President
OPERATING GENERAL PARTNER:
Intervest Development Corporation,
By: /s/ J. Stephen Nail
J. Stephen Nail, its duly
authorized President
ORIGINAL LIMITED PARTNER:
Intervest Corporation,
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, its duly
authorized Vice-President
Exhibit A
XXXXXXX HOUSING, L.P.
FACT SHEET
1A. Construction Financing
A. Lender Trustmark
National Bank of
Jackso
n, Mississippi
B. Mortgage Amount: $368,600
C. Note Date: April 11, 1996
D. Interest Rate: Trustmark
National Bank's
floati
ng Prime plus 1%
E. Term: 365 days
1B. Permanent Financing (First Stage (Assumed))
A. Lender FmHA
B. Mortgage Amount: $912,000
C. Obligation Date:
D. Assumption Date: April 11, 1996
E. Interest Rate: 1%
F. Term: 50 years
G. Amortization: 50 years
1C. Permanent Financing (Second Stage)
A. Lender: FmHA
B. Mortgage Amount: $368,600
C. Loan Agreement: TBD
D. Note Date: TBD
E. Interest Rate: 8.75% (1%)
F. Term: 50 years
G. Amortization: 50 years
2. Eligible Basis: $ 708,613 (Rehab.)
$ 884,200 (Acquisition)
3. Qualified Basis: $ 708,613 (Rehab.)
$ 884,200 (Acquisition)
4. Operating General Partner
Capital Contribution: $19,400
5. Working Capital Loan
Amount: $0
6. Type of Credit: 3.63%
7. Rent-up Schedule:
17% occupancy as of November 1, 1996
34% occupancy as of December 1, 1996
100% occupancy as of January 1, 1997
8. Projected Credit to the
Investment Partnership (99%) $572,409
A. $7,155 for 1996;
B. $57,241 per annum for
each of the years
1997 through 2005;
and
C. $50,086 for 2006.
9. Total Projected Credit to the
Operating Partnership (100%) $578,191
A. $7,227 for 1996;
B. $57,819 per annum for
each of the years
1997 through 2005;
and
C. $50,592 for 2006.
10. Tax Credit Approval:
A. Application:
1. Date: April 27, 1995
2. Amount: $ 68,921
B. Reservation:
1. Date: October 19, 1995
(1996 Credits)
2. Amount: $ 63,984
11. Apartment Complex:
A. Name: Shannon Rentals Apartments
B. Address: Xx. 0, Xxx 00X
Xxxxxxx, XX 00000
C. County: Xxx
X. Type of Project: Family
12. Area Median Income (1996): $ 35,200
13. Type of Apartments:
Unit Basic Utility
Market
Number Sq. Ft. Rent Allowance
Rent
1-Bedroom 16 623 $235 $ 58
$345.50
2-Bedroom 23 718 $260 $ 71
$409.50
3-Bedroom 8 961 $280 $126 $479.50
4-Bedroom 1
14. Annual Operating Expenses
(beginning 1996): $ 80,764
15. Replacement Reserve Account
A. Annual: $ 12,806
B. Total: $128,060
16. Operating Reserves: $0
17. Amount of Annual Asset Management
to Boston Capital: $ 750
18. Amount of Annual Partnership
Management Fee: $ 750
19. Amount of Total Depreciable
Base Allocated to Personal
Property: $ 31,419 (1.97%)
20. Completion Date:
21. Total Capital Contribution of
Investment Partnership: $331,997
22. Schedule of Capital Contributions
A. $ 149,399 on the latest to occur of (i) Tax Credit Set
Aside, (ii) closing of the Construction
Mortgage Loan, (iii) receipt of commitment
acceptable to Boston Capital for the Permanent
Mortgage Loan, or (iv) Admission Date.
B. $ 82,999 on the latest of (i) State Designation, (ii)
Completion, (iii) Cost Certification or (iv)
receipt of an updated title insurance policy
satisfactory to Investment Limited Partner.
C. $ 82,999 on the latest of (i) the Initial 100% Occupancy
Date, (ii) Permanent Mortgage Commencement or
(iii) Breakeven;
D. $ 16,600 on receipt of a tax return and audited
financial statement for the year in which
Breakeven occurred.
23. Fees and Other Items to be paid from Capital Contributions
Construction and Development
Fee: $ 56,680
Financing Shortfall: $275,317
24. Operating General Partner: Intervest Development
Corporation
Address: 0000 X-00 X. Xxxxxxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Contact Person: J. Stephen Nail
25. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating General Partner: 1% 60% 70%
Special Limited Partner: 0% .001%
0%
Investment Partnership: 99% 39.999% 30%
26. Management Agent: Intervest Corporation
Contact Person: Xxxxxx X. Xxxxxx
Address: 0000 X-00 X. Xxxxxxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Amount of Fees:
27. Builder: Intervest Construction
Address: 0000 X-00 X. Xxxxxxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Amount of Compensation: $571,330
Builder's Profit:
28. Architect: Xxxxxx X. Xxx
Address: 000 Xxxx Xxxxxxx
X.X.Xxx 000
Xxxxxxx, XX 00000
Phone:
Amount of Fee: $ 34,280
29. Auditor and Tax Return Preparer: Xxxxxxxx, Xxxxxxx, Xxxx
& Company
X.X. Xxx 000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
30. Federal Taxpayer ID Number: 00-0000000
31. Building Breakdown:
A. # of Xxxxx 00
X. # xx Xxxxxxxxx 0
C. BIN
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
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 per cent 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 per cent or more of any class of securities of the
Operating Partnership or ten per cent 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-
xxxxxx 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 Xxxxx 00, Xxxxxx Xxxxxx 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).
13708_1
