BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 24)
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 25)
LAURELWOOD PARK LIMITED PARTNERSHIP
_______________________________________
CERTIFICATION AND AGREEMENT
_______________________________________
CERTIFICATION AND AGREEMENT made as of February _, 1996 by
LAURELWOOD PARK LIMITED PARTNERSHIP, a Georgia limited partnership
(the "Operating Partnership"); THE NORSOUTH CORPORATION (the
"Operating General Partner"); and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Original
Limited Partner") for the benefit of BOSTON CAPITAL TAX CREDIT FUND
IV L.P. (Series 24) and BOSTON CAPITAL CORPORATE TAX CREDIT FUND
IV L.P. (Series 25) each a Delaware limited partnership (the
"Investment Partnerships"), BOSTON CAPITAL ASSOCIATES IV L.P. ("Boston
Capital"), PEABODY & ▇▇▇▇▇ and certain other persons or entities
described herein.
WHEREAS, the Operating Partnership proposes to admit the
Investment Partnerships as limited partners thereof pursuant to an
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership dated as of February 1, 1996 (the "Operating Partnership
Agreement"), 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, Peabody & ▇▇▇▇▇, as counsel for the Investment
Partnerships, 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 Partnerships to enter
into the Operating Partnership Agreement and become 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, the Operating General Partner
and the Original Limited Partner hereby agree as follows for the
benefit of the Investment Partnerships, Boston Capital, Peabody &
▇▇▇▇▇ and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership, the Operating General
Partner and the Original Limited Partner
The Operating Partnership, the Operating General Partner and the
Original Limited Partner jointly and severally represent, warrant and
certify to the Investment Partnerships, Boston Capital, and Peabody &
▇▇▇▇▇ 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 and in North Carolina 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 any Operating General Partner or Original
Limited Partner is bound or any law, regulation, judgment, decree or
order applicable to the Operating Partnership or any Operating General
Partner or 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 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.
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. There has been no material adverse change in the
financial position of the Operating General Partner from that shown on
the December 31, 1994 financial statement of the 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 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 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 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 Partnerships, nor is any Operating General
Partner acting as an agent of the Investment Partnerships.
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 biphenals (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 any Operating General Partner or
Original Limited Partners 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 Payment of $273,687 of the total Development Fee
of $521,603 by December 31, 1995 was reasonable for the services
rendered to the Partnership for the development of the Apartment
Complex by such date and is not a prepayment for future services;
furthermore, The Norsouth Corporation will report the $273,687 as
income on its 1995 income tax returns.
2. Indemnification
2.01 The Operating General Partner and the Original
Limited Partner (for purposes of this Section 2.01, the "Indemnifying
Parties" or, individually, an "Indemnifying Party") jointly and
severally agree to indemnify and hold harmless the Investment
Partnerships 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 biphenals
(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 Parties 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 Parties 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 Parties 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 any 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, Peabody & ▇▇▇▇▇
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 Certification and 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:
LAURELWOOD PARK LIMITED PARTNERSHIP
By: THE NORSOUTH CORPORATION,
General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President
OPERATING GENERAL PARTNER:
THE NORSOUTH CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
ORIGINAL LIMITED PARTNER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Exhibit A
LAURELWOOD PARK LIMITED PARTNERSHIP
FACT SHEET
1. Construction Mortgage
A. Lender: Midland Mortgage
Investment Corporation
B. Mortgage Amount: $2,674,000
C. Note Date: September 7, 1995
D. Interest Rate: 10.5%
E. Term: 24 months
F. Guarantors: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and
The Norsouth
Corporation
G. Fees: $53,480
2. Permanent Mortgage
A. Lender Midland
Affordable Housing
Group Trust
B. Maximum Mortgage Amount: $2,115,000
C. Obligation Date: September 1,1995
D. Interest Rate: 8.875%
E. Term: 18 years
F. Amortization Term: 30 years
G. Fees: $63,450
3. Eligible Basis: $4,978,222
4. Qualified Basis: $6,471,689
5. GP Capital Contribution: $50,000
Georgia
Power Grant
6. Operating Deficit Escrow: $97,029
7. Type of Credit: 9%
8. Rent-up Schedule:
Thirteen units a month in each of June, 1996
through November, 1996; 11 units in December, 1996;
6 units in January, 1997; and 5 units in February, 1997.
9. Total Projected Credit* to the
Investment Limited Partners: $5,390,510
A. $125,779 for 1996,
B. $535,008 for 1997,
C. $539,051 per annum for each of the years 1998 through
2005,
D. $413,272 for 2006, and
E. $4,043 for 2007.
10. Total Projected Credit: $5,444,960
A. $127,049 for 1996,
B. $540,412 for 1997,
C. $544,496 per annum for each of the years 1997 through
2005,
D. $417,447 for 2006, and
E. $4,084 for 2007.
11. Tax Credit Approval:
A. Application
1. Date: Feb. 28, 1995
2. Credit Amount Requested: $544,983
B. Reservation
1. Date: May 22, 1995
2. Credit Amount Reserved: $544,496
C. Carryover Reservation
1. Date: November 14, 1995
2. Credit Amount Allocated: $544,496
12. Apartment Complex:
A. Name: Laurelwood
Park
Apartments
B. Address: ▇▇▇▇▇▇
Avenue
High Point,
N.C.
C. County: Guilford
D. Type of Project: Family
13. Area Median Income: $38,800
14. Type of Apartments:
______________
* Class A Class B
d
1996 $ 84,272 $ 41,507
1997 $358,455 $176,553
'98-05 $361,164 $177,887
2006 $276,892 $136,380
2007 $ 2,709 $ 1,334
Unit
Utility
Number Square Ft. Rent Allowance
2-Bedroom 62 1,004 $393 $77
3-Bedroom 38 1,168 $460 $85
15. A. Annual Operating Expenses
(beginning 1997): $248,422
B. Projected Annual Cash Flow
(beginning 1999): $1,244
16. Rental Assistance: N/A
17. Replacement Reserve $15,000 per
annum
18. Amount of Annual Reporting Fee
to Boston Capital: $10,000
19. Amount of Annual Partnership
Management Fee: $10,000
20. Amount of Total Depreciable
Base Allocated to Personal
Property: $142,067
21. Completion Date: August, 1996
22. Total Capital Contribution of
the Investment Limited Partners: $3,164,780
Class A Limited Partner: $2,120,403
Class B Limited Partner $1,044,377
23. Schedule of Capital Contributions
A. $2,127,107 * ($1,425,162 by the Class A Limited
Partner,
$701,945 by the Class B Limited Partner) on
the latest of (i) the Admission Date,
(ii) Tax Credit Set-Aside, (iii) Permanent
Mortgage Commitment, (iv) Construction
Permitting Date or (v) closing of the
Construction Mortgage;
B. $741,195 ($496,601 by the Class A Limited Partner,
$244,594 by the Class B Limited Partner) on
the latest of (i) Cost Certification or
(ii) the Completion Date; and
_____________________
*At the time of the First Installment, the Operating Partnership
will repay the Investment Partnerships for the Bridge Loan in the
amount of $1,927,107 which was made to the Operating Partnership
at the time of the closing of the Construction Mortgage.
C. $296,479 ($198,640 by the Class A Limited Partner,
$97,838 by the Class B Limited Partner) on
the latest of (i) the Initial 95% Qualified
Occupancy Date, (ii) achievement of the
Breakeven Point, (iii) State Designation or
(iv) Permanent Mortgage Commencement.
24. Fees, Special Distributions and Other Items to be paid from
Capital Contributions
A. Construction and Development
Fee:
B. Special Distributions: None
C. Direct Development Costs: $2,643,178
25. Consulting Fee Payable by the $ 200,000
General Partner to Boston Capital:
26. General Partner: The Norsouth Corporation
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
27. Ownership Interests
Normal Capital
Cash
Operations Transactions
Flow*
General Partners: 1% 50% 50%
Class A Limited Partner: 66.3% 33.5% 45%
Class B Limited Partner 32.7% 16.5% 5%
28. Management Agent: The Norsouth
Corporation
Contact Person: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Building 300
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
______________________
*See Section 10.2(a) for a detailed description of Cash Flow sharing.
Amount of Fee: 6.5% gross collected income
29. Builder: The Norsouth Corporation
Address: Building 300
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Amount of Construction Contract: $4,080,929
Builder's Profit and Overhead: $278,245
30. Architect: ▇▇▇▇▇▇ ▇▇▇▇▇ Associates - Architects
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Amount of Fee: $69,000
31. Auditor/Tax Return Preparer: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CPA
Contact Person: (same)
Address: ▇.▇. ▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇)▇▇▇-▇▇▇▇
32. Federal Taxpayer ID Number: ▇▇-▇▇▇▇▇▇▇
33. Operating Deficit Guaranty: The General Partner shall be
obligated for 120 months beginning on Permanent Mortgage Commencement
to advance any funds necessary to meet cash operating expenses which
exceed cash operating income up to a maximum amount outstanding from
time to time of $600,000 (which amount includes the Operating Deficit
Escrow of $97,029).
34. Replacement Reserve: The General Partner shall cause the
Partnership to deposit at least $15,000 annually into a Replacement
Reserve.
35. Building Breakdown: Eleven buildings number NC-95-00011
through NC-95-00021.
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
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 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 jurisdiction, or which is the subject of a 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 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, em-
bezzlement, 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,
con 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).
BOS2: 54171_1