FIRST POTOMAC REALTY TRUST
Common Shares of Beneficial Interest
(par value $.001 per share)
UNDERWRITING AGREEMENT
KeyBanc Capital
Markets,
a division of McDonald Investments
Inc.
as representative of the several
Underwriters
c/o McDonald Investments Inc.
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
INTRODUCTORY.
First Potomac Realty Trust, a Maryland real estate investment trust
(the “Company”), proposes to issue and sell to the
several underwriters named in Schedule A (the
“Underwriters”) an aggregate of 3,000,000 of its common
shares (the “Firm Shares”) of beneficial interest, par
value $.001 per share (the “Common Shares”). In
addition, the Company has granted to the Underwriters an option to
purchase up to an additional 450,000 Common Shares (the
“Option Shares”), as provided in Section 2. The
Firm Shares and, if and to the extent such option is exercised, the
Option Shares are collectively called the “Shares.”
KeyBanc Capital Markets, a division of McDonald Investments Inc.
(“KCM”), has agreed to act as representative of the
several Underwriters (in such capacity, the
“Representative”) in connection with the offering and
sale of the Shares.
The
Company is the sole general partner of First Potomac Realty
Investment Limited Partnership (the “Operating
Partnership”), a Delaware limited partnership that serves as
the Company’s primary operating partnership
subsidiary.
The
Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”), under the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”), a
registration statement on Form S-3 (File No. 333-120821),
which contains a form of prospectus to be used in connection with
the public offering and sale of the Shares. Such registration
statement, herein referred to as the “Registration
Statement,” shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and all
information incorporated by reference therein. The form of final
prospectus first filed by the Company with the Commission pursuant
to Rule 424(b) is herein referred to as the
“Prospectus.” Each preliminary prospectus included in
the Registration Statement is herein referred to as a
“Preliminary Prospectus.” Any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein and
any supplements or amendments thereto filed
with the
Commission as of the date of such Preliminary Prospectus or
Prospectus, as the case may be, and any supplements or amendments
thereto, filed with the Commission after the date of the filing of
the Prospectus under Rule 424(b) or 430A, and prior to the
termination of the offering of the Shares by the
Underwriters.
Each
of the Company and the Operating Partnership hereby confirms its
agreements with the Underwriters as follows:
SECTION
1. REPRESENTATIONS AND WARRANTIES.
Each
of the Company and the Operating Partnership hereby represents,
warrants and covenants to each Underwriter as follows:
(a)
Compliance with Registration Requirements . The Registration
Statement has been declared effective by the Commission under the
Securities Act. The Company has complied with all requests of the
Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statement is
in effect and no proceedings for such purpose have been instituted
or are pending or, to the Company’s knowledge, are
contemplated or threatened by the Commission. The Company satisfied
all applicable requirements for the use of Form S-3 under the
Securities Act when the Registration Statement was
filed.
Each
Preliminary Prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by
electronic transmission pursuant to the Commission’s
Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”) (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the
copy thereof delivered to the Underwriters for use in connection
with the offer and sale of the Shares. Each of the Registration
Statement and any post-effective amendment thereto, at the time it
became effective and at the date hereof, complied and complies in
all material respects with the Securities Act and did not and does
not 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. Each Preliminary
Prospectus, at the time of filing thereof, did not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Prospectus, as amended and supplemented, as of its
date and at all subsequent times up to and including the First
Closing Date or the Second Closing Date (each, as defined below),
as the case may be, did not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the three immediately
preceding sentences do not apply to statements in or omissions from
the Registration Statement, or any post-effective amendment
thereto, any Preliminary Prospectus, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in
conformity with information relating to any Underwriter furnished
to the Company in writing by the Representative expressly for use
therein.
(b)
Incorporated Documents . Each document incorporated or
deemed to be incorporated by reference in the Registration
Statement, the Prospectus and the Preliminary
Prospectus, at
the time they were or hereafter are filed with the Commission,
complied and will comply when filed in all material respects with
the requirements of the Exchange Act, and, when read together with
the other information in the Prospectus, at the date of the
Prospectus, at the First Closing Date or the Second Closing Date,
did not and will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and any further documents so filed
and incorporated by reference in the Registration Statement or
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform to the
requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), in all material respects, and
will not contain an 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.
(c)
Offering Materials Furnished to Underwriters . The Company
has delivered to the Representative a complete manually signed copy
of the Registration Statement and of each consent of experts filed
as a part thereof, and conformed copies of the Registration
Statement (without exhibits) and Preliminary Prospectuses and the
Prospectus, as amended or supplemented, in such quantities and at
such places as the Representative has reasonably requested for each
of the Underwriters.
(d)
Distribution of Offering Material by the Company . The
Company has not distributed and will not distribute, prior to the
later of the Second Closing Date and the completion of the
Underwriters’ distribution of the Shares, any written
offering material in connection with the offering and sale of the
Shares other than a Preliminary Prospectus, the Prospectus or the
Registration Statement.
(e)
Exhibits; Material Contracts . There are no contracts or
other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement which have not been
described or filed as required. The contracts so described in the
Prospectus to which the Company is a party have been duly
authorized, executed and delivered by the Company, constitute valid
and binding agreements of the Company, and are enforceable against
and, to the Company’s knowledge by, the Company in accordance
with their respective terms, except to the extent that the
indemnification and contribution provisions set forth in
Sections 6 and 7 of this Agreement may be limited by the
federal and state securities laws and public policy considerations
in respect thereof, and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors’ rights generally.
To the Company’s knowledge, no other party is in material
breach of or material default under any of such
contracts.
(f)
The Underwriting Agreement . The Company has the trust power
to enter into this Agreement and to perform its obligations and
consummate the transactions contemplated herein. The Company has
the trust power to issue, sell and deliver the Shares as provided
herein. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that the
indemnification and contribution provisions set forth in
Sections 6 and 7 of this Agreement may be limited by the
federal and state securities laws and public policy consideration
in respect thereof, and except as
enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of
creditors’ rights generally. The Operating Partnership has
the full legal right, power and authority to enter into this
Agreement and to perform its obligations and consummate the
transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Operating Partnership and
constitutes the valid and binding agreement of the Operating
Partnership enforceable against the Operating Partnership in
accordance with its terms, except to the extent that the
indemnification and contribution provisions set forth in
Sections 6 and 7 of this Agreement may be limited by federal
and state securities laws and public policy considerations in
respect thereof, and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforceability of creditors’ rights
generally.
(g)
Authorization of the Shares . The Shares to be purchased by
the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and
delivered against payment therefor as provided herein by the
Company pursuant to this Agreement, will be validly issued, fully
paid and nonassessable.
(h)
No Applicable Registration or Other Similar Rights . There
are no persons with registration or other similar rights to have
any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by
this Agreement, except for such rights as have been duly satisfied
or waived.
(i)
No Material Adverse Change . Except as otherwise disclosed
in or contemplated by the Prospectus, subsequent to the respective
dates as of which information is given in the Prospectus:
(i) there has been no material adverse change, or any
development that could reasonably be expected to result in a
material adverse change, in the financial condition or in the
earnings, business or operations or anticipated financial results
for the most recently completed fiscal quarter, whether or not
arising from transactions in the ordinary course of business, of
the Company and the Subsidiaries (as defined below), considered as
one enterprise (any such change or development is called a
“Material Adverse Change”); (ii) the Company and
the Subsidiaries, considered as one enterprise, have not incurred
any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business, nor entered
into any material transaction or agreement not in the ordinary
course of business; (iii) there has been no material casualty
loss or condemnation or other material adverse event with respect
to any of the real properties or interests in real properties owned
by the Company and the Subsidiaries or the real properties
described as being under contract in the Prospectus;
(iv) there has been no change in the capital stock, long-term
debt or short-term borrowings of the Company and the Subsidiaries
on a consolidated basis, except for borrowings under the
Company’s line of credit in the ordinary course of business,
consistent with past practice, and (v) there has been no
dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends or distributions paid to the
Company or the Subsidiaries, any of the Subsidiaries on any class
of capital stock or other equity interests, or any repurchase or
redemption by the Company or any of the Subsidiaries of any class
of capital stock or other equity interests. The properties
currently owned by the Company’s Subsidiaries (the
“Real Properties”) and the properties described in the
Prospectus as being under contract by the Company (the
“Acquisition Properties”) are referred to collectively
herein as the “Properties” and individually as a
“Property.”
(j)
Independent Accountants . KPMG LLP, which has expressed its
opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes and schedules
thereto) included or incorporated by reference in the Registration
Statement and the Prospectus, is an independent registered public
accounting firm with respect to the Company, Enterprise Center and
Windsor at Battlefield Park as required by the Securities Act, the
Exchange Act and the rules and regulations of the Public Company
Accounting Oversight Board.
(k)
Preparation of the Financial Statements . The financial
statements included or incorporated by reference in the
Registration Statement and the Prospectus present fairly
(i) the consolidated financial position of the Company and the
Subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified,
(ii) the revenues and certain expenses of Enterprise Center
for the year ended December 31, 2004, and (iii) the revenues
and certain expenses of Windsor at Battlefield Park for the nine
months ended September 30, 2004 and year ended
December 31, 2003. Any supporting schedules included or
incorporated by reference in the Registration Statement present
fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in
conformity with United States generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes
thereto, and are in compliance with Regulation S-X promulgated
under the Securities Act. The pro forma consolidated financial
statements of the Company and the Subsidiaries and the related
notes thereto incorporated by reference in the Prospectus and the
Registration Statement present fairly the information contained
therein, have been prepared in accordance with the
Commission’s rules and guidelines with respect thereto and
have been properly presented on the bases described therein, and
the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein. The amounts
incorporated by reference in the Prospectus under the caption
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” are accurately computed,
fairly present the information shown therein and have been
determined on a basis consistent with the financial statements
incorporated by reference in the Registration Statement and the
Prospectus. No other financial statements or supporting schedules
are required under applicable law or the rules and regulations of
the Commission to be included or incorporated by reference in the
Registration Statement. The financial data set forth or
incorporated by reference in the Prospectus under the captions
“Capitalization” and “Selected Financial
Data” fairly present the information set forth therein on a
basis consistent with that of the financial statements contained or
incorporated by reference in the Registration Statement when read
in conjunction with the textual information included in those
sections.
(l)
Internal Controls and Procedures . The Company has
established and maintains disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that
are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules
and forms and is accumulated and communicated to the
Company’s management, including its chief executive officer
and chief financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure; and the Company maintains a system of internal
control over financial reporting sufficient to provide reasonable
assurance
regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles and which includes policies and
procedures that (i) pertain to the maintenance of records that
in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company, (ii) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles and that receipts and
expenditures of the Company are being made only in accordance with
the authorization of management, and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisitions, use or dispositions of assets that could have a
material effect on the financial statements. The Company’s
disclosure controls and procedures have been evaluated for
effectiveness as of the end of the period covered by the
Company’s most recently filed quarterly report on Form 10-Q
which precedes the date of the Prospectus and were effective in all
material respects to perform the functions for which they were
established. Based on the most recent evaluation of its internal
control over financial reporting, the Company was not aware of
(i) any material weaknesses in the design or operation of
internal control over financial reporting or (ii) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting. The Company is not aware
of any change in its internal control over financial reporting that
has occurred during its most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial
reporting.
(m)
Organization and Good Standing of the Company and the
Subsidiaries . The Company has been duly organized and is
validly existing as a real estate investment trust in good standing
with the State Department of Assessments and Taxation of the State
of Maryland and has the trust power and authority to own, lease and
operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under
this Agreement. The entities set forth on Schedule B hereto
are the only subsidiaries (as defined in Rule 1-02(x) of
Regulation S-X of the Securities Act) of the Company (each,
including the Operating Partnership, except where noted, a
“Subsidiary” and, collectively, the
“Subsidiaries”). Each Subsidiary (i) that is a
corporation has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation and has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus, (ii) that is a limited liability
company has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the
jurisdiction of its organization and has limited liability company
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and
(iii) that is a limited partnership has been duly organized
and is validly existing as a limited partnership in good standing
under the laws of the jurisdiction of its organization and has the
partnership power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus. The Operating Partnership has been duly organized and
is validly existing as a limited partnership in good standing under
the laws of the jurisdiction of its organization and has limited
partnership power and authority to own, lease and operate its
properties, to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement.
Each of the Company and the Subsidiaries is duly qualified as a
foreign trust corporation, limited partnership or limited liability
company, as the case may be, to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business,
except for such
jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Change. All of the issued and outstanding capital
stock of each Subsidiary that is a corporation has been duly
authorized and validly issued, is fully paid and nonassessable and,
except as described in the Prospectus, is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, claim, restriction or
encumbrance, and all of the issued and outstanding membership
interests of each Subsidiary that is a limited liability company,
and all of the partnership interests of each Subsidiary that is a
limited partnership, have been duly authorized and validly issued
and are fully paid and, except as described in the Prospectus, are
owned by the Company, directly or through Subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, claim,
restriction or encumbrance. All of the issued and outstanding units
of partnership interest of the Operating Partnership
(“Units”) have been duly authorized and validly issued
and are fully paid and upon completion of the offering of the Firm
Shares, the Company will be the sole general partner of the
Operating Partnership and will own Units representing an
approximately 93.7% interest in the Operating Partnership, free and
clear of any security interest, mortgage, pledge, lien, claim,
restriction or encumbrance. The Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the Subsidiaries.
(n)
Capitalization and Other Capital Stock Matters . The
authorized capital stock of the Company is as set forth in the
Prospectus. The number of issued and outstanding Common Shares is
as set forth in the Prospectus. The Common Shares (including the
Shares) conform in all material respects to the description thereof
contained in the Prospectus. All of the issued and outstanding
Common Shares have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance
with applicable federal and state securities laws. None of the
outstanding Common Shares was issued in violation of any preemptive
rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. The Operating
Partnership has not issued any security or other equity interest
other than Units described in the Prospectus. None of the Units in
the Operating Partnership has been or will be issued or is owned or
held in violation of any preemptive right. The outstanding Units in
the Operating Partnership have been issued by the Operating
Partnership in compliance with applicable federal and state
securities laws. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the
Company or any of the Subsidiaries other than those described in
the Prospectus. The descriptions of the Company’s Equity
Compensation Plan, and of the options or other awards granted
thereunder, set forth in the Prospectus fairly and accurately
present the information required to be shown with respect to such
plan, options or other awards. Except as described in the
Prospectus, the Company has not sold or issued any Common Shares
nor has the Operating Partnership sold or issued any Units during
the one-year period preceding the date of the
Prospectus.
(o)
Exchange Act Registration and Filings; Stock Exchange
Listing . The Common Shares are registered pursuant to Section
12(b) of the Exchange Act and have been approved for listing on the
New York Stock Exchange (the “NYSE”). The Shares have
been approved for listing on the NYSE, subject only to official
notice of issuance.
(p)
Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required . Neither the Company nor
any of the Subsidiaries is (i) in violation of (A) its
declaration of trust, charter or bylaws, operating agreement,
partnership agreement or other organizational documents or
(B) any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or the Subsidiaries except, in
the case of clause (i)(B), for such violations as could not,
individually or in the aggregate, result in a Material Adverse
Change, or (ii) in default (or, with the giving of notice or
lapse of time or both, would be in default) (“Default”)
under any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other instrument to which the Company
or any of the Subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the
Company or any of the Subsidiaries is subject (each, an
“Existing Instrument”), except such Defaults as would
not, individually or in the aggregate, result in a Material Adverse
Change. The execution, delivery and performance of this Agreement
by the Company and the Operating Partnership and consummation of
the transactions contemplated hereby and by the Prospectus
(i) will not result in any violation of the provisions of the
(A) Amended and Restated Declaration of Trust (the
“Declaration of Trust”) or by-laws of the Company,
(B) the Certificate of Limited Partnership or Amended and
Restated Agreement of Limited Partnership (the “Partnership
Agreement”) of the Operating Partnership or (C) other
organizational documents of the Company or any of the Subsidiaries,
in each case as amended or as amended and restated through the date
hereof, (ii) will not conflict with or constitute a breach of,
or a Default or Debt Repayment Triggering Event (as defined below)
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of
the Subsidiaries pursuant to, or require the consent of any other
party to, any Existing Instrument, except such consents as have
been obtained by the Company, and (iii) will not result in any
violation of any law, administrative regulation or administrative
or court decree applicable to the Company or any of the
Subsidiaries, except, with respect to clauses (ii) and (iii),
as would not individually or in the aggregate result in a Material
Adverse Change. No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental
or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby
and by the Prospectus, except (A) such as have been obtained
or made by the Company and are in full force and effect,
(B) under the Securities Act and applicable state securities
or blue sky laws, and (C) from the National Association of
Securities Dealers, Inc. (the “NASD”).
As
used herein, a “Debt Repayment Triggering Event” means
any event or condition which gives, or with the giving of notice or
lapse of time or both would give, the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company or any of the Subsidiaries.
(q)
No Material Actions or Proceedings . There are no legal or
governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened (i) against or affecting
the Company or any of the Subsidiaries or (ii) which has as
the subject thereof any officer or trustee or director of, or
property owned or leased by, the Company or any of the Subsidiaries
that would result in a Material Adverse Change. No material labor
dispute with the employees of the Company or any of the
Subsidiaries exists or, to the Company’s knowledge, is
threatened or imminent.
(r)
Intellectual Property Rights . The Company and the
Subsidiaries own or possess sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and
other similar rights (collectively, the “Intellectual
Property Rights”) reasonably necessary to conduct their
businesses as now conducted or as proposed to be conducted as
described in the Prospectus; and the expected expiration of any of
such Intellectual Property Rights would not result in a Material
Adverse Change. Neither the Company nor any of the Subsidiaries has
received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Change.
(s)
All Necessary Permits, etc . The Company and the
Subsidiaries possess such valid and current certificates,
authorizations, licenses, registrations and permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, except for those
which the failure to possess, individually or in the aggregate,
could not result in a Material Adverse Change, and neither the
Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of, or
noncompliance with, any such certificate, authorization, license,
registration or permit which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Change.
(t)
Properties . The Company and the Subsidiaries own or lease
all such properties (or, in the case of the Acquisition Properties,
will own or lease) as are necessary to its operations as now
conducted or as proposed to be conducted as described in the
Prospectus. The Company and the Subsidiaries have (or in the case
of the Acquisition Properties will have upon closing) good and
marketable title in fee simple to all of the Properties, free and
clear of all security interests, mortgages, pledges, liens, claims,
restrictions or encumbrances of any kind, except such as
(i) are described in the Prospectus or (ii) do not,
individually or in the aggregate, materially adversely affect the
value of such Property and do not interfere in any material respect
with the use made and proposed to be made of such Property. All
security interests, mortgages, pledges, liens, claims, restrictions
and encumbrances of any kind on or affecting the Properties or the
other assets of the Company and the Subsidiaries that are required
to be disclosed in the Prospectus are disclosed therein. There is
no violation by the Company of any municipal, state or federal law,
rule or regulation (including, but not limited to, those pertaining
to environmental matters) concerning the Properties or any part
thereof which would result in a Material Adverse Change. Each of
the Properties complies with all applicable zoning laws,
ordinances, regulations and deed restrictions or other covenants
and, if and to the extent there is a failure to comply, such
failure would not, individually or together with all such other
failures, result in a Material Adverse Change or result in a
forfeiture or reversion. Neither the Company nor any of the
Subsidiaries, nor, to the Company’s knowledge, any current
owner of the Acquisition Properties, has received any notice from
any governmental or regulatory authority or agency of any
condemnation of or zoning change affecting the Properties or any
part thereof, and the Company does not know of any such
condemnation or zoning change which is threatened. No lessee of any
portion of any of the Properties is in material default under any
of the leases governing such Properties and no event has occurred
which, but for the passage of time or giving of notice or both,
would constitute a default under any of such leases.
(u)
Mortgages and Deeds of Trust . Except as set forth in the
Prospectus, the mortgages and deeds of trust encumbering the
Properties and any other assets described in the Prospectus are not
convertible into equity securities of the Company or any of the
Subsidiaries and none of the Company, any of the Subsidiaries or
any other person affiliated therewith holds a participating
interest therein, and such mortgages and deeds of trust are not
cross-defaulted or cross-collateralized to any property not owned
directly or indirectly by the Company or any of the
Subsidiaries.
(v)
Tax Law Compliance . The Company and the Subsidiaries have
timely filed all necessary federal, state and foreign income and
franchise tax returns or have properly requested extensions thereof
and have paid all taxes required to be paid by them and, if due and
payable, any related or similar assessment, fine or penalty levied
against any of them. The Company has made adequate charges,
accruals and reserves in the applicable financial statements
referred to in Section 1(k) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which
the tax liability of the Company or any of the Subsidiaries has not
been finally determined.
(w)
Qualification as a REIT . The Company qualified to be taxed
as a real estate investment trust (“REIT”) under the
Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (collectively, the
“Code”), for its short taxable year ended
December 31, 2003 and its taxable year ended December 31,
2004, and its organization and current and proposed method of
operation will enable it to continue to qualify as a REIT under the
Code. No transaction or other event has occurred which could cause
the Company to not be able to qualify as a REIT for its taxable
year ending December 31, 2005 and in the future.
(x)
Company Not an “Investment Company.” The Company
has been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for
the Shares will not be, an “investment company” within
the meaning of the Investment Company Act and will conduct its
business in a manner so that it will not become subject to the
Investment Company Act.
(y)
Insurance . The Company and each of the Subsidiaries are
insured by recognized and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as
are generally deemed in the Company’s industry to be adequate
and customary for their businesses, including, but not limited to,
policies covering real and personal property owned or leased by the
Company and the Subsidiaries against theft, damage, destruction,
environmental liabilities, acts of vandalism, terrorism, floods
and, with respect to the Properties, defects in title in amounts at
least equal to the greater of (i) the cost of acquisition of
such Property or (ii) the replacement cost of the improvements
located on such Property. The Company has no reason to believe that
it or any of the Subsidiaries will not be able (i) to renew
its existing insurance coverage as and when such policies expire or
(ii) to obtain reasonably comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted or as proposed to be conducted as
described in the Prospectus and at a cost that would not result in
a Material Adverse Change.
(z)
Related Party Transactions . There are no business
relationships or related-party transactions involving the Company
or any of the Subsidiaries or any other person required to be
described in the Prospectus that have not been described as
required. Except as described in the Prospectus, there are no
outstanding loans or advances or guarantees of indebtedness by the
Company or any of the Subsidiaries to or for the benefit of any of
the officers, directors, managers or trustees of the Company or any
of the Subsidiaries or any of the members of the families of any of
them.
(aa)
Compliance with Environmental Laws . Except as otherwise
disclosed in the Prospectus, or except as would not, individually
or in the aggregate, result in a Material Adverse Change,
(i) the Company and the Subsidiaries are in compliance with
applicable Environmental Laws (as defined below), (ii) none of
the Company, any of the Subsidiaries or, to the Company’s
knowledge, any other owners of any of the Properties at any time or
any other party, has at any time released (as such term is defined
in CERCLA (as defined below)) or otherwise disposed of Hazardous
Materials (as defined below) on, to, in, under or from the
Properties or any other real properties previously owned, leased or
operated by the Company or any of the Subsidiaries,
(iii) neither the Company nor any of the Subsidiaries intends
to use the Properties or any subsequently acquired properties,
other than in compliance with applicable Environmental Laws,
(iv) neither the Company nor any of the Subsidiaries has
received any notice of, or has any knowledge of any occurrence or
circumstance which, with notice or passage of time or both, would
give rise to a claim under or pursuant to any Environmental Law
with respect to the Properties, any other real properties
previously owned, leased or operated by the Company or any of the
Subsidiaries, or the assets of the Company or the Subsidiaries
described in the Prospectus or arising out of the conduct of the
Company or the Subsidiaries, (v) none of the Properties are
included or proposed for inclusion on the National Priorities List
issued pursuant to CERCLA by the United States Environmental
Protection Agency or, to the Company’s knowledge, proposed
for inclusion on any similar list or inventory issued pursuant to
any other Environmental Law or issued by any other Governmental
Authority (as defined below), (vi) none of the Company, any of
the Subsidiaries or agents or, to the Company’s knowledge,
any other person or entity for whose conduct any of them is or may
be held responsible under any applicable environmental law, has
generated, manufactured, refined, transported, treated, stored,
handled, disposed, transferred, produced or processed any Hazardous
Material at any of the Properties, except in compliance with all
applicable Environmental Laws, and has not transported or arranged
for the transport of any Hazardous Material from the Properties or
any other real properties previously owned, leased or operated by
the Company or any of the Subsidiaries to another property, except
in compliance with all applicable Environmental Laws, (vii) no
lien has been imposed on the Properties by any Governmental
Authority in connection with the presence on or off such Property
of any Hazardous Material, and (viii) none of the Company, any
of the Subsidiaries or, to the Company’s knowledge, any other
person or entity for whose conduct any of them is or may be held
responsible under any applicable Environmental Law, has entered
into or been subject to any consent decree, compliance order, or
administrative order with respect to the Properties or any
facilities or improvements or any operations or activities
thereon.
As
used herein, “Hazardous Material” shall include,
without limitation, any flammable materials, explosives,
radioactive materials, hazardous materials, hazardous substances,
hazardous wastes, toxic substances or related materials, asbestos,
petroleum,
petroleum
products and any hazardous material as defined by any federal,
state or local environmental law, statute, ordinance, rule or
regulation, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amen
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