BOSTON CAPITAL TAX CREDIT FUND III L.P.
and
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
_______________________________________________
Certification and Agreement
of
Xxxxxx Associates Limited Partnership
_______________________________________________
CERTIFICATION AND AGREEMENT made as of August 1, 1996 by XXXXXX
ASSOCIATES LIMITED PARTNERSHIP, a Colorado limited partnership (the "Operating
Partnership"); and XXXXXXX HOUSING LIMITED PARTNERSHIP, a Colorado limited
partnership (the "Operating General Partner"); for the benefit of BOSTON
CAPITAL TAX CREDIT FUND III L.P., a Delaware limited partnership and BOSTON
CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited partnership (the
"Investment Partnerships"), BOSTON CAPITAL ASSOCIATES III L.P., a Delaware
limited partnership and BOSTON CAPITAL ASSOCIATES IV L.P., a Delaware limited
partnership (collectively, "Boston Capital"), XXXXXXXXX, POWERS & XXXXXXX, P.C.
of Boston, Massachusetts ("SPN") and certain other persons or entities
described herein.
WHEREAS, a Third Amended and Restated Agreement of Limited Partnership of
the Operating Partnership dated as of August 1, 1996 (the "Operating
Partnership Agreement") is about to be executed, in accordance with which the
Investment Partnerships will make substantial capital contributions to the
Operating Partnership;
WHEREAS, the Investment Partnerships and Boston Capital have relied upon
certain information and representations described herein in evaluating the
merits of investment by the Investment Partnerships in the Operating
Partnership; and
WHEREAS, SPN, as counsel for the Investment Partnerships will rely upon
such information and representations in connection with this transaction.
NOW, THEREFORE, to induce the Investment Partnerships to enter into the
Operating Partnership Agreement and continue as limited partners 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 and the Operating General Partner hereby agree as follows for the
benefit of the Investment Partnerships, Boston Capital, SPN and certain other
persons hereinafter described.
1. Representations, Warranties and Covenants of the Operating
Partnership and the Operating General Partner
The Operating Partnership and the Operating General Partner jointly and
severally represent, warrant and certify to the Investment Partnerships, Boston
Capital and SPN 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 and the Operating General
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 and the Operating General 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 is bound or any law, regulation, judgment,
decree or order applicable to the Operating Partnership or the Operating
General Partner or any of their respective properties; this Certification and
Agreement constitutes the valid and binding agreement of the Operating
Partnership and the Operating General Partner, enforceable against each of them
in accordance with its terms.
1.02 The Operating General Partner has delivered to the Investment
Partnerships, 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. The Investment Partnerships, Boston Capital and
their affiliates hereby acknowledge that they have been given all documents and
information they have requested and satisfactory answers to all questions they
have asked. All factual information, including without limitation the
information set forth in Exhibit A hereto, provided to the Investment
Partnerships, 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 and its affiliates. The amounts set forth in Section 1 of Exhibit A
are true and correct and any increase in the amounts set forth therein as
"Applications of Funds" shall be the responsibility of the General Partner and
the Developer and shall not be paid for with Partnership funds.
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 and the Operating General 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 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 Partnerships as the
investment limited partners of the Operating Partnership contained in the
Second Amended and Restated Agreement of Limited Partnership of the Operating
Partnership 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 The Operating General Partner is not related in any manner to the
Investment Partnerships, nor is the Operating General Partner acting as an
agent of the Investment Partnerships.
1.14 To the best of the knowledge of the Operating General Partner,
except as may be set forth in the Environmental Reports provided to the
Investment Partnerships: 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; 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; and neither the Operating
Partnership nor the Operating General 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.
1.16 The Project does not receive any federal assistance under the HUD
Section 8 Program or any other federal assistance program.
1.17 The Project is not in violation of any State or local health or
building code or regulation.
2. Indemnification
2.01 The Operating General Partner (for purposes of this Section 2.01,
the "Indemnifying Party") agrees to indemnify and hold harmless the Investment
Partnerships, 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 its 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 in
connection with the Apartment Complex 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 arrange-
ments satisfactory to any other Indemnifying Party or parties similarly noti-
fied, 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, SPN
and the Investment Partnerships (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:
XXXXXX ASSOCIATES LIMITED
PARTNERSHIP, a Colorado limited
partnership, by its general partner,
Xxxxxxx Housing Limited Partnership,
a Colorado limited partnership, by
its general partner, Paloma LLC, a
Colorado limited liability company
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Manager
OPERATING GENERAL PARTNER:
XXXXXXX HOUSING LIMITED PARTNERSHIP,
a Colorado limited partnership, by
its general partner, Paloma LLC, a
Colorado limited liability company
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Manager
Exhibit A
FACT SHEET
XXXXXX ASSOCIATES LIMITED PARTNERSHIP
1. Sources and Uses of Funds
SOURCES OF FUNDS APPLICATIONS OF FUNDS
Permanent Financing 3,685,000 Land 522,890
Investment Limited
Partner Capital 2,993,708 Site Work 791,044
General Partner
Capital 38,743 Construction Hard
Costs 4,597,167
Deferred Fees 975,000 Construction Soft
Costs 806,350
Development Fees 975,000
TOTAL $7,692,451 TOTAL $7,692,451
2. Financing
Construction
A. Lender: Bank One Arizona, NA
B. Mortgage Amount: $5,800,000
C. Note Date: February 27, 1995
D. Interest Rate: Prime + 1%
E. Amortization: Interest only
F. Maturity Date: November 30, 1996
G. Guarantors: Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx
and Xxxxxxx X. Xxxxx
Permanent
A. Lender: Massachusetts Mutual Life
Insurance Company
B. Mortgage Amount: $3,685,000
C. Note Date: October 1996 (expected)
D. Interest Rate: 8.77%
E. Amortization: 30 years
F. Maturity Date: 25 years
G. Guarantors: None
3. Eligible Basis: $6,124,387
4. Qualified Basis: $6,124,387
5. GP Capital Contribution: $38,743
6. Type of Credit: 9%, New Construction
7. Rent-up Schedule: March 1996 - 14%;
April 1996 - 45%;
May 1996 - 69%;
June 1996 - 83%;
July 1996 - 100%.
8. Projected Credit to the
Investment Partnerships:
A. $258,913 for 1996,
B. $455,034 per annum for each of the years 1997
through 2005 (inclusive), and
C. $147,601 for 2006.
9. Total Projected Partnership Credit:
A. $310,539 for 1996,
B. $459,630 per annum for each of the years 1997
through 2005 (inclusive), and
C. $149,091 for 2006.
10. Tax Credit Application:
A. Reservation Date: September 30, 1993
B. Reservation Amount: $459,630/year
C. Carryover Allocation Date: December 30, 1993
D. Carryover Allocation Amount: $459,630/year
E. LIHC Rate on 8609: 8.44%
11. Apartment Complex:
A. Name: Xxxxxx'x Crossing
B. Address: 0000 Xxxxx Xxxxx
Xxxxxx, Xxxxx
C. County: Dallas, Texas
D. MSA: Dallas
E. Type of Project: Multifamily/New Construction
12. Median Income: $48,300 (Family of Four, 1996)
13. Kind of Apartments:
Number of Number of Total Basic Utility
Bedrooms Units Sq. Ft. Rent Allowance
2 36 1025/unit $652/month $56
3 56 1285/unit $753/month $65
3 1 1500/unit $753/month $65
14. Rental Assistance: N/A
15. Annual Operating Expense: $290,430 (plus 3% annual
(beginning 1996) inflation)
16. Replacement Reserve Account: $13,950/year
(beginning 1996)
17. Maximum Yearly Distribution of
Cash Flow permitted: N/A
18. Amount of Asset Management Fee
to Boston Capital: $12,500/year
(commencing 1996 (pro rated))
19. Amount of Total Depreciable Basis
Allocated to Personal Property: $314,342
20. Completion Date: December 31, 1995
21. Total Capital Contribution of
Investment Partnerships: $2,993,708
22. Schedule of Capital Contributions
Amount Installment Conditions on Capital
Contributions
$2,394,966 First Latest of (i) Admission; (ii)
Permanent Mortgage Commitment
Date; (iii) receipt of
updated Title Policy; (iv)
satisfaction of Due Diligence
Requirements; (v) SHLP Pay-
Off Letter; (vi) Lender
Estoppel Letter; and (vii)
100% Occupancy Date.
$598,742 Second Later of (i) Permanent
Mortgage Commencement and
(ii) Rental Achievement.
23. Fees and Special Distributions to be paid from Capital Contributions:
N/A
24. General Partner: Xxxxxxx Housing Limited Partnership
Contact: Xxxxx XxXxxxxx
Address: 0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
25. Ownership Interests:
Partner Normal Capital Cash
Operations Transactions Flow
General Partners 1% 90% 90%
Investment Limited
Partners 99% 9.999% 10%
Special Limited
Partner 0% .001% 0%
26. Management Agent: Great West Management Realty, Ltd.
Contact: Xxx Xxxxxx
Address: 0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Amount of Fee: 5% of collected revenues
27. Builder: Xxxxxxx Housing Limited Partnership
Builder's Profit and
Overhead: See Construction Contract formula
(to be determined)
28. Tax Return Preparer/Auditor: Xxxxxx Xxxxxxxx, LLP
Address: 0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
29. Partnership Federal ID Number: 00-0000000
30. Operating Deficit Guarantees: Unlimited through fifth
anniversary of Rental Achievement
31. Building Breakdown:
BIN # of Units
TX-93-01780 8
TX-93-01781 12
TX-93-01782 12
TX-93-01783 12
TX-93-01784 12
TX-93-01785 12
TX-93-01786 12
TX-93-01787 12
Manager's Unit 1
TOTAL 93
Exhibit B
Certificate of Operating Partnership and
Operating General Partner Re: Lack of Disqualifications
The Operating Partnership and its Operating General Partner (as
identified on the 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
any 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
juris diction, or which is the subject of any refusal order or stop
order there under entered within five years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere to a
misdemeanor 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).
