BOSTON CAPITAL TAX CREDIT FUND IV, X.X.
XXXXXXXX-XXXXX XX ASSOCIATES, A WASHINGTON LIMITED PARTNERSHIP
_______________________________________
CERTIFICATION AND AGREEMENT
_______________________________________
CERTIFICATION AND AGREEMENT made as of June 1, 1996, by
XXXXXXXX-XXXXX II ASSOCIATES, A WASHINGTON LIMITED PARTNERSHIP, a
Washington limited partnership (the "Operating Partnership"); XXXXX X.
XXXXXXXX and XXXXX X. XXXXX (the "Operating General Partners"); and
XXXXX X. XXXXXXXX and XXXXX X. XXXXX as Limited Partners (the
"Original Limited Partners") 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., as general partner
("Boston Capital"), PEABODY & XXXXX 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 of Limited Partnership of the Operating
Partnership dated as of June 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, Peabody & Xxxxx, 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
Partners and the Original Limited Partners hereby agree as follows for
the benefit of the Investment Partnership, Boston Capital, Peabody &
Xxxxx and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the Operating
Partnership, the Operating General Partners and the
Original Limited Partners
The Operating Partnership, the Operating General Partners and
the Original Limited Partners jointly and severally represent, warrant
and certify to the Investment Partnership, Boston Capital, and
Peabody & Xxxxx 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 Partners and the
Original Limited Partners 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 Partners and the Original Limited
Partners 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
Partners and the Original Limited Partners, enforceable against each
of them in accordance with its terms.
1.02 The Operating General Partners have 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 Partners previously delivered, there has been no
material adverse change in the financial position of the Operating
General Partners. 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 Partners.
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
Partners and the Original Limited Partners 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 Partners contained in
the Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required on or
prior to the date hereof.
1.06 All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have been
satisfied.
1.07 No default has occurred and is continuing under the
Operating Partnership Agreement or any of the Project Documents (as
said term is defined in the Operating Partnership Agreement) for the
Operating Partnership.
1.08 The Operating General Partners agree 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 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 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 assistance under the
HUD Section 8 Moderate Rehabilitation Program other than under the
Xxxxxxx X. XxXxxxxx Homeless Assistance Act of 1988.
1.17 The Project is not in violation of any State or
local health or building code or regulation.
1.18 The Project is located in a qualified census tract
or difficult development area for purposes of Section 42(d)(5)(B) of
the Code.
2. Indemnification
2.01 Each Operating General Partner (for purposes of this
Section 2.01, an "Indemnifying Party") agrees to indemnify and hold
harmless the Investment Partnership and Boston Capital (for purposes
of this Section 2.01, the "Indemnified Parties" or, individually, an
"Indemnified Party") and each officer, director, employee and person,
if any, who controls any party against any losses, claims, damages or
liabilities (collectively, "Liabilities"), joint or several, to which
any Indemnified Party or such officer, director, employee or
controlling person may become subject, insofar as such Liabilities or
actions in respect thereof arise out of or are based upon (i) a breach
by such Indemnifying Party of any of his representations, warranties
or covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this Certification
and Agreement or (ii) liability under any statute, regulation,
ordinance, or other provision of federal, state, or local law or any
civil action pertaining to the protection of the environment or
otherwise pertaining to public health or employee health and safety,
including, without limitation, protection from hazardous waste, lead-
based paint, asbestos, methane gas, urea formaldehyde insulation, oil,
toxic substance, underground storage tanks, polychlorinated 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 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 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
Partners, the Original Limited Partners and Boston Capital, Peabody &
Xxxxx 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 date first above written
OPERATING PARTNERSHIP:
XXXXXXXX-XXXXX II ASSOCIATES,
A WASHINGTON LIMITED PARTNERSHIP:
By: /s/Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
OPERATING GENERAL PARTNERS
AND ORIGINAL LIMITED PARTNERS:
/s/Xxxxx X. Xxxxxxxx
XXXXX X. XXXXXXXX
/s/Xxxxx X. Xxxxx
XXXXX X. XXXXX
Exhibit A
XXXXXXXX - XXXXX II ASSOCIATES, A WASHINGTON LIMITED PARTNERSHIP
FACT SHEET
I. Construction Financing
A. Lender: Midland Mortgage Investment
Corporation
B. Mortgage Amount: $1,143,703
C. Interest Rate: 10.5%
D. Term: Ten (10) months
E. Guarantors Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxxxx-Xxxxx & Associates,
Inc.
II. Permanent Financing
A. Lender Farmers Home
Administration (RECD)
B. Mortgage Amount: $1,143,703
C. Interest Rate: 8.0%
D. Term: 50 years
E. Obligation Date: August 4, 1995
III. Eligible Basis: $1,335,740
IV. Qualified Basis (130%): $1,736,462
V. GP Capital Contribution: $60,195
VI. Type of Credit: Low Income Housing Tax
Credit-Projected Rate of 3.62%
VII. Rent-up Schedule: 21% by May 1996
42% by June 1996
63% by July 1996
84% by August 1996
100% by September 1996
VIII. Projected Credit to the
Investment Partnership: $622,314
A. $31,857 for 1996,
B. $62,231 per annum for each of the years 1997 through 2005,
and
C. $30,374 for 2006.
IX. Total Projected Credit: $628,600
A. $32,178 for 1996,
B. $62,860 per annum for each of the years 1997 through 2005,
and
C. $30,682 for 2006.
X. Tax Credit Approval:
A. Reservation
1. Date: September 9, 1994
2. Credit Amount Reserved: $70,532
B. 1994 Carryover Allocation
1. Date: December 19, 1994
2. Credit Amount Allocated: $70,532
XI. Apartment Complex:
A. Name: Heritage Xxxx Apartments
B. Address: 0000 Xxxxx 0xx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
C. County: Pinal
D. Type of Project: Elderly
XII. Area Median Income: $45,000 (1996)
XIII. Type of Apartments:
Unit Basic Market Utility
Number Square Ft. Rent Rent Allowance
1-Bedroom 25 667 $325 $540 $53
2-Bedroom 3 841 $345 $560 $68
I. Rental Assistance:
A. Type: FmHA
B. Number of Units: 28
II. Annual Operating Expenses: $72,586 (1997)
III. Reserve Account
A. Annual: $11,437
B. Total: $114,370
IV. Amount of Annual Reporting Fee
to Boston Capital (beginning 1997): $1,000
V. Amount of Annual Partnership
Management Fee (beginning 1997): $1,000
VI. Amount of Total Depreciable
Base Allocated to Personal
Property: $23,215
VII. Completion Date: April 1996
VIII. Total Capital Contribution of
Investment Partnership: $373,388
IX. Schedule of Capital Contributions
A. $186,694 on the latest of (i) the Admission Date,
(ii) Tax Credit Set-Aside, (iii) Construction Mortgage
Closing, or (iv) Permanent Mortgage Commitment;
B. $74,678 on (i) the Completion Date, (ii) Cost
Certification (iii) receipt by the Investment Limited
Partner of an endorsement to the owner's title insurance
policy in form and substance satisfactory to the
Investment Limited Partner in its sole discretion;
(iv) Due Diligence, (v) receipt of the Contractor Payment
Letter;
C. $97,016 on the latest of (i) the Initial 100%
Occupancy Date (ii) Permanent Mortgage Commencement; (iii)
State Designation; and (iv) the Breakdown Point.
D. $15,000 on Breakeven Confirmation.
X. Fees, Special Distributions and Other Items to be paid from
Capital Contributions
A. Construction and Development Fee: $187,162
B. Special Distribution: $60,095
C. Developer's Overhead: $82,285
XI. General Partners: Xxxxx X. Xxxxxxxx
000 000xx Xxxxxx XX
Xxxxxxxx 0, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxx X. Xxxxx
000-000xx Xxxxxx XX
Xxxxxxxx 0, Xxxxx 000
Xxxxxxxx, XX
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
XII. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
General Partners: 1% 60.000% 90%
Investment Partnership: 99% 39.999% 10%
Special Limited Partner: 0% .001% 0%
XIII. Management Agent: CHP Management Group, Inc.
Contact Person:
Address:
Telephone Number:
Amount of Fee: $25.25 per month per
occupied unit
XIV. Builder: CHDA Construction Company
Address:
Construction Contract Amount: $1,074,981
Builder's Profit: $96,485
XV. Architect: Xxxxxx Xxxxxx
Amount of Fee: $44,200
XVI. Auditor: Ruljaucich, Xxxxx &
Xxxxxxxxx
Contact Person: Xxx Xxxxx
Address: 00000 XX 0xx Xx, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
XVII. Federal Tax ID Number: 00-0000000
XVIII. Building Breakdown:
A. # of Xxxxx 00
X. XXX # XX-00-00000
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partners and Original
Limited Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partners 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 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 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,
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).
