BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
CERTIFICATION AND AGREEMENT
OF
PYRAMID FOUR LIMITED PARTNERSHIP
CERTIFICATION AND AGREEMENT made as of May 1, 1998, by
PYRAMID FOUR LIMITED PARTNERSHIP, a Missouri limited partnership
(the Operating Partnership); XXXXXXXX DEVELOPMENT CORPORATION, an
Arkansas corporation (referred to herein, even if only one, as
the Operating General Partners); for the benefit of BOSTON
CAPITAL TAX CREDIT FUND IV, L.P. (the Investment Partnership),
Boston Capital Associates IV, L.P., a Delaware limited
partnership (the Investment General Partner), 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 Agreement of Limited Partnership of the Operating Partnership
dated as of May 1, 1998 (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 Investment General
Partner 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 and
the Operating General Partners hereby agree as follows for the
benefit of the Investment Partnership, Investment General
Partner, Peabody & Xxxxx and certain other persons hereinafter
described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the Operating General
Partners
The Operating Partnership and the Operating General Partners
jointly and severally represent, warrant and certify to the
Investment Partnership, Investment General Partner and Peabody &
Xxxxx that, with respect to the Operating Partnership, as of the
date hereof:
A. 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 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 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 is bound or any law,
regulation, judgment, decree or order applicable to the Operating
Partnership or any 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 Partners, enforceable
against each of them in accordance with its terms.
B. The Operating General Partners have delivered to the
Investment Partnership, the Investment General Partner 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, the Investment General
Partner 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. The financial statements for the
Operating General Partners and their affiliates previously
delivered fairly present the financial condition of such parties
as of the dates of said financial statements and since the date
of such financial statements there has been no material adverse
change in the financial position of any of the Operating General
Partners or such affiliates. 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.
C. 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 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.
D. Each of the representations and warranties contained in
the Operating Partnership Agreement is true and correct as of the
date hereof.
E. 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.
F. 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.
G. 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.
H. 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.
I. No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
J. 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.
K. 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.
L. 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.
M. 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.
N. 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.
O. 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.
P. The Apartment Complex does not receive assistance under
the HUD Section 8 Moderate Rehabilitation Program, other than
under the Xxxxxxx X. XxXxxxxx Homeless Assistance Act of 1988.
Q. The Apartment Complex is not in violation of any State
or local health or building code or regulation.
R. 1998 low-income housing tax credit authorization in the
amount of at least $288,028 per annum and $288,028 per annum in
Missouri Tax Credits for the Apartment Complex have been obtained
by the Operating Partnership from the tax credit agency of the
State of Missouri and is in full force and effect.
S. The Operating Partnership has validly elected under
Section 42(b)(2)(A)(i) of the Code to apply the credit percentage
determined for the month the Property is placed in service with
respect to the qualified basis of the Property.
T. All 47 low-income dwelling units in the Property will
be leased to persons who satisfy the income restrictions under
Section 42(g)(1) of the Code at rents satisfying the rent
restrictions of Section 42(g)(2) of the Code.
U. All qualified low income dwelling units in the Property
will be occupied by tenants under leases with terms of not less
than six months.
V. 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.
2. Indemnification
A. The Operating General Partners (for purposes of this
Section 2.A, the Indemnifying Parties or, individually, an
Indemnifying Party) agree to indemnify and hold harmless the
Investment Partnership, Investment General Partner (for purposes
of this Section 2.A, 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.
B. No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.A 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.A. 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
A. This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the Operating General
Partners, Investment General Partner, 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.
B. 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.
C. 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:
PYRAMID FOUR LIMITED
PARTNERSHIP
By: Xxxxxxxx Development
Corporation,
its general partner
By: /s/ Xxxxxxxxx Xxxxx
Its President
OPERATING GENERAL PARTNER:
XXXXXXXX DEVELOPMENT
CORPORATION
By: /s/ Xxxxxxxxx Xxxxx
Its President
Attachments
Exhibit A Fact Sheet
Exhibit B Certificate re: Lack of Disqualifications
Exhibit A
PYRAMID FOUR LIMITED PARTNERSHIP
FACT SHEET
1. Construction Financing
A. Lender: Midland Mortgage Investment
Corporation
B. Mortgage Amount: Up to $1,328,315
C. Note Date: Not yet closed
D. Interest Rate: prime + 2% or 10.5%
E. Guarantor: Xxxxxxxx Development
Corporation
F. Term: 24 months
G. Fee: 1%
2. Permanent Financing
A. Lender: Midland Mortgage Investment
Corporation
B. Amount: Up to $685,000
C. Note Date: Not yet closed
D. Interest Rate: 50 Basis Points Over
Xxxxxx Xxx LIHTC
percentage
E. Term: 360 months
Fee: 1.5%
3. Grant
A. Grantor: Missouri Housing Development
Commission
X. Xxxxx Amount: $200,000
X. Xxxxx Date: Not yet closed
4. Eligible Basis $3,232,793
5. Qualified Basis: $3,232,793
6. GP Capital Contribution $100
7. Type of Credit: 9%
8. Rent-up Schedule (47 Units):
19% occupancy by August, 1999
40% occupancy by September, 1999
59% occupancy by October, 1999
80% occupancy by November, 1999
100% occupancy by December, 1999
(One additional unit is for resident manager)
9. Projected Credit to the
Investment Partnership: $2,879,990 (99.99% total credit)
A. $71,000 for 1999;
B. $287,999, per annum for each of the years 2000 through
2008; and
C. $216,999 for 2009.
10. Total Projected Credit: $2,880,280 (100% of total credit)
A. $71,007 for 1999;
B. $288,028 per annum for each of the years 2000 through
2008 (inclusive); and
C. $217,021 for 2009.
11. Missouri Projected Credit:
A. $71,007 for 1999;
B. $288,028 for each of the years 2000 through 2008
(inclusive); and
C. $217,021 for 2009.
12. Tax Credit Approval:
A. Application
1. Date: November 24, 1997
2. Credit Amount Requested: $303,080
3. Missouri Credit Amount
Requested $303,080
B. Reservation
1. Date:
2. Credit Amount Reserved: $288,028
3. Missouri Credit Amount
Reserved $288,028
13. Apartment Complex
A. Name: Sterling Creek Apartments
Address: 0000-0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx
B. County Xxxxxxx
C. Type of Project: Family
14. Area Median Income
(1998): $49,500
15. Type of Apartments:
Utility
Unit Size Number Square Feet Rent Allowance
2 bedroom 1 1040 manager unit
2 bedroom 23 1040 $383 $63
3 bedroom 24 1186 $475 $85
16. Rental Assistance: N/A
17. Annual Operating Expenses
(2000): $127,396
18. Annual Replacement Reserve
Account Deposit: $13,600
19. Amount of Annual Reporting Fee
(commencing in 2000): $2,000
20. Amount of Annual Partnership
Management Fee (commencing
in 2000) $2,000
21. Amount of Total Depreciable
Base Allocated to Personal
Property: $53,672
22. Projected Completion Date: May 1999
23. Total Capital Contribution of
Investment Partnership: $2,073,594
24. Schedule of Investment Partnerships Capital Contributions:
A. $1,693,431 on the latest of (i) the Admission Date, ,
(ii) closing of the Construction Mortgage or (iii)
receipt of Permanent Mortgage Commitment and the Grant
commitment;
B. $0 on the latest of (i) the Completion Date, (ii) Cost
Certification, (iii) State Designation, (iv) receipt of
a current endorsement to Title Policy, (v) receipt of
the Construction Contract Payment Letter, (vi) receipt
of an estoppel letter from the Construction Lender,
(vii) compliance with Due Diligence Recommendations and
(viii) satisfaction of all the conditions of the
payment of the First Installment;
C. $239,044 on the latest of (i) the Initial 100%
Qualified Occupancy Date, (ii) Permanent Mortgage
Commencement, (iii) State Designation, (iv) Rental
Achievement or (v) satisfaction of all conditions to
the payment of the First and Second Installments; and
D. $141,119 upon the later to occur of (i) Rental
Achievement Confirmation or (ii) satisfaction of all
the conditions of payment of the First Installment,
Second Installment and Third Installment.
25. Missouri Limited Partner: Missouri Affordable Housing
Fund IX, L.P.
26. Missouri Capital Contribution: $748,790 (payable in
installments as provided in Section 5.1(a) of the Partnership
Agreement)
27. Construction and Development Fee: $474,121
28. General Partner: Xxxxxxxx Development Corporation
A. Address: 0000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
B. Telephone
Number: (000) 000-0000
C. Fax
Number: (000) 000-0000
D. Contact
Person: Xxxxxxx X. Xxxxxxxx
29. Investment Special Missouri
. Ownership General Limited Limited Limited
Interests Partner Partner Partner Partner
A. Profits
Losses and
Credits 0.01% 99.99% 0% 0%
B. Missouri Credits: 0% 0% 0% 100%
C. Cash Flow 80.0% 20.000% 0% 0%
D. Capital
Transactions 80.0% 19.998% 0.001% 0.001%
29. Management Agent: Xxxxxxxx Development Corporation
A. Contact Person: Xxxxxxx X. Xxxxxxxx
B. Address: 0000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
C. Telephone Number: (000) 000-0000
D. Amount of Fee: $30 per occupied unit per month
30. Builder: Xxxxxxx Xxxxxxxx Construction
Company, Inc.
A. Address: 0000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
B. Contract Price: $2,706,800
31. Architect: Xxxxxxxx & Xxxx Associates Arch.
A. Address: 00 Xxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxx Xxxx, XX 00000
B. Amount of
Architectural Fees: $43,200
32. Auditor and Tax Return
Preparer: Little Xxxxxxxxxx & Company
A. Contact Person Xxxxxx Xxxxxx
B. Address: 3rd Floor - Prospect Building
0000 X. Xxxxxxxxxx
Xxxxxx Xxxx, XX 00000
C. Telephone Number: (000) 000-0000
33. Federal Taxpayer ID Number: 00-0000000
34. Operating Deficit Guaranty: The General Partner shall be
obligated for a period of five years beginning on Permanent
Mortgage Commencement to advance funds necessary to meet
cash operating expenses which exceed cash operating income.
35. Operating Reserve: The General Partner shall establish an
operating reserve account in the amount of $24,000 on or
prior to the Completion Date.
36. Replacement Reserve: Beginning on Permanent Mortgage
Commencement, the General Partners shall cause
thePartnership to deposit at least $13,600 annually into the
Replacement Reserve.
37. Building Breakdown: (Not available at this time)
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership and
Operating General Partners Re: Lack of Disqualifications
The Operating Partnership and its Operating General Partners
(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,
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,
preliminary 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 Secu-
rities 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 custo-
mer 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.
(14) 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).
