897(C)(1)(A)(II) OF THE CODE.
(D)
NEITHER THE COMPANY NOR ITS SUBSIDIARIES HAS CONSTITUTED EITHER A
"DISTRIBUTING CORPORATION" OR A "CONTROLLED CORPORATION" IN A DISTRIBUTION OF
STOCK QUALIFYING FOR TAX-FREE TREATMENT UNDER SECTION 355 OF THE CODE (I) IN THE
TWO YEARS PRIOR TO THE DATE OF THIS AGREEMENT OR (II) IN A DISTRIBUTION WHICH
COULD OTHERWISE CONSTITUTE PART OF A "PLAN" OR "SERIES OF RELATED TRANSACTIONS"
(WITHIN THE MEANING OF SECTION 355(E) OF THE CODE) IN CONJUNCTION WITH THE
MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(E)
EACH OF THE COMPANY AND CBO REIT II, INC. IS A REAL ESTATE
INVESTMENT TRUST ("REIT") AS DEFINED IN SECTION 856(A) OF THE CODE THAT HAS
QUALIFIED AS A REIT FOR U.S. FEDERAL INCOME TAX AND MARYLAND STATE INCOME TAX
PURPOSES SINCE ITS FORMATION.
EACH SUBSIDIARY OF THE COMPANY, OTHER THAN CBO
REIT II, INC., AND EACH SUBSIDIARY OF CBO REIT II, INC., IS EITHER A QUALIFIED
REIT SUBSIDIARY ("QRS") UNDER SECTION 856(I) OF THE CODE, A TAXABLE REIT
SUBSIDIARY ("TRS") UNDER SECTION 856(L) OF THE CODE OR A DISREGARDED ENTITY FOR
U.S. FEDERAL INCOME TAX PURPOSES.
SCHEDULE 2.8(E) OF THE COMPANY LETTER SETS
FORTH WHETHER EACH SUBSIDIARY OF THE COMPANY IS A REIT, A QRS, A TRS OR A
DISREGARDED ENTITY FOR U.S. FEDERAL INCOME TAX PURPOSES.
NEITHER THE COMPANY
NOR ITS SUBSIDIARIES HOLDS ANY ASSET THE DISPOSITION OF WHICH WOULD BE SUBJECT
TO TREASURY REGULATIONS SECTION 1.337(D)-5, 1.337(D)-6 OR 1.337(D)-7 (OR ANY
SIMILAR PROVISION OF STATE OR LOCAL LAW).
(F)
NONE OF THE COMPANY AND CBO REIT II, INC. HAS ENGAGED IN ANY
PROHIBITED TRANSACTIONS WITHIN THE MEANING OF SECTION 857(B)(6)(B)(III) OF THE
CODE.
(G)
BASED UPON THE COMPANY'S TAX RETURNS AS FILED, AND WITHOUT MAKING
ANY OTHER ADDITIONAL REPRESENTATION BEYOND THOSE SPECIFICALLY MADE ELSEWHERE IN
THIS SECTION 2.8, AS OF DECEMBER 31, 2004, THE COMPANY'S NET OPERATING LOSSES
AND OTHER LOSS CARRYFORWARDS AVAILABLE FOR U.S. FEDERAL INCOME TAX PURPOSES WERE
ESTIMATED TO BE AT LEAST $297.5 MILLION.
13
(H)
AS OF THE DATE OF THIS AGREEMENT, THE COMPANY DOES NOT HAVE ANY
EARNINGS AND PROFITS ATTRIBUTABLE TO THE COMPANY OR ANY OTHER CORPORATION IN ANY
NON-REIT YEARS WITHIN THE MEANING OF SECTION 857 OF THE CODE.
(I)
SCHEDULE 2.8(I) OF THE COMPANY LETTER IS A COMPLETE AND ACCURATE
STATEMENT OF THE ADJUSTED BASIS OF ALL THE REGULAR INTERESTS HELD BY THE COMPANY
AND ANY OF ITS SUBSIDIARIES AS OF JUNE 30, 2005 IN "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS" WITHIN THE MEANING OF SECTION 860D(A) OF THE CODE.
(J)
THE COMPANY HAS NOT HAD ANY EXCESS INCLUSION WITHIN THE MEANING
OF SECTION 860E OF THE CODE FOR ANY TAXABLE YEAR BEGINNING ON OR AFTER
JANUARY 1, 2001, AND ENDING ON OR PRIOR TO DECEMBER 31, 2004.
(K)
EXCEPT AS SET FORTH IN SCHEDULE 2.8(K) OF THE COMPANY LETTER,
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES WILL BE REQUIRED TO INCLUDE ANY
ITEM OF INCOME IN, OR EXCLUDE ANY ITEM OF DEDUCTION FROM, TAXABLE INCOME FOR ANY
TAXABLE