<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 333-57103
Mack-Cali Realty, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 22-3315804
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
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(Address or principal executive office)
(Zip Code)
(908) 272-8000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES X NO and (2) has been
--- ---
subject to such filing requirements for the past ninety (90) days YES X NO .
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<PAGE>
MACK-CALI REALTY, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1999
and December 31, 1998................................................. 4
Consolidated Statements of Operations for the three and six
month periods ended June 30, 1999 and 1998............................ 5
Consolidated Statement of Changes in Partners' Capital
for the six months ended June 30, 1999................................ 6
Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 and 1998.......................................... 7
Notes to Consolidated Financial Statements................................ 8-31
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................. 32-46
Item 3. Quantitative and Qualitative Disclosures about Market Risk................ 47
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings......................................................... 48
Item 2. Changes in Securities and Use of Proceeds................................. 48
Item 3. Defaults Upon Senior Securities........................................... 48
Item 4. Submission of Matters to a Vote of Security Holders....................... 48
Item 5. Other Information......................................................... 48
Item 6. Exhibits.................................................................. 49-51
Signatures................................................................ 52
</TABLE>
2
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MACK-CALI REALTY, L.P.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements
of operations, of changes in partners' capital, and of cash flows
and related notes, have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial
information and in conjunction with the rules and regulations of
the Securities and Exchange Commission ("SEC"). Accordingly, they
do not include all of the disclosures required by GAAP for
complete financial statements. The financial statements reflect
all adjustments consisting only of normal, recurring adjustments,
which are, in the opinion of management, necessary for a fair
presentation for the interim periods.
The aforementioned financial statements should be read in
conjunction with the notes to the aforementioned financial
statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements
and notes thereto included in the Operating Partnership's Annual
Report on Form 10-K and Form 10-K/A for the fiscal year ended
December 31, 1998.
The results of operations for the three and six month periods
ended June 30, 1999 are not necessarily indicative of the results
to be expected for the entire fiscal year or any other period.
3
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
June 30, December 31,
ASSETS 1999 1998
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<S> <C> <C>
Rental property
Land and leasehold interests $ 523,250 $ 510,534
Buildings and improvements 2,934,780 2,887,115
Tenant improvements 83,030 64,464
Furniture, fixtures and equipment 5,795 5,686
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3,546,855 3,467,799
Less - accumulated depreciation and amortization (220,152) (177,934)
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Total rental property 3,326,703 3,289,865
Cash and cash equivalents 11,519 5,809
Investments in unconsolidated joint ventures 86,380 66,508
Unbilled rents receivable 48,435 41,038
Deferred charges and other assets, net 52,703 39,020
Restricted cash 6,160 6,026
Accounts receivable, net of allowance for doubtful accounts
of $346 and $670 6,698 3,928
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Total assets $ 3,538,598 $ 3,452,194
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LIABILITIES AND PARTNERS' CAPITAL
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Senior Unsecured Notes $ 597,344 $ --
Revolving credit facilities 148,600 671,600
Mortgages and loans payable 749,041 749,331
Distributions payable 40,926 40,564
Accounts payable and accrued expenses 39,644 33,253
Rents received in advance and security deposits 31,117 29,980
Accrued interest payable 14,729 2,246
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Total liabilities 1,621,401 1,526,974
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Commitments and contingencies
PARTNERS' CAPITAL:
Preferred units, 229,304 and 250,256 units outstanding 235,200 223,330
General partner, 58,915,684 and 57,266,137 common units outstanding 1,458,653 1,387,674
Limited partners, 8,299,690 and 9,086,585 common units outstanding 214,820 305,692
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
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Total partners' capital 1,917,197 1,925,220
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Total liabilities and partners' capital $ 3,538,598 $ 3,452,194
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
4
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
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Three Months Ended June 30, Six Months Ended June 30,
REVENUES 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Base rents $ 116,499 $ 105,861 $ 232,579 $ 198,777
Escalations and recoveries from tenants 16,366 12,358 31,226 22,715
Parking and other 3,061 2,836 6,961 4,818
Interest income 215 916 470 1,459
Equity in earnings of unconsolidated joint ventures 834 70 628 95
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Total revenues 136,975 122,041 271,864 227,864
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EXPENSES
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Real estate taxes 14,208 11,854 28,051 21,926
Utilities 9,829 9,115 19,421 17,417
Operating services 17,227 15,629 34,143 28,321
General and administrative 5,770 6,394 13,904 12,591
Depreciation and amortization 22,465 19,093 44,434 35,324
Interest expense 25,697 21,786 49,319 40,265
Non-recurring charges 16,458 -- 16,458 --
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Total expenses 111,654 83,871 205,730 155,844
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Income before extraordinary item 25,321 38,170 66,134 72,020
Extraordinary item - loss on early retirement of debt -- (2,670) -- (2,670)
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Net income 25,321 35,500 66,134 69,350
Preferred unit distributions (3,869) (3,985) (7,738) (7,896)
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Net income available to common unitholders $ 21,452 $ 31,515 $ 58,396 $ 61,454
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BASIC EARNINGS PER UNIT:
Income before extraordinary item $ 0.32 $ 0.53 $ 0.87 $ 1.05
Extraordinary item - loss on early retirement of debt -- (0.04) -- (0.04)
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Net income $ 0.32 $ 0.49 $ 0.87 $ 1.01
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DILUTED EARNINGS PER UNIT:
Income before extraordinary item $ 0.32 $ 0.53 $ 0.87 $ 1.04
Extraordinary item - loss on early retirement of debt -- (0.04) -- (0.04)
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Net income $ 0.32 $ 0.49 $ 0.87 $ 1.00
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Distributions declared per common unit $ 0.55 $ 0.50 $ 1.10 $ 1.00
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Basic weighted average units outstanding 67,173 64,145 67,092 61,055
Diluted weighted average units outstanding 67,486 64,626 67,385 61,671
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS= CAPITAL (IN THOUSANDS)
<TABLE>
<CAPTION>
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General Limited
Preferred Partner Partner Preferred General Limited Unit
Units Units Units Unitholders Partner Partners Warrants Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 250 57,266 9,087 $223,330 $1,387,674 $305,692 $8,524 $1,925,220
Net income -- -- -- 7,738 50,750 7,646 -- 66,134
Distributions -- -- -- (7,738) (64,559) (9,386) -- (81,683)
Conversion of preferred units
to limited partner units (21) -- 605 (21,491) -- 21,491 -- --
Redemption of limited partner
units for shares of common stock -- 1,634 (1,634) -- 48,287 (48,287) -- --
Issuance of limited partner units -- -- 242 -- -- 7,258 -- 7,258
Contributions - proceeds from
stock options exercised -- 41 -- -- 933 -- -- 933
Repurchase of general partner units -- (26) -- -- (713) -- -- (713)
Deferred compensation plan
for directors -- -- -- -- 38 -- -- 38
Contributions - proceeds from
dividend reinvestment
and stock purchase plan -- 1 -- -- 10 -- -- 10
Allocation of net equity -- -- -- 33,361 36,233 (69,594) -- --
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Balance at June 30, 1999 229 58,916 8,300 $235,200 $1,458,653 $214,820 $8,524 $1,917,197
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
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- --------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998
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<S> <C> <C>
Net income $ 66,134 $ 69,350
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 44,434 35,324
Amortization of deferred financing costs 1,518 654
Equity in earnings of unconsolidated joint ventures (628) (95)
Extraordinary item - loss on early retirement of debt -- 2,670
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (7,397) (6,339)
Increase in deferred charges and other assets, net (10,794) (4,569)
Increase in accounts receivable, net (2,770) (1,793)
Increase in accounts payable and accrued expenses 5,891 366
Increase in rents received in advance and security deposits 1,137 8,425
Increase (decrease) in accrued interest payable 12,483 (1,476)
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Net cash provided by operating activities $ 110,008 $ 102,517
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CASH FLOWS FROM INVESTING ACTIVITIES
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Additions to rental property $ (71,107) $ (625,434)
Issuance of mortgage note receivable -- (20,000)
Repayment of mortgage note receivable -- 20,000
Investments in unconsolidated joint ventures (29,941) (39,031)
Distributions from unconsolidated joint ventures 10,634 1,000
(Increase) decrease in restricted cash (134) 1,361
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Net cash used in investing activities $ (90,548) $ (662,104)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from Senior Unsecured Notes $ 597,252 $ --
Proceeds from revolving credit facilities 130,900 1,307,452
Proceeds from mortgages and loans payable 45,500 --
Repayments of revolving credit facilities (653,900) (880,111)
Repayments of mortgages and loans payable (45,819) (69,704)
Redemption of common units -- (3,163)
Payment of financing costs (6,592) (7,492)
Repurchase of general partner units (713) --
Net proceeds from common stock offerings -- 284,453
Proceeds from stock options exercised 933 5,271
Proceeds from dividend reinvestment and stock purchase plan 10 --
Payment of distributions (81,321) (63,228)
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Net cash (used in) provided by financing activities $ (13,750) $ 573,478
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Net increase in cash and cash equivalents $ 5,710 $ 13,891
Cash and cash equivalents, beginning of period $ 5,809 $ 2,704
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Cash and cash equivalents, end of period $ 11,519 $ 16,595
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
UNIT AMOUNTS)
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1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries
(the "Operating Partnership") was formed on August 31, 1994 to conduct the
business of leasing, management, acquisition, development, construction, and
tenant-related services for its sole general partner, Mack-Cali Realty
Corporation and its subsidiaries (the "Corporation" or "General Partner"). The
Operating Partnership, through its operating divisions and subsidiaries,
including the Mack-Cali property-owning partnerships and limited liability
companies (collectively, the "Property Partnerships"), as described below, is
the entity through which all of the General Partner's operations are conducted.
The Property Partnerships, not a legal entity, consist of partnerships and
limited liability companies which are engaged in the ownership and operation of
the Properties (as hereinafter defined) of the Operating Partnership, excluding
certain Properties which are wholly-owned by the Operating Partnership. Prior to
January 1, 1998 the Property Partnerships were owned 99 percent by the Operating
Partnership as a non-controlling limited partner, and one percent by the General
Partner, as a controlling general partner. During 1998, the Operating
Partnership obtained control of the Property Partnerships pursuant to agreements
with the General Partner.
The General Partner is a fully integrated, self-administered, self-managed real
estate investment trust ("REIT"). The General Partner controls the Operating
Partnership as its sole general partner, and owned an 87.7 percent and 86.3
percent common unit interest in the Operating Partnership as of June 30, 1999
and December 31, 1998, respectively.
The General Partner's business is the ownership of interests in and operation of
the Operating Partnership, and all of the General Partner's expenses are
incurred for the benefit of the Operating Partnership. The General Partner is
reimbursed by the Operating Partnership for all expenses it incurs relating to
the ownership and operation of the Operating Partnership. The Operating
Partnership earns a management fee of between three percent and five percent of
revenues, as defined, for its management of the Property Partnerships.
As of June 30, 1999, the Operating Partnership owned or had interests in 254
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 28.1 million square feet, and are comprised
of 160 office buildings and 81 office/flex buildings totaling approximately 27.7
million square feet (which included four office buildings and one office/flex
building, aggregating 1.0 million square feet, owned by unconsolidated joint
ventures in which the Operating Partnership has investment interests), six
industrial/warehouse buildings totaling approximately 387,400 square feet, two
multi-family residential complexes consisting of 453 units, two stand-alone
retail properties and three land leases. The Properties are located in 12
states, primarily in the Northeast, plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Operating Partnership and its subsidiaries, including the Property Partnerships.
During 1998, the Operating Partnership obtained control of the Property
Partnerships pursuant to agreements with the General Partner, as discussed
above. Accordingly, the accounts of the Property Partnerships are consolidated
with the financial statements of the Operating Partnership effective January 1,
1998. Prior to January 1, 1998, the Operating Partnership accounted for the
Property Partnerships under the equity method of accounting. All significant
intercompany accounts and transactions have been eliminated. See Investments in
Unconsolidated Joint Ventures in Note 2 for the Operating Partnership's
accounting treatment of unconsolidated joint venture interests.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
RENTAL
PROPERTY Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to
the acquisition and development of rental properties are
capitalized. Capitalized development costs include
interest, property taxes, insurance and other project
costs incurred during the period of construction.
Ordinary repairs and maintenance are expensed as
incurred; major replacements and betterments, which
improve or extend the life of the asset, are capitalized
and depreciated over their estimated useful lives.
Fully-depreciated assets are removed from the accounts.
Properties are depreciated using the straight-line
method over the estimated useful lives of the assets.
The estimated useful lives are as follows:
<TABLE>
<S> <C>
Leasehold interests Remaining lease term
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Buildings and improvements 5 to 40 years
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Tenant improvements The shorter of the term of
the related lease or useful life
---------------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
---------------------------------------------------------------------
</TABLE>
On a periodic basis, management assesses whether there
are any indicators that the value of the real estate
properties may be impaired. A property's value is
impaired only if management's estimate of the aggregate
future cash flows (undiscounted and without interest
charges) to be generated by the property are less than
the carrying value of the property. To the extent
impairment has occurred, the loss shall be measured as
the excess of the carrying amount of the property over
the fair value of the property. Management does not
believe that the value of any of its rental properties
is impaired.
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The Operating Partnership accounts for its investments
in unconsolidated joint ventures under the equity
method of accounting as the Operating Partnership
exercises significant influence, but does not control
these entities. These investments are recorded
initially at cost, as Investments in Unconsolidated
Joint Ventures, and subsequently adjusted for equity in
net earnings (loss) and cash contributions and
distributions. Any difference between the carrying
amount of these investments on the balance sheet of the
Operating Partnership and the underlying equity in
net assets is amortized as an adjustment to equity in
earnings (loss) of unconsolidated joint ventures over
40 years. See Note 4.
CASH AND CASH
EQUIVALENTS All highly liquid investments with a maturity of three
months or less when purchased are considered to be cash
equivalents.
DEFERRED
FINANCING COSTS Costs incurred in obtaining financing are
capitalized and amortized on a straight-line basis,
which approximates the effective interest method, over
the term of the related indebtedness. Amortization of
such costs is included in interest expense and was $917
and $400 for the three months ended June 30, 1999 and
1998, respectively, and $1,518 and $654 for the six
months ended June 30, 1999 and 1998, respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are
capitalized and amortized on a straight-line basis over
the terms of the related leases and included in
depreciation and amortization. Unamortized deferred
leasing costs are charged to amortization expense upon
early termination of the lease. Certain employees
provide leasing services to the Properties and receive
compensation based on space leased. The portion of such
compensation, which is capitalized and amortized,
approximated $743 and $659 for the three months ended
June 30, 1999 and 1998, respectively, and $1,401 and
$1,236 for the six months ended June 30, 1999 and 1998,
respectively.
9
<PAGE>
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line
basis over the terms of the respective leases. Unbilled
rents receivable represents the amount by which
straight-line rental revenue exceeds rents currently
billed in accordance with the lease agreements. Parking
revenue includes income from parking spaces leased to
tenants. Rental income on residential property under
operating leases having terms generally of one year or
less is recognized when earned.
Reimbursements are received from tenants for certain
costs as provided in the lease agreements. These costs
generally include real estate taxes, utilities,
insurance, common area maintenance and other recoverable
costs. See Note 14.
INCOME AND
OTHER TAXES The Operating Partnership is a partnership and, as
a result, all income and losses of the partnership are
allocated to the partners for inclusion in their
respective income tax returns. Accordingly, no provision
or benefit for income taxes has been made in the
accompanying financial statements.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Operating
Partnership to reduce interest rate risks. The Operating
Partnership does not hold or issue derivative financial
instruments for trading purposes. The differentials to
be received or paid under contracts designated as hedges
are recognized over the life of the contracts as
adjustments to interest expense.
In certain situations, the Operating Partnership uses
forward treasury lock agreements to mitigate the
potential effects of changes in interest rates for
prospective transactions. Gains and losses are deferred
and amortized as adjustments to interest expense over
the remaining life of the associated debt to the extent
that such debt remains outstanding.
EARNINGS
PER UNIT In accordance with the Statement of Financial
Accounting Standards No. 128 ("FASB No. 128"), the
Operating Partnership presents both basic and diluted
earnings per unit ("EPU"). Basic EPU excludes dilution
and is computed by dividing net income available to
common unitholders by the weighted average number of
units outstanding for the period. Diluted EPU reflects
the potential dilution that could occur if securities
or other contracts to issue common units were exercised
or converted into common units, where such exercise or
conversion would result in a lower EPU amount.
DISTRIBUTIONS
PAYABLE The distributions payable at June 30, 1999 represents
distributions payable to common unitholders of record on
July 6, 1999 (67,408,967 common units), and preferred
distributions to preferred unitholders (229,304
preferred units) for the second quarter 1999. The second
quarter 1999 common unit distribution of $0.55 per
common unit (pro-rated for units issued during the
quarter), as well as the second quarter preferred unit
distribution of $16.875 per preferred unit, were
approved by the General Partner on June 10, 1999 and
paid on July 23, 1999.
UNDERWRITING
COMMISSIONS
AND COSTS Underwriting commissions and costs incurred in
connection with the Corporation's stock offerings, and
subsequent reinvestment in general partner units, are
reflected as a reduction of these unit values.
10
<PAGE>
STOCK OPTIONS The Operating Partnership accounts for stock-based
compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and
related Interpretations ("APB No. 25"). Under APB No.
25, compensation cost is measured as the excess, if
any, of the quoted market price of the Corporation's
stock at the date of grant over the exercise price of
the option granted. Compensation cost for stock
options, if any, is recognized ratably over the vesting
period. The Corporation's policy is to grant options
with an exercise price equal to the quoted closing
market price of the Corporation's stock on the business
day preceding the grant date. Accordingly, no
compensation cost has been recognized for the
Corporation's stock option plans. See Note 10.
EXTRAORDINARY
ITEM Extraordinary item represents the effect resulting from
the early settlement of certain debt obligations,
including related deferred financing costs, prepayment
penalties, yield maintenance payments and other related
items.
NON-RECURRING
CHARGES The Operating Partnership considers non-recurring charges
as costs incurred specific to significant non-recurring
events that impact the comparative measurement of the
Operating Partnership's performance.
11
<PAGE>
3. ACQUISITIONS/TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Operating Partnership acquired the following operating properties during the
six months ended June 30, 1999:
<TABLE>
<CAPTION>
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Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (a)
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<S> <C> <C> <C> <C> <C>
OFFICE
3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709
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TOTAL OFFICE PROPERTY ACQUISITIONS: 2 94,737 $ 5,709
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- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Operating Partnership acquired the following operating properties during the
year ended December 31, 1998:
<TABLE>
<CAPTION>
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OFFICE
Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2/05/98 500 West Putnam Avenue (c) Greenwich, Fairfield County, CT 1 121,250 $ 20,125
2/25/98 10 Mountainview Road Upper Saddle River, Bergen County, NJ 1 192,000 24,754
3/12/98 1250 Capital of Texas Highway South Austin, Travis County, TX 1 270,703 37,266
3/27/98 Prudential Business Campus (d) Parsippany, Morris County, NJ 5 703,451 130,437
3/27/98 Pacifica Portfolio- Phase I (b) (e) Denver & Colorado Springs, CO 10 620,017 74,966
3/30/98 Morris County Financial Center Parsippany, Morris County, NJ 2 301,940 52,763
5/13/98 3600 South Yosemite Denver, Denver County, CO 1 133,743 13,555
5/22/98 500 College Road East (f) Princeton, Mercer County, NJ 1 158,235 21,334
6/01/98 1709 New York Ave./1400 L Street N.W. Washington, D.C. 2 325,000 90,385
6/03/98 400 South Colorado Boulevard Denver, Denver County, CO 1 125,415 12,147
6/08/98 Pacifica Portfolio - Phase II (b)(e)(g) Denver & Colorado Springs, CO 6 514,427 85,910
7/16/98 4200 Parliament Drive (h) Lanham, Prince George's County, MD 1 122,000 15,807
9/10/98 40 Richards Avenue (e) Norwalk, Fairfield County, CT 1 145,487 19,587
9/15/98 Seven Skyline Drive (i) Hawthorne, Westchester County, NY 1 109,000 13,379
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TOTAL OFFICE PROPERTY ACQUISITIONS: 34 3,842,668 $ 612,415
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OFFICE/FLEX
1/30/98 McGarvey Portfolio (j) Moorestown, Burlington County, NJ 17 748,660 $ 47,526
7/14/98 1510 Lancer Road (k) Moorestown, Burlington County, NJ 1 88,000 3,700
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TOTAL OFFICE/FLEX PROPERTY ACQUISITIONS: 18 836,660 $ 51,226
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TOTAL OPERATING PROPERTY ACQUISITIONS: 52 4,679,328 $ 663,641
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</TABLE>
PROPERTIES PLACED IN SERVICE
The Operating Partnership placed in service the following properties through the
completion of development during the six months ended June 30, 1999:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Investment by
Date Placed # of Rentable Operating
in Service Property Name Location Bldgs. Square Feet Partnership (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OFFICE/FLEX
3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140
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TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 1 38,961 $ 2,140
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LAND LEASE
2/01/99 Horizon Center Business Park (l) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LAND LEASE TRANSACTIONS: 27.7 acres $ 1,007
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 1 38,961 $ 3,147
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE FOOTNOTES TO THESE SCHEDULES ON SUBSEQUENT PAGE.
12
<PAGE>
The Operating Partnership placed in service the following properties through the
completion of development or redevelopment during the year ended December 31,
1998:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Investment by
Date Placed # of Rentable Operating
in Service Property Name Location Bldgs Square Feet Partnership (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
1/15/98 224 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 $ 7,796
8/01/98 228 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 7,986
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACED IN SERVICE: 2 148,000 $ 15,782
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
6/08/98 Two Center Court Totowa, Passaic County, NJ 1 30,600 $ 2,231
10/23/98 650 West Avenue Stamford, Fairfield County, CT 1 40,000 4,952
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 2 70,600 $ 7,183
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 4 218,600 $ 22,965
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Unless otherwise noted, transactions were funded by the Operating
Partnership primarily with funds made available through draws on the
Operating Partnership's credit facilities.
(b) The Operating Partnership may be required to pay additional consideration
due to earn-out provisions in the agreement. William L. Mack, a director
and equity holder of the Operating Partnership, was an indirect owner of an
interest in certain of the buildings contained in the Pacifica portfolio.
(c) The acquisition was funded with cash as well as the assumption of mortgage
debt (estimated fair value of approximately $12,104, with annual effective
interest rate of 6.52 percent).
(d) The acquisition was funded primarily from proceeds received from the sale
of 2,705,628 shares of common stock (see Note 10). Also included in the
acquisition, but excluded from this schedule, is (i) Nine Campus Drive, in
which the Operating Partnership has a 50 percent interest through an
unconsolidated joint venture (see Note 4), and (ii) developable land
adjacent to the acquired portfolio (see "1998 Redevelopment
Properties/Developable Land Acquisitions").
(e) The acquisition was funded with cash and the issuance of common units to
the seller (see Note 11).
(f) The property was acquired subject to a ground lease, which is prepaid
through 2031, and has two 10-year renewal options, at rent levels as
defined in the lease agreement.
(g) Also included in the acquisition, but excluded from this schedule, is
developable land adjacent to the acquired portfolio (see "1998
Redevelopment Properties/Developable Land Acquisitions").
(h) Includes land adjacent to the operating property, which may be sub-divided
for future development.
(i) The property was acquired through the exercise of a purchase option
obtained in connection with the Operating Partnership's acquisition of 65
properties from Robert Martin Company, LLC in January 1997. The acquisition
was funded with cash, net of the repayment by the seller of the remaining
balance of a note receivable.
(j) The acquisition was funded with cash as well as the assumption of mortgage
debt (aggregate estimated fair value of approximately $8,354, with a
weighted average annual effective interest rate of 6.24 percent). The
Operating Partnership is under contract to acquire an additional four
office/flex properties and has a right of first refusal to acquire six
additional office/flex properties.
(k) The property was acquired through the exercise of a purchase option
obtained in the acquisition of the McGarvey portfolio in January 1998.
(l) On February 1, 1999, the Operating Partnership entered into a ground lease
agreement to lease 27.7 acres of developable land located at the Operating
Partnership's Horizon Center Business Park, located in Hamilton Township,
Mercer County, New Jersey on which Home Depot is developing a 134,000
square-foot retail store.
- -------------------------------
1999 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND TRANSACTIONS
On February 26, 1999, the Operating Partnership acquired approximately 2.3 acres
of vacant land adjacent to one of the Operating Partnership's operating
properties located in San Antonio, Bexar County, Texas for approximately $1,524,
which was made available from the Operating Partnership's cash reserves.
On March 15, 1999, the Operating Partnership entered into a joint venture with
SJP 106 Allen Road to form MC-SJP Pinson Development, LLC, which acquired vacant
land located in Bernards Township, Somerset County, New Jersey. The venture has
commenced construction of a 135,000 square-foot office building on this site.
The Operating Partnership provided a construction loan with a total commitment
of $22,859 (aggregate borrowings of $4,987 as of June 30, 1999) to the venture.
Upon completion of the building, the Operating Partnership's construction loan
will convert to an equity interest in the venture. The Operating Partnership
accounts for its investment in the joint venture on a consolidated basis.
13
<PAGE>
On May 4, 1999, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 2.5
acres of vacant land in the Stamford Executive Park, located in Stamford,
Fairfield County, Connecticut. The Operating Partnership acquired the land for
approximately $2,181. $1,681 of the purchase price was funded from the Operating
Partnership's cash reserves with an additional $500 due three years from the
closing date contingent upon certain conditions per the acquisition contract and
subject to interest over the term.
On June 1, 1999, the Operating Partnership acquired 795 Folsom Street, a 183,445
square-foot office building located in San Francisco, San Francisco County,
California. The building was acquired for approximately $34,282, which was made
available from drawing on one of the Operating Partnership's credit facilities.
The Operating Partnership is currently redeveloping the property for lease-up
and operation.
1998 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND ACQUISITIONS
On January 23, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 10
acres of vacant land in the Stamford Executive Park, located in Stamford,
Fairfield County, Connecticut for approximately $1,341, which was funded from
the Operating Partnership's cash reserves. In October 1998, the Operating
Partnership completed and placed in service a 40,000 square-foot office/flex
property on the acquired land (see "Properties Placed in Service").
On February 2, 1998, the Operating Partnership acquired 2115 Linwood Avenue, a
68,000 square-foot vacant office building located in Fort Lee, Bergen County,
New Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Operating Partnership's credit facilities.
The Operating Partnership is currently redeveloping the property for future
lease-up and operation.
On March 27, 1998, as part of the purchase of the Prudential Business Campus
(see "Operating Property Acquisitions"), the Operating Partnership acquired
approximately 95 acres of vacant land adjacent to the operating properties for
approximately $27,500.
On June 8, 1998, as part of the Pacifica portfolio-phase II acquisition (see
"Operating Property Acquisitions"), the Operating Partnership acquired vacant
land adjacent to the operating properties for approximately $2,006.
On September 4, 1998, the Operating Partnership acquired approximately 128 acres
of vacant land located at the Operating Partnership's Horizon Center Business
Park, Hamilton Township, Mercer County, New Jersey, through the exercise of a
purchase option obtained in the Operating Partnership's acquisition of the
Horizon Center Business Park in November 1995. The land was acquired for
approximately $1,698, which was funded from the Operating Partnership's cash
reserves. Subsequently in February 1999, the Operating Partnership leased 27.7
acres of the acquired land to Home Depot (see "Properties Placed in Service").
On November 10, 1998, the Operating Partnership acquired approximately 10.1
acres of land located at Three Vaughn Drive, Princeton, Mercer County, New
Jersey. The Operating Partnership acquired the land for approximately $2,146,
which was funded from the Operating Partnership's cash reserves.
On December 3, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 2.7
acres of land located at 12 Skyline Drive, Hawthorne, Westchester County, New
York. The Operating Partnership acquired the land for approximately $1,540,
which was funded from the Operating Partnership's cash reserves. The Operating
Partnership is currently constructing a 47,000 square-foot office/flex property
on the land parcel.
SUBSEQUENT ACQUISITION
On July 21, 1999, the Operating Partnership acquired 1201 Connecticut Avenue,
NW, a 169,000 square-foot office property, located in Washington, D.C., for
approximately $32,200, which was made available from drawing on one of the
Operating Partnership's credit facilities.
14
<PAGE>
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
PRU-BETA 3 (NINE CAMPUS DRIVE)
On March 27, 1998, the Operating Partnership acquired a 50 percent interest in
an existing joint venture with The Prudential Insurance Company of America
("Prudential"), known as Pru-Beta 3, which owns and operates Nine Campus Drive,
a 156,495 square-foot office building, located in the Prudential Business Campus
office complex in Parsippany, Morris County, New Jersey (see Note 3). The
Operating Partnership performs management and leasing services for the property
owned by the joint venture and received $75 and $43 in fees for such services in
the six months ended June 30, 1999 and 1998, respectively.
HPMC (CONTINENTAL GRAND II/SUMMIT RIDGE/LAVA RIDGE)
On April 23, 1998, the Operating Partnership entered into a joint venture
agreement with HCG Development, L.L.C. and Summit Partners I, L.L.C. to form
HPMC Development Partners, L.P. and, on July 21, 1998, entered into a second
joint venture, HPMC Development Partners II, L.P. (formerly known as HPMC Lava
Ridge Partners, L.P.), with these same parties. HPMC Development Partners,
L.P.'s efforts have focused on two development projects, commonly referred to as
Continental Grand II and Summit Ridge. Continental Grand II is a 4.2 acre site
located in El Segundo, Los Angeles County, California, acquired by the venture
upon which it has commenced construction of a 237,000 square-foot office
property. Summit Ridge is a 7.3-acre site located in San Diego, San Diego
County, California, acquired by the venture upon which it has commenced
construction of a 132,000 square-foot office/flex property. HPMC Development
Partners II, L.P. has commenced construction of three two-story buildings
aggregating 183,200 square-feet of office space on a 12.1-acre site located in
Roseville, Placer County, California and is currently in negotiations with the
City of Daly City, California to purchase a parcel of land for future
development into office space, a hotel and other retail establishments. Among
other things, the partnership agreements provide for a preferred return on the
Operating Partnership's invested capital in each venture, in addition to 50
percent of such venture's profit above the preferred returns, as defined in each
agreement.
G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Operating Partnership acquired a 49.9 percent interest in
an existing joint venture, known as G&G Martco, which owns Convention Plaza, a
305,618 square-foot office building, located in San Francisco, San Francisco
County, California. A portion of its initial investment was financed through the
issuance of common units (see Note 11) as well as funds drawn from the Operating
Partnership's credit facilities. Subsequently, on June 4, 1999, the Operating
Partnership acquired an additional 0.1 percent interest in G&G Martco through
the issuance of common units (see Note 11). The Operating Partnership performs
management and leasing services for the property owned by the joint venture and
received $108 and none in fees for such services in the six months ended June
30, 1999 and 1998, respectively.
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Operating Partnership entered into a joint venture
agreement with Columbia Development Corp. to form American Financial Exchange
L.L.C. The venture was initially formed to acquire land for future development,
located on the Hudson River waterfront in Jersey City, Hudson County, New
Jersey, adjacent to the Operating Partnership's Harborside Financial Center
office complex. The Operating Partnership holds a 50 percent interest in the
joint venture. Among other things, the partnership agreement provides for a
preferred return on the Operating Partnership's invested capital in the venture,
in addition to the Operating Partnership's proportionate share of the venture's
profit, as defined in the agreement. The joint venture acquired land on which it
constructed a parking facility, which is currently leased to a parking operator
under a 10-year agreement. Such parking facility serves a ferry service between
the Operating Partnership's Harborside property and Manhattan.
RAMLAND REALTY ASSOCIATES, L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Operating Partnership entered into a joint venture
agreement with S.B. New York Realty Corp. to form Ramland Realty Associates
L.L.C. The venture was formed to own, manage and operate One Ramland Road, a
232,000 square-foot office/flex building plus adjacent developable land, located
in Orangeburg, Rockland County, New York. The office/flex building is being
redeveloped for future lease-up and operation. The Operating Partnership holds a
50 percent interest in the joint venture.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Operating Partnership entered into a joint venture
agreement with Prudential to form Ashford Loop Associates L.P. The venture was
formed to own, manage and operate 1001 South Dairy Ashford, a 130,000
square-foot office building acquired on September 18, 1998 and 2100 West Loop
South, a 168,000 square-foot office building acquired on November 25, 1998, both
located in Houston, Harris County, Texas. The Operating Partnership holds a 20
percent interest in the joint venture. The joint venture may be required to pay
additional
15
<PAGE>
consideration due to earn-out provisions in the acquisition contracts. During
the six months ended June 30, 1999, the venture paid $2,317 ($463 representing
the Operating Partnership's share) in accordance with the earn-out provisions in
the acquisition contracts. The Operating Partnership performs management and
leasing services for the properties owned by the joint venture and received $63
and none in fees for such services in the six months ended June 30, 1999 and
1998, respectively.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Operating Partnership invested in ARCap Investors,
L.L.C., a joint venture with several participants, which was formed to invest in
sub-investment grade tranches of commercial mortgage-backed securities ("CMBS").
The Operating Partnership has agreed to invest $20,000 in the venture. William
L. Mack, a director and equity holder of the Operating Partnership, is a
principal of the managing member of the venture. During the six months ended
June 30, 1999, the venture purchased approximately $221,539 face value of CMBS
bonds for an aggregate cost of $107,981.
SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Operating Partnership had investment interests as of June
30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
June 30, 1999
---------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Rental property, net $ 22,301 $ 50,252 $ 13,150 $ 10,678 $ 15,606 $ 21,309 $ -- $ 133,296
Other assets 3,598 1,283 3,287 495 273 1,365 147,781 158,082
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 25,899 $ 51,535 $ 16,437 $ 11,173 $ 15,879 $ 22,674 $ 147,781 $ 291,378
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 24,042 $ 42,671 $ -- $ -- $ -- $ 73,840 $ 140,553
Other liabilities 486 5,035 1,368 1 2,661 354 554 10,459
Partners'/members' capital 25,413 22,458 (27,602) 11,172 13,218 22,320 73,387 140,366
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $ 25,899 $ 51,535 $ 16,437 $ 11,173 $ 15,879 $ 22,674 $ 147,781 $ 291,378
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's net
investment in unconsolidated
joint ventures $ 17,381 $19,839 $ 8,956 $ 11,221 $ 6,923 $ 4,808 $ 17,252 $ 86,380
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998
--------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental property, net $ 22,711 $ 30,278 $ 11,099 $ 10,621 $8,467 $ 19,166 -- $ 102,342
Other assets 3,995 1,097 4,058 389 1,101 378 -- 11,018
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 632 $ 39,762 $ -- $ -- $ -- -- $ 40,394
Other liabilities 484 3,522 2,096 79 6 509 -- 6,696
Partners'/members' capital 26,222 27,221 (26,701) 10,931 9,562 19,035 -- 66,270
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $ 26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's net
investment in unconsolidated
joint ventures $ 17,980 $ 17,578 $ 10,964 $ 10,983 $4,851 $ 4,152 -- $ 66,508
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Operating Partnership had investment
interests during the three and six month periods ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
---------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $1,239 -- $ 2,160 $ 229 -- $ 1,071 $ 2,528 $ 7,227
Operating and other expenses (371) -- (699) (61) -- (575) (1,622) (3,328)
Depreciation and amortization (307) -- (230) (23) -- (108) -- (668)
Interest expense -- -- (738) -- -- -- (519) (1,257)
- -----------------------------------------------------------------------------------------------------------------------------
Net income $ 561 -- $ 493 $ 145 -- $ 388 $ 387 $ 1,974
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 242 -- $ 89 $ 145 -- $ 78 $ 280 $ 834
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended June 30, 1998
--------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $1,105 -- $ 671 -- -- -- -- $ 1,776
Operating and other expenses (346) -- (306) -- -- -- -- (652)
Depreciation and amortization (344) -- (135) -- -- -- -- (479)
Interest expense -- -- (505) -- -- -- -- (505)
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 415 -- $ (275) -- -- -- -- $ 140
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 207 -- $ (137) -- -- -- -- $ 70
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended June 30, 1999
--------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $2,470 -- $4,150 $ 417 -- $ 1,988 $2,775 $ 11,800
Operating and other expenses (745) -- (1,390) (130) -- (1,048) (2,012) (5,325)
Depreciation and amortization (625) -- (463) (46) -- (216) -- (1,350)
Interest expense -- -- (1,448) -- -- -- (544) (1,992)
- -----------------------------------------------------------------------------------------------------------------------------
Net income $1,100 -- $ 849 $ 241 -- $ 724 $ 219 $ 3,133
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
earnings (loss) of
unconsolidated joint ventures $ 356 -- $ (277) $ 191 -- $ 134 $ 224 $ 628
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended June 30, 1998
--------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 1,135 -- $ 671 -- -- -- -- $ 1,806
Operating and other expenses (352) -- (306) -- -- -- -- (658)
Depreciation and amortization (344) -- (135) -- -- -- -- (479)
Interest expense -- -- (505) -- -- -- -- (505)
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 439 -- $ (275) -- -- -- -- $ 164
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
earnings (loss) of
unconsolidated joint ventures $ 232 -- $ (137) -- -- -- -- $ 95
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred leasing costs $ 44,977 $ 35,151
Deferred financing costs 16,825 9,962
- ----------------------------------------------------------------------------------------------------------
61,802 45,113
Accumulated amortization (15,761) (13,527)
- ----------------------------------------------------------------------------------------------------------
Deferred charges, net 46,041 31,586
Prepaid expenses and other assets 6,662 7,434
- ----------------------------------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 52,703 $ 39,020
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
6. RESTRICTED CASH
Restricted cash includes security deposits for the Operating Partnership's
residential properties and certain commercial properties, and escrow and reserve
funds for debt service, real estate taxes, property insurance, capital
improvements, tenant improvements, and leasing costs established pursuant to
certain mortgage financing arrangements, and is comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Security deposits $ 5,986 $ 5,696
Escrow and other reserve funds 174 330
- -----------------------------------------------------------------------------------------------------------
Total restricted cash $ 6,160 $ 6,026
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
7. SENIOR UNSECURED NOTES
On March 16, 1999, the Operating Partnership issued $600,000 of senior unsecured
notes ("Senior Unsecured Notes") under a shelf registration statement which was
declared effective by the SEC in September 1998. Interest on the Senior
Unsecured Notes is payable semi-annually in arrears. The Senior Unsecured Notes
are redeemable at any time at the option of the Operating Partnership, subject
to certain conditions including yield maintenance. The total proceeds from the
issuance (net of selling commissions and discount) of approximately $593,500
were used to pay down outstanding borrowings under the 1998 Unsecured Facility,
as defined below, and to pay off certain mortgage loans. The Senior Unsecured
Notes were issued at a discount of approximately $2,748, which is being
amortized over the terms of the respective tranches as an adjustment to interest
expense. Including amortization of offering costs, the weighted average
effective annual interest rate for the Senior Unsecured Notes is approximately
7.38 percent.
A summary of the terms of the Senior Unsecured Notes outstanding as of June 30,
1999 is presented below:
<TABLE>
<CAPTION>
EFFECTIVE
AMOUNT RATE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7.00% Senior Unsecured Notes, due March 15, 2004 $299,624 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 $297,720 7.49%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $597,344 7.38%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the cost of terminated treasury lock agreements, offering and
transaction costs and the discount on the notes.
In August 1999, the Operating Partnership issued an additional $185,283 of
unsecured corporate debt with an interest rate of 7.18 percent payable monthly
and maturity date of December 31, 2003. The Operating Partnership used the
proceeds to retire the TIAA Mortgage as defined below (see Note 9).
18
<PAGE>
The terms of the Senior Unsecured Notes and the unsecured corporate debt include
certain restrictions and covenants which require compliance with financial
ratios relating to the maximum amount of debt leverage, the maximum amount of
secured indebtedness, the minimum amount of debt service coverage and the
maximum amount of unsecured debt as a percent of unsecured assets.
8. REVOLVING CREDIT FACILITIES
ORIGINAL UNSECURED FACILITY
The Original Unsecured Facility ("Original Unsecured Facility") was repaid in
full and retired in connection with the Operating Partnership obtaining the 1998
Unsecured Facility in April 1998, as defined below. On account of prepayment
fees, loan origination fees, legal fees, and other costs incurred in the
retirement of the Original Unsecured Facility, an extraordinary loss of $2,478
was recorded for the year ended December 31, 1998.
1998 UNSECURED FACILITY
In April 1998, the Operating Partnership repaid in full and terminated the
Original Unsecured Facility and obtained a new unsecured revolving credit
facility ("1998 Unsecured Facility") with a current borrowing capacity of
$1,000,000 from a group of 28 lenders. The interest rate is based on the
Operating Partnership's achievement of investment grade unsecured debt ratings
and is currently 90 basis points over London Inter-Bank Offered Rate ("LIBOR")
(5.05 percent at June 30, 1999). The 1998 Unsecured Facility matures in April
2001.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
PRUDENTIAL FACILITY
The Operating Partnership has a revolving credit facility ("Prudential
Facility") from Prudential Securities Corp. ("PSC") in the amount of $100,000,
which currently bears interest at 110 basis points over one-month LIBOR, with a
maturity date of June 30, 2000. The Prudential Facility is a recourse liability
of the Operating Partnership and is secured by the Operating Partnership's
equity interest in Harborside. The Prudential Facility limits the ability of the
Operating Partnership to make any distributions during any fiscal quarter in an
amount in excess of 100 percent of the Operating Partnership's available funds
from operations for the immediately preceding fiscal quarter (except to the
extent such excess distributions or dividends are attributable to gains from the
sale of the Operating Partnership's assets or are required for the Corporation
to maintain its status as a REIT under the Code); provided, however, that the
Operating Partnership may make distributions and pay dividends in excess of 100
percent of available funds from operations for the preceding fiscal quarter for
not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership.
SUMMARY
As of June 30, 1999, the Operating Partnership had outstanding borrowings of
$148,600 under its revolving credit facilities (with aggregate borrowing
capacity of $1,100,000). The total outstanding borrowings were from the 1998
Unsecured Facility, with no outstanding borrowings on its Prudential Facility.
19
<PAGE>
9. MORTGAGES AND LOANS PAYABLE
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Portfolio Mortgages $335,283 $335,283
Property Mortgages 413,758 414,048
- ------------------------------------------------------------------------------------------------
Total Mortgages and Loans Payable $749,041 $749,331
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO MORTGAGES
TIAA MORTGAGE
Several of the Property Partnerships have an aggregate $185,283 non-recourse
mortgage loan with Teachers Insurance and Annuity Association of America, with
interest only payable monthly at a fixed annual rate of 7.18 percent ("TIAA
Mortgage"). The TIAA Mortgage is secured and cross-collateralized by 43
properties and matures in December 2003. The Property Partnerships have the
option to convert, without any yield maintenance obligation or prepayment
premium, the TIAA Mortgage to unsecured public debt as a result of the
achievement of an investment grade credit rating. The TIAA Mortgage is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.
Using the proceeds from the issuance of $185,283 of unsecured corporate debt in
August 1999 (see Note 7), the Property Partnerships repaid in full and retired
the TIAA Mortgage.
$150,000 PRUDENTIAL MORTGAGE LOAN
On April 30, 1998, the Operating Partnership obtained a $150,000, interest-only,
non-recourse mortgage loan from Prudential ("$150,000 Prudential Mortgage
Loan"). The loan, which is secured by 12 properties, has an effective annual
interest rate of 7.10 percent and a seven-year term. The Operating Partnership
has the option to convert the mortgage loan to unsecured debt as a result of the
achievement of an investment grade credit rating. The mortgage loan is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.
Certain mortgages and loans payable were repaid and retired in connection with
the Operating Partnership obtaining the $150,000 Prudential Mortgage Loan. On
account of prepayment fees, loan origination fees, legal fees and other costs
incurred in the retirement of certain mortgages and loans payable in April 1998,
an extraordinary loss of $192 was recorded for the year ended December 31, 1998.
PROPERTY MORTGAGES
Property mortgages are comprised of various non-recourse loans which are
collateralized by certain of the Operating Partnership's and Property
Partnerships' rental properties. Payments on property mortgages are generally
due in monthly installments of principal and interest, or interest only.
A summary of the Operating Partnership's and Property Partnerships' property
mortgages as of June 30, 1999 and December 31, 1998 is as follows:
20
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCE AT
INTEREST JUNE 30, DECEMBER 31, DATE OF
PROPERTY NAME LENDER RATE 1999 1998 MATURITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mack-Cali Centre VI CIGNA 7.600% $ -- $29,223 03/31/99
Mack-Cali Airport CIGNA 7.600% -- 6,849 03/31/99
Mack-Cali Murray Hill Horace Mann 7.850% -- 8,027 05/01/99
Mack-Cali Manhasset IDA Financing TENR 8,000 8,000 12/01/99
201 Commerce Drive Sun Life Assurance Co. 6.240% 1,090 1,121 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,455 4,476 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,465 2,553 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,261 2,292 12/31/01
Harborside Financial Center(1) Contingent Obligation(1) 6.764% 6,358 6,150 11/04/02
Mack-Cali Willowbrook CIGNA 8.670% 10,560 10,918 10/01/03
1717 Route 208, Fair Lawn Prudential Insurance Co. 8.250% 17,348 17,586 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,781 14,983 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 -- 04/01/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.000% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.500% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.740% 27,110 27,696 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 11,127 11,471 10/10/05
Harborside - Plaza I U.S. West Pension Trust 6.990% 49,949 48,148 01/01/06
Harborside - Plaza II and III Northwestern Mutual Life Ins. 7.320% 100,051 101,852 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 -- 04/01/07
Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% 40,025 40,025 01/31/08
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
- ------------------------------------------------------------------------------------------------------------------------------------
Total Property Mortgages $413,758 $414,048
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As part of the Harborside acquisition in November 1996, a Property
Partnership agreed to make payments (with an estimated net present value of
approximately $5,252 at acquisition date) to the seller for development
rights ("Contingent Obligation") if and when such Property Partnership
commences construction on the acquired site during the next several years.
However, the agreement provides, among other things, that even if the
Property Partnership does not commence construction, the seller may
nevertheless require the Property Partnership to acquire these rights
during the six-month period after the end of the sixth year. After such
period, the seller's option lapses, but any development in years 7 through
30 will require a payment, on an increasing scale, for the development
rights. The Property Partnership is currently in the pre-development phase
of a long-range plan to develop the Harborside site on multi-property,
multi-use basis.
INTEREST RATE CONTRACTS
On May 24, 1995, the Operating Partnership entered into an interest rate swap
agreement with a commercial bank. The swap agreement fixes the Operating
Partnership's one-month LIBOR base to 6.285 percent per annum on a notional
amount of $24,000. The swap agreement expires on August 15, 1999.
On January 23, 1996, the Operating Partnership entered into an interest rate
swap agreement with a commercial bank. The swap agreement fixed the Operating
Partnership's one-month LIBOR base to 5.265 percent per annum on a notional
amount of $26,000. The swap agreement expired in January 1999.
On October 1, 1998, the Operating Partnership entered into a forward treasury
rate lock agreement with a commercial bank. The agreement locked an interest
rate of 4.089 percent per annum for the three-year U.S. Treasury Note effective
November 4, 1999, on a notional amount of $50,000. The agreement will be used to
fix the Index Rate on $50,000 of the Harborside-Plaza I mortgage, for which the
Operating Partnership's interest rate re-sets for three years beginning November
4, 1999 to the three-year U.S. Treasury Note plus 110 basis points (see
"Property Mortgages: Harborside-Plaza I").
In connection with the issuance of the Senior Unsecured Notes, the Operating
Partnership entered into and settled forward treasury rate lock agreements in
March 1999. These agreements were settled at a cost of approximately $517, which
is being amortized to interest expense over the terms of the respective
tranches.
21
<PAGE>
The Operating Partnership is exposed to credit loss in the event of
non-performance by the other parties to the interest rate contracts. However,
the Operating Partnership does not anticipate non-performance by any of the
counterparties. The Operating Partnership is also exposed to market risk from
the movement in interest rates pertaining to the forward treasury rate lock
agreement.
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Senior Unsecured Notes, revolving credit facilities and mortgages and
loans payable as of June 30, 1999 are as follows:
<TABLE>
<CAPTION>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
July through December 1999 $ 1,503 $ 8,000 $ 9,503 6.26%
2000 3,336 5,419 8,755 6.77%
2001 3,583 152,811 156,394 6.01%
2002 3,823 7,814 11,637 7.09%
2003 4,180 206,971 211,151 7.31%
Thereafter 4,721 1,092,824 1,097,545 7.19%
- ----------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 21,146 $ 1,473,839 $ 1,494,985 7.08%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes LIBOR rate at June 30, 1999 of 5.05 percent in calculating
revolving credit facility and other variable rate debt interest rates.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the six months ended June 30, 1999 and 1998, was
$38,216 and $61,440, respectively. Interest capitalized by the Operating
Partnership for the six months ended June 30, 1999 and 1998 was $3,019 and
$1,293, respectively.
SUMMARY OF INDEBTEDNESS
As of June 30, 1999, the Operating Partnership's total indebtedness of
$1,494,985, (weighted average interest rate of 7.08 percent) was comprised of
$228,803 of credit facility borrowings and other variable rate mortgage debt
(average rate of 5.84 percent), fixed rate debt of $1,259,824 (average rate of
7.31 percent), and a Contingent Obligation of $6,358.
10. PARTNERS' CAPITAL
Partners' capital in the accompanying financial statements of the Operating
Partnership, prior to August 21, 1998, relates to common units held by the
Corporation in the Operating Partnership, in addition to warrants to purchase
common units ("Unit Warrants") in the Operating Partnership issued in connection
with the Operating Partnership's December 1997 acquisition of 54 office
properties ("Mack Properties") from the Mack Company and Patriot American Office
Group ("Mack Transaction"). Subsequent to August 21, 1998, partners' capital
also includes common units held by the limited partners and preferred units
("Preferred Units") held by the preferred unitholders of the Operating
Partnership.
Net income allocated to the preferred unitholders and limited partners reflects
their pro-rata share of net income and distributions subsequent to August 21,
1998. Net income and distributions for the period prior to August 21, 1998 is
included in the changes in redeemable partnership units (see Note 11).
COMMON STOCK
On February 25, 1998, the Corporation completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92,194 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities
and fund the acquisition of 10 Mountainview Road (see Note 3).
On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Corporation completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99,899 (after offering
costs) in the funding of such acquisition (see Note 3).
22
<PAGE>
On March 27, 1998, the Corporation completed an underwritten public offer and
sale of 650,407 shares of its common stock and used the net proceeds, which
totaled approximately $23,690 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On April 29, 1998, the Corporation completed an underwritten offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,570 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On May 29, 1998, the Corporation completed an underwritten offer and sale of
984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34,100 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On December 31, 1998, the Corporation completed an offer and sale of 132,710
shares of its common stock, using the net proceeds of approximately $3,940 for
general corporate purposes.
The proceeds of the above offerings were contributed by the Corporation to the
Operating Partnership in exchange for units.
On August 6, 1998, the Board of Directors of the Corporation authorized a share
repurchase program ("Repurchase Program") under which the Corporation was
permitted to purchase up to $100,000 of the Corporation's outstanding common
stock. Purchases could be made from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.
For the year ended December 31, 1998, the Corporation purchased, for
constructive retirement, 854,700 shares of its outstanding common stock for an
aggregate cost of approximately $25,058. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 854,700 common units for
approximately $25,058.
For the six months ended June 30, 1999, the Corporation purchased, for
constructive retirement, 26,000 shares of its outstanding common stock for an
aggregate cost of approximately $713. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 26,000 common units for
approximately $713.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Corporation filed a registration statement with the SEC for the
Corporation's dividend reinvestment and stock purchase plan ("Plan") which was
declared effective in February 1999. The Plan commenced on March 1, 1999.
During the six months ended June 30, 1999, 320 shares were issued and proceeds
of approximately $10 were received from stock purchases and/or dividend
reinvestments under the Plan.
SHAREHOLDER RIGHTS PLAN
On June 10, 1999, the Board of Directors of the Corporation authorized a
dividend distribution of one preferred share purchase right ("Right") for each
outstanding share of common stock to be distributed to all holders of record of
the common stock on July 6, 1999. Each Right entitles the registered holder to
purchase from the Corporation one one-thousandth of a share of Series A junior
participating preferred stock, par value $0.01 per share ("the Preferred
Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share
("Purchase Price"), subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Corporation.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock ("Acquiring
Person"). In the event that a person or group becomes an Acquiring Person, each
holder of a Right will have the right to receive, upon exercise, common stock
having a market value equal to two times the Purchase Price of the Right.
23
<PAGE>
STOCK OPTION PLANS
In 1994, and as subsequently amended, the Corporation established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Corporation's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 become
exercisable over a three-year period and those options granted under the
Employee Plan in 1996, 1997 and 1998 become exercisable over a five-year period.
All stock options granted under the Director Plan become exercisable in one
year. All options were granted at the fair market value at the dates of grant
and have terms of ten years. As of June 30, 1999 and December 31, 1998, the
stock options outstanding had a weighted average remaining contractual life of
approximately 7.6 and 8.5 years, respectively.
Information regarding the Corporation's stock option plans is summarized below:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1998 3,287,290 $31.47
Granted 1,048,620 $35.90
Exercised (267,660) $20.47
Lapsed or canceled (128,268) $36.61
- ----------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 3,939,982 $33.22
Granted 37,000 $31.63
Exercised (41,063) $22.87
Lapsed or canceled (289,434) $37.38
- ----------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 1999 3,646,485 $32.99
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Options exercisable at December 31, 1998 1,334,137 $27.84
Options exercisable at June 30, 1999 1,904,177 $30.49
- ----------------------------------------------------------------------------------------------------------------
Available for grant at December 31, 1998 709,223
Available for grant at June 30, 1999 961,657
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
STOCK WARRANTS
The Corporation has outstanding a total of 400,000 warrants to purchase an equal
number of shares of common stock ("Stock Warrants") at $33 per share (the market
price at date of grant). Such warrants generally vest equally over a three-year
period through January 31, 2000 and expire on January 31, 2007.
The Corporation also has outstanding a total of 514,976 Stock Warrants to
purchase an equal number of shares of common stock at $38.75 per share (the
market price at date of grant). Such warrants vest equally over a five-year
period through December 12, 2002 and expire on December 12, 2007.
As of June 30, 1999 and December 31, 1998, there were 914,976 Stock Warrants
outstanding. As of June 30, 1999 and December 31, 1998, there were 585,989 and
565,991 Stock Warrants exercisable, respectively. No Stock Warrants have been
exercised or canceled.
EXECUTIVE STOCK COMPENSATION
Effective July 1, 1999, the Corporation entered into amended and restated
employment contracts with six of its key executive officers which provided for,
among other things, compensation in the form of stock awards ("Restricted Stock
Awards") and associated tax obligation payments. In connection with the
Restricted Stock Awards, the executive officers are to receive up to a total of
193,593 shares of the Corporation's common stock vesting over a five-year period
contingent upon the Corporation meeting certain performance and/or stock
appreciation objectives.
24
<PAGE>
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Deferred Compensation Plan for Directors ("Deferred Compensation Plan")
commenced January 1, 1999 and is a plan which allows non-employee directors of
the Corporation to elect to defer up to 100 percent of their annual retainer fee
into deferred stock units. The deferred stock units are convertible into an
equal number of shares of common stock upon the directors' termination of
service from the Board of Directors or a change in control of the Corporation,
as defined in the plan. Deferred stock units are credited to each director
quarterly using the closing price of the Corporation's common stock on the
applicable dividend record date for the respective quarter. Each participating
director's account is also credited for an equivalent amount of deferred stock
units based on the dividend rate for each quarter.
During the six months ended June 30, 1999, 1,309 deferred stock units were
earned.
EARNINGS PER UNIT
FASB No. 128 requires a dual presentation of basic and diluted EPU on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPU excludes dilution
and is computed by dividing net income available to common unitholders by the
weighted average number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units.
The following information presents the Operating Partnership's results for the
three and six month periods ended June 30, 1999 and 1998 in accordance with FASB
No. 128.
<TABLE>
<CAPTION>
Three Months Ended June 30,
1999 1998
Basic EPU Diluted EPU Basic EPU Diluted EPU
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $21,452 $ 21,452 $ 31,515 $ 31,515
Weighted average units 67,173 67,486 64,145 64,626
- -----------------------------------------------------------------------------------------------------------------
Per Unit $ 0.32 $ 0.32 $ 0.49 $ 0.49
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended June 30,
1999 1998
Basic EPU Diluted EPU Basic EPU Diluted EPU
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $58,396 $ 58,396 $ 61,454 $ 61,454
Weighted average units 67,092 67,385 61,055 61,671
- -----------------------------------------------------------------------------------------------------------------
Per Unit $ 0.87 $ 0.87 $ 1.01 $ 1.00
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic EPU Units: 67,173 64,145 67,092 61,055
Add: Stock options 313 444 293 529
Stock Warrants -- 37 -- 87
- -----------------------------------------------------------------------------------------------------------------
Diluted EPU Units: 67,486 64,626 67,385 61,671
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Preferred Units and Contingent Units outstanding in 1999 and 1998 were not
included in the computation of diluted EPU as such units were anti-dilutive
during the period.
Pursuant to the Repurchase Program, during 1998, the Corporation purchased for
constructive retirement, 854,700 shares of its outstanding common stock for
approximately $25,058. Additionally, during the six months ended June 30, 1999,
the Corporation purchased for constructive retirement, 26,000 shares of its
outstanding common stock for approximately $713.
25
<PAGE>
11. REDEEMABLE PARTNERSHIP UNITS
The outstanding preferred and common units, excluding those common units held by
the Corporation, have been classified as redeemable partnership units outside of
permanent partners' capital prior to August 21, 1998. These units were initially
recorded at fair value and subsequently adjusted based on the fair value at the
balance sheet date as measured by the closing price of the Corporation's common
stock on that date multiplied by the total number of units outstanding.
Effective August 21, 1998, pursuant to an amendment to the Operating Partnership
agreement, in which the Operating Partnership obtained the control over the
redemption rights of the units, these units were reclassified as a component of
permanent partners' capital. The fair value of the reclassified units was
measured by the closing price of the Corporation's common stock on that date
multiplied by the total number of units outstanding.
PREFERRED UNITS
In connection with the Mack Transaction in December 1997, the Operating
Partnership issued 15,237 Series A Preferred Units and 215,325 Series B
Preferred Units, with an aggregate value of $236,491. The Preferred Units have a
stated value of $1,000 per unit and are preferred as to assets over any class of
common units or other class of preferred units of the Operating Partnership,
based on circumstances per the applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the common units are redeemable for an equal number of shares of
common stock.
During 1998, the Operating Partnership issued 19,694 additional Preferred Units
(11,895 of Series A and 7,799 of Series B), convertible into 568,369 common
units and valued at approximately $20,200, in connection with the achievement of
certain performance goals at the Mack Properties in redemption of an equivalent
number of contingent Preferred Units.
During the six months ended June 30, 1999, 20,952 Series A Preferred Units were
converted into 604,675 common units.
As of June 30, 1999, there were 229,304 Preferred Units outstanding (convertible
into 6,617,721 common units).
COMMON UNITS
Certain individuals and entities own common units in the Operating Partnership.
A common unit and a share of common stock of the General Partner have
substantially the same economic characteristics in as much as they effectively
share equally in the net income or loss of the Operating Partnership.
Common units are redeemable by the common unitholders (other than the General
Partner) at their option, subject to certain restrictions, on the basis of one
common unit for either one share of common stock or cash equal to the fair
market value of a share at the time of the redemption. The General Partner has
the option to deliver shares of common stock in exchange for all or any portion
of the cash requested. When a unitholder redeems a common unit for common stock
of the Corporation, limited partner's capital is reduced and the General
Partner's capital is increased. Effective August 21, 1998, the partnership
agreement was amended to vest this right in the Operating Partnership, rather
than in the General Partnership (see Note 2). Common units held by the General
Partner are not redeemable.
During 1998, the Operating Partnership redeemed a total of 82,880 common units
in exchange for an aggregate of $3,163 in cash. Additionally, the Operating
Partnership redeemed an aggregate of 29,300 common units for an equivalent
number of shares of common stock in the General Partner.
On March 26, 1998, in connection with the Pacifica portfolio-phase I
acquisition, the Operating Partnership issued 100,175 common units, valued at
approximately $3,779.
26
<PAGE>
On April 30, 1998, in connection with the acquisition of a 49.9 percent interest
in the G&G Martco joint venture (see Note 4), the Operating Partnership issued
218,105 common units, valued at approximately $8,334.
On June 8, 1998, in connection with the Pacifica portfolio-phase II acquisition,
the Operating Partnership issued 585,263 common units, valued at approximately
$20,753.
On July 20, 1998, in connection with the expansion of one of the Mack
Properties, the Operating Partnership issued 52,245 common units, valued at
approximately $1,632.
On September 10, 1998, in connection with the acquisition of 40 Richards Avenue,
the Operating Partnership issued 414,114 common units, valued at approximately
$12,615.
During 1998, the Operating Partnership also issued 1,731,386 common units,
valued at approximately $58,936, in connection with the achievement of certain
performance goals at the Mack Properties in redemption of an equivalent number
of contingent common units.
On June 4, 1999, in connection with the acquisition of a 0.1 percent interest in
G&G Martco joint venture (see Note 4), the Operating Partnership issued 437
common units, valued at approximately $17.
During the six months ended June 30, 1999, the Operating Partnership redeemed an
aggregate of 1,634,164 common units for an equivalent number of shares of common
stock in the Corporation.
During the six months ended June 30, 1999, the Operating Partnership also issued
242,157 common units, valued at approximately $7,241, in connection with the
achievement of certain performance goals at the Mack Properties in redemption of
an equivalent number of contingent common units.
As of June 30, 1999, there were 8,299,690 common units outstanding.
CONTINGENT COMMON & PREFERRED UNITS
In conjunction with the Mack Transaction in December 1997, 2,006,432 contingent
common units, 11,895 Series A contingent Preferred Units and 7,799 Series B
contingent Preferred Units were issued as contingent non-participating units
("Contingent Units"). Such Contingent Units have no voting, distribution or
other rights until such time as they are redeemed into common units, Series A
Preferred Units, and Series B Preferred Units, respectively. Redemption of such
Contingent Units shall occur upon the achievement of certain performance goals
relating to certain of the Mack Properties, specifically the achievement of
certain leasing activity. When Contingent Units are redeemed for common and
Preferred Units, an adjustment to the purchase price of certain of the Mack
Properties is recorded, based on the value of the units issued.
On account of certain of the performance goals at the Mack Properties having
been achieved during 1998, the Operating Partnership redeemed 1,731,386
contingent common units and 19,694 contingent Preferred Units and issued an
equivalent number of common and Preferred Units, as indicated above.
On account of certain of the performance goals at the Mack Properties having
been achieved during the six months ended June 30, 1999, the Company redeemed
242,157 contingent common units and issued an equivalent number of common units,
as indicated above. There were no contingent Preferred Units outstanding and
32,889 contingent common units outstanding as of June 30, 1999.
UNIT WARRANTS
The Operating Partnership has 2,000,000 Unit Warrants outstanding. The Unit
Warrants are exercisable at $37.80 per common unit and expire on December 11,
2002.
27
<PAGE>
CHANGES IN REDEEMABLE PARTNERSHIP UNITS
The following table sets forth the changes in redeemable partnership units for
the year ended December 31, 1998:
<TABLE>
<CAPTION>
Limited
Preferred Partner Preferred Limited
Units Units Unitholders Partners Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 231 6,097 $ 272,815 $ 249,997 $ 522,812
Net income -- -- 10,267 9,260 19,527
Distributions -- -- (7,896) (6,827) (14,723)
Issuance of units in connection with acquisitions -- 1,735 -- 64,628 64,628
Redemption of units for shares of common stock -- (22) -- (848) (848)
Redemption of units -- (83) -- (3,163) (3,163)
Issuance of Preferred Units 17 -- 17,943 -- 17,943
Adjustment to reflect preferred unitholders'
and limited partners' capital at redemption value -- -- (69,686) (46,172) (115,858)
Reclassification of redeemable partnership units
as permanent partners' capital (248) (7,727) (223,443) (266,875) (490,318)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 -- -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
12. EMPLOYEE BENEFIT PLAN
All employees of the Corporation who meet certain minimum age and period of
service requirements are eligible to participate in a 401(k) defined
contribution plan (the "401(k) Plan"). The 401(k) Plan allows eligible employees
to defer up to 15 percent of their annual compensation. The amounts contributed
by employees are immediately vested and non-forfeitable. The Corporation, at
management's discretion, may match employee contributions, although no employer
contributions have been made to date.
13. COMMITMENTS AND CONTINGENCIES
TAX ABATEMENT AGREEMENTS
GROVE STREET PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey, as
amended, expiring in 2004, one of the Property Partnerships is required to
make payments in lieu of property taxes ("PILOT") on its property at 95
Christopher Columbus Drive, Jersey City, Hudson County, New Jersey. Such
PILOT, as defined, is $1,267 per annum through May 31, 1999 and $1,584 per
annum through May 31, 2004.
HARBORSIDE FINANCIAL CENTER PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by one of the
Property Partnerships as part of the acquisition of the property in November
1996, the Property Partnerships are required to make PILOT payments on its
Harborside property. The agreement, which commenced in 1990, is for a term of
15 years. Such PILOT is equal to two percent of Total Project Costs, as
defined, in year one and increases by $75 per annum through year fifteen.
Total Project Costs, as defined, are $145,644. Such PILOT totaled $1,302 and
$1,239 for the six months ended June 30, 1999 and 1998, respectively.
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Operating Partnership or Property Partnerships are the
lessees as of June 30, 1999, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
July 1, 1999 to December 31, 1999 $ 213
2000 425
2001 427
2002 427
2003 427
Thereafter 21,934
- ------------------------------------------------------------------------------------------------------------------------
Total $23,853
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
OTHER
On April 19, 1999, the Corporation announced the following changes in the
membership of its Board of Directors and the identities, titles and
responsibilities of its executive officers: (i) Thomas A. Rizk resigned from the
Board of Directors, the Executive Committee of the Board of Directors, his
position as Chief Executive Officer and as an employee of the Corporation; (ii)
Mitchell E. Hersh was appointed Chief Executive Officer of the Corporation
simultaneous with his resignation from his positions as President and Chief
Operating Officer of the Corporation; (iii) Timothy M. Jones was appointed
President of the Corporation simultaneous with his resignation from his
positions as Executive Vice President and Chief Investment Officer of the
Corporation; and (iv) Brant Cali was appointed to the Board of Directors of the
Corporation to fill the remainder of Thomas A. Risk's term as a Class III
Director and was appointed Chief Operating Officer of the Corporation, also
remaining as an Executive Vice President and Assistant Secretary of the
Corporation.
Pursuant to the terms of Mr. Rizk's employment agreement entered into with the
Corporation in December 1997 and an agreement entered into simultaneous with his
resigning from the Corporation, Mr. Rizk received a payment of approximately
$14,490 in April 1999 and will receive $500 annually over the next three years.
All costs associated with Mr. Rizk's resignation are included in non-recurring
charges for the three and six month periods ended June 30, 1999.
The Operating Partnership is a defendant in certain litigation arising in the
normal course of business activities. Management does not believe that the
resolution of these matters will have a materially adverse effect upon the
Operating Partnership and the Property Partnerships.
14. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
15. SEGMENT REPORTING
The Operating Partnership operates in one business segment - real estate. The
Operating Partnership provides leasing, management, acquisition, development,
construction and tenant-related services for its portfolio. The Operating
Partnership does not have any foreign operations. The accounting policies of the
segment are the same as those described in Note 2, excluding straight-line rent
adjustments and depreciation and amortization.
The Operating Partnership evaluates performance based upon net operating income
from the combined properties in the segment.
Selected results of operations for the three and six month periods ended June
30, 1999 and 1998 and selected asset information as of June 30, 1999 and
December 31, 1998 regarding the Operating Partnership's operating segment are as
follows:
29
<PAGE>
<TABLE>
<CAPTION>
Total Corporate & Total
Segment Other (e) Operating Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL CONTRACT REVENUES (A):
Three months ended:
June 30, 1999 $ 132,575 $ 567 $ 133,142 (f)
June 30, 1998 116,878 2,021 118,899 (g)
Six months ended:
June 30, 1999 $ 264,344 $ 142 $ 264,486 (h)
June 30, 1998 218,479 3,040 221,519 (i)
TOTAL OPERATING AND INTEREST EXPENSES (B):
Three months ended:
June 30, 1999 $ 28,110 $ 61,079 $ 89,189
June 30, 1998 38,750 26,028 64,778
Six months ended:
June 30, 1999 $ 71,265 $ 90,031 $ 161,296
June 30, 1998 71,696 48,824 120,520
NET OPERATING INCOME (C):
Three months ended:
June 30, 1999 $ 104,465 $ (60,512) $ 43,953 (f)
June 30, 1998 78,128 (24,007) 54,121 (g)
Six months ended:
June 30, 1999 $ 193,079 $ (89,889) $ 103,190 (h)
June 30, 1998 146,783 (45,784) 100,999 (i)
TOTAL ASSETS:
June 30, 1999 $ 3,512,260 $ 26,338 $ 3,538,598
December 31, 1998 3,430,865 21,329 3,452,194
TOTAL LONG-LIVED ASSETS (D):
June 30, 1999 $ 3,457,321 $ 4,196 $ 3,461,517
December 31, 1998 3,393,313 4,098 3,397,411
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total contract revenues represents all revenues during the period
(including the Operating Partnership's share of net income from
unconsolidated joint ventures), excluding adjustments for straight-lining
of rents and the Operating Partnership's share of straight-line rent
adjustments from unconsolidated joint ventures. All interest income is
excluded from the segment amounts and is classified in Corporate and Other
for all periods.
(b) Total operating and interest expenses represents the sum of real estate
taxes, utilities, operating services, general and administrative and
interest expense. All interest expense (including for property-level
mortgages) is excluded from the segment amounts and is classified in
Corporate and Other for all periods.
(c) Net operating income represents total contract revenues [as defined in Note
(a)] less total operating and interest expenses [as defined in Note (b)]
for the period.
(d) Long-lived assets are comprised of total rental property, unbilled rents
receivable and investments in unconsolidated joint ventures.
(e) Corporate & Other represents all corporate-level items (including interest
income, interest expense and non-property general and administrative
expense) as well as intercompany eliminations necessary to reconcile to
consolidated Operating Partnership totals.
(f) Excludes $3,859 of adjustments for straight lining of rents and $(26) for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(g) Excludes $3,136 of adjustments for straight lining of rents and $6 for the
Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(h) Excludes $7,422 of adjustments for straight lining of rents and $(44) for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(i) Excludes $6,339 of adjustments for straight lining of rents and $6 for the
Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
30
<PAGE>
16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Cost of Start-Up Activities" ("SOP 98-5"), which is effective
for fiscal years beginning after December 15, 1998. SOP 98-5 requires costs of
start-up and organizational activities be expensed as incurred. The adoption of
SOP 98-5 did not have a material effect on the Operating Partnership's financial
statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. In June 1999, the FASB delayed the implementation
date of FASB No. 133 by one year (January 1, 2001 for the Operating
Partnership). FASB No. 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of the
Operating Partnership anticipates that, due to its limited use of derivative
instruments, the adoption of FASB No. 133 will not have a significant effect on
the Operating Partnership's results of operations or its financial position.
17. PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information for the six months ended June 30,
1999 and 1998 are presented as if all acquisitions and common stock offerings
completed during the six months ended June 30, 1999 and the year ended December
31, 1998 had occurred on January 1, 1998. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1998, nor do they
represent the results of operations of future periods.
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenues $ 271,864 $ 252,675
Operating and other expenses 81,615 74,327
General and administrative 13,904 13,746
Depreciation and amortization 44,434 39,211
Interest expense 49,319 50,090
Non-recurring charges 16,458 --
- -------------------------------------------------------------------------------------------------------
Income before preferred unit distributions 66,134 75,301
Preferred units distributions (7,738) (7,896)
- -------------------------------------------------------------------------------------------------------
Income available to common unitholders $ 58,396 $ 67,405
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Basic earnings per common unit $ 0.87 $ 1.02
Diluted earnings per common unit $ 0.87 $ 1.01
- -------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 67,092 65,825
Diluted weighted average units outstanding 67,385 66,441
- -------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty, L.P. and subsidiaries and the notes
thereto. Certain defined terms used herein have the meaning ascribed to them in
the Consolidated Financial Statements.
The following comparisons for the three and six month periods ended June 30,
1999 ("1999"), as compared to the three and six month periods ended June 30,
1998 ("1998") make reference to the following: (i) the effect of the "Same-Store
Properties," which represents all in-service properties owned by the Operating
Partnership at March 31, 1998 (for the three-month period comparisons), and
which represents all in-service properties owned by the Operating Partnership at
December 31, 1997 (for the six-month period comparisons) and (ii) the effect of
the "Acquired Properties," which represents all properties acquired or placed in
service by the Operating Partnership from April 1, 1998 through June 30, 1999
(for the three-month period comparisons), and which represents all properties
acquired or placed in service by the Operating Partnership from January 1, 1998
through June 30, 1999 (for the six-month period comparisons).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Quarter Ended
June 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change
- ----------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
<S> <C> <C> <C> <C>
Base rents $116,499 $105,861 $10,638 10.0%
Escalations and recoveries from tenants 16,366 12,358 4,008 32.4
Parking and other 3,061 2,836 225 7.9
- ----------------------------------------------------------------------------------------------------------------
Sub-total 135,926 121,055 14,871 12.3
Interest income 215 916 (701) (76.5)
Equity in earnings of
unconsolidated joint ventures 834 70 764 1,091.4
- ----------------------------------------------------------------------------------------------------------------
Total revenues 136,975 122,041 14,934 12.2
- ----------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 14,208 11,854 2,354 19.9
Utilities 9,829 9,115 714 7.8
Operating services 17,227 15,629 1,598 10.2
- ----------------------------------------------------------------------------------------------------------------
Sub-total 41,264 36,598 4,666 12.7
General and administrative 5,770 6,394 (624) (9.8)
Depreciation and amortization 22,465 19,093 3,372 17.7
Interest expense 25,697 21,786 3,911 18.0
Non-recurring charges 16,458 -- 16,458 --
- ----------------------------------------------------------------------------------------------------------------
Total expenses 111,654 83,871 27,783 33.1
- ----------------------------------------------------------------------------------------------------------------
Income before extraordinary item 25,321 38,170 (12,849) (33.7)
Extraordinary item - loss on
early retirement of debt -- (2,670) 2,670 100.0
- ----------------------------------------------------------------------------------------------------------------
Net income 25,321 35,500 (10,179) (28.7)
Preferred unit distribution (3,869) (3,985) 116 (2.9)
- ----------------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $ 21,452 $ 31,515 $(10,063) (31.9)%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Total Acquired Same-Store
Operating Partnership Properties Properties
--------------------- ---------- ----------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $10,638 10.0% $7,529 7.1% $3,109 2.9%
Escalations and recoveries from tenants 4,008 32.4 994 8.0 3,014 24.4
Parking and other 225 7.9 96 3.4 129 4.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total $14,871 12.3% $8,619 7.1% $6,252 5.2%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes $2,354 19.9% $ 959 8.1% $1,395 11.8%
Utilities 714 7.8 645 7.0 69 0.8
Operating services 1,598 10.2 1,255 8.0 343 2.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,666 12.7% $2,859 7.8% $1,807 4.9%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
Number of wholly-owned properties 249 22 227
Square feet (in thousands) 27,152 2,161 24,991
</TABLE>
Base rents for the Same-Store Properties increased $3.1 million, or 2.9 percent,
for 1999 as compared to 1998, due primarily to occupancy and rental rate
increases in 1999. Escalations and recoveries from tenants for the Same-Store
Properties increased $3.0 million, or 24.4 percent, for 1999 over 1998, due to
the recovery of an increased amount of total property expenses, as well as
additional settle-up billings in 1999. Parking and other income for the
Same-Store Properties increased $0.1 million, or 4.5 percent, which is primarily
attributable to lease termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $1.4 million, or 11.8
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties increased $0.1 million, or 0.8 percent, for 1999 as compared to 1998,
due primarily to increased electric rates and usage in 1999. Operating services
for the Same-Store Properties increased $0.3 million, or 2.2 percent, due
primarily to additional maintenance costs incurred.
Equity in earnings of unconsolidated joint ventures increased $0.8 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).
Interest income decreased by approximately $0.7 million, or 76.5 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative decreased by $0.6 million, or 9.8 percent for 1999 as
compared to 1998. This decrease is due primarily to decreased payroll and
related costs in 1999.
Depreciation and amortization increased by $3.4 million, or 17.7 percent, for
1999 over 1998. Of this increase, $1.7 million, or 8.8 percent, is attributable
to the Acquired Properties, and $1.7 million, or 8.9 percent, is due to the
Same-Store Properties.
Interest expense increased $3.9 million, or 18.0 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Operating Partnership's revolving credit facilities
generally as a result of Operating Partnership acquisitions in 1998. These
increases were partially offset by a reduction in LIBOR in 1999, the reduction
in spread over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and
the achievement by the Operating Partnership of investment grade credit ratings
in November 1998.
33
<PAGE>
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 12 to the Financial Statements).
Net income available to common unitholders decreased to $21.5 million in 1999
from $31.5 million in 1998. The decrease of $10.0 million is due to the factors
discussed above, partially offset by an extraordinary item of $2.7 million in
1998. Additionally, there were preferred dividends of $3.9 million in 1999 and
$4.0 million in 1998.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Quarter Ended
June 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 232,579 $ 198,777 $ 33,802 17.0%
Escalations and recoveries from tenants 31,226 22,715 8,511 37.5
Parking and other 6,961 4,818 2,143 44.5
- ----------------------------------------------------------------------------------------------------------------------------
Sub-total 270,766 226,310 44,456 19.6
Interest income 470 1,459 (989) (67.8)
Equity in earnings of
unconsolidated joint ventures 628 95 533 561.1
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 271,864 227,864 44,000 19.3
- ----------------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 28,051 21,926 6,125 27.9
Utilities 19,421 17,417 2,004 11.5
Operating services 34,143 28,321 5,822 20.6
- ----------------------------------------------------------------------------------------------------------------------------
Sub-total 81,615 67,664 13,951 20.6
General and administrative 13,904 12,591 1,313 10.4
Depreciation and amortization 44,434 35,324 9,110 25.8
Interest expense 49,319 40,265 9,054 22.5
Non-recurring charges 16,458 -- 16,458 --
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 205,730 155,844 49,886 32.0
- ----------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 66,134 72,020 (5,886) (8.2)
Extraordinary item - loss on early
retirement of debt -- (2,670) 2,670 100.0
- ----------------------------------------------------------------------------------------------------------------------------
Net income 66,134 69,350 (3,216) (4.6)
Preferred unit distribution (7,738) (7,896) 158 (2.0)
- ----------------------------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $ 58,396 $ 61,454 $ (3,058) (5.0)%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Total Acquired Same-Store
Operating Partnership Properties Properties
--------------------- ---------- ----------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $33,802 17.0% $26,271 13.2% $ 7,531 3.8%
Escalations and recoveries from tenants 8,511 37.5 4,735 20.9 3,776 16.6
Parking and other 2,143 44.5 1,430 29.7 713 14.8
- ------------------------------------------------------------------------------------------------------------------------
Total $44,456 19.6% $32,436 14.3% $12,020 5.3%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes $ 6,125 27.9% $ 4,206 19.2% $ 1,919 8.7%
Utilities 2,004 11.5 2,200 12.6 (196) (1.1)
Operating services 5,822 20.6 5,004 17.7 818 2.9
- ------------------------------------------------------------------------------------------------------------------------
Total $13,951 20.6% $11,410 16.9% $2,541 3.7%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
Number of wholly-owned properties 249 60 189
Square feet (in thousands) 27,152 5,187 21,965
</TABLE>
Base rents for the Same-Store Properties increased $7.5 million, or 3.8 percent,
for 1999 as compared to 1998, due primarily to occupancy and rental rate
increases in 1999. Escalations and recoveries from tenants for the Same-Store
Properties increased $3.8 million, or 16.6 percent, for 1999 over 1998, due to
the recovery of an increased amount of total property expenses, as well as
additional settle-up billings in 1999. Parking and other income for the
Same-Store Properties increased $0.7 million, or 14.8 percent, which is
primarily attributable to lease termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $1.9 million, or 8.7
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties decreased $0.2 million, or 1.1 percent, for 1999 as compared to 1998,
due primarily to decreased electric rates and usage in 1999. Operating services
for the Same-Store Properties increased $0.8 million, or 2.9 percent, due
primarily to increased snow removal costs incurred at the Same-Store Properties
in 1999.
Equity in earnings of unconsolidated joint ventures increased $0.5 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).
Interest income decreased by approximately $1.0 million, or 67.8 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative increased by $1.3 million, or 10.4 percent for 1999
as compared to 1998. This increase is due primarily to an increase in payroll
and related costs and professional fees as a result of the Operating
Partnership's expansion in 1998.
Depreciation and amortization increased by $9.1 million, or 25.8 percent, for
1999 over 1998. Of this increase, $6.8 million, or 19.4 percent, is attributable
to the Acquired Properties, and $2.3 million, or 6.4 percent, is due to the
Same-Store Properties.
Interest expense increased $9.1 million, or 22.5 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Operating Partnership's revolving credit facilities
generally as a result of Operating Partnership acquisitions in 1998. These
increases were partially offset by a reduction in LIBOR in 1999, the reduction
in spread over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and
the achievement by the Operating Partnership of investment grade credit ratings
in November 1998.
35
<PAGE>
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 12 to the Financial Statements).
Net income available to common unitholders decreased to $58.4 million in 1999
from $61.5 million in 1998. The decrease of $3.1 million is due to the factors
discussed above, partially offset by an extraordinary item of $2.7 million in
1998. Additionally, there were preferred dividends of $7.7 million in 1999 and
$7.9 million in 1998.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the six months ended June 30, 1999, the Operating Partnership generated
$110.0 million in cash flows from operating activities, and together with $773.6
million in borrowings from the Operating Partnership's revolving credit
facilities, the issuance of unsecured notes and funds from additional mortgage
debt, $0.9 million in proceeds from stock options exercised, $10.6 million in
distributions received from unconsolidated joint ventures, used an aggregate of
approximately $895.1 million to acquire properties and land parcels and pay for
other tenant and building improvements totaling $71.1 million, repay outstanding
borrowings on its revolving credit facilities and other mortgage debt of $699.7
million, pay quarterly distributions of $81.3 million, invest $29.9 million in
unconsolidated joint ventures, repurchase 26,000 shares of the Corporation's
outstanding common stock for $0.7 million, pay deferred financing costs of $6.6
million, add $0.1 million to restricted cash and increase the Operating
Partnership's cash and cash equivalents by $5.7 million.
CAPITALIZATION
During the six months ended June 30, 1999, in conjunction with the redemption of
certain of the contingent units issued in the Mack Transaction, the Operating
Partnership issued a total of 242,157 common units with a total value of
approximately $7.2 million at time of issuance.
In August 1998, the Board of Directors of the Corporation authorized a share
repurchase program under which the Corporation was permitted to purchase up to
$100.0 million of the Corporation's outstanding common stock. Purchases could be
made from time to time in open market transactions at prevailing prices or
through privately negotiated transactions. Subsequently, through June 30, 1999,
the Corporation purchased, for constructive retirement, 880,700 shares of its
outstanding common stock for an aggregate cost of approximately $25.8 million.
Concurrent with these purchases, the Corporation sold to the Operating
Partnership 880,700 common units for approximately $25.8 million.
On June 10, 1999, the Board of Directors of the Corporation authorized a
dividend distribution of one preferred share purchase right for each outstanding
share of common stock to be distributed to all holders of record of the common
stock on July 6, 1999. Each Right entitles the registered holder to purchase
from the Corporation one one-thousandth of a share of Series A junior
participating preferred stock, par value $0.01 per share, at a price of $100.00
per one one-thousandth of a Preferred Share, subject to adjustment as provided
in the rights agreement. The Rights expire on July 6, 2009, unless the
expiration date is extended or the Right is redeemed or exchanged earlier by the
Corporation.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock. In the event that
a person or group becomes an Acquiring Person, each holder of a Right will have
the right to receive, upon exercise, common stock having a market value equal to
two times the Purchase Price of the Right. The Corporation's adoption of the
shareholder rights plan was not taken in response to any known effort to acquire
control of the Corporation.
As of June 30, 1999, the Operating Partnership's total indebtedness of $1.5
billion (weighted average interest rate of 7.08 percent) was comprised of $228.8
million of revolving credit facility borrowings and other variable rate mortgage
debt (average rate of 5.84 percent), fixed rate debt of $1.3 billion (average
rate of 7.31 percent), and a Contingent Obligation of $6.4 million.
As of June 30, 1999, the Operating Partnership had outstanding borrowings of
$148.6 million under its revolving credit facilities (with aggregate borrowing
capacity of $1.1 billion). The total outstanding borrowings were from the 1998
Unsecured Facility, with no outstanding borrowings on the Prudential Facility.
The 1998 Unsecured Facility, with 28 lender banks, carries an interest rate of
90 basis points over LIBOR and matures in April 2001. The Prudential Facility
carries an interest rate of 110 basis points over LIBOR and matures in June
2000.
36
<PAGE>
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
The Operating Partnership has three investment grade credit ratings. Duff &
Phelps Credit Rating Co. ("DCR") and Standard & Poors Rating Services ("S&P")
have each assigned their BBB rating to the $785.3 million of total unsecured
corporate debt of the Operating Partnership. DCR and S&P have also assigned
their BBB- rating to prospective preferred stock offerings of the Corporation.
Moody's Investors Service has assigned its Baa3 rating to the unsecured
corporate debt and its Ba1 rating to prospective preferred stock offerings of
the Corporation.
The terms of the unsecured corporate debt include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
In May 1995, the Operating Partnership entered into an interest rate swap
agreement with a commercial bank. The swap agreement fixes the Operating
Partnership's one-month LIBOR base to 6.285 percent per annum on a notional
amount of $24.0 million. The swap agreement expires on August 15, 1999.
In October 1998, the Operating Partnership entered into a forward treasury rate
lock agreement with a commercial bank. The agreement locked an interest rate of
4.089 percent per annum for the three-year U.S. Treasury Note effective November
4, 1999, on a notional amount of $50.0 million. The agreement will be used to
fix the Index Rate on $50.0 million of the Harborside - Plaza I mortgage, for
which the Operating Partnership's interest rate re-sets for three years
beginning November 4, 1999 to the interpolated three-year U.S. Treasury Note
plus 110 basis points (see Note 9 to the Financial Statements - "Property
Mortgages: Harborside-Plaza I").
Using the proceeds from the issuance of $185.3 million of unsecured corporate
debt in August 1999, the Operating Partnership repaid in full and retired the
TIAA Mortgage, which was secured by 43 properties aggregating 3.1 million square
feet. Following the repayment, the Operating Partnership had 217 unencumbered
properties, totaling 20.1 million square feet, representing 73.5 percent of the
Operating Partnership's total portfolio on a square footage basis. The Operating
Partnership is currently reviewing its option to convert the $150.0 Million
Prudential Mortgage Loan, encumbering 12 properties aggregating 2.4 million
square feet, to unsecured corporate debt.
The Operating Partnership and Corporation has an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $785.3 million of
unsecured corporate debt.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Operating
Partnership will have access to the capital resources necessary to expand and
develop its business. To the extent that the Operating Partnership's cash flow
from operating activities is insufficient to finance its non-recurring capital
expenditures such as property acquisition and construction project costs and
other capital expenditures, the Operating Partnership expects to finance such
activities through borrowings under its credit facilities and other debt and
equity financing.
The Operating Partnership expects to meet its short-term liquidity requirements
generally through its working capital and net cash provided by operating
activities, along with the 1998 Unsecured Facility and the Prudential Facility.
The Operating Partnership is frequently examining potential property
acquisitions and construction projects and, at any given time, one or more of
such acquisitions may be under consideration. Accordingly, the ability to fund
property acquisitions is a major part of the Operating Partnership's financing
requirements. The Operating Partnership expects to meet its financing
requirements through funds generated from operating activities, long-term or
short-term borrowings (including draws on the Operating Partnership's revolving
credit facilities) and the issuance of additional debt or equity securities. In
addition, the Operating Partnership anticipates utilizing the 1998 Unsecured
Facility and the Prudential Facility primarily to fund property acquisitions.
37
<PAGE>
As of quarter end, the Operating Partnership's total debt had a weighted average
term to maturity of 5.9 years. The Operating Partnership does not intend to
reserve funds to retire its unsecured corporate debt, Harborside mortgages,
$150.0 Million Prudential Mortgage Loan, its other property mortgages or other
long-term mortgages and loans payable upon maturity. Instead, the Operating
Partnership will seek to refinance such debt at maturity or retire such debt
through the issuance of additional debt or equity securities. The Operating
Partnership is reviewing various refinancing options, including the issuance of
additional unsecured corporate debt, preferred stock, and/or obtaining
additional mortgage debt, some or all of which may be completed during 1999. The
Operating Partnership anticipates that its available cash and cash equivalents
and cash flows from operating activities, together with cash available from
borrowings and other sources, will be adequate to meet the Operating
Partnership's capital and liquidity needs both in the short and long-term.
However, if these sources of funds are insufficient or unavailable, the
Operating Partnership's ability to make the expected distributions discussed
below may be adversely affected.
To maintain its qualification as a REIT, the Corporation must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. The Corporation currently relies on the
distributions it receives from the Operating Partnership to make its
distributions to its stockholders. Moreover, the Operating Partnership intends
to continue to make regular quarterly distributions to its unitholders which,
based upon current policy, in the aggregate would equal approximately $130.4
million on an annualized basis. However, any such distribution would only be
paid out of available cash after meeting operating requirements, scheduled debt
service on mortgages and loans payable, and preferred unit distributions.
38
<PAGE>
SIGNIFICANT TENANTS
The following table sets out a schedule of the Operating Partnership's 20
largest tenants, for the Operating Partnership's wholly-owned properties as of
June 30, 1999, based upon annualized base rents:
<TABLE>
<CAPTION>
Percentage of Percentage of
Annualized Operating Partnership Square Total Year of
Number of Base Rental Annualized Base Feet Operating Partnership Lease
Properties Revenue ($)(1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT&T Corporation 6 15,433,135 3.5 1,034,779 4.0 2009 (2)
Donaldson, Lufkin &
Jenrette Securities Corp. 2 9,960,413 2.3 527,506 2.1 2009 (3)
AT&T Wireless Services 2 7,826,368 1.8 365,593 1.4 2007 (4)
International Business
Machines Corporation 5 7,522,499 1.7 390,370 1.5 2007 (5)
Allstate Insurance Company 10 6,377,507 1.4 293,820 1.1 2009 (6)
Prentice-Hall Inc. 1 5,794,893 1.3 474,801 1.9 2014
Nabisco Inc. 2 5,467,178 1.2 300,378 1.2 2000
Toys R US - NJ, Inc. 1 5,342,672 1.2 242,518 0.9 2012
American Institute of Certified
Public Accountants 1 4,981,357 1.1 249,768 1.0 2012
CMP Media Inc 1 4,826,107 1.1 206,274 0.8 2014
Board of Gov./Federal Reserve 1 4,605,090 1.0 117,008 0.5 2009 (7)
Winston & Strawn 1 4,214,885 1.0 108,100 0.4 2003
Dow Jones Telerate Systems Inc. 1 3,660,064 0.8 194,219 0.8 2006 (8)
KPMG Peat Marwick, LLP 2 3,510,412 0.8 161,760 0.6 2007 (9)
Bank of Tokyo - Mitsubishi Ltd 1 3,378,923 0.8 137,076 0.5 2009
Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003
Morgan Stanley Dean Witter 1 3,188,532 0.7 179,131 0.7 2008
Dean Witter Reynolds Inc. 4 3,185,372 0.7 137,181 0.5 2008(10)
Deloitte & Touche USA LLP 1 3,162,933 0.7 118,864 0.5 2000
Cendant Operations Inc. 1 3,117,051 0.7 148,431 0.6 2008
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 45 108,827,891 24.5 5,772,577 22.5
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999, annualized base
rental revenue is based on the first month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(2) 39,183 square feet expire February 2000; 66,268 square feet expire December
2000; 3,950 square feet expire August 2002; 63,278 square feet expire May
2004; 475,100 square feet expire January 2008; 387,000 square feet expire
January 2009.
(3) 426,691 square feet expire July 2009; 100,815 square feet expire November
2009.
(4) 341,512 square feet expire March 2007; 24,081 square feet expire June 2007.
(5) 29,157 square feet expire October 2000; 85,000 square feet expire December
2000; 26,749 square feet expire January 2002; 1,065 square feet expire
November 2002; 248,399 square feet expire December 2007.
(6) 22,444 square feet expire July 2001; 70,517 square feet expire June 2002;
71,030 square feet expire September 2002; 18,882 square feet expire April
2003; 2,867 square feet expire January 2004; 36,305 square feet expire
January 2005; 23,024 square feet expire October 2005; 6,108 square feet
expire August 2006; 31,143 square feet expire April 2008; 11,500 square
feet expire April 2009.
(7) 94,719 square feet expire May 2005; 22,289 square feet expire June 2009.
(8) 144,332 square feet expire June 2000; 4,700 square feet expire March 2001;
45,187 square feet expire June 2006.
(9) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
(10) 13,140 square feet expire April 2005; 19,390 square feet expire October
2007; 85,151 square feet expire February 2008; 19,500 square feet expire
June 2008.
39
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of the lease expirations for the total
of the Operating Partnership's wholly-owned office, office/flex,
industrial/warehouse and stand-alone retail properties beginning July 1, 1999,
assuming that none of the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($)(3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999.......... 284 1,268,000 5.0 23,022,486 18.16 5.2
2000.......... 512 3,826,970 14.9 65,672,700 17.16 14.8
2001.......... 491 2,879,134 11.2 47,247,344 16.41 10.6
2002.......... 461 3,435,094 13.4 59,678,362 17.37 13.4
2003.......... 375 3,798,347 14.8 64,709,328 17.04 14.6
2004.......... 217 1,988,936 7.8 35,264,420 17.73 7.9
2005.......... 87 1,381,554 5.4 27,012,032 19.55 6.1
2006.......... 51 869,866 3.4 16,718,122 19.22 3.8
2007.......... 37 1,200,573 4.7 23,166,129 19.30 5.2
2008.......... 36 1,506,175 5.9 23,403,100 15.54 5.3
2009.......... 30 1,369,950 5.3 24,385,015 17.80 5.5
2010 and thereafter 38 2,114,619 8.2 33,883,564 16.02 7.6
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,619 25,639,218 100.0(4) 444,162,602 17.32 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes office, office/flex, industrial/warehouse and stand-alone retail
property tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of June 30, 1999.
(3) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999, annualized base
rental revenue is based on the first month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(4) Reconciliation to the Operating Partnership's total net rentable square
footage is as follows:
<TABLE>
<CAPTION>
Square Feet Percentage of Total
----------- -------------------
<S> <C> <C>
Square footage leased to commercial tenants 25,639,218 94.7%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 442,122 1.6
Square footage vacant 1,002,786 3.7
----------- ----------
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,084,126 100.0%
----------- ----------
----------- ----------
</TABLE>
40
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning July 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($)(3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999.......... 238 1,033,094 4.8 20,710,575 20.05 5.2
2000.......... 436 3,281,927 15.3 59,699,510 18.19 15.0
2001.......... 406 2,298,371 10.7 40,607,660 17.67 10.2
2002.......... 375 2,624,143 12.2 51,060,129 19.46 12.8
2003.......... 314 3,211,580 14.9 58,891,050 18.34 14.8
2004.......... 179 1,560,537 7.3 30,467,625 19.52 7.7
2005.......... 67 1,136,112 5.3 24,235,117 21.33 6.1
2006.......... 42 662,641 3.1 13,191,575 19.91 3.3
2007.......... 31 1,086,992 5.1 21,561,795 19.84 5.4
2008.......... 33 1,356,580 6.3 22,461,242 16.56 5.7
2009.......... 22 1,240,750 5.8 22,842,195 18.41 5.7
2010 and thereafter 33 1,979,931 9.2 32,071,515 16.20 8.1
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,176 21,472,658 100.0 397,799,988 18.53 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of June 30, 1999.
(3) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999, annualized base
rental revenue is based on the first month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
41
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office/flex properties beginning July 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999.......... 43 229,521 6.1 2,262,141 9.86 5.4
2000.......... 72 524,939 13.9 5,736,473 10.93 13.6
2001.......... 80 549,216 14.6 6,035,657 10.99 14.3
2002.......... 84 764,511 20.3 8,123,571 10.63 19.2
2003.......... 58 495,293 13.1 5,386,530 10.88 12.7
2004.......... 30 245,579 6.5 2,896,790 11.80 6.8
2005.......... 20 245,442 6.5 2,776,915 11.31 6.6
2006.......... 9 207,225 5.5 3,526,547 17.02 8.3
2007.......... 6 113,581 3.0 1,604,334 14.13 3.8
2008.......... 3 149,595 4.0 941,858 6.30 2.2
2009.......... 7 117,400 3.1 1,436,620 12.24 3.4
2010 and thereafter 4 126,688 3.4 1,547,049 12.21 3.7
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 416 3,768,990 100.0 42,274,485 11.22 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office/flex tenants. Some tenants have multiple
leases.
(2) Excludes all space vacant as of June 30, 1999.
(3) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999, annualized base
rental revenue is based on the first month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
42
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning July 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999.......... 3 5,385 1.4 49,770 9.24 1.4
2000.......... 4 20,104 5.3 236,717 11.77 6.5
2001.......... 5 31,547 8.3 604,027 19.15 16.7
2002.......... 2 46,440 12.2 494,662 10.65 13.6
2003.......... 3 91,474 24.1 431,748 4.72 11.9
2004.......... 7 173,520 45.6 1,705,005 9.83 47.0
2009.......... 1 11,800 3.1 106,200 9.00 2.9
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 25 380,270 100.0 3,628,129 9.54 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(2) Excludes all space vacant as of June 30, 1999.
(3) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999, annualized base
rent revenue is based on the first month's billing times 12. As annualized
base rental revenue is not derived from historical GAAP results, the
historical results may differ from those set forth above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning July 1, 1999, assuming that none of the
tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) Leases ($) (2) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2004.......... 1 9,300 53.8 195,000 20.97 42.4
2012 ......... 1 8,000 46.2 265,000 33.12 57.6
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 460,000 26.59 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes stand-alone retail property tenants only.
(2) Annualized base rental revenue is based on actual June 1999 billings times
12. For leases whose rent commences after June 30, 1999 annualized base
rental revenue is based on the first month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
43
<PAGE>
FUNDS FROM OPERATIONS
The Operating Partnership considers funds from operations ("FFO"), after
adjustment for straight lining of rents, one measure of REIT performance. Funds
from operations is defined as net income (loss) before distribution to preferred
unitholders, computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and sales of property, plus
real estate-related depreciation and amortization. Funds from operations should
not be considered as an alternative to net income as an indication of the
Operating Partnership's performance or to cash flows as a measure of liquidity.
Funds from operations presented herein is not necessarily comparable to funds
from operations presented by other real estate companies due to the fact that
not all real estate companies use the same definition. However, the Operating
Partnership's funds from operations is comparable to the funds from operations
of real estate companies that use the current definition of the National
Association of Real Estate Investment Trusts ("NAREIT"), after the adjustment
for straight-lining of rents.
NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Operating Partnership's
performance.
Funds from operations for the three and six month periods ended June 30, 1999
and 1998, as calculated in accordance with NAREIT's definition as published in
March 1995 after adjustment for straight-line of rents, are summarized in the
following table (IN THOUSANDS):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income before non-recurring charges, distributions
to preferred unitholders and extraordinary item $ 41,779 $ 38,170 $ 82,592 $ 72,020
Add: Real estate-related depreciation and
amortization (1) 22,769 19,211 45,720 35,330
Deduct: Rental income adjustment for
straight-lining of rents (1) (3,833) (3,142) (7,378) (6,345)
- --------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before distributions
to preferred unitholders $ 60,715 $ 54,239 $ 120,934 $ 101,005
Deduct: Distributions to preferred unitholders (3,869) (3,985) (7,738) (7,896)
- --------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $ 56,846 $ 50,254 $ 113,196 $ 93,109
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash flows provided by operating activities $ 110,008 $ 102,517
Cash flows used in investing activities $ (90,548) $(662,104)
Cash flows (used in) provided by financing activities $ (13,750) $ 573,478
- --------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding (2) 67,173 64,145 67,092 61,055
- --------------------------------------------------------------------------------------------------------------------
Diluted weighted average units outstanding (2) 74,104 71,444 74,040 68,425
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes FFO adjustments related to the Operating Partnership's investments
in unconsolidated joint ventures.
(2) See calculations for the amounts presented in the following reconciliation.
44
<PAGE>
The following schedule reconciles the Operating Partnership's basic weighted
average units to the diluted weighted average units presented above:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic weighted average units: 67,173 64,145 67,092 61,055
Add: Weighted average preferred units 6,618 6,818 6,655 6,754
(after conversion to common units)
Stock options 313 444 293 529
Stock warrants -- 37 -- 87
- -----------------------------------------------------------------------------------------------------------------------
Diluted weighted average units: 74,104 71,444 74,040 68,425
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
INFLATION
The Operating Partnership's leases with the majority of its tenants provide for
recoveries and escalation charges based upon the tenant's proportionate share
of, and/or increases in, real estate taxes and certain operating costs, which
reduce the Operating Partnership's exposure to increases in operating costs
resulting from inflation.
DISRUPTION IN OPERATIONS DUE TO YEAR 2000 PROBLEMS.
GENERAL
The Year 2000 issue is the result of computer programs and embedded chips using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. We have developed a three-phase Year 2000 project (the "Project") to
determine our Year 2000 systems compliance. Phase I was to identify those
systems with which we have exposure to Year 2000 issues. Phase II was the
development and implementation of action plans to be Year 2000 compliant in all
areas. Phase III is the final testing of each major area of exposure to assure
compliance. We have identified three major areas critical for successful Year
2000 compliance: (i) our central accounting and operating computer system at our
Cranford, New Jersey headquarters and local networks and related systems in our
regional offices, (ii) inquiries of our tenants and key vendors as to their Year
2000 readiness and (iii) assessment of our individual buildings as to the Year
2000 readiness of their operating systems. We believe that progress in all such
areas is proceeding on schedule and that we will experience no material adverse
effect as a result of the Year 2000 issue. There can, however, be no assurance
that this will be the case. Set forth below is a more detailed analysis of the
Project and its anticipated impact on us.
CENTRAL ACCOUNTING AND OPERATING SYSTEMS
We have completed a review of key computer hardware and software and other
equipment, and have modified, upgraded or replaced all identified hardware and
equipment in our corporate and regional offices that we believe may be affected
by problems associated with Year 2000. Such hardware includes, but is not
limited to, desktop and laptop computers, servers, printers, telecopier machines
and telephones. We, as part of our routine modernization efforts, have completed
necessary upgrades to identified secondary software systems, such as word
processing, spreadsheet applications, telephone voicemail systems and computer
calendar programs. The software supplier of our accounting system completed its
Year 2000 upgrade and supplied us with Year 2000 compliant software at no cost
to us. We have substantially completed our internal testing of such software
with satisfactory results.
TENANT COMPLIANCE
We believe that the completion of the Project as scheduled will minimize Year
2000 related issues in our internal operations. However, we may still be
adversely impacted by Year 2000 related issues as a result of problems outside
our control, such as the inability of tenants to pay rent when due. In order to
gauge such risk, we sent questionnaires to each of our then existing tenants in
August 1998 to assess their Year 2000 compliance status. The responses to these
questionnaires continue to be received, reviewed and evaluated. Based on the
responses received, we do not anticipate any material adverse impact on the
orderly payment of monthly rent. Therefore, while there can be no assurance that
Year 2000 problems of tenants will not have a material adverse effect on our
operating results or financial condition, the information available to us
indicates such an occurrence is not likely.
45
<PAGE>
PROPERTY COMPLIANCE
Our property managers have completed Phase I of the Project, a building by
building survey of all of our properties to determine whether building support
systems such as heat, power, light, security, garages and elevators will be
affected by the advent of the Year 2000. Most of such systems either are already
Year 2000 compliant or contain no computerized parts. Our property managers have
completed Phase II of the Project, the development and implementation of action
plans to modify, upgrade or replace non-compliant building systems. The
compliance testing of these installed building systems is in progress pursuant
to Phase III of the Project.
We have communicated with vendors of building systems or other services to our
buildings regarding their Year 2000 compliance. In many instances, we will rely
on the written representations from these vendors regarding the Year 2000
compliance of their product or service. We are also relying on assurances
requested from utility providers of their Year 2000 compliance and their
continued ability to provide uninterrupted service to our buildings. We
anticipate incurring a total of approximately $1.0 million in costs to modify,
upgrade and/or replace identified building support systems for Year 2000
compliance.
WORST CASE EXPOSURE
We are aware that it is generally believed that the Year 2000 problem, if
uncorrected, may result in a worldwide economic crisis. We are unable to
determine whether such predictions are true or false. However, if such
predictions prove true, we assume that all companies (including ours) will
experience the effects in one way or another. The most reasonably likely worst
case scenario we anticipate in connection with the Year 2000 issue relates to
the failure of the upgrade to our accounting system to effectively become Year
2000 compliant. We believe that such an event is most unlikely, but an
occurrence of the foregoing might have a material adverse impact on our
operations. We cannot currently assess the financial impact of such a worst case
scenario.
CONTINGENCY PLANS
We are developing contingency plans to address the Year 2000 non-compliance of
(i) critical building support systems and (ii) our accounting system.
CRITICAL BUILDING SYSTEMS. We believe that the failure of any of the
following critical building support systems due to Year 2000 issues could have a
material adverse impact on the performance of an individual building: security
systems, elevator systems or fire/life safety systems. We believe that in the
event of a Year 2000 related failure in a building security system, we would be
able to maintain adequate security at the building through the use of security
guards. We believe that in the event of a Year 2000 related failure in a
building elevator system, adequate access would exist at most of our buildings
through existing stairways. We believe that in the event of a Year 2000 related
failure in a building fire/life safety system, our property's management staff
would be able to manually operate such system.
ACCOUNTING SOFTWARE. We believe that failure of the Year 2000
compliance upgrade to our accounting software might have a material adverse
impact on our operations. However, we believe that financial data within any
given fiscal year will remain intact and retrievable. We believe that
alternative accounting software and/or manual bookkeeping would minimize the
impact of a Year 2000 related failure of our current accounting software.
RISKS
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third-party vendors and tenants, we are unable to
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations, liquidity or financial
condition. The Project is expected to significantly reduce our level of
uncertainty about the Year 2000 problem. We believe that, with the
implementation and completion of the Project as scheduled, the possibility of
significant interruptions of normal operations should be reduced.
46
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Approximately $1.3 billion of the Operating Partnership's long-term debt bears
interest at fixed rates, and therefore the fair value of these instruments is
affected by changes in the market interest rates. The following table presents
principal cash flows (in thousands) based upon maturity dates of the debt
obligations and the related weighted-average interest rates by expected maturity
dates for the fixed rate debt. The interest rate on the variable rate debt as of
June 30, 1999 ranged from LIBOR plus 0.65 percent to LIBOR plus 0.90 percent.
JUNE 30, 1999
<TABLE>
<CAPTION>
LONG-TERM DEBT, FAIR
INCLUDING CURRENT PORTION 1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
- ----------------------------- ---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate $1,503 $8,755 $ 7,794 $11,637 $211,151 $1,025,342 $1,266,182 $1,237,813
Average Interest Rate 7.65% 6.77% 7.27% 7.09% 7.31% 7.27% 7.30%
Variable Rate $8,000 $ 148,600 $ 72,203 $ 228,803 $ 228,803
</TABLE>
47
<PAGE>
MACK-CALI REALTY, L.P.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to "Other" in Note 13 (Commitments and
Contingencies) to the Consolidated Financial Statements, which
is specifically incorporated by reference herein.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Item 5. OTHER INFORMATION
Not Applicable.
48
<PAGE>
MACK-CALI REALTY, L.P.
PART II -- OTHER INFORMATION (CONTINUED)
ITEM 6 - EXHIBITS
(a) Exhibits.
The following exhibits are filed herewith or are incorporated by reference
to exhibits previously filed:
Exhibit Number Exhibit Title
-------------- -------------
3.1 Restated Charter of Mack-Cali Realty Corporation
dated June 10, 1999, together with Articles
Supplementary thereto (filed as Exhibit 3.1 to the
General Partner's Form 8-K dated June 10, 1999 as
Exhibit 4.2 to the Operating Partnership's Form 8-K
dated July 6, 1999 and each incorporated herein by
reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty
Corporation dated June 10, 1999 (filed as Exhibit
3.2 to the General Partner's Form 8-K dated June 10,
1999 and incorporated herein by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership dated December 11, 1997, for Mack-Cali
Realty, L.P. (filed as Exhibit 10.110 to the General
Partner's Form 8-K dated December 11, 1997 and
incorporated herein by reference).
3.4 Amendment No. 1 to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali
Realty, L.P. (filed as Exhibit 3.1 to the General
Partner's and the Operating Partnership's
Registration Statement on Form S-3, Registration No.
333-57103, and incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali
Realty, L.P. (filed as Exhibit 10.2 to the Operating
Partnership's Form 8-K dated July 6, 1999 and
incorporated herein by reference).
4.1 Shareholder Rights Agreement, dated as of July 6,
1999, between Mack-Cali Realty Corporation and
ChaseMellon Shareholder Services, LLC, as Rights
Agent (filed as Exhibit 4.1 to the Operating
Partnership's Form 8-K dated July 6, 1999 and
incorporated herein by reference).
4.2 Indenture dated as of March 16, 1999, by and among
Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty
Corporation, as guarantor, and Wilmington Trust
Company, as trustee (filed as Exhibit 4.1 to the
Operating Partnership's Form 8-K dated March 16,
1999 and incorporated herein by reference).
4.3 Supplemental Indenture No. 1 dated as of March 16,
1999, by and among Mack-Cali Realty, L.P., as
issuer, and Wilmington Trust Company, as trustee
(filed as Exhibit 4.2 to the Operating Partnership's
Form 8-K dated March 16, 1999 and incorporated
herein by reference).
4.4 Supplemental Indenture No. 2 dated as of August 2,
1999, by and among Mack-Cali Realty, L.P., as
issuer, and Wilmington Trust Company, as trustee.
10.1 Note Purchase Agreement dated as of August 2, 1999
by and among Mack-Cali Realty, L.P. and Teachers
Insurance and Annuity Association of America.
49
<PAGE>
Exhibit Number Exhibit Title
-------------- -------------
10.2 Amended and Restated Employment Agreement dated as
of July 1, 1999 between Mitchell E. Hersh and
Mack-Cali Realty Corporation.
10.3 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Timothy M. Jones
and Mack-Cali Realty Corporation.
10.4 Amended and Restated Employment Agreement dated as
of July 1, 1999 between John R. Cali and Mack-Cali
Realty Corporation.
10.5 Amended and Restated Employment Agreement dated as
of July 1, 1999 between Brant Cali and Mack-Cali
Realty Corporation.
10.6 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Barry Lefkowitz and
Mack-Cali Realty Corporation.
10.7 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Roger W. Thomas and
Mack-Cali Realty Corporation.
10.8 Restricted Share Award Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation.
10.9 Restricted Share Award Agreement dated as of July 1,
1999 between Timothy M. Jones and Mack-Cali Realty
Corporation.
10.10 Restricted Share Award Agreement dated as of July 1,
1999 between John R. Cali and Mack-Cali Realty
Corporation.
10.11 Restricted Share Award Agreement dated as of July 1,
1999 between Brant Cali and Mack-Cali Realty
Corporation.
10.12 Restricted Share Award Agreement dated as of July 1,
1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation.
10.13 Restricted Share Award Agreement dated as of July 1,
1999 between Roger W. Thomas and Mack-Cali Realty
Corporation.
10.14 Purchase and Sale Agreement dated as of April 28,
1999 between AT&T Corp. and Mack-Cali Realty
Acquisition Corp.
10.15 Purchase and Sale Agreement dated as of June 30,
1999 between The Equitable Life Assurance Society of
the United States and Mack-Cali Realty Acquisition
Corp.
10.16 Credit Agreement, dated as of December 10, 1997, by
and among Cali Realty, L.P. and the other
signatories thereto (filed as Exhibit 10.122 to the
General Partner's Form 8-K dated December 11, 1997
and incorporated herein by reference).
10.17 Amendment No. 1 to Revolving Credit Agreement dated
July 20, 1998, by and among Mack-Cali Realty, L.P.
and The Chase Manhattan Bank, Fleet National Bank
and Other Lenders Which May Become Parties Thereto
(filed as Exhibit 10.5 to the Operating
Partnership's Form 10-K dated December 31, 1998 and
incorporated herein by reference).
50
<PAGE>
Exhibit Number Exhibit Title
-------------- -------------
10.18 Amendment No. 2 to Revolving Credit Agreement dated
December 30, 1998, by and among Mack-Cali Realty,
L.P. and The Chase Manhattan Bank, Fleet National
Bank and Other Lenders Which May Become Parties
Thereto (filed as Exhibit 10.6 to the Operating
Partnership's Form 10-K dated December 31, 1998 and
incorporated herein by reference).
10.19 Contribution and Exchange Agreement among The MK
Contributors, The MK Entities, The Patriot
Contributors, The Patriot Entities, Patriot American
Management and Leasing Corp., Cali Realty, L.P. and
Cali Realty Corporation, dated September 18, 1997
(filed as Exhibit 10.98 to the General Partner's
Form 8-K dated September 19, 1997 and incorporated
herein by reference).
10.20 First Amendment to Contribution and Exchange
Agreement, dated as of December 11, 1997, by and
among the Company and the Mack Group (filed as
Exhibit 10.99 to the General Partner's Form 8-K
dated December 11, 1997 and incorporated herein by
reference).
27 Financial Data Schedule
(b) Reports on Form 8-K.
During the quarter ended June 30, 1999, the Operating Partnership filed
a Current Report on Form 8-K dated April 19, 1999.
51
<PAGE>
MACK-CALI REALTY, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mack-Cali Realty, L.P.
-------------------------------------
(Registrant)
By: Mack-Cali Realty Corporation,
as its General Partner
Date: August 12, 1999 /s/ Mitchell E. Hersh
-------------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: August 12, 1999 /s/ Barry Lefkowitz
--------------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
52
<PAGE>
Exhibit 4.4
MACK-CALI REALTY, L.P.,
Issuer
to
WILMINGTON TRUST COMPANY,
Trustee
----------------------------
Supplemental Indenture No. 2
Dated as of August 2, 1999
----------------------------
$185,283,478
of
7.18% Notes due 2003
<PAGE>
SUPPLEMENTAL INDENTURE NO. 2, dated as of August 2, 1999 (the
"Supplemental Indenture"), between MACK-CALI REALTY, L.P., a limited partnership
duly organized and existing under the laws of the State of Delaware (herein
called the "Issuer"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation duly organized and existing under the laws of the State of Delaware,
as Trustee (herein called the "Trustee").
RECITALS OF THE ISSUER
The Issuer and Mack-Cali Realty Corporation, a corporation duly
organized and existing under the laws of the State of Maryland (herein called
the "Corporation"), have heretofore delivered to the Trustee an Indenture dated
as of March 16, 1999 (the "Original Indenture"), a form of which has been filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, as an exhibit to the Issuer's Registration Statement on Form S-3
(Registration No. 333-57103), providing for the issuance from time to time of
Debt Securities of the Issuer (the "Securities").
Section 301 of the Original Indenture provides for various matters
with respect to any series of Securities issued under the Original Indenture to
be established in an indenture supplemental to the Original Indenture.
Section 901(7) of the Original Indenture provides for the Issuer and
the Trustee to enter into an indenture supplemental to the Original Indenture to
establish the form or terms of Securities of any series as provided by Sections
201 and 301 of the Original Indenture.
The Board of Directors of the Corporation, the general partner of
the Issuer, has duly adopted resolutions authorizing the Issuer to execute and
deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this
Supplemental Indenture, when duly executed and delivered, a valid and binding
agreement in accordance with its terms and for the purposes herein expressed,
have been performed and fulfilled.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities provided for herein by the Holders thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the Notes,
as follows:
2
<PAGE>
ARTICLE ONE
RELATION TO ORIGINAL INDENTURE; DEFINITIONS
Section 1.1 Relation to Original Indenture.
This Supplemental Indenture constitutes an integral part of the
Original Indenture.
Section 1.2 Definitions.
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided for or unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Original Indenture; and
(2) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing
at the time such Person becomes a Subsidiary or (ii) assumed in connection with
the acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed
to be incurred on the date of the related acquisition of assets from any Person
or the date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the aggregate interest
expense for such period in respect of, and the amortization during such period
of any original issue discount of, Indebtedness of the Issuer and its
Subsidiaries.
"Business Day" means any day, other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking institutions in the City
of New York or Delaware are authorized or required by law, regulation or
executive order to close.
"Consolidated Income Available for Debt Service" for any period
means Earnings from Operations of the Issuer and its Subsidiaries plus amounts
which have been deducted, and minus amounts which have been added, for the
following (without duplication): (i) interest on Indebtedness of the Issuer and
its Subsidiaries, (ii) provision for taxes of the Issuer and its Subsidiaries
based on income, (iii) amortization of debt discount and deferred financing
costs, (iv) provisions for gains and losses on properties and depreciation and
amortization, (v)
3
<PAGE>
increases in deferred taxes and other non-cash items, (vi) depreciation and
amortization with respect to interests in joint venture and partially owned
entity investments, (vii) the effect of any charge resulting from a change in
accounting principles in determining Earnings from Operations for such period
and (viii) amortization of deferred charges.
"Corporate Trust Office" means the office of the Trustee at which,
at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration and, for purposes of the Place of Payment provisions of
Sections 305 and 1002 of the Original Indenture, is located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Earnings from Operations" for any period means net income excluding
provisions for gains and losses on sales of investments or joint ventures,
extraordinary and non-recurring items, and property valuation losses, as
reflected in the consolidated financial statements of the Issuer and its
Subsidiaries for such period determined in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder by the Commission.
"GAAP" means generally accepted accounting principles as used in the
United States applied on a consistent basis as in effect from time to time;
provided that solely for purposes of any calculation required by the financial
covenants contained herein, "GAAP" shall mean generally accepted accounting
principles as used in the United States on the date hereof, applied on a
consistent basis.
"Indebtedness" of the Issuer or any Subsidiary means, without
duplication, any indebtedness of the Issuer or any Subsidiary, whether or not
contingent, in respect of: (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments whether or not such indebtedness is secured by
any Encumbrance existing on property owned by the Issuer or any Subsidiary, (ii)
indebtedness for borrowed money of a Person other than the Issuer or a
Subsidiary which is secured by any Encumbrance existing on property owned by the
Issuer or any Subsidiary, to the extent of the lesser of (x) the amount of
indebtedness so secured and (y) the fair market value of the property subject to
such Encumbrance, (iii) the reimbursement obligations, contingent or otherwise,
in connection with any letters of credit actually issued or amounts representing
the balance deferred and
4
<PAGE>
unpaid of the purchase price of any property or services, except any such
balance that constitutes an accrued expense or trade payable, or (iv) any lease
of property by the Issuer or any Subsidiary as lessee which is reflected on the
Issuer's consolidated balance sheet as a capitalized lease in accordance with
GAAP; and also includes, to the extent not otherwise included, any obligation by
the Issuer or any Subsidiary to be liable for, or to pay, as obligor, guarantor
or otherwise (other than for purposes of collection in the ordinary course of
business), Indebtedness of another Person (other than the Issuer or any
Subsidiary; it being understood that Indebtedness shall be deemed to be incurred
by the Issuer or any Subsidiary whenever the Issuer or such Subsidiary shall
create, assume, guarantee or otherwise become liable in respect thereof;
Indebtedness of a Subsidiary of the Issuer existing prior to the time it became
a Subsidiary of the Issuer shall be deemed to be incurred upon such Subsidiary's
becoming a Subsidiary of the Issuer; and Indebtedness of a person existing prior
to a merger or consolidation of such person with the Issuer or any Subsidiary of
the Issuer in which such person is the successor to the Issuer or such
Subsidiary shall be deemed to be incurred upon the consummation of such merger
or consolidation; provided, however, the term "Indebtedness" shall not include
any such indebtedness that has been the subject of an "in substance" defeasance
in accordance with GAAP).
"Intercompany Indebtedness" means Indebtedness to which the only
parties are the Issuer, the Corporation and any Subsidiary (but only so long as
such Indebtedness is held solely by any of the Issuer, the Corporation and any
Subsidiary) that is subordinate in right of payment to the Notes.
"Make-Whole Premium" means, in connection with any optional
redemption of any Notes, the excess, if any, of (i) the aggregate present value
as of the date of such redemption of each dollar of principal of such Notes
being redeemed and the amount of interest (exclusive of interest accrued to the
date of redemption) that would have been payable in respect of such dollar if
such redemption had not been made, determined by discounting, on a monthly
basis, such principal and interest at the Reinvestment Rate (determined on the
third Business Day preceding the date such notice of redemption is given) from
the respective dates on which such principal and interest would have been
payable if such redemption had not been made, over (ii) the aggregate principal
amount of such Notes being redeemed.
"Notes" has the meaning specified in Section 2.1 hereof.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one
percent) plus the arithmetic mean of the yields under the respective headings
"This Week" and "Last Week" published in the Statistical Release under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity of such Notes, as of the
payment date of the principal of such Notes being redeemed. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to
5
<PAGE>
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be obtained by linear interpolation, rounding in
each of such relevant periods to the nearest month. For such purposes of
calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Premium shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination of the
Make-Whole Premium, then such other reasonably comparable index which shall be
designated by the Issuer.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the voting power of the voting equity
securities or the outstanding equity interests of which are owned, directly or
indirectly, by such Person. For the purposes of this definition, "voting equity
securities" means equity securities having voting power for the election of
directors, whether at all times or only so long as no senior class of security
has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Issuer and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Issuer and its Subsidiaries not subject to an Encumbrance
for borrowed money, determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"Unsecured Indebtedness" means Indebtedness which is not secured by
any Encumbrance upon any of the properties of the Issuer or any Subsidiary.
ARTICLE TWO
THE SERIES OF NOTES
Section 2.1 Title of the Securities.
6
<PAGE>
There shall be a series of Securities designated the "7.18% Notes
due 2003" (the "Notes").
Section 2.2 Limitation on Aggregate Principal Amount.
The aggregate principal amount of the Notes shall be limited to
$185,283,478, and, except as provided in this Section and in Section 306 of the
Original Indenture, the Issuer shall not execute and the Trustee shall not
authenticate or deliver Notes in excess of such aggregate principal amount.
Nothing contained in this Section 2.2 or elsewhere in this
Supplemental Indenture, or in the Notes, is intended to or shall limit execution
by the Issuer or authentication or delivery by the Trustee of Notes under the
circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107 and 1305 of
the Original Indenture.
Section 2.3 Interest and Interest Rates; Maturity Date of Notes.
The Notes will bear interest at a rate of 7.18% per annum from
August __, 1999 or from the immediately preceding Interest Payment Date to which
interest has been paid or duly provided for, payable monthly in arrears on the
first Business Day of each month, commencing on September 1, 1999 (each, an
"Interest Payment Date"), to the Person in whose name such Note is registered at
the close of business on the last Business Day of the month preceding the
relevant Interest Payment Date (each, a "Regular Record Date"). Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months. The
interest so payable on any Note which is not punctually paid or duly provided
for on any Interest Payment Date shall forthwith cease to be payable to the
Person in whose name such Note is registered on the relevant Regular Record
Date, and such defaulted interest shall instead be payable to the Person in
whose name such Note is registered on the Special Record Date or other specified
date determined in accordance with the Original Indenture.
If any Interest Payment Date or Maturity falls on a day that is not
a Business Day, the required payment shall be made on the next Business Day as
if it were made on the date such payment was due and no interest shall accrue on
the amount so payable for the period from and after such Interest Payment Date
or Maturity, as the case may be.
The Notes will mature on December 31, 2003.
Section 2.4 Limitations on Incurrence of Indebtedness.
(a) The Issuer will not, and will not permit any Subsidiary to,
7
<PAGE>
incur any Indebtedness, other than Intercompany Indebtedness, if, immediately
after giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Indebtedness of the Issuer and its Subsidiaries on a consolidated
basis determined in accordance with GAAP is greater than 60% of the sum of
(without duplication) (i) the Total Assets of the Issuer and its Subsidiaries as
of the end of the calendar quarter covered in the Issuer's Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the Commission (or, if such filing is not permitted under the Exchange Act,
with the Trustee) prior to the incurrence of such additional Indebtedness and
(ii) the purchase price of any assets included in the definition of Total Assets
acquired, and the amount of any securities offering proceeds received (to the
extent such proceeds were not used to acquire items included in the definition
of Total Assets or used to reduce indebtedness), by the Issuer or any Subsidiary
since the end of such calendar quarter, including those proceeds obtained in
connection with the incurrence of such additional Indebtedness.
(b) In addition to the limitation set forth in subsection (a) of
this Section 2.4, the Issuer will not, and will not permit any Subsidiary to,
incur any Indebtedness if the ratio of Consolidated Income Available for Debt
Service to the Annual Service Charge for the four consecutive fiscal quarters
most recently ended prior to the date on which such additional Indebtedness is
to be incurred shall have been less than 1.5:1, on a pro forma basis after
giving effect thereto and to the application of the proceeds therefrom, and
calculated on the assumption that (i) such Indebtedness and any other
Indebtedness incurred by the Issuer and its Subsidiaries since the first day of
such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of such
period; (ii) the repayment or retirement of any other Indebtedness by the Issuer
and its Subsidiaries since the first day of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such period); (iii) in the case of Acquired Indebtedness or Indebtedness
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the first day of
such period with the appropriate adjustments with respect to such acquisition
being included in such pro forma calculation; and (iv) in the case of any
acquisition or disposition by the Issuer or its Subsidiaries of any asset or
group of assets since the first day of such four-quarter period, whether by
merger, stock purchase or sale, or asset purchase or sale, such acquisition or
disposition or any related repayment of Indebtedness had occurred as of the
first day of such period with the appropriate adjustments with respect to such
acquisition or disposition being included in such pro forma calculation.
(c) In addition to the limitations set forth in subsections (a) and
(b) of this Section 2.4, the Issuer will not, and will not permit any Subsidiary
to, incur any Indebtedness secured by any Encumbrance upon any of the property
of the
8
<PAGE>
Issuer or any Subsidiary, whether owned at the date of the Indenture or
thereafter acquired, if, immediately after giving effect to the incurrence of
such additional Indebtedness secured by an Encumbrance and the application of
the proceeds thereof, the aggregate principal amount of all outstanding
Indebtedness of the Issuer and its Subsidiaries on a consolidated basis which is
secured by any Encumbrance on property of the Issuer or any Subsidiary is
greater than 40% of the sum of (without duplication) (i) the Total Assets of the
Issuer and its Subsidiaries as of the end of the calendar quarter covered in the
Issuer's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Commission (or, if such filing is not
permitted under the Exchange Act, with the Trustee) prior to the incurrence of
such additional Indebtedness and (ii) the purchase price of any assets included
in the definition of Total Assets acquired, and the amount of any securities
offering proceeds received (to the extent such proceeds were not used to acquire
items included in the definition of Total Assets or used to reduce
Indebtedness), by the Issuer or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of
such additional Indebtedness.
(d) The Issuer and its Subsidiaries may not at any time own Total
Unencumbered Assets equal to less than 150% of the aggregate outstanding
principal amount of the Unsecured Indebtedness of the Issuer and its
Subsidiaries on a consolidated basis.
(e) For purposes of this Section 2.4, Indebtedness shall be deemed
to be "incurred" by the Issuer or a Subsidiary whenever the Issuer or such
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof.
Section 2.5 Redemption.
The Notes may be redeemed at any time at the option of the Issuer,
in whole or in part, at a redemption price equal to the sum of (i) the principal
amount of the Notes being redeemed plus accrued and unpaid interest thereon up
to but not including the Redemption Date and (ii) the Make-Whole Premium, if
any, with respect to such Notes (the "Redemption Price").
Section 2.6 Places of Payment.
The Places of Payment where the Notes may be presented or
surrendered for payment, where the Notes may be surrendered for registration of
transfer or exchange and where notices and demands to and upon the Issuer in
respect of the Notes and the Original Indenture may be served shall be in
Wilmington, Delaware, and the office or agency for such purpose shall initially
be located at the Corporate Trust Office.
Section 2.7 Method of Payment.
9
<PAGE>
Payment of the principal of and interest on the Notes will be made
at the office or agency of the Issuer maintained for that purpose in Wilmington,
Delaware (which shall initially be an office or agency of the Trustee), in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Issuer, payments of principal and interest on the Notes (other
than payments of principal and interest due at Maturity) may be made (i) by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register or (ii) by wire transfer to an account
maintained by the Person entitled thereto located within the United States.
Section 2.8 Currency.
Principal and interest on the Notes shall be payable in Dollars.
Section 2.9 Registered Securities; Global Form.
The Notes shall be issuable and transferable in fully registered
form as Registered Securities, without coupons. The Notes shall each be issued
in the form of one or more permanent global Securities. The depository for the
Notes shall be The Depository Trust Company ("DTC"). The Notes shall not be
issuable in definitive form except as provided in Section 305 of the Original
Indenture.
Section 2.10 Form of Notes.
The Notes shall be substantially in the form attached as Exhibit A
hereto.
Section 2.11 Registrar and Paying Agent.
The Trustee shall initially serve as Security Registrar and Paying
Agent for the Notes.
Section 2.12 Defeasance.
The provisions of Sections 1402 and 1403 of the Original Indenture,
together with the other provisions of Article Fourteen of the Original
Indenture, shall be applicable to the Notes. The provisions of Section 1403 of
the Original Indenture shall apply to the covenants set forth in Sections 2.4
and 2.15 of this Supplemental Indenture and to those covenants specified in
Section 1403 of the Original Indenture.
Section 2.13 Events of Default.
The provisions of clause (5) of Section 501 of the Original
Indenture
10
<PAGE>
as applicable with respect to the Notes shall be deemed to be amended and
restated in their entirety to read as follows:
(5) default under any bond, debenture, note, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness (other than non-recourse indebtedness) for money
borrowed by the Issuer (or by any Subsidiary, the repayment of which the Issuer
has guaranteed or for which the Issuer is directly responsible or liable as
obligor or guarantor), having an aggregate principal amount outstanding of at
least $10,000,000, whether such recourse indebtedness now exists or shall
hereafter be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within a
period of 10 days after there shall have been given written notice, by
registered or certified mail, to the Issuer by the Trustee or to the Issuer and
the Trustee by the Holders of at least a majority in principal amount of the
Outstanding Securities of that series specifying such default and requiring the
Issuer to cause such indebtedness to be discharged or cause such acceleration to
be rescinded or annulled and stating that such notice is a "Notice of Default"
hereunder; or
Section 2.14 Acceleration of Maturity; Rescission and Annulment.
The provisions of the first paragraph of Section 502 of the Original
Indenture as applicable with respect to the Notes shall be deemed to be amended
and restated in their entirety to read as follows:
If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than a majority in principal amount of the
Outstanding Securities of that series may declare the principal (or, if any
Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Issuer (and to the Trustee if given by the Holders), and upon any
such declaration such principal or specified portion thereof shall become
immediately due and payable. If an Event of Default with respect to the
Securities of any series set forth in Section 501(6) or (7) of the Original
Indenture occurs and is continuing, then in every such case all the Securities
of that series shall become immediately due and payable, without notice to the
Issuer, at the principal amount thereof (or, if any Securities are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
as may be specified in the terms thereof) plus accrued interest to the date the
Securities of that series are paid plus the Make-Whole Premium, if any.
11
<PAGE>
Section 2.15 Provision of Financial Information.
Whether or not the Issuer is subject to Section 13 or 15(d) of the
Exchange Act, the Issuer will, to the extent permitted under the Exchange Act,
file with the Commission the annual reports, quarterly reports and other
documents which the Issuer would have been required to file with the Commission
pursuant to such Section 13 or 15(d) if the Issuer were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Issuer would have been required so to
file such documents if the Issuer were so subject.
The Issuer will also in any event (x) within 15 days of each
Required Filing Date (i) if the Issuer is not then subject to Section 13 or
15(d) of the Exchange Act, transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, copies
of the annual reports and quarterly reports which the Issuer would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Issuer were subject to such Sections, and (ii) file with the
Trustee copies of annual reports, quarterly reports and other documents which
the Issuer would have been required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act if the Issuer were subject to such
Sections and (y) if filing such documents by the Issuer with the Commission is
not permitted under the Exchange Act, promptly upon written request and payment
of the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder.
Section 2.16 Waiver of Certain Covenants.
Notwithstanding the provisions of Section 1010 of the Original
Indenture, the Issuer may omit in any particular instance to comply with any
term, provision or condition set forth in the Original Indenture and in this
Supplemental Indenture and with any other term, provision or condition with
respect to the Notes or either series thereof (except any such term, provision
or condition which could not be amended without the consent of all Holders of
the Notes or such series thereof, as applicable), if before or after the time
for such compliance the Holders of at least a majority in principal amount of
all Outstanding Notes or such series thereof, as applicable, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition. Except to the extent so expressly
waived, and until such waiver shall become effective, the obligations of the
Issuer and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
Section 2.17 No Guaranty by the Corporation.
The Guarantee set forth in Article Sixteen of the Original Indenture
shall not be in effect with respect to the Notes.
12
<PAGE>
ARTICLE THREE
MISCELLANEOUS PROVISIONS
SECTION 3.1. Ratification of Original Indenture.
Except as expressly modified or amended hereby, the Original
Indenture continues in full force and effect and is in all respects confirmed
and preserved.
SECTION 3.2. Governing Law.
This Supplemental Indenture and each Note shall be governed by and
construed in accordance with the laws of the State of New York. This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, and shall, to the extent applicable, be governed by such
provisions.
SECTION 3.3. Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
SECTION 3.4. Certain Rights of Trustee.
Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Supplemental Indenture. This
Supplemental Indenture is executed and accepted by the Trustee subject to all
the terms and conditions set forth in the Original Indenture with the same force
and effect as if those terms and conditions were repeated at length herein and
made applicable to the Trustee with respect hereto.
SECTION 3.5. Trustee Not Responsible.
The Trustee shall not be responsible in any manner for or in respect
of the validity or sufficiency of this Supplemental Indenture.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first written above.
MACK-CALI REALTY, L.P.
By: Mack-Cali Realty Corporation, its
General Partner
By: /s/ Barry Lefkowitz
-----------------------------------
Name: Barry Lefkowitz
Title: Executive Vice President and
Chief Financial Officer
Attest:
/s/ Roger W. Thomas
- ---------------------------------
Name: Roger W. Thomas
Title: Secretary of Mack-Cali
Realty Corporation
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James D. Nesci
-----------------------------------
Name: James D. Nesci
Title: Authorized Signer
14
<PAGE>
Exhibit A to
Supplemental Indenture
Unless this Security is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), 55 Water Street, New
York, New York, to the Issuer (as defined below) or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
This Security is a Global Security within the meaning set forth in the Indenture
hereinafter referred to and is registered in the name of DTC or a nominee of
DTC. This Security is exchangeable for Securities registered in the name of a
person other than DTC or its nominee only in the limited circumstances described
in the Indenture, and may not be transferred except as a whole by DTC to a
nominee of DTC or another nominee of DTC or by DTC or its nominee to a successor
Depository or its nominee.
Registered No. 1 PRINCIPAL AMOUNT
CUSIP No.: 55448Q AC 0 $185,283,478.00
MACK-CALI REALTY, L.P.
7.18% NOTE DUE 2003
MACK-CALI REALTY, L.P., a limited partnership duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer" which term shall include any Successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, upon presentation, the principal sum of ONE HUNDRED
EIGHTY-FIVE MILLION TWO HUNDRED EIGHTY-THREE THOUSAND FOUR HUNDRED SEVENTY-EIGHT
AND 00/100 DOLLARS on December 31, 2003, and to pay interest on the outstanding
principal amount thereon from August 2, 1999, or from the immediately preceding
Interest Payment Date to which interest has been paid or duly provided for,
monthly in arrears on the first Business Day of each month in each year,
commencing September 1, 1999, at the rate of 7.18% per annum, until the entire
principal hereof is paid or made available for payment. The interest so payable
and punctually paid or duly provided for on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security is
registered at the close of business on the Regular Record Date for such interest
which shall be the last Business Day of the month preceding the relevant
Interest Payment Date. Any such interest not so punctually paid or duly
15
<PAGE>
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of the Securities not more than 15 days and not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. Payment of the
principal of and interest on this Security will be made at the office or agency
maintained for that purpose in the City of Wilmington, Delaware or elsewhere as
provided in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Issuer payments of
principal and interest on the Notes (other than payments of principal and
interest due at Maturity) may be made (i) by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
(ii) by wire transfer to an account of the Person entitled thereto located
within the United States.
Securities of this series are one of a duly authorized issue of
securities of the Issuer (herein called the "Securities"), issued and to be
issued in one or more series under an Indenture, dated as of March 16, 1999,
among the Issuer, Mack-Cali Realty Corporation and Wilmington Trust Company,
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), as supplemented by Supplemental Indenture No. 1, dated as of
March 16, 1999, as further supplemented by Supplemental Indenture No. 2, dated
as of August 2, 1999 (as so supplemented, herein called the "Indenture"),
between the Issuer and the Trustee to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Issuer,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are authenticated and delivered. This Security is one of the series
designated in the first page thereof, limited in aggregate principal amount to
$185,283,478.
Securities of this series may be redeemed at any time at the option
of the Issuer, in whole or in part, upon notice of not more than 60 nor less
than 30 days prior to the Redemption Date, at a redemption price equal to the
sum of (i) the principal amount of the Securities being redeemed plus accrued
and unpaid interest thereon up to but not including the Redemption Date and (ii)
the Make-Whole Premium, if any.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Issuer on this Security and (b) certain
restrictive covenants and the related defaults and Events of Default applicable
to the Issuer, in each case, upon compliance by the Issuer with certain
conditions set forth in the Indenture,
16
<PAGE>
which provisions apply to this Security.
If an Event of Default with respect to the Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
written notice to the Trustee of a continuing Event of Default with respect to
the Securities, the Holders of not less than a majority in principal amount of
the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any interest on or after the
respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Issuer and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series of Securities then Outstanding affected
thereby. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of (and Make-Whole
Premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
17
<PAGE>
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in any Place of Payment where the principal of
(and Make-Whole Premium, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Security Registrar duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
Except as set forth in Section 302 of the Indenture, the Securities
of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of Securities
of this series of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Security, or because of any indebtedness
evidenced hereby or thereby, shall be had against any promoter, as such, or
against any past, present or future shareholder, officer or director, as such,
of the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of this Security by the Holder thereof and as part of the
consideration for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18
<PAGE>
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the Holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
19
<PAGE>
IN WITNESS WHEREOF, MACK-CALI REALTY, L.P. has caused this
instrument to be duly executed.
Dated: August 2, 1999
MACK-CALI REALTY, L.P.
By: Mack-Cali Realty Corporation, its
General Partner
By:
----------------------------------
Name: Barry Lefkowitz
Title: Executive Vice President and
Chief Financial Officer
Attest:
- ----------------------------------
Name: Roger W. Thomas
Title: Secretary of Mack-Cali
Realty Corporation
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
WILMINGTON TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Signatory
20
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
- -----------------------------
- -----------------------------
(Please Print or Typewrite Name and Address including
Zip Code of Assignee)
the within Security of Mack-Cali Realty, L.P. and hereby does irrevocably
constitute and appoint
Attorney
to transfer said Security on the books of the within-named Issuer with full
power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as it
appears on the first page of the within Security in every particular, without
alteration or enlargement or any change whatever.
Signature(s) must be guaranteed by an institution
which is a member of one of the following
recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program
(STAMP); (ii) The New York Stock Exchange
Medallion Program (MNSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) another
guarantee program acceptable to the Trustee.
-----------------------------------------
Signature Guarantee
21
<PAGE>
Exhibit 10.1
Execution Copy
MACK-CALI REALTY, L.P.
-----------------------------
NOTE PURCHASE AGREEMENT
Dated as of August 2, 1999
-----------------------------
7.18% Notes due 2003
<PAGE>
TABLE OF CONTENTS
Page
1. ISSUANCE OF NOTES 1
(a) Authorization 1
(b) Registration Statement and Prospectuses 1
(c) Purchase and Sale of the Notes; the Closing 2
2. REPRESENTATIONS OF THE OPERATING PARTNERSHIP 2
(a) Organization; Qualification, Etc. 2
(b) Authorization 3
(c) Compliance with Securities Laws; Disclosure 3
(d) Priority 3
(e) Compliance with Other Instruments 3
(f) Governmental Consents 4
(g) Litigation; Governmental Orders 4
(h) Taxes 4
(i) Compliance with ERISA 4
(j) Shelf Registration Statement and Prospectus Supplement 6
3. CONDITIONS OF CLOSING 6
(a) Proceedings Satisfactory 6
(b) Supplemental Indenture 6
(c) Mortgage Notes 6
(d) Opinion of Counsel to the Operating Partnership 6
(e) Certificate of the Trustee 6
(f) Representations True, Etc.; Certificate 7
(g) Legality 7
(h) Rating 7
(i) CUSIP Number 7
(j) Representation Letter 7
4. PAYMENT 7
5. MISCELLANEOUS 8
(a) Expenses 8
(b) Reliance on and Survival of Representations 8
(c) Successors and Assigns 8
<PAGE>
(d) Notices 8
(e) Law Governing 9
(f) Headings; Counterparts 9
SCHEDULE A - Mortgage Notes
SCHEDULE I - Purchaser Information
EXHIBIT A - Form of Opinion of Counsel to the Operating Partnership
<PAGE>
MACK CALI REALTY, L.P.
11 Commerce Drive
Cranford, New Jersey 07016
New York, New York
as of August 2, 1999
To the Purchaser named
on the signature page hereof
7.18% Notes due 2003
Ladies and Gentlemen:
Mack Cali Realty, L.P., a limited partnership formed under the laws of the
State of Delaware (the "Operating Partnership") hereby agrees with the Purchaser
named on the signature page hereof (the "Purchaser" and, together with each and
every purchaser of the Notes (as hereinafter defined), the "Purchasers") as
follows:
1. ISSUANCE OF NOTES.
(1) Authorization. The Operating Partnership has duly authorized the
issuance and sale of (i) certain securities (the "Securities"), including one or
more series of unsecured non-convertible debt securities (the "Debt
Securities"), pursuant to an Indenture (the "Base Indenture"), dated as of March
16, 1999, among the Operating Partnership, Mack-Cali Realty Corporation, a
Maryland corporation (the "Corporation") and Wilmington Trust Company, as
trustee (the "Trustee") and (ii) as a series of such Debt Securities, its 7.18%
Notes due 2003 (the "Notes"), pursuant to the Supplemental Indenture No. 2 (the
"Supplemental Indenture"), dated as of August 2, 1999, between the Operating
Partnership, as Issuer, and the Trustee (the Base Indenture as supplemented by
the Supplemental Indenture, the "Indenture"). All capitalized terms used herein
but not otherwise defined herein shall have the meanings ascribed thereto in the
Indenture.
(2) Registration Statement and Prospectuses. The Operating Partnership and
the Corporation have filed with the Securities and Exchange Commission (the
"Commission"), (i) a Registration Statement on Form S-3 (Registration Statement
<PAGE>
333-57103) (the "Registration Statement"), including a Prospectus, dated
September 25, 1998, relating to the Securities (the "Base Prospectus") and (ii)
a Prospectus Supplement, dated August 2, 1999, to the Base Prospectus relating
to the Notes (the "Prospectus Supplement" and, together with the Base
Prospectus, the "Prospectus"). As used herein, the terms "Registration
Statement," "Base Prospectus," "Prospectus Supplement" and "Prospectus" includes
in each case the material incorporated by reference therein.
(3) Purchase and Sale of the Notes; the Closing. (i) The Operating
Partnership shall sell to the Purchaser and, subject to the terms and conditions
hereof, the Purchaser agrees to purchase from the Operating Partnership the
Notes for the aggregate purchase price of $185,283,478 (the "Purchase Price").
The closing of the purchase of the Notes (the "Closing") shall be held at the
offices of Pryor Cashman Sherman & Flynn LLP ("PCS&F"), 410 Park Avenue, New
York, New York 10022, at 10:00 A.M., New York time, on August 2, 1999 or on such
other Business Day as mutually agreed upon by the parties (the "Closing Date").
(ii) On the Closing Date, the Operating Partnership shall issue the Notes
in accordance with Section 2.9 of the Supplemental Indenture.
2. REPRESENTATIONS OF THE OPERATING PARTNERSHIP. The Operating Partnership
represents and warrants to the Purchaser as follows:
(1) Organization; Qualification, Etc. The Operating Partnership is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite power and authority to own
its properties and to carry on its business as now conducted and as proposed to
be conducted. The Operating Partnership is duly qualified as a foreign limited
partnership to do business in and is in good standing in each jurisdiction in
which the character of the properties owned or held under lease by it or the
nature of the business now conducted by it and proposed to be conducted by it
requires such qualification, except where the failure to be so qualified or to
be in good standing would not have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Operating Partnership and its subsidiaries taken as a whole, or (b) the ability
of the Operating Partnership to perform its obligations under this Agreement and
the Notes, or (c) the validity or enforceability of this Agreement or the Notes.
(2) Authorization. The Operating Partnership has all requisite power and
authority to enter into this Agreement, the Original Indenture and the
Supplemental Indenture (all of the foregoing Agreements being referred to herein
collectively as the
<PAGE>
"Transaction Documents"), to issue the Notes and to perform its obligations
pursuant to the provisions hereof and thereof. The execution and delivery of the
Transaction Documents and the Notes have been duly authorized by all requisite
action on the part of the Operating Partnership. This Agreement constitutes, and
each of the other Transaction Documents and the Notes will constitute the legal,
valid and binding obligations of the Operating Partnership, enforceable against
the Operating Partnership in accordance with their respective terms, except as
limited by general equitable principles and by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally.
(3) Compliance with Securities Laws; Disclosure. The Registration
Statement and the Prospectus (i) comply in all material respects with the
Securities Act of 1933, as amended (the "Securities Act") and the applicable
rules and regulations thereunder, (ii) correctly describe in all material
respects the business of the Operating Partnership and (iii) do 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.
(4) Priority. The Notes will constitute senior unsecured obligations of
the Operating Partnership, ranking equally with such of the Operating
Partnership's existing and future senior unsecured and unsubordinated
indebtedness.
(5) Compliance with Other Instruments. The consummation of the
transactions contemplated by this Agreement and the performance of the terms and
provisions of the Transaction Documents and the Notes will not result in any
breach of, or constitute a default under, or result in the creation of any lien
in respect of any property of the Operating Partnership under, any indenture,
mortgage, deed of trust, bank loan or credit agreement, organizational
instrument, or other agreement or instrument to which the Operating Partnership
is a party or by which the Operating Partnership or any of its properties is
bound except where such breach, default or creation could not reasonably be
expected to result in a Material Adverse Effect. The Operating Partnership is
not in violation of, in default under or in breach of any agreement or
instrument to which the Operating Partnership or any of its properties is bound,
except where such violation, default or breach would not have a Material Adverse
Effect.
(6) Governmental Consents. Except for the filing of the Registration
Statement and the Prospectus, no consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Body is required for
the execution, delivery or performance by the Operating Partnership of the
Transaction Documents and the Notes.
<PAGE>
(7) Litigation; Governmental Orders. There are no actions, suits or
proceedings pending or, to the knowledge of the Operating Partnership,
threatened against the Operating Partnership or any of its properties in any
court or before any arbitrator or Governmental Body, except for those actions,
suits or proceedings an adverse decision with respect to which would not have a
Material Adverse Effect. The Operating Partnership is not, and the consummation
of the transactions contemplated by this Agreement and the performance of the
terms and provisions of the Transaction Documents and the Notes will not cause
the Operating Partnership to be, (i) in default under any Order of any court,
arbitrator or Governmental Body, (ii) subject to any Order of any court or
Governmental Body or (iii) in violation of any statute or other rule or
regulation of any Governmental Body, the violation of which would have a
Material Adverse Effect.
As used in this Agreement, the term "Governmental Body" includes any
applicable federal, state, county, city, municipal or other governmental
department, commission, board, bureau, agency, authority or instrumentality,
whether domestic or foreign; and the term "Order" includes any order, writ,
injunction, decree, judgment, award, determination or written direction or
demand.
(8) Taxes. The Operating Partnership has filed all tax returns that are
required to have been filed by it in any jurisdiction. All taxes shown to be due
and payable on such returns and all other taxes and assessments payable by the
Operating Partnership, to the extent the same have become due and payable, have
been paid. The Operating Partnership does not know of any proposed material tax
assessment against the Operating Partnership and, in the opinion of the
Operating Partnership, all of its tax liabilities are adequately provided for on
the books of the Operating Partnership.
(9) Compliance with ERISA. (i) The Operating Partnership and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of non-compliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Operating Partnership nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in Section
3 of ERISA) and no event, transaction or condition has occurred or exists that
could reasonably be expected to result in the incurrence of any such liability
by the Operating Partnership or any ERISA Affiliate, or in the imposition of any
lien on any of the rights, properties or assets of the Operating Partnership or
any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such
<PAGE>
liabilities or liens as would not be individually or in the aggregate Material.
(ii) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in Section 3 of ERISA.
(iii) The Operating Partnership and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(iv) The expected postretirement benefit obligation (determined as of the
last day of the Operating Partnership's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by Section
4980B of the Code) of the Operating Partnership and its subsidiaries is not
Material.
(v) As used in this Agreement, the following terms have the following
meanings:
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Operating
Partnership under Section 414 of the Code.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Operating Partnership
and its subsidiaries taken as a whole.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
<PAGE>
such term is defined in Section 4001(a)(3) of ERISA).
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Operating Partnership or any ERISA
Affiliate or with respect to which the Operating Partnership or any ERISA
Affiliate may have any liability.
(10) Shelf Registration Statement and Prospectus Supplement. The
Prospectus Supplement has been filed with the Securities and Exchange Commission
in the manner and within the time period required by Rule 424(b); and the Shelf
Registration Statement has been declared effective under the Securities Act and
no stop order suspending the effectiveness of the Shelf Registration Statement
and no order directed at any document incorporated by reference in the
Prospectus Supplement or any amendment or supplement thereto has been issued,
and no proceedings for that purpose have been instituted or threatened by the
Securities and Exchange Commission.
3. CONDITIONS OF CLOSING. The Purchaser's obligation to purchase and pay
for the Notes to be purchased by it hereunder shall be subject to the conditions
hereinafter set forth:
(a) Proceedings Satisfactory. All proceedings taken in connection with the
issue of the Notes and the consummation of the other transactions contemplated
hereby and all documents and papers relating thereto shall be reasonably
satisfactory to the Purchaser, and the Purchaser shall have received copies of
such documents and papers, all in form and substance satisfactory to the
Purchaser, as the Purchaser may reasonably request in connection therewith.
(b) Supplemental Indenture. The Supplemental Indenture shall have been
duly executed and delivered by the Operating Partnership and the Trustee.
(c) Mortgage Notes. On or prior to the Closing Date, the Operating
Partnership shall have paid or caused to be paid all amounts outstanding under
the first mortgage loans from the Purchaser to certain Affiliates of the
Operating Partnership listed on Schedule A hereto (the "Mortgage Notes").
(d) Opinion of Counsel to the Operating Partnership. The Purchaser shall
have received opinions, dated the Closing Date, addressed to it and otherwise
satisfactory in scope and substance to it, from PCS&F, counsel to the Operating
Partnership, substantially in the form of Exhibit A hereto and covering such
other matters
<PAGE>
incident to the transactions contemplated hereby as it may reasonably request.
(e) Certificate of the Trustee. The Purchaser shall have received a
certificate, dated the Closing Date, from the Trustee, certifying that the
Trustee is authorized to execute and deliver the Indenture and that the Notes
delivered pursuant to this Agreement are authentic and follow the form required
under the Indenture.
(f) Representations True, Etc.; Certificate. All representations and
warranties of the Operating Partnership contained in Section 2 (except as
affected by the transactions hereby contemplated) shall be true in all material
respects on and as of the Closing Date; the Operating Partnership shall have
performed in all material respects all agreements on its part required to be
performed under this Agreement on or prior to the Closing Date; no Default or
Event of Default shall have occurred and be continuing; and the Purchaser shall
have received a certificate, dated the Closing Date, of the Operating
Partnership certifying to the effect specified in this paragraph (f).
(g) Legality. The Notes to be purchased by the Purchaser hereunder on the
Closing Date shall be a legal investment for it under the laws of each
jurisdiction to which it may be subject, without resort to any basket provision
of said laws such as Section 1405 (a)(8) of the New York Insurance Law, and it
shall have received, such certificates or other evidence as it may reasonably
request demonstrating the legality of such purchase under such laws.
(h) Rating. The Purchaser shall have received evidence satisfactory to it
that the Notes have been rated BBB- or better by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. or Baa3 or better by
Moody's Investors Service, Inc. and BBB- or better by Fitch IBCA or Duff &
Phelps Credit Rating Co.
(i) CUSIP Number. The Operating Partnership shall have obtained for the
Notes a CUSIP number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners).
(j) Representation Letter. The Operating Partnership shall have obtained
confirmation from The Depository Trust Company confirming its appointment as
depository for the Notes.
4. PAYMENT. Notwithstanding anything to the contrary in this Agreement,
the Indenture or the Notes, so long as any Purchaser or any nominee designated
by the Purchaser shall be the holder of any Note, the Operating Partnership
shall cause the Trustee to punctually pay all amounts that become due and
payable on
<PAGE>
such Note to the Purchaser at the address and in the manner set forth in
Schedule I hereto for the Purchaser, or at such other place and in such other
manner as the Purchaser may designate by notice to the Operating Partnership and
the Trustee in the manner provided by Section 105 of the Indenture, without
presentation or surrender of such Note.
5. MISCELLANEOUS.
(1) Expenses. Whether or not the transactions contemplated hereby are
consummated, the Operating Partnership shall: (i) concurrently with the Closing,
pay the reasonable fees and disbursements of Debevoise & Plimpton, special
counsel to the Purchaser, and any other fees and expenses due and owing on or
prior to the Closing Date under the Transactions Documents, (ii) pay the
reasonable fees and disbursements of the Trustee and of special counsel to the
Purchaser in connection with any amendment, waiver or consent with respect to
this Agreement, the other Transaction Documents or the Notes, and all other
reasonable expenses in connection therewith, including the fees and expenses of
enforcing collection of any Notes or interest, if any, thereon, whether before
or after any bankruptcy, reorganization, dissolution, winding up or liquidation
of the Operating Partnership and (iii) reimburse the Purchaser for its
reasonable out-of-pocket expenses in connection with such transactions,
amendments, waivers or consents, and any items of the character referred to in
clause (ii) which shall have been paid by the Purchaser (except out-of-pocket
expenses occasioned by any sale or transfer of any of the Notes), and pay the
cost of transmitting Notes to the Purchaser's principal office upon the issuance
thereof.
(2) Reliance on and Survival of Representations. All agreements,
representations and warranties herein and in any certificates or other
instruments delivered pursuant to this Agreement or the other Transaction
Documents shall (i) be deemed to be material and to have been relied upon by the
other parties hereto notwithstanding any investigation heretofore or hereafter
made by or on behalf of such party and (ii) survive the execution and delivery
of this Agreement and the Supplemental Indenture, and the delivery of the Notes,
and shall continue in effect so long as any Note is outstanding and thereafter
as provided in Section 5(a).
(3) Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of the respective parties hereto shall bind and inure to the
benefit of their respective successors and assigns.
(4) Notices. All notices and other communications provided for in this
Agreement shall be in writing and delivered or mailed, first class postage
prepaid, or transmitted by telecopier and confirmed by a similar mailed writing
addressed (i) if to the
<PAGE>
Operating Partnership, at the address set forth at the head of this Agreement
(marked for the attention of the Executive Vice President and Chief Financial
Officer of the Operating Partnership), or at such other address as the Operating
Partnership may hereafter designate by notice to the Purchaser and to each other
holder of any Note at the time outstanding, or (ii) if to any Purchaser, at the
address as set forth in Schedule I hereto for the Purchaser or at such other
address as the Purchaser may hereafter designate by notice to the Operating
Partnership, or (iii) if to any other holder of any Note, at the address of such
holder as it appears on the Note Register.
(5) Law Governing. This Agreement and the Notes shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
(6) Headings; Counterparts. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms hereof. This Agreement may be executed and delivered in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance in the space provided below, and upon the acceptance hereof by the
Purchaser, this letter shall constitute a binding agreement between the
Operating Partnership and the Purchaser.
MACK-CALI REALTY, L.P.
By: MACK-CALI REALTY
CORPORATION, its General
Partner
By: /s/ Roger W. Thomas
-------------------------------------
Name: Roger W. Thomas
-------------------------------
Title: Executive Vice President
and General Counsel
------------------------
The foregoing Agreement is
hereby accepted as of the date
first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Bridget Maclean-Lai
--------------------------------
Name: Bridget Maclean-Lai
--------------------------
Title: Associate Director
-------------------------
<PAGE>
SCHEDULE A
1. Loan in the amount of $10,292,001 ("Loan A") made by Teachers Insurance
and Annuity Association of America ("Lender") to Robert Martin Company,
LLC ("RMC"), which Loan A is evidenced by a First Replacement Mortgage
Note dated December 30, 1996.
2. Loan in the amount of $25,600,537 ("Loan B") made by Lender to RMC, which
Loan B is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
3. Loan in the amount of $4,462,646 ("Loan C") made by Lender to RMC, which
Loan C is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
4. Loan in the amount of $58,596,855 ("Loan D") made by Lender to RMC, which
Loan D is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
5. Loan in the amount of $15,464,970 ("Loan E") made by Lender to RMC, which
Loan E is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
6. Loan in the amount of $10,058,354 ("Loan F") made by Lender to Cali CW
Realty Associates L.P. and Cali So. West Realty Associates L.P., which
Loan F is evidenced by an Amended and Restated First Replacement Mortgage
Note dated January 31, 1997.
7. Loan in the amount of $21,552,695 ("Loan G") made by Lender to RMC, which
Loan G is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
8. Loan in the amount of $27,918,366 ("Loan H") made by Lender to RMC, which
Loan H is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
9. Loan in the amount of $11,337,053 ("Loan I") made by Lender to RMC, which
Loan I is evidenced by a First Replacement Mortgage Note dated December
30, 1996.
<PAGE>
SHEDULE I
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
(1) Payments on account of the Notes shall be made in immediately available
funds at the opening of business on the due date by electronic funds
transfer (identifying each payment as "MACK-CALI REALTY, L.P.,
$185,283,478 7.18% Notes due 2003 CUSIP number 55448Q AC 0 (principal or
interest)") through the Automated Clearing House System to the following
account:
The Chase Manhattan Bank, N.A.
New York, New York 10036
ABA No. 021-0000-21
Account No. 910-2-766483
(2) Contemporaneous with the above electronic funds transfer, mail or send by
facsimile the following information setting forth: (i) the full name,
cusip number, interest rate and maturity date of the Notes or other
obligations; (ii) the allocation of payment between principal, interest,
premium and any special payment; and (iii) the name and address of the
bank from which such electronic funds transfer was sent, to:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn: Nicole Kim
Associate Director of Commercial Mortgage
and Real Estate Securities
Phone: 212-916-4481
Fax: 212-916-6960
(3) All other communications:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn: Nicole Kim
Associate Director of Commercial Mortgage
and Real Estate Securities
Phone: 212-916-4481
Fax: 212-916-6960
<PAGE>
(4) Tax Identification No: 13-1624203N
<PAGE>
Exhibit A
August 2, 1999
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Re: Purchase of Unsecured Notes by Teachers Insurance and Annuity
Association of America
Dear Sirs:
We have acted as counsel to Mack-Cali Realty, L.P., a Delaware limited
partnership (the "Operating Partnership"), and the Operating Partnership's
general partner, Mack-Cali Realty Corporation, a Maryland corporation (the
"Company"), in connection with the issuance and sale by the Operating
Partnership of $185,283,478 of 7.18% notes due 2003 (the "Securities"). The
Securities are being sold by the Operating Partnership pursuant to the Note
Purchase Agreement, dated as of August 2, 1999 (the "Note Purchase Agreement"),
between the Operating Partnership and Teachers Insurance and Annuity Association
of America, a New York corporation ("TIAA"). Terms not defined herein have the
meanings ascribed to them in the Note Purchase Agreement.
In so acting, we have participated in the preparation of the Base
Indenture, Supplemental Indenture No. 2, the Base Prospectus and the Prospectus
Supplement. We have examined originals or copies certified or otherwise
identified to our satisfaction, of such documents, necessary or appropriate for
purposes of rendering this opinion, including (a) the Certificate of Limited
Partnership of the Operating Partnership, (b) the Second Amended and Restated
Agreement of Limited Partnership, as amended, of the Operating Partnership, (c)
the Note Purchase Agreement, (d) a proof of a specimen note, (e) the Prospectus
Supplement, (f) the Shelf Registration Statement, (g) certificates prepared for
purposes of this opinion and (h) such other documents, records and other
instruments and matters of law as we have deemed necessary or appropriate for
purposes of this opinion. In all such examinations, we have assumed the
genuineness of all signatures on original and certified documents, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to executed documents of all unexecuted copies
submitted to us, and the conformity to the originals of photostatic copies.
As to the various questions of fact material to our opinion stated to be
"to the best of our
<PAGE>
Teachers Insurance and Annuity Association of America
August 2, 1999
Page 2
knowledge", and as otherwise specifically stated in our opinion, we have made
inquiries of and relied upon oral statements, written information and
certificates of officials and representatives of the Operating Partnership and
the Company.
We are admitted to the Bar in the States of New York and New Jersey and we
express no opinion as to the laws of any other jurisdiction, except the laws of
the United States of America and the limited partnership laws of the State of
Delaware.
Upon the basis of the foregoing and in reliance upon the representations
made to us, we are of the opinion that:
1 The Operating Partnership has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the State
of Delaware and is duly qualified to transact business and is in good standing
under the laws of all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified does not amount to a material liability or
disability to the Operating Partnership and its subsidiaries, taken as a whole.
2. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland and is duly
qualified to transact business and is in good standing under the laws of all
other jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified does not amount to a material liability or disability to the
Company and its subsidiaries, taken as a whole.
3. The Operating Partnership, the Company and each of their subsidiaries
have full power, corporate or other, to own or lease their respective properties
and conduct their respective businesses as described in the Base Prospectus and
the Prospectus Supplement, and the Operating Partnership has full power,
partnership or other, to enter into the Note Purchase Agreement, the Base
Indenture and the Supplemental Indenture and to carry out all the terms and
provisions thereof to be carried out by it.
4. The Securities have been duly authorized by all necessary partnership
action, and when executed and delivered against payment therefor in the manner
provided in the Note Purchase Agreement, the Securities will be the legal,
valid, binding and enforceable obligation of the Operating Partnership entitled
to the benefits provided by the Base Indenture and the Supplemental Indenture,
subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to creditors' rights
generally and the application of equitable principles in any proceeding, whether
at law or in equity. The Operating Partnership has complied with all conditions
precedent or covenants with respect to the
<PAGE>
Teachers Insurance and Annuity Association of America
August 2, 1999
Page 3
authentication and delivery of the Securities under the Base Indenture and the
Supplemental Indenture.
5. No partner of the Operating Partnership is entitled as such to any
preemptive or other rights to subscribe for any of the Securities and no holder
of securities of the Operating Partnership or any subsidiary has any right which
has not been waived to require the Operating Partnership to register the offer
or sale of any securities owned by such holder under the Act in the public
offering contemplated by the Note Purchase Agreement.
6. The form and terms of the Securities have been established in
conformity with the provisions of the Base Indenture and the Supplemental
Indenture.
7. The execution and delivery of the Note Purchase Agreement, the Base
Indenture and the Supplemental Indenture have been duly authorized by all
necessary action of the Operating Partnership, and the Note Purchase Agreement,
the Base Indenture and the Supplemental Indenture have been duly executed and
delivered by the Operating Partnership, and are valid and binding agreements of
the Operating Partnership, enforceable against the Operating Partnership in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws relating to
creditors' rights generally and to the application of equitable principles in
any proceeding, whether at law or in equity, and except as rights to indemnity
and contribution may be limited by federal or state securities laws or
principles of public policy.
8. (A) No legal or governmental proceedings are pending to which the
Operating Partnership, any of its subsidiaries, or any of their senior
management in their capacity as such, is a party or to which the Properties or
any other property of the Operating Partnership or any of its subsidiaries is
subject that are required to be described in the Prospectus Supplement or the
Shelf Registration Statement and are not described therein, and, to the best of
our knowledge, no such proceedings have been threatened against the Operating
Partnership or any of its subsidiaries or with respect to the Properties or any
of their respective other properties and (B) no contract or other document is
required to be described in the Prospectus Supplement that is not described
therein.
9. The issuance, offering and sale of the Securities to TIAA by the
Operating Partnership pursuant to the Note Purchase Agreement, the compliance by
the Operating Partnership with the other provisions of the Note Purchase
Agreement, and the consummation of the other transactions contemplated by the
Note Purchase Agreement do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained and such as may be required under state securities
<PAGE>
Teachers Insurance and Annuity Association of America
August 2, 1999
Page 4
or blue sky laws (as to which we do not opine) or (B) conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the Properties or any other properties or assets of the
Operating Partnership or any of its subsidiaries pursuant to any indenture,
mortgage, deed of trust, lease or other agreement or instrument known to us
after due inquiry to which the Operating Partnership or any of its subsidiaries
is a party or by which the Operating Partnership or any of its subsidiaries or
the Properties or any other of their respective properties are bound, the Second
Amended and Restated Agreement of Limited Partnership or other organizational
documents, as the case may be, of the Operating Partnership or any of its
subsidiaries, or any statute, or (to the best of our knowledge after due
inquiry) any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Operating Partnership
or any of its subsidiaries or any of the Properties.
10. The Operating Partnership is not subject to registration as an
Investment Company under the Investment Company Act of 1940, as amended, and the
transactions contemplated by the Note Purchase Agreement will not cause the
Operating Partnership to become an investment company subject to registration
under such Act.
11. The Prospectus Supplement will be filed with the Securities and
Exchange Commission in the manner and within the time period required by Rule
424(b); and the Shelf Registration Statement has been declared effective under
the Securities Act and no stop order suspending the effectiveness of the Shelf
Registration Statement and no order directed at any document incorporated by
reference in the Prospectus Supplement or any amendment or supplement thereto
has been issued, and no proceedings for that purpose have been instituted or, to
the best of our knowledge, threatened by the Securities and Exchange Commission.
12. The Registration Statement and each amendment thereto, and the
Prospectus Supplement (in each case, including the documents incorporated by
reference therein but not including the financial statements and other financial
or statistical data included therein or omitted therefrom, as to which we
express no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the Securities and Exchange Commission thereunder.
13. The statements in the Base Prospectus under the caption entitled
"Description of Debt Securities," insofar as they purport to summarize certain
provisions of the Base Indenture, are accurate summaries of such provisions. The
statements in the Prospectus Supplement under the caption entitled "Description
of the Notes," insofar as they purport to summarize certain provisions of the
Supplemental Indenture and the Notes, are accurate summaries of such provisions.
<PAGE>
Teachers Insurance and Annuity Association of America
August 2, 1999
Page 5
The opinions set forth herein are solely for your benefit in connection
with the transactions contemplated by the Note Purchase Agreement and may not be
relied on by you for any other purpose, or by any other person, firm or
corporation for any purpose without prior written consent except for Wilmington
Trust Company, as Trustee, who shall be entitled to rely on this opinion as if
it were addressed directly to them.
Very truly yours,
<PAGE>
Exhibit 10.2
================================================================================
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
MITCHELL E. HERSH
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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1. Employment................................................................2
2. Employment Period.........................................................2
3. Services / Place of Employment............................................3
4. Compensation and Benefits.................................................4
5. Termination of Employment and Change in Control...........................7
6. Compensation Upon Termination of Employment By the Company for
Cause or By Executive without Good Reason...................................10
7. Compensation Upon Termination of Employment Upon Death or Disability.....11
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.......................................13
9. Change in Control........................................................14
10. Mitigation / Effect on Employee Benefit Plans and Programs..............16
11. Confidential Information................................................17
12. Return of Documents.....................................................18
13. Noncompete..............................................................18
14. Remedies................................................................20
15. Indemnification/Legal Fees..............................................20
16. Successors and Assigns..................................................21
17. Timing of and No Duplication of Payments................................23
18. Modification or Waiver..................................................23
19. Notices.................................................................24
20. Governing Law...........................................................24
21. Severability............................................................24
22. Legal Representation....................................................25
23. Counterparts............................................................25
24. Headings................................................................25
25. Entire Agreement........................................................25
26. Survival of Agreements..................................................26
<PAGE>
MITCHELL E. HERSH
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between Mitchell E. Hersh, an individual
residing at 15 Parkwood Drive, Wayne, New Jersey 07470 ("Executive"), and
Mack-Cali Realty Corporation, a Maryland corporation with offices at 11 Commerce
Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as President and Chief Operating Officer and
as a member of the Board of Directors of the Company (the "Board") pursuant to
his prior employment agreement dated as of December 1997 (the "Prior Agreement")
entered into as of the closing of the combination of Cali Realty Corporation
with the Mack Companies (the "Mack Combination");
WHEREAS, Executive was appointed Chief Executive Officer of the Company on
April 18, 1999;
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety among other things to acknowledge Executive's
appointment as Chief Executive Officer, to provide for an award of Restricted
Shares and a Tax Gross-Up Payment (as defined in sub-paragraph 4(c) below), to
change the Employment Period (as defined in sub-paragraph 2(a) below) to (4)
years and to amend the amount of the severance payment Executive may be eligible
to receive upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as Chief
Executive Officer and to continue to have Executive serve as a member of the
Board
<PAGE>
and Executive desires to continue to be employed by the Company as Chief
Executive Officer and to continue to serve as member of the Board, pursuant to
the amended and restated terms set forth herein and to restate the Prior
Agreement in its entirety
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become
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fixed and shall end on the fourth anniversary of the date of such written notice
("Notice of Non-Renewal"), or (ii) Executive's employment terminates hereunder.
(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board and Executive may
mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
position of Chief Executive Officer and shall serve as a member of the Board.
Executive shall devote his best efforts and substantially all of his business
time, skill and attention to the business of the Company (other than absences
due to vacation, illness, disability or approved leave of absence), and shall
perform such duties as are customarily performed by similar executive officers
and as may be more specifically enumerated from time to time by the Board or
Executive Committee of the Board; provided, however, that the foregoing is not
intended to (a) preclude Executive from (i) owning and managing personal
investments, including real estate investments, subject
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to the restrictions set forth in Paragraph 13 hereof or (ii) engaging in
charitable activities and community affairs, or (b) restrict or otherwise limit
Executive from conducting real estate development, acquisition or management
activities with respect to those properties described in Schedule A, attached
hereto, (the "Excluded Properties"), provided that the performance of the
activities referred to in clauses (a) and (b) does not prevent Executive from
devoting substantially all of his business time to the Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $1,050,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Option and Executive Compensation
Committee of the Board (the "Compensation Committee"). In no event shall
Executive's Annual Base Salary in effect at a particular time be reduced without
his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
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determined by the Compensation Committee. Executive shall be entitled to receive
such bonuses, restricted share awards and options to purchase shares of common
stock, par value $0.01 per share, of the Company (the "Common Stock") as the
Board or the Compensation Committee as the case may be shall approve, in its
sole discretion, including, without limitation, options, restricted share awards
and bonuses contingent upon Executive's performance and the achievement of
specified financial and operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 62,500 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
vesting occurs for any other reason, including, without limitation, termination
of
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Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) participation in the security plan and reimbursement for
reasonable business expenses incurred by Executive in
furtherance of the interests of the Company.
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As further consideration for Executive agreeing to serve as an
officer and entering into the Prior Agreement upon the terms set forth therein,
including, without limitation, the terms relating to non-competition set forth
in Paragraph 13 of the Prior Agreement, the Company issued to Executive,
warrants to purchase an aggregate of 339,976 shares of Common Stock at a
purchase price equal to $38.75 per share ("Warrants"). Executive's Warrants are
evidenced by the Warrant Agreement dated December 11, 1997 which includes, but
is not limited to, the following provision: vesting over a five year period with
one fifth (1/5) of the Warrants vesting on each of the first, second, third,
fourth and fifth anniversaries of the date of the Warrant Agreement subject to
acceleration in accordance with the terms of this Agreement.
5. Termination of Employment and Change in Control.
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued failure to use best efforts to substantially
perform his duties hereunder (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
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<PAGE>
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as Chief Executive Officer or a member of the Board or
a material or adverse alteration in the nature of or
diminution in Executive's duties and/or responsibilities,
reporting obligations, titles or authority; (B) upon a
reduction in Executive's Annual Base Salary or a material
reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question,
a failure to pay such amounts when due or any other failure by
the Company to comply with Paragraph 4 hereof; (C) on or
within six (6) months following the date a Notice of
Non-Renewal is issued by the Company pursuant to Paragraph 2
hereof; (D) on or within six (6) months following a Change in
Control (as hereinafter defined) in accordance with the
provisions set forth in sub-paragraph 5(a)(vii) hereof; (E)
upon any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of
sub-paragraph 5(a)(i) (and for purposes of this Agreement, in
the event of such failure to comply, no such purported
termination shall be effective); (F) upon the relocation of
the Company's principal executive offices or Executive's own
office location to a location more than thirty (30) miles away
from Cranford, New Jersey; or (G) failure to be appointed or
reappointed as a member of the Board.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
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(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the Common Stock and
the Common OP Units (treating all classes of outstanding
stock, units or other securities convertible into stock units
as if they were converted into Common Stock or Common OP Units
as the case may be and then treating Common Stock and Common
OP Units as if they were a single class) issued and
outstanding immediately prior to such acquisition as if they
were a single class and disregarding any equity raise in
connection with the financing of such transaction; (B) any
Common Stock is purchased pursuant to a tender or exchange
offer other than an offer by the Company; (C) the dissolution
or liquidation of the Company or the consummation of any
merger or consolidation of the Company or any sale or other
disposition of all or substantially all of its assets, if the
shareholders of the Company and unitholders of the Partnership
taken as a whole and considered as one class immediately
before such transaction own, immediately after consummation of
such transaction, equity securities and partnership units
possessing less than fifty (50%) percent of the surviving or
acquiring company and partnership taken as a whole; or (D) a
turnover, during any two (2) year period, of the majority of
the members of the Board, without the consent of the remaining
members of the Board as to the appointment of the new Board
members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death)
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<PAGE>
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
6. Compensation Upon Termination of Employment By the Company for Cause
or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and including the date of termination. In addition, in such event,
Executive shall be entitled (i) to receive any earned but unpaid incentive
compensation or bonuses and (ii) to exercise any options which have vested and
are exercisable in accordance with the terms of the applicable option grant
agreement or plan, and (iii) to retain and/or receive any Restricted Shares
which have vested as of the last day of the Company's fiscal year coincident or
immediately preceding Executive's termination of employment and the
corresponding Tax Gross-Up Payment (irrespective of whether the determination is
made after Executive's termination of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
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corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his personal representative the aggregate of (i) a cash payment of
eight million dollars ($8,000,000) in full immediately upon such termination
(the "Fixed Amount") and (ii) reimbursement of expenses incurred prior to date
of termination ("Expense Reimbursement"). Executive (and Executive's dependents)
shall also receive continuation of health coverage through the end of the
Unexpired Employment Period on the same basis as health coverage is provided by
the Company for active employees and as may be amended from time to time
("Medical Continuation").
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Warrants, the Restricted Share Award or any
other restricted stock, phantom stock, units and any loan forgiveness
arrangements granted to Executive ("Incentive Compensation") shall immediately
vest as of the date of such termination ("Vested Incentive Compensation"), (B)
options granted to Executive shall immediately vest as of the date of such
termination (the "Vested Options") and Executive shall be entitled at the option
of Executive, his estate or his personal representative, within one (1) year of
the date of such termination, to exercise the
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Vested Options and/or other options which have vested (including, without
limitation, all other options which have previously vested in accordance with
the Prior Agreement, any applicable option grant agreement or plan) (the "Total
Vested Options") and are exercisable in accordance with the terms of the
applicable option grant agreement or plan and/or any other methods or procedures
for exercise applicable to optionees or to require the Company (upon written
notice delivered within one hundred eighty (180) days following the date of
Executive's termination) to repurchase all or any portion of Executive's vested
options to purchase shares of Common Stock at a price equal to the difference
between the Repurchase Fair Market Value (as hereinafter defined) of the shares
of Common Stock for which the options to be repurchased are exercisable and the
exercise price of such options as of the date of Executive's termination of
employment (the "Vested Option Exercise Election"), and (C) the Tax Gross-Up
Payment(s) applicable to the Restricted Share Award shall vest and be paid to
Executive at such time as provided in sub-paragraph 4(c) above (the "Vested Tax
Gross-Up Payments"). In the event of a conflict between any Incentive
Compensation grant agreement or program or any option grant agreement or plan
and this Agreement, the terms of this Agreement shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's
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dependents), the Company shall have no further obligations hereunder following
such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment, Expense Reimbursement and Medical Continuation. In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant agreement or plan and this Agreement, the terms of this Agreement
shall control. Executive understands that any options exercised more than ninety
(90) days following the date of his termination of employment which were granted
as incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
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Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any warrants or options as a result
thereof shall require Executive to exercise any warrants or options. In the
event of a conflict between any Incentive Compensation grant agreement or
program or any option grant agreement or plan and this Agreement, the terms of
this Agreement shall control.
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise
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Election, the Vested Tax Gross-Up Payment, Expense Reimbursement, Medical
Continuation and the Excise Tax Gross Up set forth in subparagraph 9(c), the
Company shall have no further obligations hereunder following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for the benefit of) Executive pursuant to this Agreement or otherwise, an excise
tax may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
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M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Company provide Executive with a full tax gross-up under
the provisions of this sub-paragraph, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed. The Excise Tax
Gross Up may be adjusted if alternative minimum tax rules are applicable to
Executive.
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
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(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the Company and shall not, directly or indirectly, at any time,
either during or after his employment with the Company, without the Company's
prior written consent, use any of such Confidential Information or disclose any
of such Confidential Information to any individual or entity other than the
Company or its employees, attorneys, accountants, financial advisors,
consultants, or investment bankers except as required in the performance of his
duties for the Company or as otherwise required by law. Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft.
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(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any entity of which a majority of the economic
interest is owned, directly or indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any Confidential Information shall be the exclusive property of the
Company, shall not be copied, summarized, extracted from, or removed from the
premises of the Company, except in pursuit of the business of the Company and at
the direction of the Company, and shall be delivered to the Company, without
retaining any copies, upon the termination of Executive's employment or at any
time as requested by the Company.
13. Noncompete.
Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall
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not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity. Moreover, the foregoing
limitations shall not be deemed to restrict or otherwise limit Executive from
conducting real estate development, acquisition or management activities with
respect to the Excluded Properties, if any, provided that during the Employment
Period the performance of such activities does not prevent Executive from
devoting substantially all of his business time to the Company.
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions and upon substitution by such court,
this Agreement shall be automatically modified without further action by the
parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
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<PAGE>
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraphs 11, 12
or 13 of this Agreement, the Company may, in addition and supplementary to other
rights and remedies existing in its favor, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or director of the Company,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Company shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
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<PAGE>
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination. The indemnification
provisions of this Paragraph shall not supersede or reduce any indemnification
provided to Executive under any separate agreement, or the by-laws of the
Company since it is intended that this Agreement shall expand and extend the
Executive's rights to receive indemnity.
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance
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satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of an such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if Executive terminated his employment hereunder
within six (6) months of a Change in Control as set forth in Paragraph 9, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. In the
event of such a breach of this Agreement, the Notice of Termination shall
specify such date as the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 16 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Any cash payments owed to Executive pursuant to this Paragraph
16 shall be paid to Executive in a single sum without discount for early payment
immediately prior to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's
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<PAGE>
interests under this Agreement. Executive shall be entitled to select and change
a beneficiary or beneficiaries to receive any benefit or compensation payable
hereunder following Executive's death by giving Company written notice thereof.
If Executive should die following the date of termination while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons so appointed in writing by
Executive, including, without limitation, under any applicable plan, or
otherwise to his legal representatives or estate.
17. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or
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Executive of any such right or remedy shall preclude other or further exercise
thereof. A waiver of right or remedy on any one occasion shall not be construed
as a bar to or waiver of any such right or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the President of the Company or Executive, as applicable, at the
address set forth above (or to such other address as shall have been previously
provided in accordance with this Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any
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provision or term of this Agreement shall be held to be prohibited by or invalid
under such applicable law, then, subject to the provisions of sub-paragraph
13(b) above, such provision or term shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provisions or term or the remaining provisions
or terms of this Agreement.
22. Legal Representation.
Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof. The parties recognize that the Prior Agreement has been
amended and restated in its
25
<PAGE>
entirety by this Agreement and the terms of the Prior Agreement are of no
further force and effect.
26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Timothy M. Jones
--------------------------------------------
Timothy M. Jones
President
/s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
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<PAGE>
SCHEDULE A
Properties listed on Schedule 5.1(r) to the Contribution and Exchange Agreement
between the MK Contributors, the MK Entities, the Patriot Contributors, the
Patriot Entities, Patriot American Management and Leasing Corp., the Partnership
and the Company dated September 18, 1997, as amended by that certain First
Amendment dated as of December 11, 1997 in which Mitchell E. Hersh has an
interest.
A passive investment interest in properties permitted to be developed, acquired
or managed by Mack-Arizona Corporation and its affiliates and subsidiaries.
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Exhibit 10.3
================================================================================
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
TIMOTHY M. JONES
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. EMPLOYMENT................................................................2
2. EMPLOYMENT PERIOD.........................................................2
3. SERVICES / PLACE OF EMPLOYMENT............................................3
4. COMPENSATION AND BENEFITS.................................................4
5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...........................6
6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON....................................9
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY.....10
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY
WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON...............................12
9. CHANGE IN CONTROL........................................................13
10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS..............16
11. CONFIDENTIAL INFORMATION................................................16
12. RETURN OF DOCUMENTS.....................................................17
13. NONCOMPETE..............................................................18
14. REMEDIES................................................................19
15. INDEMNIFICATION/LEGAL FEES..............................................19
16. SUCCESSORS AND ASSIGNS..................................................21
17. TIMING OF AND NO DUPLICATION OF PAYMENTS................................22
18. MODIFICATION OR WAIVER..................................................23
19. NOTICES.................................................................23
20. GOVERNING LAW...........................................................24
21. SEVERABILITY............................................................24
22. LEGAL REPRESENTATION....................................................24
23. COUNTERPARTS............................................................24
24. HEADINGS................................................................25
25. ENTIRE AGREEMENT........................................................25
26. SURVIVAL OF AGREEMENTS..................................................25
<PAGE>
TIMOTHY M. JONES
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between Timothy M. Jones, an individual
residing at 1165 Park Avenue, Apt. 7D, New York, New York 10128 ("Executive"),
and Mack-Cali Realty Corporation, a Maryland corporation with offices at 11
Commerce Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as Executive Vice President of the Company
pursuant to his prior employment agreement dated as of December 1997 (the "Prior
Agreement") entered into as of the closing of the combination of Cali Realty
Corporation with the Mack Companies (the "Mack Combination");
WHEREAS, Executive was appointed President of the Company on April 18,
1999;
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety among other things to acknowledge Executive's
appointment as President, to provide for an award of Restricted Shares and a Tax
Gross-Up Payment (as defined in sub-paragraph 4(c) below), to change the
Employment Period (as defined in sub-paragraph 2(a) below) to (4) years and to
amend the amount of the severance payment Executive may be eligible to receive
upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as President
and Executive desires to continue to be employed by the Company as President,
<PAGE>
pursuant to the amended and restated terms set forth herein and to restate the
Prior Agreement in its entirety
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become fixed and shall end on the fourth
anniversary of the date of such written notice ("Notice of Non-Renewal"), or
(ii) Executive's employment terminates hereunder.
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(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board of Directors of
the Company (the "Board") and Executive may mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
position of President of the Company. Executive shall devote his best efforts
and substantially all of his business time, skill and attention to the business
of the Company (other than absences due to vacation, illness, disability or
approved leave of absence), and shall perform such duties as are customarily
performed by similar executive officers and as may be more specifically
enumerated from time to time by the Chief Executive Officer; provided, however,
that the foregoing is not intended to (a) preclude Executive from (i) owning and
managing personal investments, including real estate investments, subject to the
restrictions set forth in Paragraph 13 hereof or (ii) engaging in charitable
activities and community affairs, or (b) restrict or otherwise limit Executive
from
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<PAGE>
conducting the activities described in Schedule A, attached hereto, (the
"Excluded Activities"), provided that the performance of the activities referred
to in clauses (a) and (b) does not prevent Executive from devoting substantially
all of his business time to the Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $515,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Chief Executive Officer. In no event
shall Executive's Annual Base Salary in effect at a particular time be reduced
without his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
determined by the Option and Executive Compensation Committee of the Board (the
"Compensation Committee"). Executive shall be entitled to receive such bonuses,
restricted share awards and options to purchase shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") as the Board or the
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<PAGE>
Compensation Committee as the case may be shall approve, in its sole discretion,
including, without limitation, options, restricted share awards and bonuses
contingent upon Executive's performance and the achievement of specified
financial and operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 37,500 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
vesting occurs for any other reason, including, without limitation, termination
of Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
5
<PAGE>
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) reimbursement for reasonable business expenses incurred by
Executive in furtherance of the interests of the Company
including a monthly allowance of twelve hundred ($1,200) which
is intended to cover the cost of local business-related travel
expenses exclusive of amounts paid to third-parties (e.g. taxi
service).
5. Termination of Employment and Change in Control.
6
<PAGE>
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued failure to use best efforts to substantially
perform his duties hereunder (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as President or a material or adverse alteration in the
nature of or diminution in Executive's duties and/or
responsibilities, reporting obligations, titles or authority;
(B) upon a reduction in Executive's Annual Base Salary or a
material reduction in other benefits (except for bonuses or
similar discretionary payments) as in effect at the time in
question, a failure to pay such amounts when due or
7
<PAGE>
any other failure by the Company to comply with Paragraph 4
hereof; (C) on or within six (6) months following the date a
Notice of Non-Renewal is issued by the Company pursuant to
Paragraph 2 hereof; (D) on or within six (6) months following
a Change in Control (as hereinafter defined) in accordance
with the provisions set forth in sub-paragraph 5(a)(vii)
hereof; (E) upon any purported termination of Executive's
employment for Cause which is not effected pursuant to the
procedures of sub-paragraph 5(a)(i) (and for purposes of this
Agreement, in the event of such failure to comply, no such
purported termination shall be effective); or (F) upon the
relocation of the Company's principal executive offices or
Executive's own office location to a location more than thirty
(30) miles away from Cranford, New Jersey.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the Common Stock and
the Common OP Units (treating all classes of outstanding
stock, units or other securities convertible into stock units
as if they were converted into Common Stock or Common OP Units
as the case may be and then treating Common Stock and Common
OP Units as if they were a single class) issued and
outstanding immediately prior to such acquisition as if they
were a single class and disregarding any equity raise in
connection with the financing of such transaction; (B) any
Common Stock is
8
<PAGE>
purchased pursuant to a tender or exchange offer other than an
offer by the Company; (C) the dissolution or liquidation of
the Company or the consummation of any merger or consolidation
of the Company or any sale or other disposition of all or
substantially all of its assets, if the shareholders of the
Company and unitholders of the Partnership taken as a whole
and considered as one class immediately before such
transaction own, immediately after consummation of such
transaction, equity securities and partnership units
possessing less than fifty (50%) percent of the surviving or
acquiring company and partnership taken as a whole; or (D) a
turnover, during any two (2) year period, of the majority of
the members of the Board, without the consent of the remaining
members of the Board as to the appointment of the new Board
members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
6. Compensation Upon Termination of Employment By the Company for Cause
or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and including the date of termination. In addition, in such event,
Executive shall be entitled
9
<PAGE>
(i) to receive any earned but unpaid incentive compensation or bonuses and (ii)
to exercise any options which have vested and are exercisable in accordance with
the terms of the applicable option grant agreement or plan, and (iii) to retain
and/or receive any Restricted Shares which have vested as of the last day of the
Company's fiscal year coincident or immediately preceding Executive's
termination of employment and the corresponding Tax Gross-Up Payment
(irrespective of whether the determination is made after Executive's termination
of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his personal representative the aggregate of (i) a cash payment of two
million seven hundred thousand dollars ($2,700,000) in full immediately upon
such termination (the "Fixed Amount") and (ii) reimbursement of expenses
incurred prior to date of termination ("Expense Reimbursement"). Executive (and
Executive's dependents) shall also receive continuation of health coverage
through the end of the Unexpired Employment Period on the same basis as health
coverage is provided by the Company
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<PAGE>
for active employees and as may be amended from time to time ("Medical
Continuation").
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Restricted Share Award or any other
restricted stock, phantom stock, units and any loan forgiveness arrangements
granted to Executive ("Incentive Compensation") shall immediately vest as of the
date of such termination ("Vested Incentive Compensation"), (B) options granted
to Executive shall immediately vest as of the date of such termination (the
"Vested Options") and Executive shall be entitled at the option of Executive,
his estate or his personal representative, within one (1) year of the date of
such termination, to exercise the Vested Options and/or other options which have
vested (including, without limitation, all other options which have previously
vested in accordance with the Prior Agreement, any applicable option grant
agreement or plan) (the "Total Vested Options") and are exercisable in
accordance with the terms of the applicable option grant agreement or plan
and/or any other methods or procedures for exercise applicable to optionees or
to require the Company (upon written notice delivered within one hundred eighty
(180) days following the date of Executive's termination) to repurchase all or
any portion of Executive's vested options to purchase shares of Common Stock at
a price equal to the difference between the Repurchase Fair Market Value (as
hereinafter defined) of the shares of Common Stock for which the options to be
repurchased are exercisable and the exercise price of such options as of the
date of Executive's termination of employment (the "Vested Option Exercise
Election"), and (C) the Tax Gross-Up Payment(s) applicable to the Restricted
Share
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<PAGE>
Award shall vest and be paid to Executive at such time as provided in
sub-paragraph 4(c) above (the "Vested Tax Gross-Up Payments"). In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant agreement or plan and this Agreement, the terms of this Agreement
shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's dependents), the Company shall have no further
obligations hereunder following such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment,
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<PAGE>
Expense Reimbursement and Medical Continuation. In the event of a conflict
between any Incentive Compensation grant agreement or program or any option
grant agreement or plan and this Agreement, the terms of this Agreement shall
control. Executive understands that any options exercised more than ninety (90)
days following the date of his termination of employment which were granted as
incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to Executive
that have not vested as of the date of a Change in Control shall immediately
vest upon the date of the Change in Control. Neither the occurrence of a Change
in Control, nor the vesting in any options as a result thereof shall require
Executive to exercise any options. In the event of a conflict between any
Incentive Compensation
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<PAGE>
grant agreement or program or any option grant agreement or plan and this
Agreement, the terms of this Agreement shall control.
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement, Medical Continuation and the Excise Tax Gross Up set forth in
subparagraph 9(c), the Company shall have no further obligations hereunder
following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for the benefit of) Executive pursuant to this Agreement or otherwise, an excise
tax may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
14
<PAGE>
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Company provide Executive with a full tax gross-up under
the provisions of this sub-paragraph, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed. The Excise Tax
Gross Up may be adjusted if alternative minimum tax rules are applicable to
Executive.
15
<PAGE>
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the
16
<PAGE>
Company and shall not, directly or indirectly, at any time, either during or
after his employment with the Company, without the Company's prior written
consent, use any of such Confidential Information or disclose any of such
Confidential Information to any individual or entity other than the Company or
its employees, attorneys, accountants, financial advisors, consultants, or
investment bankers except as required in the performance of his duties for the
Company or as otherwise required by law. Executive shall take all reasonable
steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any entity of which a majority of the economic
interest is owned, directly or indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any Confidential Information shall be the exclusive property of the
Company, shall not be copied, summarized, extracted from, or removed from the
premises of the Company,
17
<PAGE>
except in pursuit of the business of the Company and at the direction of the
Company, and shall be delivered to the Company, without retaining any copies,
upon the termination of Executive's employment or at any time as requested by
the Company.
13. Noncompete. Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity. Moreover, the foregoing
limitations shall not be deemed to restrict or otherwise limit Executive from
conducting the Excluded Activities, if any, provided that during the Employment
Period the performance of such activities does not prevent Executive from
devoting substantially all of his business time to the Company.
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable,
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<PAGE>
the parties agree that reasonable maximum duration, scope, area or other
restrictions may be substituted by such court for the stated duration, scope,
area or other restrictions and upon substitution by such court, this Agreement
shall be automatically modified without further action by the parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraphs 11, 12
or 13 of this Agreement, the Company may, in addition and supplementary to other
rights and remedies existing in its favor, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment
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<PAGE>
with or serving as an officer or director of the Company, whether or not the
basis of such Proceeding is alleged action in an official capacity, the Company
shall indemnify, hold harmless and defend Executive to the fullest extent
authorized by Maryland law, as the same exists and may hereafter be amended,
against any and all claims, demands, suits, judgments, assessments and
settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination. The indemnification
provisions of this Paragraph shall not supersede or reduce any indemnification
provided to Executive under any separate agreement, or the by-laws of the
Company since it is intended that this Agreement shall expand and extend the
Executive's rights to receive indemnity.
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is
20
<PAGE>
successful in respect of substantially all of Executive's claims pursued or
defended in connection with such contest or dispute. Such reimbursement shall be
made as soon as practicable following the resolution of such contest or dispute
(whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of an
such succession shall be a breach of this Agreement and shall entitle Executive
to compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if Executive terminated his employment hereunder
within six (6) months of a Change in Control as set forth in Paragraph 9, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. In the
event of such a breach of this Agreement, the Notice of Termination shall
specify such date as the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 16 or which
otherwise becomes
21
<PAGE>
bound by all the terms and provisions of this Agreement by operation of law. Any
cash payments owed to Executive pursuant to this Paragraph 16 shall be paid to
Executive in a single sum without discount for early payment immediately prior
to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving Company written notice thereof. If Executive should die following the
date of termination while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons so appointed in writing by Executive, including, without limitation,
under any applicable plan, or otherwise to his legal representatives or estate.
17. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
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<PAGE>
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered by hand
or delivered by a recognized delivery service or mailed, postage prepaid, by
express, certified or registered mail, return receipt requested, and addressed
to the Chief Executive Officer of the Company or Executive, as applicable, at
the address set forth above (or to such
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<PAGE>
other address as shall have been previously provided in accordance with this
Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting
in any manner whatsoever the remainder of such provisions or term or the
remaining provisions or terms of this Agreement.
22. Legal Representation.
Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
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24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof. The parties recognize that the Prior Agreement has been
amended and restated in its entirety by this Agreement and the terms of the
Prior Agreement are of no further force and effect.
26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
Chief Executive Officer
/s/ Timothy M. Jones
--------------------------------------------
Timothy M. Jones
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SCHEDULE A
1. Conducting the real estate development, acquisition or management activities
as and to the extent permitted pursuant to Section 26 of the Contribution and
Exchange Agreement dated January 24, 1997 by and between Cali, CRLP and Robert
Martin Company, LLC and Robert Martin-Eastview North Company, L.P. (the
"Contribution and Exchange Agreement").
2. Acquiring and conducting real estate development and management activities
with respect to properties which may be purchased by the Executive pursuant to
Sections 8.3 or 27.5 of the Contribution and Exchange Agreement.
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Exhibit 10.4
================================================================================
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
JOHN R. CALI
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. EMPLOYMENT................................................................2
2. EMPLOYMENT PERIOD.........................................................2
3. SERVICES / PLACE OF EMPLOYMENT............................................3
4. COMPENSATION AND BENEFITS.................................................4
5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...........................6
6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON....................................9
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY.....10
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT
CAUSE OR BY EXECUTIVE FOR GOOD REASON.......................................12
9. CHANGE IN CONTROL........................................................13
10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS..............16
11. CONFIDENTIAL INFORMATION................................................16
12. RETURN OF DOCUMENTS.....................................................17
13. NONCOMPETE..............................................................18
14. REMEDIES................................................................19
15. INDEMNIFICATION/LEGAL FEES..............................................19
16. SUCCESSORS AND ASSIGNS..................................................21
17. TIMING OF AND NO DUPLICATION OF PAYMENTS................................22
18. MODIFICATION OR WAIVER..................................................23
19. NOTICES.................................................................23
20. GOVERNING LAW...........................................................24
21. SEVERABILITY............................................................24
22. LEGAL REPRESENTATION....................................................24
23. COUNTERPARTS............................................................25
24. HEADINGS................................................................25
25. ENTIRE AGREEMENT........................................................25
26. SURVIVAL OF AGREEMENTS..................................................25
<PAGE>
JOHN R. CALI
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between John R. Cali, an individual
residing at 203 Laurel Hill Road, Mountain Lakes, New Jersey 07046
("Executive"), and Mack-Cali Realty Corporation, a Maryland corporation with
offices at 11 Commerce Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as Chief Administrative Officer of the
Company pursuant to his prior employment agreement dated as of December 1997
(the "Prior Agreement") entered into as of the closing of the combination of
Cali Realty Corporation with the Mack Companies (the "Mack Combination");
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety to provide for an award of Restricted Shares and a Tax
Gross-Up Payment (as defined in sub-paragraph 4(c) below), to change the
Employment Period (as defined in sub-paragraph 2(a) below) to (4) years and to
amend the amount of the severance payment Executive may be eligible to receive
upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as Executive
Vice President of Development, and Executive desires to continue to be employed
by the Company as Executive Vice President of Development, pursuant to the
amended and restated terms set forth herein and to restate the Prior Agreement
in its entirety
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
<PAGE>
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become fixed and shall end on the fourth
anniversary of the date of such written notice ("Notice of Non-Renewal"), or
(ii) Executive's employment terminates hereunder.
(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation
2
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of Executive's employment following the expiration of the Employment Period upon
such terms and conditions as the Board of Directors of the Company (the "Board")
and Executive may mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
position of Executive Vice President of Development of the Company. Executive
shall devote his best efforts and substantially all of his business time, skill
and attention to the business of the Company (other than absences due to
vacation, illness, disability or approved leave of absence), and shall perform
such duties as are customarily performed by similar executive officers and as
may be more specifically enumerated from time to time by the Chief Executive
Officer; provided, however, that the foregoing is not intended to (a) preclude
Executive from (i) owning and managing personal investments, including real
estate investments, subject to the restrictions set forth in Paragraph 13 hereof
or (ii) engaging in charitable activities and community affairs, or (b) restrict
or otherwise limit Executive from conducting real estate development,
acquisition or management activities with respect to those properties described
in Schedule A, attached hereto, (the "Excluded Properties"), provided that the
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performance of the activities referred to in clauses (a) and (b) does not
prevent Executive from devoting substantially all of his business time to the
Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $325,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Chief Executive Officer. In no event
shall Executive's Annual Base Salary in effect at a particular time be reduced
without his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
determined by the Option and Executive Compensation Committee of the Board (the
"Compensation Committee"). Executive shall be entitled to receive such bonuses,
restricted share awards and options to purchase shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") as the Board or the
Compensation Committee as the case may be shall approve, in its sole discretion,
including, without limitation, options, restricted share awards and bonuses
contingent
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upon Executive's performance and the achievement of specified financial and
operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 22,031 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
vesting occurs for any other reason, including, without limitation, termination
of Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
5
<PAGE>
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) reimbursement for reasonable business expenses incurred by
Executive in furtherance of the interests of the Company
including a monthly allowance of twelve hundred ($1,200) which
is intended to cover the cost of local business-related travel
expenses exclusive of amounts paid to third-parties (e.g. taxi
service).
5. Termination of Employment and Change in Control.
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued
6
<PAGE>
failure to use best efforts to substantially perform his
duties hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness) for
a period of thirty (30) days after written demand for
substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as Executive Vice President of Development or a
material or adverse alteration in the nature of or diminution
in Executive's duties and/or responsibilities, reporting
obligations, titles or authority; (B) upon a reduction in
Executive's Annual Base Salary or a material reduction in
other benefits (except for bonuses or similar discretionary
payments) as in effect at the time in question, a failure to
pay such amounts when due or any other failure by the Company
to comply with Paragraph 4 hereof; (C) on or within six (6)
months following the date a Notice of Non-Renewal is issued by
the Company pursuant to Paragraph 2 hereof; (D) on or within
six (6) months following a Change in Control (as hereinafter
defined) in accordance with the provisions set forth in
sub-paragraph 5(a)(vii)
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<PAGE>
hereof; (E) upon any purported termination of Executive's
employment for Cause which is not effected pursuant to the
procedures of sub-paragraph 5(a)(i) (and for purposes of this
Agreement, in the event of such failure to comply, no such
purported termination shall be effective); or (F) upon the
relocation of the Company's principal executive offices or
Executive's own office location to a location more than thirty
(30) miles away from Cranford, New Jersey.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the Common Stock and
the Common OP Units (treating all classes of outstanding
stock, units or other securities convertible into stock units
as if they were converted into Common Stock or Common OP Units
as the case may be and then treating Common Stock and Common
OP Units as if they were a single class) issued and
outstanding immediately prior to such acquisition as if they
were a single class and disregarding any equity raise in
connection with the financing of such transaction; (B) any
Common Stock is purchased pursuant to a tender or exchange
offer other than an offer by the Company; (C) the dissolution
or liquidation of the Company or the consummation of any
merger or consolidation of the Company or any sale or other
disposition of all or substantially all of its assets, if the
shareholders of the Company and unitholders
8
<PAGE>
of the Partnership taken as a whole and considered as one
class immediately before such transaction own, immediately
after consummation of such transaction, equity securities and
partnership units possessing less than fifty (50%) percent of
the surviving or acquiring company and partnership taken as a
whole; or (D) a turnover, during any two (2) year period, of
the majority of the members of the Board, without the consent
of the remaining members of the Board as to the appointment of
the new Board members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
6. Compensation Upon Termination of Employment By the Company for Cause
or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and including the date of termination. In addition, in such event,
Executive shall be entitled (i) to receive any earned but unpaid incentive
compensation or bonuses and (ii) to exercise any options which have vested and
are exercisable in accordance with the
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<PAGE>
terms of the applicable option grant agreement or plan, and (iii) to retain
and/or receive any Restricted Shares which have vested as of the last day of the
Company's fiscal year coincident or immediately preceding Executive's
termination of employment and the corresponding Tax Gross-Up Payment
(irrespective of whether the determination is made after Executive's termination
of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his personal representative the aggregate of (i) a cash payment of two
million five hundred thousand dollars ($2,500,000) in full immediately upon such
termination (the "Fixed Amount") and (ii) reimbursement of expenses incurred
prior to date of termination ("Expense Reimbursement"). Executive (and
Executive's dependents) shall also receive continuation of health coverage
through the end of the Unexpired Employment Period on the same basis as health
coverage is provided by the Company for active employees and as may be amended
from time to time ("Medical Continuation").
10
<PAGE>
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Restricted Share Award or any other
restricted stock, phantom stock, units and any loan forgiveness arrangements
granted to Executive ("Incentive Compensation") shall immediately vest as of the
date of such termination ("Vested Incentive Compensation"), (B) options granted
to Executive shall immediately vest as of the date of such termination (the
"Vested Options") and Executive shall be entitled at the option of Executive,
his estate or his personal representative, within one (1) year of the date of
such termination, to exercise the Vested Options and/or other options which have
vested (including, without limitation, all other options which have previously
vested in accordance with the Prior Agreement, any applicable option grant
agreement or plan) (the "Total Vested Options") and are exercisable in
accordance with the terms of the applicable option grant agreement or plan
and/or any other methods or procedures for exercise applicable to optionees or
to require the Company (upon written notice delivered within one hundred eighty
(180) days following the date of Executive's termination) to repurchase all or
any portion of Executive's vested options to purchase shares of Common Stock at
a price equal to the difference between the Repurchase Fair Market Value (as
hereinafter defined) of the shares of Common Stock for which the options to be
repurchased are exercisable and the exercise price of such options as of the
date of Executive's termination of employment (the "Vested Option Exercise
Election"), and (C) the Tax Gross-Up Payment(s) applicable to the Restricted
Share Award shall vest and be paid to Executive at such time as provided in
sub-paragraph 4(c) above (the "Vested Tax Gross-Up Payments"). In the event of a
conflict between
11
<PAGE>
any Incentive Compensation grant agreement or program or any option grant
agreement or plan and this Agreement, the terms of this Agreement shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's dependents), the Company shall have no further
obligations hereunder following such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment, Expense Reimbursement and Medical Continuation. In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant
12
<PAGE>
agreement or plan and this Agreement, the terms of this Agreement shall control.
Executive understands that any options exercised more than ninety (90) days
following the date of his termination of employment which were granted as
incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any options as a result thereof shall
require Executive to exercise any options. In the event of a conflict between
any Incentive Compensation grant agreement or program or any option grant
agreement or plan and this Agreement, the terms of this Agreement shall control.
13
<PAGE>
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement, Medical Continuation and the Excise Tax Gross Up set forth in
subparagraph 9(c), the Company shall have no further obligations hereunder
following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for the benefit of) Executive pursuant to this Agreement or otherwise, an excise
tax may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
14
<PAGE>
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Company provide Executive with a full tax gross-up under
the provisions of this sub-paragraph, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed. The Excise Tax
Gross Up may be adjusted if alternative minimum tax rules are applicable to
Executive.
15
<PAGE>
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the Company and shall not, directly or indirectly, at any time,
either during or after his employment with the
16
<PAGE>
Company, without the Company's prior written consent, use any of such
Confidential Information or disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, attorneys,
accountants, financial advisors, consultants, or investment bankers except as
required in the performance of his duties for the Company or as otherwise
required by law. Executive shall take all reasonable steps to safeguard such
Confidential Information and to protect such Confidential Information against
disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any entity of which a majority of the economic
interest is owned, directly or indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any Confidential Information shall be the exclusive property of the
Company, shall not be copied, summarized, extracted from, or removed from the
premises of the Company, except in pursuit of the business of the Company and at
the direction of the Company,
17
<PAGE>
and shall be delivered to the Company, without retaining any copies, upon the
termination of Executive's employment or at any time as requested by the
Company.
13. Noncompete.
Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity. Moreover, the foregoing
limitations shall not be deemed to restrict or otherwise limit Executive from
conducting real estate development, acquisition or management activities with
respect to the Excluded Properties, if any, provided that during the Employment
Period the performance of such activities does not prevent Executive from
devoting substantially all of his business time to the Company.
18
<PAGE>
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions and upon substitution by such court,
this Agreement shall be automatically modified without further action by the
parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraphs 11, 12
or 13 of this Agreement, the Company may, in addition and supplementary to other
rights and remedies existing in its favor, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
19
<PAGE>
(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or director of the Company,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Company shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination. The indemnification
provisions of this Paragraph shall not supersede or reduce any indemnification
provided to Executive under any separate agreement, or the by-laws of the
Company since it is intended that this Agreement shall expand and extend the
Executive's rights to receive indemnity.
20
<PAGE>
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of an
such succession shall be a breach of this Agreement and shall entitle Executive
to compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if Executive terminated his employment hereunder
within six (6) months of a Change in Control as set forth in Paragraph 9, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. In the
event of such a breach of this Agreement, the Notice of Termination
21
<PAGE>
shall specify such date as the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 16 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Any cash payments owed to Executive pursuant to this Paragraph
16 shall be paid to Executive in a single sum without discount for early payment
immediately prior to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving Company written notice thereof. If Executive should die following the
date of termination while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons so appointed in writing by Executive, including, without limitation,
under any applicable plan, or otherwise to his legal representatives or estate.
17. Timing of and No Duplication of Payments.
22
<PAGE>
All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
23
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All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Chief Executive Officer of the Company or Executive, as
applicable, at the address set forth above (or to such other address as shall
have been previously provided in accordance with this Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting
in any manner whatsoever the remainder of such provisions or term or the
remaining provisions or terms of this Agreement.
22. Legal Representation.
24
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Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof. The parties recognize that the Prior Agreement has been
amended and restated in its entirety by this Agreement and the terms of the
Prior Agreement are of no further force and effect.
26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
25
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
Chief Executive Officer
/s/ John R. Cali
--------------------------------------------
John R. Cali
26
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SCHEDULE A
Those properties described in the Prospectus of Cali Realty Corporation for the
sale of 10,500,000 Shares dated August 24, 1994, in the section entitled
"Business and Properties -- Excluded Properties".
27
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Exhibit 10.5
================================================================================
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
BRANT CALI
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. EMPLOYMENT................................................................2
2. EMPLOYMENT PERIOD.........................................................2
3. SERVICES / PLACE OF EMPLOYMENT............................................3
4. COMPENSATION AND BENEFITS.................................................4
5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...........................7
6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON...................................10
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY.....10
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT
CAUSE OR BY EXECUTIVE FOR GOOD REASON.......................................13
9. CHANGE IN CONTROL........................................................14
10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS..............16
11. CONFIDENTIAL INFORMATION................................................17
12. RETURN OF DOCUMENTS.....................................................18
13. NONCOMPETE..............................................................18
14. REMEDIES................................................................19
15. INDEMNIFICATION/LEGAL FEES..............................................20
16. SUCCESSORS AND ASSIGNS..................................................21
17. TIMING OF AND NO DUPLICATION OF PAYMENTS................................23
18. MODIFICATION OR WAIVER..................................................23
19. NOTICES.................................................................24
20. GOVERNING LAW...........................................................24
21. SEVERABILITY............................................................24
22. LEGAL REPRESENTATION....................................................26
23. COUNTERPARTS............................................................26
24. HEADINGS................................................................26
25. ENTIRE AGREEMENT........................................................26
26. SURVIVAL OF AGREEMENTS..................................................27
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BRANT CALI
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between Brant Cali, an individual
residing at 175 Eagle Rock Way, Montclair, New Jersey 07042 ("Executive"), and
Mack-Cali Realty Corporation, a Maryland corporation with offices at 11 Commerce
Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as Executive Vice President and Secretary of
the Company pursuant to his prior employment agreement dated as of December 1997
(the "Prior Agreement") entered into as of the closing of the combination of
Cali Realty Corporation with the Mack Companies (the "Mack Combination");
WHEREAS, Executive was appointed Chief Operating Officer of the Company on
April 18, 1999;
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety among other things to acknowledge Executive's
appointment as Chief Operating Officer, to provide for an award of Restricted
Shares and a Tax Gross-Up Payment (as defined in sub-paragraph 4(c) below), to
change the Employment Period (as defined in sub-paragraph 2(a) below) to (4)
years and to amend the amount of the severance payment Executive may be eligible
to receive upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as Chief
Operating Officer, Executive Vice President of Operations, Leasing and Marketing
and Assistant Secretary, and Executive desires to continue to be employed by the
Company
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as Chief Operating Officer, Executive Vice President of Operations, Leasing and
Marketing and Assistant Secretary, pursuant to the amended and restated terms
set forth herein and to restate the Prior Agreement in its entirety
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become
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fixed and shall end on the fourth anniversary of the date of such written notice
("Notice of Non-Renewal"), or (ii) Executive's employment terminates hereunder.
(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board of Directors of
the Company (the "Board") and Executive may mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
positions of Chief Operating Officer, Executive Vice President of Operations,
Leasing and Marketing and Assistant Secretary of the Company. Executive shall
devote his best efforts and substantially all of his business time, skill and
attention to the business of the Company (other than absences due to vacation,
illness, disability or approved leave of absence), and shall perform such duties
as are customarily performed by similar executive officers and as may be more
specifically enumerated from time to time by the Chief Executive Officer;
provided, however, that the foregoing is not intended to
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(a) preclude Executive from (i) owning and managing personal investments,
including real estate investments, subject to the restrictions set forth in
Paragraph 13 hereof or (ii) engaging in charitable activities and community
affairs, or (b) restrict or otherwise limit Executive from conducting real
estate development, acquisition or management activities with respect to those
properties described in Schedule A, attached hereto, (the "Excluded
Properties"), provided that the performance of the activities referred to in
clauses (a) and (b) does not prevent Executive from devoting substantially all
of his business time to the Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $345,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Chief Executive Officer. In no event
shall Executive's Annual Base Salary in effect at a particular time be reduced
without his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
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determined by the Option and Executive Compensation Committee of the Board (the
"Compensation Committee"). Executive shall be entitled to receive such bonuses,
restricted share awards and options to purchase shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") as the Board or the
Compensation Committee as the case may be shall approve, in its sole discretion,
including, without limitation, options, restricted share awards and bonuses
contingent upon Executive's performance and the achievement of specified
financial and operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 23,437 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
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vesting occurs for any other reason, including, without limitation, termination
of Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) reimbursement for reasonable business expenses incurred by
Executive in furtherance of the interests of the Company
including a monthly allowance of twelve hundred ($1,200) which
is intended
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to cover the cost of local business-related travel expenses
exclusive of amounts paid to third-parties (e.g. taxi
service).
5. Termination of Employment and Change in Control.
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued failure to use best efforts to substantially
perform his duties hereunder (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as
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Chief Operating Officer, Executive Vice President of
Operations, Leasing and Marketing and Assistant Secretary or a
material or adverse alteration in the nature of or diminution
in Executive's duties and/or responsibilities, reporting
obligations, titles or authority; (B) upon a reduction in
Executive's Annual Base Salary or a material reduction in
other benefits (except for bonuses or similar discretionary
payments) as in effect at the time in question, a failure to
pay such amounts when due or any other failure by the Company
to comply with Paragraph 4 hereof; (C) on or within six (6)
months following the date a Notice of Non-Renewal is issued by
the Company pursuant to Paragraph 2 hereof; (D) on or within
six (6) months following a Change in Control (as hereinafter
defined) in accordance with the provisions set forth in
sub-paragraph 5(a)(vii) hereof; (E) upon any purported
termination of Executive's employment for Cause which is not
effected pursuant to the procedures of sub-paragraph 5(a)(i)
(and for purposes of this Agreement, in the event of such
failure to comply, no such purported termination shall be
effective); or (F) upon the relocation of the Company's
principal executive offices or Executive's own office location
to a location more than thirty (30) miles away from Cranford,
New Jersey.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the
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Common Stock and the Common OP Units (treating all classes of
outstanding stock, units or other securities convertible into
stock units as if they were converted into Common Stock or
Common OP Units as the case may be and then treating Common
Stock and Common OP Units as if they were a single class)
issued and outstanding immediately prior to such acquisition
as if they were a single class and disregarding any equity
raise in connection with the financing of such transaction;
(B) any Common Stock is purchased pursuant to a tender or
exchange offer other than an offer by the Company; (C) the
dissolution or liquidation of the Company or the consummation
of any merger or consolidation of the Company or any sale or
other disposition of all or substantially all of its assets,
if the shareholders of the Company and unitholders of the
Partnership taken as a whole and considered as one class
immediately before such transaction own, immediately after
consummation of such transaction, equity securities and
partnership units possessing less than fifty (50%) percent of
the surviving or acquiring company and partnership taken as a
whole; or (D) a turnover, during any two (2) year period, of
the majority of the members of the Board, without the consent
of the remaining members of the Board as to the appointment of
the new Board members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
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6. Compensation Upon Termination of Employment By the Company for
Cause or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and including the date of termination. In addition, in such event,
Executive shall be entitled (i) to receive any earned but unpaid incentive
compensation or bonuses and (ii) to exercise any options which have vested and
are exercisable in accordance with the terms of the applicable option grant
agreement or plan, and (iii) to retain and/or receive any Restricted Shares
which have vested as of the last day of the Company's fiscal year coincident or
immediately preceding Executive's termination of employment and the
corresponding Tax Gross-Up Payment (irrespective of whether the determination is
made after Executive's termination of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his
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personal representative the aggregate of (i) a cash payment of two million five
hundred thousand dollars ($2,500,000) in full immediately upon such termination
(the "Fixed Amount") and (ii) reimbursement of expenses incurred prior to date
of termination ("Expense Reimbursement"). Executive (and Executive's dependents)
shall also receive continuation of health coverage through the end of the
Unexpired Employment Period on the same basis as health coverage is provided by
the Company for active employees and as may be amended from time to time
("Medical Continuation").
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Restricted Share Award or any other
restricted stock, phantom stock, units and any loan forgiveness arrangements
granted to Executive ("Incentive Compensation") shall immediately vest as of the
date of such termination ("Vested Incentive Compensation"), (B) options granted
to Executive shall immediately vest as of the date of such termination (the
"Vested Options") and Executive shall be entitled at the option of Executive,
his estate or his personal representative, within one (1) year of the date of
such termination, to exercise the Vested Options and/or other options which have
vested (including, without limitation, all other options which have previously
vested in accordance with the Prior Agreement, any applicable option grant
agreement or plan) (the "Total Vested Options") and are exercisable in
accordance with the terms of the applicable option grant agreement or plan
and/or any other methods or procedures for exercise applicable to optionees or
to require the Company (upon written notice delivered within one hundred eighty
(180) days following the date of Executive's termination) to repurchase all or
any portion of Executive's vested options to purchase
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shares of Common Stock at a price equal to the difference between the Repurchase
Fair Market Value (as hereinafter defined) of the shares of Common Stock for
which the options to be repurchased are exercisable and the exercise price of
such options as of the date of Executive's termination of employment (the
"Vested Option Exercise Election"), and (C) the Tax Gross-Up Payment(s)
applicable to the Restricted Share Award shall vest and be paid to Executive at
such time as provided in sub-paragraph 4(c) above (the "Vested Tax Gross-Up
Payments"). In the event of a conflict between any Incentive Compensation grant
agreement or program or any option grant agreement or plan and this Agreement,
the terms of this Agreement shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's dependents), the Company shall have no further
obligations hereunder following such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
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8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment, Expense Reimbursement and Medical Continuation. In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant agreement or plan and this Agreement, the terms of this Agreement
shall control. Executive understands that any options exercised more than ninety
(90) days following the date of his termination of employment which were granted
as incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
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9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any options as a result thereof shall
require Executive to exercise any options. In the event of a conflict between
any Incentive Compensation grant agreement or program or any option grant
agreement or plan and this Agreement, the terms of this Agreement shall control.
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement, Medical Continuation, and the Excise Tax Gross Up set forth in
subparagraph 9(c), the Company shall have no further obligations hereunder
following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for
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the benefit of) Executive pursuant to this Agreement or otherwise, an excise tax
may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the
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transaction with any successor. It is the intention of the parties that the
Company provide Executive with a full tax gross-up under the provisions of this
sub-paragraph, so that on a net after-tax basis, the result to Executive shall
be the same as if the excise tax under Section 4999 of the Code (or any
successor provisions) had not been imposed. The Excise Tax Gross Up may be
adjusted if alternative minimum tax rules are applicable to Executive.
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
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11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the Company and shall not, directly or indirectly, at any time,
either during or after his employment with the Company, without the Company's
prior written consent, use any of such Confidential Information or disclose any
of such Confidential Information to any individual or entity other than the
Company or its employees, attorneys, accountants, financial advisors,
consultants, or investment bankers except as required in the performance of his
duties for the Company or as otherwise required by law. Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any
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entity of which a majority of the economic interest is owned, directly or
indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any Confidential Information shall be the exclusive property of the
Company, shall not be copied, summarized, extracted from, or removed from the
premises of the Company, except in pursuit of the business of the Company and at
the direction of the Company, and shall be delivered to the Company, without
retaining any copies, upon the termination of Executive's employment or at any
time as requested by the Company.
13. Noncompete.
Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity
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engaged in such business which is publicly traded, so long as he has no active
participation in the business of such corporation or other entity. Moreover, the
foregoing limitations shall not be deemed to restrict or otherwise limit
Executive from conducting real estate development, acquisition or management
activities with respect to the Excluded Properties, if any, provided that during
the Employment Period the performance of such activities does not prevent
Executive from devoting substantially all of his business time to the Company.
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions and upon substitution by such court,
this Agreement shall be automatically modified without further action by the
parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this
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Agreement. Therefore, in the event of the actual or threatened breach by
Executive of any of the provisions of Paragraphs 11, 12 or 13 of this Agreement,
the Company may, in addition and supplementary to other rights and remedies
existing in its favor, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or director of the Company,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Company shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph
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shall remain in effect after this Agreement is terminated irrespective of the
reasons for termination. The indemnification provisions of this Paragraph shall
not supersede or reduce any indemnification provided to Executive under any
separate agreement, or the by-laws of the Company since it is intended that this
Agreement shall expand and extend the Executive's rights to receive indemnity.
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of an
such succession shall be a breach of this Agreement and shall entitle Executive
to compensation from the Company in the
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<PAGE>
same amount and on the same terms as he would be entitled to hereunder if
Executive terminated his employment hereunder within six (6) months of a Change
in Control as set forth in Paragraph 9, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the date of termination. In the event of such a breach of this Agreement,
the Notice of Termination shall specify such date as the date of termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to all or substantially all of its business and/or its assets
as aforesaid which executes and delivers the agreement provided for in this
Paragraph 16 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. Any cash payments owed to Executive pursuant
to this Paragraph 16 shall be paid to Executive in a single sum without discount
for early payment immediately prior to the consummation of the transaction with
such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving Company written notice thereof. If Executive should die following the
date of termination while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided
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herein, shall be paid in accordance with the terms of this Agreement to such
person or persons so appointed in writing by Executive, including, without
limitation, under any applicable plan, or otherwise to his legal representatives
or estate.
17. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
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The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Chief Executive Officer of the Company or Executive, as
applicable, at the address set forth above (or to such other address as shall
have been previously provided in accordance with this Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity,
24
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without invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.
25
<PAGE>
22. Legal Representation.
Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof. The parties recognize that the Prior Agreement has been
amended and restated in its entirety by this Agreement and the terms of the
Prior Agreement are of no further force and effect.
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26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
Chief Executive Officer
/s/ Brant Cali
--------------------------------------------
Brant Cali
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SCHEDULE A
Those properties described in the Prospectus of Cali Realty Corporation for the
sale of 10,500,000 Shares dated August 24, 1994, in the section entitled
"Business and Properties -- Excluded Properties".
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Exhibit 10.6
================================================================================
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
BARRY LEFKOWITZ
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. EMPLOYMENT................................................................2
2. EMPLOYMENT PERIOD.........................................................2
3. SERVICES / PLACE OF EMPLOYMENT............................................3
4. COMPENSATION AND BENEFITS.................................................4
5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...........................6
6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON....................................9
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY.....10
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT
CAUSE OR BY EXECUTIVE FOR GOOD REASON.......................................12
9. CHANGE IN CONTROL........................................................13
10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS..............16
11. CONFIDENTIAL INFORMATION................................................16
12. RETURN OF DOCUMENTS.....................................................17
13. NONCOMPETE..............................................................18
14. REMEDIES................................................................20
15. INDEMNIFICATION/LEGAL FEES..............................................20
16. SUCCESSORS AND ASSIGNS..................................................21
17. TIMING OF AND NO DUPLICATION OF PAYMENTS................................23
18. MODIFICATION OR WAIVER..................................................23
19. NOTICES.................................................................24
20. GOVERNING LAW...........................................................24
21. SEVERABILITY............................................................24
22. LEGAL REPRESENTATION....................................................25
23. COUNTERPARTS............................................................25
24. HEADINGS................................................................25
25. ENTIRE AGREEMENT........................................................25
26. SURVIVAL OF AGREEMENTS..................................................26
<PAGE>
BARRY LEFKOWITZ
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between Barry Lefkowitz, an individual
residing at 4 Borden Place, Livingston, New Jersey 07039 ("Executive"), and
Mack-Cali Realty Corporation, a Maryland corporation with offices at 11 Commerce
Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as Executive Vice President Finance and
Chief Financial Officer of the Company pursuant to his prior employment
agreement dated as of December 1997 (the "Prior Agreement") entered into as of
the closing of the combination of Cali Realty Corporation with the Mack
Companies (the "Mack Combination");
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety to provide for an award of Restricted Shares and a Tax
Gross-Up Payment (as defined in sub-paragraph 4(c) below), to change the
Employment Period (as defined in sub-paragraph 2(a) below) to (4) years and to
amend the amount of the severance payment Executive may be eligible to receive
upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as Executive
Vice President and Chief Financial Officer, and Executive desires to continue to
be employed by the Company as Executive Vice President and Chief Financial
Officer, pursuant to the amended and restated terms set forth herein and to
restate the Prior Agreement in its entirety
<PAGE>
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become fixed and shall end on the fourth
anniversary of the date of such written notice ("Notice of Non-Renewal"), or
(ii) Executive's employment terminates hereunder.
(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
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Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board of Directors of
the Company (the "Board") and Executive may mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
positions of Executive Vice President and Chief Financial Officer of the
Company. Executive shall devote his best efforts and substantially all of his
business time, skill and attention to the business of the Company (other than
absences due to vacation, illness, disability or approved leave of absence), and
shall perform such duties as are customarily performed by similar executive
officers and as may be more specifically enumerated from time to time by the
Chief Executive Officer; provided, however, that the foregoing is not intended
to (a) preclude Executive from (i) owning and managing personal investments,
including real estate investments, subject to the restrictions set forth in
Paragraph 13 hereof or (ii) engaging in charitable activities and community
affairs, or (b) restrict or otherwise limit Executive from conducting real
estate development, acquisition or management activities with respect to those
properties
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described in Schedule A, attached hereto, (the "Excluded Properties"), provided
that the performance of the activities referred to in clauses (a) and (b) does
not prevent Executive from devoting substantially all of his business time to
the Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $385,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Chief Executive Officer. In no event
shall Executive's Annual Base Salary in effect at a particular time be reduced
without his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
determined by the Option and Executive Compensation Committee of the Board (the
"Compensation Committee"). Executive shall be entitled to receive such bonuses,
restricted share awards and options to purchase shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") as the Board or the
Compensation Committee as the case may be shall approve, in its sole discretion,
4
<PAGE>
including, without limitation, options, restricted share awards and bonuses
contingent upon Executive's performance and the achievement of specified
financial and operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 26,094 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
vesting occurs for any other reason, including, without limitation, termination
of Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
5
<PAGE>
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) reimbursement for reasonable business expenses incurred by
Executive in furtherance of the interests of the Company
including a monthly allowance of twelve hundred ($1,200) which
is intended to cover the cost of local business-related travel
expenses exclusive of amounts paid to third-parties (e.g. taxi
service).
5. Termination of Employment and Change in Control.
6
<PAGE>
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued failure to use best efforts to substantially
perform his duties hereunder (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as Executive Vice President and Chief Financial Officer
or a material or adverse alteration in the nature of or
diminution in Executive's duties and/or responsibilities,
reporting obligations, titles or authority; (B) upon a
reduction in Executive's Annual Base Salary or a material
reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question,
7
<PAGE>
a failure to pay such amounts when due or any other failure by
the Company to comply with Paragraph 4 hereof; (C) on or
within six (6) months following the date a Notice of
Non-Renewal is issued by the Company pursuant to Paragraph 2
hereof; (D) on or within six (6) months following a Change in
Control (as hereinafter defined) in accordance with the
provisions set forth in sub-paragraph 5(a)(vii) hereof; (E)
upon any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of
sub-paragraph 5(a)(i) (and for purposes of this Agreement, in
the event of such failure to comply, no such purported
termination shall be effective); or (F) upon the relocation of
the Company's principal executive offices or Executive's own
office location to a location more than thirty (30) miles away
from Cranford, New Jersey.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the Common Stock and
the Common OP Units (treating all classes of outstanding
stock, units or other securities convertible into stock units
as if they were converted into Common Stock or Common OP Units
as the case may be and then treating Common Stock and Common
OP Units as if they were a single class) issued and
outstanding immediately prior to such acquisition as if they
were a single class and disregarding any equity raise in
connection with
8
<PAGE>
the financing of such transaction; (B) any Common Stock is
purchased pursuant to a tender or exchange offer other than an
offer by the Company; (C) the dissolution or liquidation of
the Company or the consummation of any merger or consolidation
of the Company or any sale or other disposition of all or
substantially all of its assets, if the shareholders of the
Company and unitholders of the Partnership taken as a whole
and considered as one class immediately before such
transaction own, immediately after consummation of such
transaction, equity securities and partnership units
possessing less than fifty (50%) percent of the surviving or
acquiring company and partnership taken as a whole; or (D) a
turnover, during any two (2) year period, of the majority of
the members of the Board, without the consent of the remaining
members of the Board as to the appointment of the new Board
members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
6. Compensation Upon Termination of Employment By the Company for
Cause or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and
9
<PAGE>
including the date of termination. In addition, in such event, Executive shall
be entitled (i) to receive any earned but unpaid incentive compensation or
bonuses and (ii) to exercise any options which have vested and are exercisable
in accordance with the terms of the applicable option grant agreement or plan,
and (iii) to retain and/or receive any Restricted Shares which have vested as of
the last day of the Company's fiscal year coincident or immediately preceding
Executive's termination of employment and the corresponding Tax Gross-Up Payment
(irrespective of whether the determination is made after Executive's termination
of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his personal representative the aggregate of (i) a cash payment of two
million five hundred thousand dollars ($2,500,000) in full immediately upon such
termination (the "Fixed Amount") and (ii) reimbursement of expenses incurred
prior to date of termination ("Expense Reimbursement"). Executive (and
Executive's dependents) shall also receive continuation of health coverage
through the end of the Unexpired Employment
10
<PAGE>
Period on the same basis as health coverage is provided by the Company for
active employees and as may be amended from time to time ("Medical
Continuation").
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Restricted Share Award or any other
restricted stock, phantom stock, units and any loan forgiveness arrangements
granted to Executive ("Incentive Compensation") shall immediately vest as of the
date of such termination ("Vested Incentive Compensation"), (B) options granted
to Executive shall immediately vest as of the date of such termination (the
"Vested Options") and Executive shall be entitled at the option of Executive,
his estate or his personal representative, within one (1) year of the date of
such termination, to exercise the Vested Options and/or other options which have
vested (including, without limitation, all other options which have previously
vested in accordance with the Prior Agreement, any applicable option grant
agreement or plan) (the "Total Vested Options") and are exercisable in
accordance with the terms of the applicable option grant agreement or plan
and/or any other methods or procedures for exercise applicable to optionees or
to require the Company (upon written notice delivered within one hundred eighty
(180) days following the date of Executive's termination) to repurchase all or
any portion of Executive's vested options to purchase shares of Common Stock at
a price equal to the difference between the Repurchase Fair Market Value (as
hereinafter defined) of the shares of Common Stock for which the options to be
repurchased are exercisable and the exercise price of such options as of the
date of Executive's termination of employment (the "Vested Option Exercise
Election"), and (C) the Tax Gross-Up Payment(s) applicable to the Restricted
Share
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<PAGE>
Award shall vest and be paid to Executive at such time as provided in
sub-paragraph 4(c) above (the "Vested Tax Gross-Up Payments"). In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant agreement or plan and this Agreement, the terms of this Agreement
shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's dependents), the Company shall have no further
obligations hereunder following such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment,
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Expense Reimbursement and Medical Continuation. In the event of a conflict
between any Incentive Compensation grant agreement or program or any option
grant agreement or plan and this Agreement, the terms of this Agreement shall
control. Executive understands that any options exercised more than ninety (90)
days following the date of his termination of employment which were granted as
incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any options as a result thereof shall
require Executive to exercise any options. In the event of a conflict between
any Incentive Compensation
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<PAGE>
grant agreement or program or any option grant agreement or plan and this
Agreement, the terms of this Agreement shall control.
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement, Medical Continuation and the Excise Tax Gross Up set forth in
subparagraph 9(c), the Company shall have no further obligations hereunder
following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for the benefit of) Executive pursuant to this Agreement or otherwise, an excise
tax may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
14
<PAGE>
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Company provide Executive with a full tax gross-up under
the provisions of this sub-paragraph, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed. The Excise Tax
Gross Up may be adjusted if alternative minimum tax rules are applicable to
Executive.
15
<PAGE>
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the
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<PAGE>
Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the Company and shall not, directly or indirectly, at any time,
either during or after his employment with the Company, without the Company's
prior written consent, use any of such Confidential Information or disclose any
of such Confidential Information to any individual or entity other than the
Company or its employees, attorneys, accountants, financial advisors,
consultants, or investment bankers except as required in the performance of his
duties for the Company or as otherwise required by law. Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any entity of which a majority of the economic
interest is owned, directly or indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any
17
<PAGE>
Confidential Information shall be the exclusive property of the Company, shall
not be copied, summarized, extracted from, or removed from the premises of the
Company, except in pursuit of the business of the Company and at the direction
of the Company, and shall be delivered to the Company, without retaining any
copies, upon the termination of Executive's employment or at any time as
requested by the Company.
13. Noncompete. Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity. Moreover, the foregoing
limitations shall not be deemed to restrict or otherwise limit Executive from
conducting real estate development, acquisition or management activities with
respect to the Excluded Properties, if any, provided that during the Employment
Period the
18
<PAGE>
performance of such activities does not prevent Executive from devoting
substantially all of his business time to the Company.
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions and upon substitution by such court,
this Agreement shall be automatically modified without further action by the
parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
19
<PAGE>
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraphs 11, 12
or 13 of this Agreement, the Company may, in addition and supplementary to other
rights and remedies existing in its favor, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or director of the Company,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Company shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
20
<PAGE>
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination. The indemnification
provisions of this Paragraph shall not supersede or reduce any indemnification
provided to Executive under any separate agreement, or the by-laws of the
Company since it is intended that this Agreement shall expand and extend the
Executive's rights to receive indemnity.
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance
21
<PAGE>
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of an such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if Executive terminated his employment hereunder
within six (6) months of a Change in Control as set forth in Paragraph 9, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. In the
event of such a breach of this Agreement, the Notice of Termination shall
specify such date as the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 16 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Any cash payments owed to Executive pursuant to this Paragraph
16 shall be paid to Executive in a single sum without discount for early payment
immediately prior to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's
22
<PAGE>
interests under this Agreement. Executive shall be entitled to select and change
a beneficiary or beneficiaries to receive any benefit or compensation payable
hereunder following Executive's death by giving Company written notice thereof.
If Executive should die following the date of termination while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons so appointed in writing by
Executive, including, without limitation, under any applicable plan, or
otherwise to his legal representatives or estate.
17. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall
23
<PAGE>
operate as a waiver thereof, and no single or partial exercise by the Company or
Executive of any such right or remedy shall preclude other or further exercise
thereof. A waiver of right or remedy on any one occasion shall not be construed
as a bar to or waiver of any such right or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Chief Executive Officer of the Company or Executive, as
applicable, at the address set forth above (or to such other address as shall
have been previously provided in accordance with this Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
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Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting
in any manner whatsoever the remainder of such provisions or term or the
remaining provisions or terms of this Agreement.
22. Legal Representation.
Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings,
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<PAGE>
both written and oral, among the parties with respect to the subject matter
hereof. The parties recognize that the Prior Agreement has been amended and
restated in its entirety by this Agreement and the terms of the Prior Agreement
are of no further force and effect.
26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
26
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
Chief Executive Officer
/s/ Barry Lefkowitz
--------------------------------------------
Barry Lefkowitz
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SCHEDULE A
None.
28
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Exhibit 10.7
================================================================================
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
ROGER W. THOMAS
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. EMPLOYMENT................................................................2
2. EMPLOYMENT PERIOD.........................................................2
3. SERVICES / PLACE OF EMPLOYMENT............................................3
4. COMPENSATION AND BENEFITS.................................................4
5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...........................6
6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON....................................9
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY.....10
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT
CAUSE OR BY EXECUTIVE FOR GOOD REASON.......................................12
9. CHANGE IN CONTROL........................................................13
10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS..............16
11. CONFIDENTIAL INFORMATION................................................16
12. RETURN OF DOCUMENTS.....................................................17
13. NONCOMPETE..............................................................18
14. REMEDIES................................................................19
15. INDEMNIFICATION/LEGAL FEES..............................................19
16. SUCCESSORS AND ASSIGNS..................................................21
17. TIMING OF AND NO DUPLICATION OF PAYMENTS................................22
18. MODIFICATION OR WAIVER..................................................23
19. NOTICES.................................................................23
20. GOVERNING LAW...........................................................24
21. SEVERABILITY............................................................24
22. LEGAL REPRESENTATION....................................................24
23. COUNTERPARTS............................................................25
24. HEADINGS................................................................25
25. ENTIRE AGREEMENT........................................................25
26. SURVIVAL OF AGREEMENTS..................................................25
<PAGE>
ROGER W. THOMAS
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of July 1, 1999, by and between Roger W. Thomas, an individual
residing at 95 Mathews Drive, Bedminster, New Jersey 07921 ("Executive"), and
Mack-Cali Realty Corporation, a Maryland corporation with offices at 11 Commerce
Drive, Cranford, New Jersey 07016 (the "Company").
RECITALS
WHEREAS, Executive has served as Executive Vice President, General Counsel
and Assistant Secretary of the Company pursuant to his prior employment
agreement dated as of December 1997 (the "Prior Agreement") entered into as of
the closing of the combination of Cali Realty Corporation with the Mack
Companies (the "Mack Combination");
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Agreement in its entirety to provide for an award of Restricted Shares and a Tax
Gross-Up Payment (as defined in sub-paragraph 4(c) below), to change the
Employment Period (as defined in sub-paragraph 2(a) below) to (4) years and to
amend the amount of the severance payment Executive may be eligible to receive
upon termination of employment with the Company; and
WHEREAS, the Company desires to continue to employ Executive as Executive
Vice President, General Counsel and Secretary, and Executive desires to continue
to be employed by the Company as Executive Vice President, General Counsel and
Secretary, pursuant to the amended and restated terms set forth herein and to
restate the Prior Agreement in its entirety
<PAGE>
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept such employment during the period and upon the terms and conditions
set forth in this Agreement.
2. Employment Period.
(a) Except as otherwise provided in this Agreement to the contrary,
the terms and conditions of this Agreement shall be and remain in effect during
the period of employment (the "Employment Period") established under this
Paragraph 2. The initial Employment Period shall be for a term commencing on the
date of this Agreement and ending on the fourth anniversary of the date of this
Agreement provided, however, that commencing on the day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one additional day so that a constant four (4) year Employment Period shall
be in effect, unless (i) the Company or Executive elects not to extend the term
of this Agreement by giving written notice to the other party in accordance with
Paragraph 19, in which case, subject to the provisions of sub-paragraph 5(a)(iv)
below, the term of this Agreement shall become fixed and shall end on the fourth
anniversary of the date of such written notice ("Notice of Non-Renewal"), or
(ii) Executive's employment terminates hereunder.
(b) Notwithstanding anything contained herein to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
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Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board of Directors of
the Company (the "Board") and Executive may mutually agree.
(c) If Executive's employment with the Company is terminated, for
purposes of this Agreement the term "Unexpired Employment Period" shall mean the
period commencing on the date of such termination and ending on the last day of
the Employment Period.
3. Services / Place of Employment.
(a) Services. During the Employment Period, Executive shall hold the
positions of Executive Vice President, General Counsel and Secretary of the
Company. Executive shall devote his best efforts and substantially all of his
business time, skill and attention to the business of the Company (other than
absences due to vacation, illness, disability or approved leave of absence), and
shall perform such duties as are customarily performed by similar executive
officers and as may be more specifically enumerated from time to time by the
Chief Executive Officer; provided, however, that the foregoing is not intended
to (a) preclude Executive from (i) owning and managing personal investments,
including real estate investments, subject to the restrictions set forth in
Paragraph 13 hereof or (ii) engaging in charitable activities and community
affairs, or (b) restrict or otherwise limit Executive from conducting real
estate development, acquisition or management activities with respect to those
properties
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described in Schedule A, attached hereto, (the "Excluded Properties"), provided
that the performance of the activities referred to in clauses (a) and (b) does
not prevent Executive from devoting substantially all of his business time to
the Company.
(b) Place of Employment. The principal place of employment of
Executive shall be at the Company's principal executive offices in Cranford, New
Jersey.
4. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company shall pay
Executive a minimum annual base salary in the amount of $325,000 (the "Annual
Base Salary") payable in accordance with the Company's regular payroll
practices. Executive's Annual Base Salary shall be reviewed annually in
accordance with the policy of the Company from time to time and may be subject
to upward adjustment based upon, among other things, Executive's performance, as
determined in the sole discretion of the Chief Executive Officer. In no event
shall Executive's Annual Base Salary in effect at a particular time be reduced
without his prior written consent.
(b) Incentive Compensation/Bonuses. In addition, Executive shall be
eligible for incentive compensation payable each year in such amounts as may be
determined by the Option and Executive Compensation Committee of the Board (the
"Compensation Committee"). Executive shall be entitled to receive such bonuses,
restricted share awards and options to purchase shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") as the Board or the
Compensation Committee as the case may be shall approve, in its sole discretion,
4
<PAGE>
including, without limitation, options, restricted share awards and bonuses
contingent upon Executive's performance and the achievement of specified
financial and operating objectives.
(c) Restricted Share Award/Tax Gross-Up Payment. Pursuant to the
Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally
effective August 31, 1994 and amended and restated as of December 1, 1998 (the
"SOP"), Executive has been awarded a restricted share award of 22,031 shares of
Common Stock ("Restricted Shares") as of July 1, 1999 (the "Restricted Share
Award"). Executive shall be entitled to receive a tax gross-up payment (the "Tax
Gross-Up Payment") from the Company with respect to each tax year in which
Restricted Shares granted pursuant to the Restricted Share Award vest and are
distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to
forty-three (43%) percent of the fair market value of the Restricted Shares at
time of vesting, exclusive of dividends. In the event vesting occurs with
respect to any Restricted Shares as a result of the achievement of the required
performance goals, such payment shall be made as soon as practicable after a
determination that the performance goals have been achieved but in no event
later than the 90th day of the fiscal year of the Company immediately following
the fiscal year as to which the performance goals were achieved. In the event
vesting occurs for any other reason, including, without limitation, termination
of Executive's employment by the Company without Cause or by Executive for Good
Reason (but excluding a termination by the Company for Cause or a voluntary quit
without Good Reason by Executive), such payment shall be made as soon as
5
<PAGE>
practicable after the date of vesting but in no event later than the tenth
(10th) business day following such vesting.
(d) Taxes and Withholding. The Company shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
(e) Additional Benefits. In addition to the compensation specified
above and other benefits provided pursuant to this Paragraph 4, Executive shall
be entitled to the following benefits:
(i) participation in the SOP, the Mack-Cali Realty Corporation
401(k) Savings and Retirement Plan (subject to statutory rules
and maximum contributions and non-discrimination requirements
applicable to 401(k) plans) and such other benefit plans and
programs, including but not limited to restricted stock,
phantom stock and/or unit awards, loan programs and any other
incentive compensation plans or programs (whether or not
employee benefit plans or programs), as maintained by the
Company from time to time and made generally available to
executives of the Company with such participation to be
consistent with reasonable Company guidelines;
(ii) participation in any health insurance, disability insurance,
paid vacation, group life insurance or other welfare benefit
program made generally available to executives of the Company;
and
(iii) reimbursement for reasonable business expenses incurred by
Executive in furtherance of the interests of the Company
including a monthly allowance of twelve hundred ($1,200) which
is intended to cover the cost of local business-related travel
expenses exclusive of amounts paid to third-parties (e.g. taxi
service).
5. Termination of Employment and Change in Control.
6
<PAGE>
(a) Executive's employment hereunder may be terminated during the
Employment Period under the following circumstances:
(i) Cause. The Company shall have the right to terminate
Executive's employment for Cause upon Executive's: (A) willful
and continued failure to use best efforts to substantially
perform his duties hereunder (other than any such failure
resulting from Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company
believes Executive has not substantially performed his duties;
(B) willful misconduct and/or willful violation of Paragraph
11 hereof, which is materially economically injurious to the
Company and the Partnership taken as a whole; (C) the willful
violation of the provisions of Paragraph 13 hereof; or (D)
conviction of, or plea of guilty to a felony. For purposes of
this sub-paragraph 5(a), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him (I) not in good faith and (II)
without reasonable belief that his action or omission was in
furtherance of the interests of the Company.
(ii) Death. Executive's employment hereunder shall terminate upon
his death.
(iii) Disability. The Company shall have the right to terminate
Executive's employment due to "Disability" in the event that
there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to
Executive, that Executive has become physically or mentally
incapable of performing his duties under this Agreement and
such disability has disabled Executive for a cumulative period
of one hundred eighty (180) days within a twelve (12) month
period.
(iv) Good Reason. Executive shall have the right to terminate his
employment for "Good Reason": (A) upon the occurrence of any
material breach of this Agreement by the Company which shall
include but not be limited to; an assignment to Executive of
duties materially and adversely inconsistent with Executive's
status as Executive Vice President, General Counsel or
Secretary or a material or adverse alteration in the nature of
or diminution in Executive's duties and/or responsibilities,
reporting obligations, titles or authority; (B) upon a
reduction in Executive's Annual Base Salary or a material
reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in
7
<PAGE>
question, a failure to pay such amounts when due or any other
failure by the Company to comply with Paragraph 4 hereof; (C)
on or within six (6) months following the date a Notice of
Non-Renewal is issued by the Company pursuant to Paragraph 2
hereof; (D) on or within six (6) months following a Change in
Control (as hereinafter defined) in accordance with the
provisions set forth in sub-paragraph 5(a)(vii) hereof; (E)
upon any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of
sub-paragraph 5(a)(i) (and for purposes of this Agreement, in
the event of such failure to comply, no such purported
termination shall be effective); or (F) upon the relocation of
the Company's principal executive offices or Executive's own
office location to a location more than thirty (30) miles away
from Cranford, New Jersey.
(v) Without Cause. The Company shall have the right to terminate
the Executive's employment hereunder without Cause subject to
the terms and conditions of this Agreement.
(vi) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason subject
to the terms and conditions of this Agreement.
(vii) Change in Control. Executive shall have the right to terminate
his employment hereunder on or within six (6) months following
a Change in Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes of this
Agreement "Change in Control" shall mean that any of the
following events has occurred: (A) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the
Company, becomes the "beneficial owner", as such term is used
in Section 13 of the Exchange Act, (irrespective of any
vesting or waiting periods) of (I) Common Stock or any class
of stock convertible into Common Stock and/or (II) Common OP
Units or preferred units or any other class of units
convertible into Common OP Units, in an amount equal to twenty
(20%) percent or more of the sum total of the Common Stock and
the Common OP Units (treating all classes of outstanding
stock, units or other securities convertible into stock units
as if they were converted into Common Stock or Common OP Units
as the case may be and then treating Common Stock and Common
OP Units as if they were a single class) issued and
outstanding immediately prior to such acquisition as if they
were a single class and disregarding any equity raise in
connection with
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<PAGE>
the financing of such transaction; (B) any Common Stock is
purchased pursuant to a tender or exchange offer other than an
offer by the Company; (C) the dissolution or liquidation of
the Company or the consummation of any merger or consolidation
of the Company or any sale or other disposition of all or
substantially all of its assets, if the shareholders of the
Company and unitholders of the Partnership taken as a whole
and considered as one class immediately before such
transaction own, immediately after consummation of such
transaction, equity securities and partnership units
possessing less than fifty (50%) percent of the surviving or
acquiring company and partnership taken as a whole; or (D) a
turnover, during any two (2) year period, of the majority of
the members of the Board, without the consent of the remaining
members of the Board as to the appointment of the new Board
members.
(b) Notice of Termination. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
6. Compensation Upon Termination of Employment By the Company for Cause
or By Executive without Good Reason.
In the event the Company terminates Executive's employment for Cause or
Executive terminates his employment without Good Reason, the Company shall pay
Executive any unpaid Annual Base Salary at the rate then in effect accrued
through and
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<PAGE>
including the date of termination. In addition, in such event, Executive shall
be entitled (i) to receive any earned but unpaid incentive compensation or
bonuses and (ii) to exercise any options which have vested and are exercisable
in accordance with the terms of the applicable option grant agreement or plan,
and (iii) to retain and/or receive any Restricted Shares which have vested as of
the last day of the Company's fiscal year coincident or immediately preceding
Executive's termination of employment and the corresponding Tax Gross-Up Payment
(irrespective of whether the determination is made after Executive's termination
of employment).
Except for any rights which Executive may have to unpaid salary amounts
through and including the date of termination, earned but unpaid incentive
compensation or bonuses, vested options, vested Restricted Shares and the
corresponding Tax Gross-Up Payment, the Company shall have no further
obligations hereunder following such termination. The aforesaid amounts shall be
payable in full immediately upon such termination.
7. Compensation Upon Termination of Employment Upon Death or
Disability.
In the event of termination of Executive's employment as a result of
either Executive's death or Disability, the Company shall pay to Executive, his
estate or his personal representative the aggregate of (i) a cash payment of two
million five hundred thousand dollars ($2,500,000)in full immediately upon such
termination (the "Fixed Amount") and (ii) reimbursement of expenses incurred
prior to date of termination ("Expense Reimbursement"). Executive (and
Executive's dependents) shall also receive continuation of health coverage
through the end of the Unexpired Employment
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<PAGE>
Period on the same basis as health coverage is provided by the Company for
active employees and as may be amended from time to time ("Medical
Continuation").
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule
including, without limitation, the Restricted Share Award or any other
restricted stock, phantom stock, units and any loan forgiveness arrangements
granted to Executive ("Incentive Compensation") shall immediately vest as of the
date of such termination ("Vested Incentive Compensation"), (B) options granted
to Executive shall immediately vest as of the date of such termination (the
"Vested Options") and Executive shall be entitled at the option of Executive,
his estate or his personal representative, within one (1) year of the date of
such termination, to exercise the Vested Options and/or other options which have
vested (including, without limitation, all other options which have previously
vested in accordance with the Prior Agreement, any applicable option grant
agreement or plan) (the "Total Vested Options") and are exercisable in
accordance with the terms of the applicable option grant agreement or plan
and/or any other methods or procedures for exercise applicable to optionees or
to require the Company (upon written notice delivered within one hundred eighty
(180) days following the date of Executive's termination) to repurchase all or
any portion of Executive's vested options to purchase shares of Common Stock at
a price equal to the difference between the Repurchase Fair Market Value (as
hereinafter defined) of the shares of Common Stock for which the options to be
repurchased are exercisable and the exercise price of such options as of the
date of Executive's termination of employment (the "Vested Option Exercise
Election"), and (C) the Tax Gross-Up Payment(s) applicable to the Restricted
Share
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<PAGE>
Award shall vest and be paid to Executive at such time as provided in
sub-paragraph 4(c) above (the "Vested Tax Gross-Up Payments"). In the event of a
conflict between any Incentive Compensation grant agreement or program or any
option grant agreement or plan and this Agreement, the terms of this Agreement
shall control.
Except for any rights which Executive or Executive's estate in the event
of Executive's death may have to all of the above including the Fixed Amount,
Vested Incentive Compensation, Total Vested Options and the Vested Option
Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and
Medical Continuation (which, in the event of Executive's death, shall be
provided to Executive's dependents), the Company shall have no further
obligations hereunder following such termination.
For purposes of this Agreement, "Repurchase Fair Market Value" shall mean
the average of the closing price on the New York Stock Exchange (or such other
exchange on which the Common Stock is primarily traded) of the Common Stock on
each of the trading days within the thirty (30) days immediately preceding the
date of termination of Executive's employment.
8. Compensation Upon Termination of Employment By the Company Without
Cause or By Executive for Good Reason.
In the event the Company terminates Executive's employment for any reason
other than Cause or Executive terminates his employment for Good Reason, the
Company shall pay to Executive and Executive shall be entitled to receive the
aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total
Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up
Payment,
12
<PAGE>
Expense Reimbursement and Medical Continuation. In the event of a conflict
between any Incentive Compensation grant agreement or program or any option
grant agreement or plan and this Agreement, the terms of this Agreement shall
control. Executive understands that any options exercised more than ninety (90)
days following the date of his termination of employment which were granted as
incentive stock options shall automatically be converted into non-qualified
options.
Except for any rights which Executive may have to the Fixed Amount, Vested
Incentive Compensation, Total Vested Options and the Vested Option Exercise
Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical
Continuation, the Company shall have no further obligations hereunder following
such termination. The parties both agree that the agreement to make these
payments was consideration and an inducement to obtain Executive's consent to
enter into this Agreement. The payments are not a penalty and neither party will
claim them to be a penalty. Rather, the payments represent a fair approximation
of reasonable amounts due to Executive for the Employment Period.
9. Change in Control.
(a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any options as a result thereof shall
require Executive to exercise any options. In the event of a conflict between
any Incentive Compensation
13
<PAGE>
grant agreement or program or any option grant agreement or plan and this
Agreement, the terms of this Agreement shall control.
(b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Company shall pay to Executive and Executive shall be entitled to
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8.
Except for any rights which Executive may have to the Fixed Amount,
Vested Incentive Compensation, Total Vested Options (including, without
limitation, by acceleration in accordance with sub-paragraph 9(a)) and the
Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement, Medical Continuation and the Excise Tax Gross Up set forth in
subparagraph 9(c), the Company shall have no further obligations hereunder
following such termination.
(c) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to the Company and Executive that as
a result of any payment in the nature of compensation made by the Company to (or
for the benefit of) Executive pursuant to this Agreement or otherwise, an excise
tax may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions), the Company shall pay Executive in cash an amount equal
to X determined under the following formula: (the "Excise Tax Gross Up"):
E x P
X = --------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
14
<PAGE>
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise Tax
Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the taxable
year in question (taking into account any phase-out or
loss of deductions, personal exemptions or other similar
adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all applicable
state and local laws for the taxable year in question
(taking into account any phase-out or loss of
deductions, personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare tax applicable to
Executive under the Code for the taxable year in
question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(c) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Company provide Executive with a full tax gross-up under
the provisions of this sub-paragraph, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed. The Excise Tax
Gross Up may be adjusted if alternative minimum tax rules are applicable to
Executive.
15
<PAGE>
10. Mitigation / Effect on Employee Benefit Plans and Programs.
(a) Mitigation. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment. Amounts owed to Executive under this Agreement shall
not be offset by any claims the Company may have against Executive and such
payment shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense, or other right which the
Company may have against Executive or others.
(b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Company or Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's (i) welfare benefit plans including, without limitation, Medical
Continuation as provided for herein and, health coverage thereafter but only to
the extent required by law, and on the same basis applicable to other employees
and (ii) 401(k) Plan but only to the extent required by law and pursuant to the
terms of the 401(k) Plan.
11. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with the Company, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Company. Executive shall hold in a fiduciary capacity for the benefit of the
Company such Confidential Information obtained by Executive during his
employment with the
16
<PAGE>
Company and shall not, directly or indirectly, at any time, either during or
after his employment with the Company, without the Company's prior written
consent, use any of such Confidential Information or disclose any of such
Confidential Information to any individual or entity other than the Company or
its employees, attorneys, accountants, financial advisors, consultants, or
investment bankers except as required in the performance of his duties for the
Company or as otherwise required by law. Executive shall take all reasonable
steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from the Company or its predecessors
or which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of the Company or its predecessors. For purposes of this Paragraph 11, the
Company shall be deemed to include any entity which is controlled, directly or
indirectly, by the Company and any entity of which a majority of the economic
interest is owned, directly or indirectly, by the Company.
12. Return of Documents.
Except for such items which are of a personal nature to Executive (e.g.,
daily business planner), all writings, records, and other documents and things
containing any Confidential Information shall be the exclusive property of the
Company, shall not be copied, summarized, extracted from, or removed from the
premises of the Company,
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<PAGE>
except in pursuit of the business of the Company and at the direction of the
Company, and shall be delivered to the Company, without retaining any copies,
upon the termination of Executive's employment or at any time as requested by
the Company.
13. Noncompete.
Executive agrees that:
(a) During the Employment Period and, in the event (i) the Company
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment without Good Reason, for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the continental United States, engage
in, or own, invest in, manage or control any venture or enterprise primarily
engaged in any office-service, flex, or office property development, acquisition
or management activities without regard to whether or not such activities
compete with the Company. Nothing herein shall prohibit Executive from being a
passive owner of not more than five percent (5%) of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity. Moreover, the foregoing
limitations shall not be deemed to restrict or otherwise limit Executive from
conducting real estate development, acquisition or management activities with
respect to the Excluded Properties, if any, provided that during the Employment
Period the performance of such activities does not prevent Executive from
devoting substantially all of his business time to the Company.
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<PAGE>
(b) If, at the time of enforcement of this Paragraph 13, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions and upon substitution by such court,
this Agreement shall be automatically modified without further action by the
parties hereto.
(c) For purposes of this Paragraph 13, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
14. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraphs 11, 12
or 13 of this Agreement, the Company may, in addition and supplementary to other
rights and remedies existing in its favor, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
15. Indemnification/Legal Fees.
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(a) Indemnification. In the event the Executive is made party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or director of the Company,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Company shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the
Company and shall inure to the benefit of his heirs, executors, and
administrators. Expenses incurred by Executive in connection with any Proceeding
shall be paid by the Company in advance upon request of Executive that the
Company pay such expenses; but, only in the event that Executive shall have
delivered in writing to the Company an undertaking to reimburse the Company for
expenses with respect to which Executive is not entitled to indemnification. The
provisions of this Paragraph shall remain in effect after this Agreement is
terminated irrespective of the reasons for termination. The indemnification
provisions of this Paragraph shall not supersede or reduce any indemnification
provided to Executive under any separate agreement, or the by-laws of the
Company since it is intended that this Agreement shall expand and extend the
Executive's rights to receive indemnity.
20
<PAGE>
(b) Legal Fees. If any contest or dispute shall arise between the
Company and Executive regarding or as a result of any provision of this
Agreement, the Company shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).
16. Successors and Assigns.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of an
such succession shall be a breach of this Agreement and shall entitle Executive
to compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if Executive terminated his employment hereunder
within six (6) months of a Change in Control as set forth in Paragraph 9, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. In the
event of such a breach of this Agreement, the Notice of Termination
21
<PAGE>
shall specify such date as the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 16 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Any cash payments owed to Executive pursuant to this Paragraph
16 shall be paid to Executive in a single sum without discount for early payment
immediately prior to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder may be
transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving Company written notice thereof. If Executive should die following the
date of termination while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons so appointed in writing by Executive, including, without limitation,
under any applicable plan, or otherwise to his legal representatives or estate.
17. Timing of and No Duplication of Payments.
22
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All payments payable to Executive pursuant to this Agreement shall be paid
as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
18. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
19. Notices.
23
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All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Chief Executive Officer of the Company or Executive, as
applicable, at the address set forth above (or to such other address as shall
have been previously provided in accordance with this Paragraph 19).
20. Governing Law.
This agreement will be governed by and construed in accordance with the
laws of the State of New Jersey except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.
21. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting
in any manner whatsoever the remainder of such provisions or term or the
remaining provisions or terms of this Agreement.
22. Legal Representation.
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Each of the Company and Executive have been represented by counsel with
respect to this Agreement.
23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and both of which taken together shall constitute one
and the same agreement.
24. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof. The parties recognize that the Prior Agreement has been
amended and restated in its entirety by this Agreement and the terms of the
Prior Agreement are of no further force and effect.
26. Survival of Agreements.
The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MACK-CALI REALTY CORPORATION
By: /s/ Mitchell E. Hersh
--------------------------------------------
Mitchell E. Hersh
Chief Executive Officer
/s/ Roger W. Thomas
--------------------------------------------
Roger W. Thomas
26
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SCHEDULE A
61,342 square foot Shopping Center located at 267-71 Jericho Turnpike,
Syosset, New York.
27
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Exhibit 10.8
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
MITCHELL E. HERSH
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and Mitchell E.
Hersh ("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Amended and Restated Employment Agreement dated as of July 1,
1999 by and between the Company and Recipient (the "Employment Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 62,500 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 62,500 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
-2-
<PAGE>
Restricted Shares Vesting Date
----------------- ------------
9,375 January 1, 2000
9,375 January 1, 2001
12,500 January 1, 2002
15,625 January 1, 2003
15,625 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
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<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
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<PAGE>
aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
-5-
<PAGE>
excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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<PAGE>
levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that
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<PAGE>
the Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
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<PAGE>
provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
-9-
<PAGE>
Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Timothy M. Jones
President
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. Mitchell E. Hersh
15 Parkwood Drive
Wayne, New Jersey 07470
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
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<PAGE>
obligations with respect to the Recipient, such terms and conditions shall
govern the Recipient's Restricted Share Award as if such terms and conditions
had been set forth herein; and in the event of any conflict or inconsistency
between the terms of the Employment Agreement or this Agreement, the terms and
conditions of the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Timothy M. Jones
--------------------------------
Timothy M. Jones
President
Recipient
/s/ Mitchell E. Hersh
--------------------------------------
Mitchell E. Hersh
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<PAGE>
Exhibit 10.9
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
TIMOTHY M. JONES
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and Timothy M. Jones
("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Second Amended and Restated Employment Agreement dated as of
July 1, 1999 by and between the Company and Recipient (the "Employment
Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
<PAGE>
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 37,500 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 37,500 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
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<PAGE>
Restricted Shares Vesting Date
----------------- ------------
5,625 January 1, 2000
5,625 January 1, 2001
7,500 January 1, 2002
9,375 January 1, 2003
9,375 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
-3-
<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
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<PAGE>
aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
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<PAGE>
excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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<PAGE>
levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that the
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<PAGE>
Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
-8-
<PAGE>
provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
-9-
<PAGE>
Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Mitchell E. Hersh
Chief Executive Officer
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. Timothy M. Jones
1165 Park Avenue
Apt. 7D
New York, New York 10128
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
-10-
<PAGE>
obligations with respect to the Recipient, such terms and conditions shall
govern the Recipient's Restricted Share Award as if such terms and conditions
had been set forth herein; and in the event of any conflict or inconsistency
between the terms of the Employment Agreement or this Agreement, the terms and
conditions of the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Recipient
/s/ Timothy M. Jones
--------------------------------------
Timothy M. Jones
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<PAGE>
Exhibit 10.10
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
JOHN R. CALI
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and John R. Cali
("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Amended and Restated Employment Agreement dated as of July 1,
1999 by and between the Company and Recipient (the "Employment Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 22,031 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 22,031 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
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Restricted Shares Vesting Date
----------------- ------------
3,304 January 1, 2000
3,305 January 1, 2001
4,406 January 1, 2002
5,508 January 1, 2003
5,508 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
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<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
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aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
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excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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<PAGE>
levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that the
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Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
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<PAGE>
provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
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<PAGE>
Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Mitchell E. Hersh
Chief Executive Officer
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. John R. Cali
203 Laurel Hill Road
Mountain Lakes, New Jersey 07046
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
obligations with respect to the Recipient, such terms and conditions shall
govern the
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<PAGE>
Recipient's Restricted Share Award as if such terms and conditions had been set
forth herein; and in the event of any conflict or inconsistency between the
terms of the Employment Agreement or this Agreement, the terms and conditions of
the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Recipient
/s/ John R. Cali
--------------------------------------
John R. Cali
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<PAGE>
Exhibit 10.11
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
BRANT CALI
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and Brant Cali
("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Amended and Restated Employment Agreement dated as of July 1,
1999 by and between the Company and Recipient (the "Employment Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 23,437 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 23,437 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
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<PAGE>
Restricted Shares Vesting Date
----------------- ------------
3,515 January 1, 2000
3,515 January 1, 2001
4,687 January 1, 2002
5,859 January 1, 2003
5,861 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
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<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
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aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
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excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that the
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Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
-8-
<PAGE>
provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
-9-
<PAGE>
Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Mitchell E. Hersh
Chief Executive Officer
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. Brant Cali
175 Eagle Rock Way
Montclair, New Jersey 07042
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
obligations with respect to the Recipient, such terms and conditions shall
govern the
-10-
<PAGE>
Recipient's Restricted Share Award as if such terms and conditions had been set
forth herein; and in the event of any conflict or inconsistency between the
terms of the Employment Agreement or this Agreement, the terms and conditions of
the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Recipient
/s/ Brant Cali
--------------------------------------
Brant Cali
-11-
<PAGE>
Exhibit 10.12
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
BARRY LEFKOWITZ
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and Barry Lefkowitz
("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Second Amended and Restated Employment Agreement dated as of
July 1, 1999 by and between the Company and Recipient (the "Employment
Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 26,094 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 26,094 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
-2-
<PAGE>
Restricted Shares Vesting Date
----------------- ------------
3,914 January 1, 2000
3,914 January 1, 2001
5,218 January 1, 2002
6,523 January 1, 2003
6,525 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
-3-
<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
-4-
<PAGE>
aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
-5-
<PAGE>
excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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<PAGE>
levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that the
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<PAGE>
Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
-8-
<PAGE>
provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
-9-
<PAGE>
Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Mitchell E. Hersh
Chief Executive Officer
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. Barry Lefkowitz
4 Borden Place
Livingston, New Jersey 07039
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
obligations with respect to the Recipient, such terms and conditions shall
govern the
-10-
<PAGE>
Recipient's Restricted Share Award as if such terms and conditions had been set
forth herein; and in the event of any conflict or inconsistency between the
terms of the Employment Agreement or this Agreement, the terms and conditions of
the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Recipient
/s/ Barry Lefkowitz
--------------------------------------
Barry Lefkowitz
-11-
<PAGE>
Exhibit 10.13
MACK-CALI REALTY CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
ROGER W. THOMAS
<PAGE>
AGREEMENT EVIDENCING THE GRANT
OF A RESTRICTED SHARE AWARD PURSUANT
TO THE EMPLOYEE STOCK OPTION PLAN
OF MACK-CALI REALTY CORPORATION
AGREEMENT ("Agreement") effective as of July 1, 1999, ("Grant Date")
by and between Mack-Cali Realty Corporation (the "Company") and Roger W. Thomas
("Recipient").
WHEREAS, pursuant to the Employee Stock Option Plan of Mack-Cali
Realty Corporation which was originally effective August 31, 1994 and amended
and restated as of December 11, 1998 (the "Plan"), the Company hereby awards
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to the Recipient subject to such terms, conditions, and restrictions
(hereinafter, "Restricted Share Award") as set forth in the Plan, this
Agreement, and the Second Amended and Restated Employment Agreement dated as of
July 1, 1999 by and between the Company and Recipient (the "Employment
Agreement"), and
WHEREAS, Recipient has agreed under the amended terms of the
Employment Agreement to change his employment period to four (4) years, and to
amend the amount of the severance payment Recipient may be eligible to receive
upon termination of employment with the Company, and
WHEREAS, upon the vesting of Restricted Shares, Recipient is also
entitled to receive a tax gross-up from the Company under the amended terms of
the Employment Agreement to enable Recipient to retain as many shares of Common
Stock as possible,
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
1. Award of Shares of Restricted Stock.
Pursuant to the Plan, the Committee hereby awards to the Recipient,
effective as of the Grant Date, a Restricted Share Award representing the
conditional receipt of 22,031 shares of Common Stock ("Restricted Shares") at no
out-of-pocket cost to the Recipient subject to the terms, conditions and
restrictions set forth herein. Except for defined terms set forth in Section 4
below, capitalized terms not otherwise defined in this Agreement shall be as
defined in the Plan.
2. Award Restrictions.
(a) General Rules. Ownership of Restricted Shares shall not
vest in the Recipient, and shall be subject to forfeiture until the conditions
of Section 2(b) and (c) or Section 4 are fully satisfied. For purposes of this
Agreement, the following concepts shall be defined as follows: (i) the lapse of
restrictions on the Recipient's rights with respect to the Restricted Shares
granted hereunder shall be referred to as "Vesting"; (ii) the period between the
Grant Date and the date of Vesting shall be referred to as the "Vesting Period";
and (iii) the date Vesting occurs shall be referred to as the "Vesting Date."
(b) Vesting. An aggregate of 22,031 Restricted Shares may vest
in the Recipient and vest on either a year by year basis over a five year
Vesting Period or on a cumulative basis over a seven year maximum Vesting
Period. The number of Restricted Shares scheduled to be vested and earned on
each Vesting Date on a year by year basis provided the Performance Goals
specified in Section 2(c) below are satisfied is as follows:
-2-
<PAGE>
Restricted Shares Vesting Date
----------------- ------------
3,304 January 1, 2000
3,305 January 1, 2001
4,406 January 1, 2002
5,508 January 1, 2003
5,508 January 1, 2004
The Vesting Date for this Agreement shall be each January 1st
through and including January 1, 2006. In determining the number of Restricted
Shares which are earned and vested, fractional shares shall be rounded down to
the nearest whole number and shall be aggregated and earned on the next Vesting
Date.
(c) Performance Goals. (i) The Restricted Shares shall vest on
the applicable Vesting Date on a year by year basis provided one of the
following financial tests ("Financial Tests") is met for the measurement period
ending on the last day of the Company's fiscal year immediately preceding such
Vesting Date: (A) the Company achieves an eight percent (8%) funds from
operations per common share ("FFO") increase, or (B) shareholders receive a
twelve and three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share of
Common Stock). For purposes of this Agreement, FFO shall mean (i) net income
(loss) before minority interest of unit holders, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding the effect of
straight lining of rents, gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and gains (or losses) on sale
of property and other property-related valuation allowances, plus real estate
related depreciation and amortization, as calculated in accordance with the
National Association of Real Estate Investment Trusts definition published in
March 1995 after
-3-
<PAGE>
adjustment for straight lining of rents and as applied in accordance with the
accounting practices and policies of the Company in effect from time to time on
a consistent basis to the entire Vesting Period, divided by (ii) the sum of (A)
the diluted weighted average number of outstanding shares of Common Stock and
(B) the diluted weighted average number of outstanding common limited
partnership units of Mack-Cali Realty, L.P., a Delaware limited partnership of
which the Company is the sole general partner, for the applicable period with
such calculations being made all before the effect on FFO and diluted common
shares/common limited partnership units resulting from certain non-recurring
cash payments made pursuant to certain written employment agreements and from
the vesting of restricted share awards and other similar plans or compensation
arrangements for the applicable period.
(ii) In the event that neither of the Financial Tests
above is satisfied for the fiscal year of the Company corresponding to the
applicable Vesting Date ("Non-Achievement Year"), any Restricted Shares that
failed to vest under the annual performance goal criteria on such Date may vest
on such Date or on a subsequent Vesting Date provided the test described below
is satisfied (the "Cumulative Test"). The Cumulative Test shall be applied at
the end of the Non-Achievement Year or any subsequent fiscal year ("Catch-Up
Year") with respect to any Non-Achievement Year provided a Financial Test was
satisfied in a prior fiscal year or is satisfied in a Catch-Up Year, by applying
the aggregate Financial Test percentages and the performance goal requirement on
a cumulative basis beginning with the first fiscal year of the Vesting Period
and ending with the Non-Achievement Year or the Catch-Up Year, as applicable. In
the event the Cumulative Test is satisfied (i.e., the
-4-
<PAGE>
aggregate increase in FFO or aggregate total return is not less than the minimum
percentage required to satisfy the Financial Test after taking into account the
applicable Non-Achievement Year), the Restricted Shares that failed to vest in
the Non-Achievement Year shall automatically vest on the Vesting Date applicable
to the Non-Achievement Year or the Catch-Up Year, as the case may be. For
example, if vesting occurred in years one (1) and two (2), year three (3) is a
Non-Achievement Year, and the Cumulative Test is met for the Non-Achievement
Year (i.e., either FFO is not less than twenty-four (24%) percent or the
aggregate return is not less than thirty-eight and one-quarter (38.25%) percent)
vesting would occur on the Vesting Date applicable to the Non-Achievement Year.
In the event the Cumulative Test is not met in the Non-Achievement Year, one of
the Financial Tests is met in year four (4), the Cumulative Test may be used.
Under this scenario, vesting in that portion of the Restricted Stock Award
scheduled to vest in year three (3) will occur in year four (4) if either the
aggregate FFO is not less than thirty-two percent (32%) or the aggregate total
return is not less than fifty-one percent (51%) at the end of the fourth (4th)
fiscal year. Rules for Application of the Cumulative Test: (a) the Cumulative
Test will be applied first at the end of any Non-Achievement Year, (b) it is not
necessary for any Catch-Up Year to immediately succeed a Non-Achievement Year in
order for the Cumulative Test to be applicable as long as the Catch-Up Year
occurs during the Vesting Period, (c) if two (2) or more Non-Achievement Years
have occurred during the Vesting Period and remain non-vested, in the event that
the Cumulative Test is met on a partial basis so that at least one (1) full
year's vesting may occur, the Restricted Share Award granted with respect to the
last Non-Achievement Year that has occurred, shall vest first and any
-5-
<PAGE>
excess shall be credited to another Non-Achievement Year and (d) the Cumulative
Test may be met on a partial basis by aggregating percentages in excess of the
minimum annual requirement from more than one (1) fiscal year in the Vesting
Period. For example, if vesting occurred in year one (1) and the FFO is sixteen
(16%) percent, years two (2) and three (3) are Non-Achievement Years with a loss
in year two (2) of two (2%) percent and year three (3) the FFO is four (4%)
percent, the Restricted Shares awarded with respect to year three (3) would vest
under the Cumulative Test and two (2%) percent of the remaining FFO would be
available to be used in year two (2) or any other year (e.g., in the event that
FFO were fourteen (14%) percent in year four (4), the Restricted Shares
applicable to year two (2) would also vest. In the alternative, if FFO were six
(6%) percent in year four (4), year four (4) would vest and year two (2) would
remain a Non-Achievement Year). Notwithstanding any contrary provisions
contained in this Section 2(c) and subject to Section 4 below, any Restricted
Shares that have not been earned and vested by January 1, 2004 on a year by year
basis or by January 1, 2006 pursuant to the Cumulative Test shall automatically
be canceled and forfeited.
(d) Lapse of Restrictions. Upon the Vesting of Restricted
Shares, the Recipient shall own the Shares free and clear of all restrictions
imposed by this Agreement and the Recipient shall be free to hold or dispose of
such Shares in his discretion, subject to applicable federal and state law or
regulations.
(e) Prohibition Against Assignment. During the Vesting Period,
the Restricted Shares may not be transferred or encumbered by the Recipient by
means of sale, assignment, mortgage, transfer, exchange, pledge, or otherwise.
The
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levy of any execution, attachment, or similar process upon the Restricted Shares
shall be null and void.
3. Stock Certificates.
(a) Certificates. Restricted Shares shall be evidenced by one
or more stock certificates registered in the name of the Recipient or a nominee
or nominees therefor. Prior to Vesting, the Company shall prepare and issue
separate certificates for the Restricted Shares scheduled to vest in each year
(the "Share Certificates"), which shall be registered in the name of the
Recipient and which shall bear such restrictive legend or legends (if any) as
the Company may deem necessary or desirable under any applicable law.
(b) Stock Powers. The Recipient shall execute and deliver to
the designee of the Company (the "Designee") stock powers corresponding to the
Share Certificates designating the Company as the transferee of an unspecified
number of Shares, which stock powers may be completed by the Designee as
specified herein. The Recipient and the Company each waive the requirement that
the signature of the Recipient on the stock powers be guaranteed. Upon receipt
of a copy of this Agreement and the stock powers, each signed by the Recipient,
the Designee shall promptly notify the proper officers of the Company and the
Share Certificates and stock powers shall be held by the Company in accordance
with the terms of this Agreement.
(c) Effect of Vesting. Upon Vesting, the Company shall cause
to be delivered to the Recipient (i) a certificate for the Shares which have
vested free and clear of restrictive legends and (ii) any stock powers signed
hereunder by the Recipient remaining in its possession related to the vested
shares. In the event that the
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Recipient dies before delivery of the certificate, such certificate shall be
delivered to, and registered in the name of, the Recipient's beneficiary or
estate, as the case may be.
(d) Rights of Stockholder. Except as otherwise provided in
Section 2 and this Section 3, during the Vesting Period and after the
certificates for the Restricted Shares have been issued, the Recipient shall be
entitled to all rights of a stockholder of the Company, including the right to
vote and the right to receive dividends, with respect to the Restricted Shares
subject to this Agreement. Subject to applicable withholding requirements, if
any, dividends on the Restricted Shares shall be paid to the Recipient when
earned and payable.
(e) Power of Designee. The Designee is hereby authorized by
the Recipient to utilize the stock power delivered by the Recipient to transfer
all forfeited Shares to the Company upon receipt of instructions from a duly
authorized representative of the Company.
4. Termination of Employment; Change in Control.
(a) Termination Due to Disability, Death or for Good Reason;
Change in Control. Unless otherwise provided in the Employment Agreement and
notwithstanding any provision of the Plan to the contrary, if the Recipient
terminates employment with the Company due to Disability, death, for Good Reason
or a termination initiated by the Company without Cause, all Restricted Shares
subject to this Agreement and held by, or on behalf of, the Recipient shall be
deemed earned and vested as of the Recipient's last day of employment with the
Company. In addition, unless otherwise provided in the Employment Agreement and
notwithstanding any
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provision of the Plan to the contrary, all Restricted Shares subject to this
Agreement and held by the Recipient on the date a Change in Control occurs shall
be deemed earned and vested as of such date.
(b) Termination for Any Other Reason. Unless otherwise
provided in the Employment Agreement, if the Recipient's employment with the
Company terminates prior to January 1, 2006 for reasons other than Disability,
death, a termination initiated by the Company without Cause or for Good Reason
or as a result of a Change in Control, any Restricted Shares subject to this
Agreement that have not been earned and vested prior to the Recipient's
termination of employment shall be immediately forfeited on the last day of the
Recipient's employment with the Company.
5. Withholding.
In connection with the delivery of any stock certificates, or the
making of any payment in accordance with the provisions of this Agreement, the
Company shall withhold Shares or cash amounts (for fractional Shares) equal to
the taxes then required by applicable federal, state and local law to be so
withheld.
6. Adjustments for Capital Changes.
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares effected without receipt or payment of consideration by the Company, a
duly authorized representative of the Company shall adjust the number of
Restricted Shares granted pursuant to the
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Plan and this Agreement to prevent dilution or enlargement of the rights granted
to the Recipient.
7. No Right to Continued Employment.
Nothing in this Agreement shall confer on the Recipient any right to
continue as an employee of the Company or in any way affect the Company's or any
subsidiary's right to terminate the Recipient's employment at any time.
8. Notice.
Any notice to the Company hereunder shall be in writing addressed
to:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Mitchell E. Hersh
Chief Executive Officer
Any notice to the Recipient hereunder shall be in writing addressed
to:
Mr. Roger W. Thomas
95 Mathews Drive
Bedminster, New Jersey 07921
or such other address as the Recipient shall notify the Company
in writing.
9. Entire Agreement; Effect of Employment Agreement.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties and shall not be modified or amended except in
writing and duly signed by each of the parties hereto. No waiver by either party
of any default under this Agreement shall be deemed a waiver of any later
default thereof.
(b) Effect of Employment Agreement. In the event the
Employment Agreement with the Company contains additional rights, duties and/or
obligations with respect to the Recipient, such terms and conditions shall
govern the
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Recipient's Restricted Share Award as if such terms and conditions had been set
forth herein; and in the event of any conflict or inconsistency between the
terms of the Employment Agreement or this Agreement, the terms and conditions of
the Employment Agreement shall control.
10. Construction.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey applicable to contracts made, and to be enforced, within the State of New
Jersey.
12. Successors.
This Agreement shall be binding upon and inure to the benefits of
the successors, assigns and heirs of the respective parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the date first above written.
Mack-Cali Realty Corporation
By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Recipient
/s/ Roger W. Thomas
--------------------------------------
Roger W. Thomas
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Exhibit 10.14
Contract
for the
Purchase and Sale
of
Real Estate
located at
795 Folsom Street
San Francisco, California,
between
AT&T Corp.,
Seller,
and
Mack-Cali Realty Acquisition Corp.,
Buyer
<PAGE>
* * * *
The mailing, delivery or negotiation of this document by AT&T Corp. or its
agent or attorney does not constitute an offer to sell, an offer to enter into
any transaction, an offer to enter into any contractual or other legal
relationship whatsoever, or an undertaking to negotiate or continue
negotiations, whether on the terms contained in this document or on any other
terms. This document will not be binding on AT&T Corp., and AT&T Corp. will not
have any obligations or liability under this document or with respect to the
property described in this document, and no person, corporation or other entity
will have any rights under this document or with respect to such property,
unless and until AT&T Corp. and the buyer designated in this document have fully
executed and delivered this document. AT&T Corp. fully reserves the right to
terminate all negotiation and discussion of the subject matter of this document
at any time, without cause or for any reason or for no reason, in the complete
and unlimited discretion of AT&T Corp., without incurring any obligation or
liability whatsoever.
* * * *
This document is a contract for the purchase and sale of real property. Buyer
and Seller agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Usage Of Defined Terms.
As used in this Agreement, each of the following terms have the meaning
set forth in this Article 1 where such term appears in this Agreement with the
initial letter of each word of the term capitalized.
Section 1.2 Specific Defined Terms.
(a) "Additional Consideration" means the payment of $200,000 that
Buyer shall be obligated to pay Seller at the time of payment of the purchase
price if Seller elects to lease the Additional Space pursuant to Section 2.5.
(b) "Additional Space" means the space that Seller may elect to
lease pursuant to Section 2.5.
(c) "Agreement" means this contract for the purchase and sale of
real
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property, consisting of fifty-nine (59) consecutively numbered pages, including
the signature pages, and ten exhibits and one schedule attached to this contract
and incorporated by reference into this contract, such exhibits and schedules
being labeled Exhibit A (Description of the Land), Exhibit B (Permitted
Exceptions), Exhibit C (Form of affidavit of nonforeign status), Exhibit D (Form
of Bill of Sale), Exhibit E (List of FF&E), Exhibit F (Form of Assignment
Agreement), Exhibit G (Form of Lease), Exhibit H (Environmental Documents),
Exhibit I (Form of Assignment of Leases), Exhibit J (Litigation), Schedule 1
(Permits and Licenses).
(d) "AT&T and Affiliates" means AT&T Corp., and all corporations,
companies, and other business entities directly or indirectly controlled by AT&T
Corp., and all current and former officers, directors and employees of AT&T
Corp. and all corporations, companies, and other business entities directly or
indirectly controlled by AT&T Corp.
(e) "Building" means the office building and all other improvements
located on the Land.
(f) "Building Evaluation Reports" means the report, dated August 19,
1998, entitled "Building Assessment Report for the 795 Folsom Street Building"
prepared for Seller by M. Bruce Ottolini & Douglas A. Booth, Architects, Inc.,
101 Howard Street, Suite 480, San Francisco, California 94105, the Steven
Tipping Associates structural review dated October 8, 1998, and the Cannon
Constructors letter dated October 15, 1998.
(g) "Building Fixtures" means the heating, air conditioning,
compressed air, steam, ventilation, plumbing, substations and electrical wiring
systems, the elevators and all other systems and equipment designed and utilized
for the maintenance and operation of the Building which are owned by AT&T and
Affiliates as of the Effective Date, including spare parts
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and supplies that are located in the Building and specifically designed and used
exclusively for the maintenance or operation of such systems and equipment.
(h) "Building Records" means plans and specifications of the
Building and Building Fixtures (including any available "as built" drawings),
maintenance records, warranties, guaranties, books and records that concern and
pertain to the Property, licenses, permits, reports, certificates and such other
documents relating to the construction and operation of the Property, if any,
which may be in the possession or control of AT&T and Affiliates at the Property
(or in the files of Eleanor Rigney, Dale Tetzloff or Craig Bruch, wherever
located) at the time that Seller receives a request from Buyer to make copies of
such documents.
(i) "Business Days" means all days other than Saturdays, Sundays and
days designated by the federal government as legal holidays.
(j) "Buyer" means Mack-Cali Realty Acquisition Corp., a Delaware
corporation, or its assigns who have taken an assignment of rights hereunder as
permitted in Section 15.3.
(k) "Buyer's Intended Use" means office use and usual and customary
auxiliary uses incident to office use, including a cafeteria or restaurant for
the use of tenants and other occupants of the Building, and an underground
storage area and motor vehicle parking garage in the basement for use by tenants
and other occupants of the Building.
(l) "Casualty" means damage to the Property or destruction of the
Property by reason of fire or any other cause before the Closing.
(m) "Closing" means the simultaneous performance by Seller of
Seller's obligations described in Section 3.2 of this Agreement and by Buyer of
Buyer's obligations
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described in Section 3.3 of this Agreement.
(n) "Closing Date" means a Business Day selected by the parties that
is not later than ten (10) calendar days after the end of the Due Diligence
Period.
(o) "Code" means the Internal Revenue Code, as amended, including
all regulations issued pursuant to the Internal Revenue Code.
(p) "Contracts" means the service contracts, equipment leases, any
property management and leasing agreements, and other contracts and agreements
affecting the Property or the operation thereof.
(q) "Days" means calendar days unless otherwise expressly stated in
this Agreement.
(r) "Deposit" means five hundred thousand dollars ($500,000.00),
which will be in the form of a certified check or cashier's check payable to
Escrow Agent, or wire transfer of funds to a bank account designated by Escrow
Agent.
(s) "Due Diligence Period" means the period of time ending at 5:00
p.m. P.S.T. on April 30, 1999.
(t) "Effective Date" means April 28, 1999.
(u) "Environmental Documents" means the environmental documentation
listed on Exhibit H, attached hereto and incorporated herein by reference
thereto.
(v) "Environmental Laws" means all federal, state, county and local
environmental laws, statutes, ordinances, rules, regulations, codes,
requirements, orders and directives concerning or related to Hazardous
Substances or their manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, discharge or release into the
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environment, or otherwise concerning or related to the protection of the
environment.
(w) "Environmental Report" means the report entitled Phase I
Environmental Site Assessment 795 Folsom Street, San Francisco, California,
dated May 20, 1998, prepared by AT&T Environmental Health and Safety
Organization, Pleasanton, California 94107.
(x) "Escrow Agent" means the Title Company.
(y) "FF&E" means those items of furniture, furnishings, fixtures,
fittings, trade fixtures, equipment, machinery, apparatus, appliances and other
articles of personal property that are owned by AT&T and Affiliates and located
in the Building or elsewhere on the Land as of the Effective Date and that are
identified in Exhibit E attached to this Agreement.
(z) "Governmental Authority" means the federal, state, county or
municipal government, or any department, agency, bureau, commission or other
similar type body obtaining authority therefrom or created pursuant to any law.
(aa) "Hazardous Substances" means those substances identified as
regulated substances, toxic substances, hazardous substances, hazardous wastes,
pollution, pollutants or contaminants under the Resource Conservation and
Recovery Act or the Comprehensive Environmental Response, Compensation and
Liability Act, or any other applicable Environmental Law.
(bb) "Indemnify" means to defend, indemnify and save harmless
against all claims, liabilities, losses, damages, costs and expenses (including
reasonable attorney's fees, expert witness fees and other costs of defense).
(cc) "Information" means all specifications, drawings, sketches,
diagrams, computer programs, data, manuals, technical information, business
information and Building
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Records which AT&T and Affiliates may furnish to Buyer or that Buyer otherwise
may obtain in connection with the transaction covered by this Agreement.
(dd) "Intermediary" means a qualified intermediary in accordance
with the provisions of Section 1031 of the Code.
(ee) "Land" means those parcels of land located in the City and
County of San Francisco, California, designated as tax assessor's lots 105, 112,
and 155, block 3751, and more particularly described in Exhibit A that is
attached to this Agreement.
(ff) "Lease" means a lease agreement to be entered into at the
Closing by Buyer, as lessor, and Seller, as lessee, in the form that is attached
to this Agreement as Exhibit G.
(gg) "Listing Broker" means Grubb & Ellis Company.
(hh) "Material Casualty" means any Casualty resulting in damage to
the Property of one million dollars ($1,000,000) or more or any Casualty that
can be the basis for any tenant to terminate any lease or leases that, in the
aggregate, are for more than ten thousand (10,000) square feet of net rentable
area in the Building, in each case as reasonably estimated by Buyer.
(ii) "Notice" means any written communication of any nature, whether
in the form of correspondence, memorandum, order, directive or otherwise.
(jj) "Permitted Exceptions" means the matters specified in Exhibit B
that is attached to this Agreement.
(kk) "Property" means the Land; the Building; the Building Fixtures;
all right, title and interest of Seller, if any, in and to the Land lying in the
bed of any street or highway in front of or adjoining the Land and to any unpaid
award for any Taking by condemnation, or any
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damage to the Land by reason of a change of grade of any street or highway; and
the appurtenances and all the estate and rights of Seller in and to the Land and
Building.
(ll) "Purchase Price" means thirty-four million dollars
($34,000,000.00).
(mm) "Seller" means AT&T Corp., a New York corporation, successor by
merger to AT&T Resource Management Corporation.
(nn) "Seller's Knowledge" means actual knowledge that Craig Bruch,
Real Estate Dispositions Manager, and Seller's current property manager for the
Building, Eleanor Rigney, and her supervisor, Dale Tetzloff have, as a result of
the performance of their respective duties as employees of Seller but without
additional inquiry or investigation.
(oo) "Substantial Part" means a part of the Property without which
the remainder of the Property will not be reasonably sufficient for Buyer's
Intended Use.
(pp) "Taking" means any taking by condemnation or eminent domain of
all or a portion of the Property.
(qq) "Tank Laws" means Cal. Health & Safety Code ss. 25280 et seq.,
the federal underground storage tank law (Subtitle I) of the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq., and any
other state, county or municipal statute, ordinance, code, rule or regulation
applicable to underground or above ground tanks, together with any amendments
thereto, regulations promulgated thereunder, and all substitutions thereof, and
any successor legislation and regulations.
(rr) "Title Company" means Partners Title Company, with an office
located at 712 Main Street, Suite 2000E, Houston, Texas 77002-3218.
(ss) "Title Report" means the revised preliminary report for a
policy of title
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insurance issued by Chicago Title Insurance Company, Order No. 9560070, dated
January 29, 1999.
(tt) "Underground Storage Tank" means each and every "underground
storage tank," whether or not subject to the Tank Laws, as well as the
"monitoring system," the "leak detection system," the "discharge detection
system" and the "tank system" associated with the "underground storage tank," as
those terms in quotations are defined by the Tank Laws.
(uu) "Violations" means any actual or alleged violations of any
applicable covenants, conditions, servitudes, restrictions, easements or other
obligations binding on the Property or the owner of the Property or any statute,
code, ordinance, regulation, rule, requirement, administrative order or
directive issued by any governmental authority having jurisdiction over the
Property.
(vv) "Works of Art" has the meaning set forth in Section 5.1(a).
(ww) "Work of Visual Art" has the meaning set forth in Section
5.1(b).
ARTICLE 2. TERMS OF SALE
Section 2.1 Purchase Price.
Subject to the terms and conditions of this Agreement, Seller shall sell
and convey the Property to Buyer, and Buyer shall purchase the Property from
Seller and pay the Purchase Price to Seller and, if Seller makes the election to
lease the Additional Space, pay the Additional Consideration to Seller. As
additional consideration, Buyer and Seller shall enter into the Lease, to be
effective and to be delivered as of the Closing as hereinafter provided.
Section 2.2 Deposit.
Buyer shall pay the Deposit to the Escrow Agent within two Business Days
after the
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Effective Date. The Deposit shall be credited against the Purchase Price at the
Closing. The Deposit shall be held by the Escrow Agent in an interest-bearing
account. Except as otherwise expressly set forth in this Agreement, all interest
on the Deposit shall accrue to the benefit of Purchaser and shall be credited
against the Purchase Price if the purchase and sale is consummated. If the sale
of the Property is not consummated due to the failure of any condition of
Closing set forth herein, or any other reason except a default under this
Agreement solely on the part of Buyer, Buyer shall be entitled to the return of
the Deposit, including any interest accrued thereon.
IF SAID SALE IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT SOLELY ON THE PART OF BUYER, THE DEPOSIT, TOGETHER WITH
INTEREST ACCRUED THEREON, SHALL BE PAID TO AND RETAINED BY SELLER AS
LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL
DAMAGES, IN THE EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT, TOGETHER
WITH INTEREST ACCRUED THEREON, HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES
AND AS SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW
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OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT SOLELY
ON THE PART OF BUYER.
Initials of authorized officer of Seller acting on behalf of Seller: _________
Initials of authorized officer of Buyer acting on behalf of Buyer: _________
Section 2.3 Payment of the Purchase Price.
At the Closing, Buyer will pay to Seller the Purchase Price, less the
Deposit and less any interest that has accrued thereon and that is paid to
Seller.
Section 2.4 Buyer's Right To Terminate.
During the Due Diligence Period, Buyer will be entitled to
investigate (i) the condition of the Building on the Property as to its
resistance to seismic stress and the necessity, feasibillity, desirability and
cost of structural upgrades related thereto; (ii) the suitability of the
Property under the Planning Code, the Yerba Buena Center Redevelopment Plan (the
"Redevelopment Plan") and related documents and other regulations of the City
and County of San Francisco and its constituent agencies for Buyer's Intended
Use, both at the time of Closing and after the expiration date of the
Redevelopment Plan; and (iii) whether parking for the Property complies with the
regulations of the City and County of San Francisco and its constituent
agencies. If Buyer is not satisfied with Buyer's investigation of such matters
in Buyer's sole discretion, Buyer shall so advise Seller in writing prior to the
expiration of the Due Diligence Period. If Buyer gives such notice to Seller
prior to the expiration of the Due Diligence Period, this Agreement shall
terminate without further obligation of either Buyer or Seller, except that (i)
Seller shall authorize the Escrow Agent to return to Buyer the Deposit held by
the Escrow Agent, together with such interest as may have been earned thereon,
and
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(ii) within five (5) Days after termination, Buyer shall, without cost to
Seller, deliver to Seller all originals and copies of all Information furnished
by Seller to Buyer in Buyer's possession or control, as well as copies of all
Information obtained by Buyer and in Buyer's possession or control, to the
extent the preparer of such Information permits Buyer to deliver such copies to
Seller. Buyer will not be obligated to provide copies of any documents prepared
by Buyer, including business plans or projections relating to the transaction
contemplated by this Agreement. Failure on the part of Buyer to give notice of
dissatisfaction with respect to any of the matters stated above within the Due
Diligence Period as above provided shall constitute a waiver of the right to
terminate this Agreement pursuant to this Section 2.4.
Section 2.5 Lease Of Additional Space; Additional Consideration.
(a) Seller shall have the right to lease Additional Space in the
Building consisting of either (i) one-half (1/2) of the net rentable square feet
on the main floor (that portion located on the west side of the Building) at a
full-service rental rate of $32.00 per rentable square foot (i.e., having a base
rent of $32.00 per rentable square foot and charging additional rent for the
tenant's pro rata share of operating costs that exceed the cost of operating
expenses in the Base Year as described in the Lease), or (ii) one-half (1/2) of
the net rentable square feet on the fourth floor at a full-service rental rate
of $32.00 per rentable square foot, as Buyer may elect, upon all of the terms,
covenants and conditions contained in the Lease. Seller shall exercise its
election by duly executing and delivering to Buyer the election to lease
Additional Space that Buyer shall select pursuant to the Lease. Seller's failure
to (i) elect to lease Additional Space, and (ii) commence payment of rent
therefor as provided in the Lease, shall constitute an irrevocable election to
relinquish the right to lease the Additional Space.
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(b) Within ten (10) Days after receipt of Seller's election to lease
Additional Space, Buyer shall duly execute and return to Seller notice of the
specific Additional Space to which the election shall apply as specified above
at Buyer's election. Buyer's failure to notify Seller of the Additional Space to
which the election shall apply within ten (10) Days after Seller's delivery of
the notice of election to lease Additional Space shall constitute a waiver of
the right so to elect, but it shall not in any way diminish or reduce Seller's
right to lease the Additional Space and select the Premises to which it shall
apply, given Buyer's failure to do so.
(c) Notwithstanding the foregoing Sections 2.5(a) and 2.5(b), if,
before the exercise by Seller of its option to lease Additional Space as set
forth in Section 2.5(a), Buyer (i) has leased either of the spaces as to which
Seller has an option, and (ii) has received a letter of intent or other written
proposal to lease the other space as to which Seller has an option, which said
proposal Buyer desires to accept, then Buyer shall give written notice to Seller
that Buyer has received such letter of intent or proposal, and Seller shall have
twenty-five (25) Days within which to exercise its option to lease Additional
Space under this Section 2.5, applying only to the space that Buyer has not yet
leased to a third party. If Seller fails to exercise its option within such
twenty-five (25) Day period, Seller's option under this Section 2.5 shall
terminate.
(d) If Seller elects to lease Additional Space and Seller's option
to do so has not terminated under Section 2.5(c), then Buyer shall pay to Seller
the Additional Consideration not later than five (5) Business Days after Buyer
receives the first payment of rent for the Additional Space.
(e) The rights and obligations of the parties under this Section 2.5
shall survive the Closing.
ARTICLE 3. CLOSING
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Section 3.1 Closing.
The Closing shall take place through the Escrow Agent at 10:00 a.m. on the
Closing Date at the office of the Title Company or at such other place as Seller
and Buyer may mutually agree in writing.
Section 3.2 Seller's Closing Obligations.
At the Closing, and as a condition to the payment of the Purchase Price,
Seller shall deliver or cause to be delivered to Buyer the following:
(a) a grant deed in the customary and proper form for recording,
properly executed and acknowledged so as to convey the real estate portion of
the Property to Buyer, subject only to the Permitted Exceptions, sufficient to
allow for issuance by Title Company of an ALTA owner's title insurance policy,
1970 Owner's Form (or if such form is unavailable, the ALTA 1992 form with the
creditor's rights and arbitration exceptions deleted), including such
endorsements as Buyer shall reasonably require, subject only to the Permitted
Exceptions and such matters as Buyer elects to take subject to pursuant to
Section 4.4, with a liability limit equal to the Purchase Price plus, if
applicable, the Additional Consideration (the "Title Policy");
(b) such affidavits of title and other customary documents and
instruments as the Title Company may reasonably require in accordance with
customary practice, including a duly executed affidavit that Seller is not a
"foreign corporation" as defined in the Code in the form attached to this
Agreement as Exhibit C and a duly executed California Franchise Tax Board Form
590-RE;
(c) a bill of sale transferring the FF&E in accordance with Section
5.2 of this Agreement to the Buyer in the form attached to this Agreement as
Exhibit D;
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(d) an assignment of license affecting the Property in the form
attached to this Agreement as Exhibit I;
(e) a certificate stating that the representations and warranties of
Seller made in this Agreement are true and correct in all material respects as
of the Closing Date;
(f) any other documents reasonably necessary for the consummation of
the transaction contemplated by this Agreement;
(g) two (2) duplicate originals of the Lease executed by Seller, as
tenant, dated as of the date of Closing;
(h) originals (or legible copies, where originals are not available)
of all documents and instruments being transferred to Buyer in accordance with
this Agreement, including without limitation all assigned Contracts and all
Building Records;
(i) a computer diskette containing this Agreement and all closing
documents prepared by Seller; and
(j) a UCC search of Seller run in San Francisco County, California
and the California Secretary of State dated within five (5) Business Days of the
Closing Date, showing that no liens affect the Property to be conveyed at
Closing other than liens being released on or before the Closing Date.
Section 3.3 Buyer's Closing Obligations.
At the Closing, as a condition to the delivery of the deed and the other
documents to be delivered by Seller under this Agreement, Buyer shall deliver or
cause to be delivered to Seller the following:
(a) the balance of the Purchase Price in the manner specified in
Section 2.3;
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(b) duplicate originals of the Lease executed by Buyer, as landlord;
and
(c) any other documents reasonably necessary for the consummation of
the transaction described in this Agreement.
ARTICLE 4. TITLE AND SURVEY
Section 4.1 Title Insurance Commitment and Survey.
Seller has delivered the Title Report to Buyer. Within fifteen (15) Days
after the Effective Date, Buyer shall advise Seller in writing of any title
defects, liens, encumbrances, other objections to title or items shown on the
Survey (as defined below) other than the Permitted Exceptions. Buyer's failure
to give such notice shall constitute an irrevocable waiver of all such matters
disclosed by the Title Report and Survey. Buyer's rights under this Article 4
are in addition to Buyer's rights under Section 2.4. For purposes hereof, the
"Survey" shall be the ALTA/ACSM survey of the Property obtained by Buyer at its
cost and expense.
Section 4.2 Seller's Right To Extend Closing.
If Buyer objects properly and in a timely manner to any title or Survey
matter under Section 4.1 of this Agreement, then Seller shall, at its option, be
entitled to an adjournment of the Closing, if necessary, for a period not to
exceed thirty (30) Days after the scheduled Closing Date, to enable Seller to
attempt to remove any claimed title defect, lien, encumbrance or objection that
Seller is willing to remove or is obligated to remove pursuant to Section 4.3 of
this Agreement.
Section 4.3 Limitation On Seller's Title Obligations.
If Buyer notifies Seller of any title defect, lien, encumbrance or
objection pursuant to Section 4.1 of this Agreement, Seller shall not be
required or obligated to (i) commence any
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litigation or (ii) incur any costs or expenses to cure or remove any defect,
lien, encumbrance or objection, except that Seller shall be obligated to (x)
cure, remove or provide for the satisfaction of any defect, lien, encumbrance or
objection that arises from Seller's actions after the Effective Date of this
Agreement, (y) remove any mortgage, deed of trust, tax, mechanic's,
materialman's or similar lien (other than the lien of non-delinquent real
property taxes) created by, through or under Seller and existing at any time
prior to the Closing Date, and (z) remove any liens created by, through or under
third parties to the extent that the cost of such removal does not exceed two
hundred thousand dollars ($200,000). Notwithstanding anything to the contrary
herein contained, Seller has disclosed to Buyer that the Survey will show the
possibility of immaterial gaps and immaterial overlaps due to minor
discrepancies between the record and survey descriptions. Any such gaps and
overlaps due to such discrepancies shall not constitute ground for objection to
title by Buyer so long as Title Company is willing to insure title to the
Property in accordance with the requirements hereof without exception for any
such matters, with Seller's share of the cost of such title insurance not to
exceed fifty cents ($0.50) per one thousand dollars ($1,000) of coverage.
Section 4.4 Buyer's Rights In the Event Of A Title Defect.
If Seller advises Buyer that Seller is unable or unwilling to remove any
defect, lien, encumbrance or objection of which Seller is notified pursuant to
Section 4.1 of this Agreement (other than matters Seller is obligated to cure
pursuant to Section 4.3 of this Agreement), Buyer shall have the right to
terminate this Agreement and be entitled to the return of the Deposit with
interest or Buyer may nevertheless elect to accept such title as Seller may be
able or willing to convey, and Buyer shall not be entitled to any abatement,
reduction of or any credit or allowance
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against the Purchase Price by reason of any such title defect, lien or
encumbrance, and Seller shall have no further liability with respect to any such
title defect, lien or encumbrance.
Section 4.5 Seller's Inability To Perform.
If for any reason whatsoever, other than Seller's default, Seller is
unable to perform any of Seller's obligations under this Agreement (including,
without limitation, Seller's obligation to deliver lien-free title to the
Property to Buyer at Closing), or is otherwise unable to convey the Property to
Buyer in accordance with this Agreement, then the only liability and obligation
of Seller shall be to authorize the Escrow Agent to return the Deposit to Buyer
with interest; and when the Deposit with interest is returned to Buyer, this
Agreement shall be terminated and neither party shall have any further liability
to the other except as otherwise expressly reserved in this Agreement. If Seller
defaults, then Buyer shall have the right to elect one of the following as
Buyer's sole and exclusive remedy: (i) Buyer shall have the right to terminate
this Agreement and receive a refund of the Deposit actually paid with interest;
or (ii) Buyer shall have the right to institute an action for specific
performance, and if Buyer is successful in such action Buyer may recover Buyer's
reasonable attorneys' fees and costs incurred directly in connection with such
action. In no event shall Buyer be entitled to seek, claim or recover any
direct, consequential or punitive damages from Seller, all of which are
expressly and irrevocably waived by Buyer.
ARTICLE 5. FF&E
Section 5.1 Works Of Art.
(a) Buyer acknowledges that all Works of Art that are at the
Property as of the Effective Date are not included in FF&E, will not be sold and
conveyed to Buyer and shall
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remain the property of Seller unless Seller is otherwise prohibited from
removing such Works of Art from the Building or the Land under applicable laws,
ordinances or regulations, conditions of any governmental permits or approvals,
or recorded agreements or restrictions. For purposes of this Section 5.1, "Works
of Art" means and includes (but without limitation) the eight (8) plexiglass
world globes located in the Building, the exterior decorative coverings on the
elevator doors and other works of art located in the Building that can be easily
removed therefrom (e.g. paintings), including works of art that may be stored in
the basement of the Building, and the bronze sculpture outside of the Building
titled "Communication At Our Fingertips" if it is determined that the same may
be removed without violating any law, ordinance, rule or regulation. All Works
of Art removed from the Property by Seller shall be removed at Seller's sole
cost and expense and Seller shall repair, at its expense, any damage to the
Property caused by such removal.
(b) Buyer's execution hereof constitutes Buyer's conclusive
acknowledgement that (i) no work of visual art, as defined in 17 U.S.C. ss. 101
("Work of Visual Art"), has been incorporated in or made a part of the Building,
or (ii) any Works of Visual Art that are to become the property of Buyer after
the Closing comply in all respects with the requirements of applicable law and
regulations.
(c) Seller will not, prior to Closing, incorporate or permit the
incorporation of any additional Work of Visual Art in the Building unless Seller
first delivers to Buyer a written instrument duly executed by (i) Seller, (ii)
the tenant of the space in which the Work of Visual Art will be incorporated, if
applicable, and (iii) the artist who created the Work of Visual Art that
acknowledges that installation of the Work of Visual Art may subject the Work of
Visual Art to
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destruction, distortion, mutilation or other modification by reason of its
removal from the Building.
(d) Except in the case of the removal of a Work of Visual Art
incorporated into the Building for which the statement referred to in Section
5.1(c) has been obtained and that either (i) cannot be removed without its
destruction, distortion, mutilation or other modification or (ii) can be removed
without its destruction, distortion, mutilation or other modification and as to
which Seller has complied with the provisions of Section 5.1(e), Seller shall
not, prior to Closing, permit (x) any intentional distortion, mutilation or
other modification of a Work of Visual Art or (y) any destruction of a Work of
Visual Art that might be considered a Work of Visual Art of recognized stature.
(e) Seller shall not permit the removal of a Work of Visual Art from
the Building that can be removed without its destruction, distortion, mutilation
or other modification, unless Seller complies with the requirements of 17 U.S.C.
ss. 113(d)(2), as amended from time to time, pertaining to the giving of notice
to the artist who created the Work of Visual Art of such intended action and the
opportunity for the artist to remove the Work of Visual Art or to pay for its
removal.
(f) Seller shall Indemnify Buyer from any loss, cost or expense,
including without limitation, reasonable attorneys' fees, that may arise out of
or in connection with Seller's failure to comply with the Visual Artists' Rights
Act of 1990 in removing any Work of Art from the Property that also constitutes
a Work of Visual Art as defined in 17 U.S.C. Section 101.
Section 5.2 Sale To Buyer Of Remaining FF&E.
(a) At the Closing, Seller shall convey to Buyer all FF&E free and
clear of all
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liens, encumbrances, licenses, or leases. The cost of the FF&E is included in
the Purchase Price.
THE FF&E SOLD UNDER THIS AGREEMENT IS SOLD AS USED OR SURPLUS
MATERIAL AND IS SOLD AS IS, WHERE IS, WITH ALL FAULTS, LATENT AND
PATENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY
AGAINST PATENT, TRADEMARK, OR COPYRIGHT INFRINGEMENT.
(b) The purchase of the FF&E under this Agreement does not convey by
implication or otherwise any licenses under any patent, domestic or foreign.
AT&T and Affiliates make no representations or warranties that the use of any
material, equipment or technical information furnished under this Agreement will
not infringe any patent, trademark, copyright, trade secret, or other
proprietary interests of any third party and it shall be Buyer's sole
responsibility to make such determination as is necessary with respect to the
acquisition of licenses or other rights under patents or with respect to other
rights of third parties.
ARTICLE 6. AS IS SALE
Section 6.1 Buyer's Access To the Property.
Subject to Seller's reasonable requirements for security and the
protection of Seller's confidential information, Buyer and Buyer's employees and
other representatives shall be permitted access to the Property on prior notice
and at mutually convenient times prior to Closing in order to inspect the
Property, take measurements, and conduct tests; provided that, in
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the case of physical and environmental tests, Seller gives its prior written
approval, which approval shall not be unreasonably withheld or delayed. During
such access, Buyer and Buyer's employees and other representatives shall not
cause any material interference with the operation of Seller or damage to the
Property. Seller may require that persons having access to the Property be
accompanied by representatives of Seller while inside the Building.
Section 6.2 Buyer's Use Of Building Records.
If requested by Buyer, Seller shall permit Buyer to make, at Buyer's
expense, photocopies or other reproductions of those Building Records that may
be reasonably reproducible by mechanical means. To the extent Building Records
are not reasonably reproducible by mechanical means, Seller shall make such
nonreproducible items available for inspection by Buyer or Buyer's employees at
Seller's office at the Property or such other location that Seller shall
reasonably designate. Seller makes no representation or warranty of, and assumes
no liability for, the accuracy, availability, or completeness of the Building
Records and Buyer assumes all risk in connection with the use of the Building
Records. Buyer releases AT&T and Affiliates from all liability in connection
with the use of the Building Records by Buyer or by any other person. If the
Closing does not occur, then, within ten (10) days after the date set for the
Closing, Buyer shall return to Seller all photocopies and reproductions of the
Building Records that Buyer may have obtained, without retaining any copies
thereof.
Section 6.3 Buyer's Obligation To Indemnify.
The rights granted under this Article 6 of this Agreement shall be
exercised by Buyer at Buyer's sole risk. Buyer shall Indemnify AT&T and
Affiliates for injury, including death, to any person, or damage or loss of any
kind to any property, including the Property and other property
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of Seller, that may occur as a result of Buyer's exercise of any of the rights
granted under this Article 6, including, but without limitation, use of the
Building Records.
Section 6.4 Buyer's Insurance.
At all times that Buyer or any of Buyer's employees or representatives may
be on the Property in accordance with this Article 6 of this Agreement, Buyer or
Buyer's consultants or representatives shall keep in force commercial general
liability insurance issued by a good and solvent insurance company with coverage
of at least $5,000,000 for personal injury and property damage, combined single
limit. A certificate evidencing the existence of such insurance shall be
delivered to Seller prior to such entry to the Property. Such certificate shall
provide that it may not be canceled or modified unless Seller is given at least
fifteen (15) Days prior written notice. Buyer may maintain the coverage required
under this Section 6.4 under a primary and an excess insurance policy and a
blanket insurance policy.
Section 6.5 Building Evaluation Reports.
Buyer acknowledges receipt of the Building Evaluation Reports. The
foregoing reports are subject to the confidentiality obligations of Section 12.1
of this Agreement. Seller makes no representation or warranty and assumes no
liability for the accuracy or completeness of the foregoing or any of the
information contained in or referred to in the Building Evaluation Reports, and
Buyer assumes all risk in connection with the use of the foregoing reports and
releases AT&T and Affiliates from all liability in connection with the use
thereof by Buyer. If for any reason the Closing does not occur, Buyer shall
return to Seller all copies of the reports and documents referred to above
within ten (10) days after the date when the Closing was to occur, without
retaining any copies thereof.
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Section 6.6 Environmental Report.
Seller has disclosed to Buyer and Buyer acknowledges receipt of a copy of
the Environmental Report. The Environmental Report is subject to the
confidentiality obligations of Section 12.1 of this Agreement. Seller makes no
representation or warranty and assumes no liability for the accuracy or
completeness of the Environmental Report or any of the information contained in
or referred to in the Environmental Report, and Buyer assumes all risk in
connection with the use of the Environmental Report and releases AT&T and
Affiliates from all liability in connection with the use of the Environmental
Report by Buyer. If for any reason the Closing does not occur, Buyer shall
return to Seller all copies of the Environmental Report within ten (10) days
after the date when the Closing was to occur, without retaining any copies
thereof.
Section 6.7 Survival Of Buyer's Obligations.
Buyer's obligation to make repairs under this Article 6 shall survive any
termination or cancellation of this Agreement. Buyer's obligation to Indemnify
under this Article 6 shall survive the Closing or any termination or
cancellation of this Agreement.
Section 6.8 Property To Be Sold As Is.
(a) Buyer has not been induced by and has not relied on any reports
or documents provided by Seller or the Environmental Report, or by any
representations, warranties or statements, whether express or implied, made by
Seller or by any agent, employee, attorney or other representative of Seller or
by any broker or any other person representing or purporting to represent
Seller, that are not expressly stated in this Agreement or the closing documents
to be delivered hereunder, whether or not any such representations, warranties
or statements were made in writing or orally. Without limiting the general
nature of the foregoing statement, except
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as expressly stated in this Agreement and the closing documents to be delivered
hereunder, Buyer has not been induced by, and has not relied upon, any
representations, warranties or statements by Seller or any person representing
or purporting to represent Seller about any of the following: (a) the condition
of the Property, including without limitation the FF&E, or the Property's
compliance with laws, ordinances or governmental regulations, or its suitability
for Buyer's Intended Use; (b) the need to undertake work of improvement to
increase the Building's resistance to seismic stresses, (c) zoning, building
codes, subdivision, land use, or environmental regulations that may apply to the
Property or any part of the Property, or the impact, if any, of such
requirements on Buyer's Intended Use; (d) the assignability of licenses or
contractual or other rights or permits now held by Seller in regard to the
Property or any part of the Property, if any; or (e) any other matter or thing
affecting the Property or any part of the Property. The Property is to be sold
and conveyed in its present condition, AS IS, as of the Effective Date, subject
to reasonable wear and tear occurring after the Effective Date until Closing.
Buyer acknowledges that Buyer has had an opportunity to inspect the Property and
relies entirely on Buyer's own inspection of the Property and investigations
concerning the Property, including the reports of consultants retained by Buyer.
Without limitation of any of the other terms contained in this Section 6.8 of
this Agreement, Buyer expressly acknowledges that by entering into this
Agreement, Buyer has confirmed conclusively that Buyer has not relied upon any
representations or warranties whatsoever except those expressly set forth in
this Agreement and the closing documents to be delivered hereunder. Without
limiting any of the other terms contained in this Section 6.8 from and after the
Closing, if Buyer is required by any federal, state or local law or authority to
remove asbestos from the Building, or if Buyer elects to remove asbestos from
the
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Building, then Buyer shall do so at Buyer's sole cost and expense without any
consideration or compensation from Seller.
(b) Buyer waives, releases and agrees not to make any claim against
Seller and AT&T and Affiliates, for any cost recovery, or for any other relief
whatsoever, under the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, or any federal, state
or local statute or regulation, or any federal or state common law whether now
existing or applicable or hereinafter enacted or applicable, providing for any
right of recovery for any environmental matter relating to or arising out of the
Property.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
Section 7.1 Seller's Representations and Warranties.
Seller represents and warrants that the following are true and correct as
of the Effective Date and shall be true and correct when the Closing occurs:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, is qualified to do
business in and is in good standing under the laws of the State of California
and has all necessary power, corporate and otherwise, to execute and deliver
this Agreement and to perform all obligations under this Agreement, and this
Agreement has been duly authorized by all requisite action on Seller's part, and
this Agreement is valid and legally binding on Seller.
(b) (i) To Seller's Knowledge, Seller has received no Notices of any
Violations. If any Notice of Violations (other than Notice of Violations arising
from the acts or omissions of Buyer or Buyer's employees, agents, contractors,
representatives or invitees, which
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shall be Buyer's sole responsibility) are received by Seller prior to the
Closing, Seller shall promptly provide copies of such notices to Buyer, and such
Violations shall be subject to the provisions of Section 7.1(b)(ii) of this
Agreement.
(ii) Seller shall use reasonable efforts to cure any Violations
specified in Section 7.1(b)(i) prior to Closing. If the Violations are not cured
before the Closing, Seller, at its option, shall have the right to cure such
Violations within sixty (60) Days after Closing or to pay to Buyer at the
Closing the reasonably estimated unpaid cost to effect or complete such removal
or compliance, in which event Buyer shall be required to accept title to the
Property subject thereto or Buyer may, at its election, terminate this Agreement
and receive a refund of the Deposit, with interest. If Seller elects to cure
Violations after Closing, that election shall bind Seller after Closing. If the
Closing takes place in accordance with this Agreement, then Buyer will have the
sole and exclusive obligation, at Buyer's own expense, to cure all Violations
identified in notices of Violations issued or received after the Closing.
(c) To Seller's Knowledge, Seller is in full compliance with all
Environmental Laws and all terms and conditions of environmental permits,
licenses and authorizations held by Seller related to the Property except as
otherwise disclosed in the Environmental Report and the Environmental Documents
and, to Seller's Knowledge, there are no above ground storage tanks or
Underground Storage Tanks on the Property (other than a fuel tank for the
generator on the roof of the Building), regardless of whether such tanks are
regulated tanks or not.
(d) To Seller's Knowledge, there is no civil, criminal or
administrative action, suit, demand, claim, hearing, Notice or demand letter,
notice of violation, investigation, condemnation proceeding or other proceeding
pending or threatened against the Property or, in
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connection with the Property, against Seller. Seller shall Indemnify Buyer from
any loss, cost or expense, including, without limitation, reasonable attorneys'
fees that may arise out of or in connection with any proceedings pending against
the Property either (i) commenced prior to the Closing Date, or (ii) that names
Seller or an Affiliate as a defendant, including, without limitation, those
cases listed on Exhibit J.
(e) There are no Contracts that will give rise to obligations
against the Property, the Building (or any part thereof or interest therein) or
Buyer, from and after the Closing.
(f) To Seller's Knowledge, all permits and licenses required to
operate and occupy the Building have been obtained, are in full force and
effect, and are listed on Schedule 1 attached hereto. True, accurate and
complete copies of all permits and licenses for the Property have been delivered
to Buyer to Seller's Knowledge.
(g) To Seller's Knowledge, Seller has received no written notices of
any proceedings to change the zoning classification of all or any part of the
Property. If any such notices are received by Seller to Seller's Knowledge prior
to Closing, Seller shall promptly provide copies of such notices to Buyer.
(h) There are no tenant leases (other than the Lease and the TCG
License Agreement, dated as of August 6, 1998, between Seller and TCG San
Francisco, (the "TCG License Agreement")) or ground leases in effect that affect
the Property, and there are no leasing commissions or fees due in connection
with any leases.
(i) Upon execution and delivery by Buyer and Seller, the Lease will
be valid, binding and enforceable against Seller in accordance with their terms.
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(j) To Seller's Knowledge, no consent, authorization, order or
approval of, or filing or registration with, any governmental authority or other
person is required for the execution and delivery by Seller of this Agreement
and the consummation by Seller of the transaction contemplated by this
Agreement.
(k) Seller hereby makes the following natural hazard disclosures:
(i) To Seller's Knowledge, the Property is not located within
a Special Flood Hazard Area (Zone "A" or "V") designated by the Federal
Emergency Management Agency.
(ii) To Seller's Knowledge, the Property is not located within
an Area of Potential Flooding as property shown on an inundation map
designated pursuant to Section 8589.5 of the California Government Code
("CGC").
(iii) To Seller's Knowledge, the Property is not located
within a Very High Fire Hazard Severity Zone as defined in Section 51179
of the CGC.
(iv) To Seller's Knowledge, the Property is not located within
a delineated Earthquake Fault Zone as determined and described in Section
2622 of the California Public Resources Code ("CPRC").
(v) To Seller's Knowledge, the Property is located within a
Seismic Hazard Zone as determined and described in Section 2696 of the
CPRC.
(vi) To Seller's Knowledge, the Property is not located within
a Wildland Area That May Contain Substantial Forest Fire Risks and Hazards
pursuant to Section 4125 of the CPRC.
Buyer acknowledges that, notwithstanding the provisions of Sections 7.1(k)(i)
through
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7.1(k)(iv), inclusive, the Property nonetheless may be situated within an
Earthquake Fault Zone, Seismic Hazard Zone, Special Flood Hazard Area, Area of
Potential Flooding, Fire Hazard Severity Zone or Wildland Fire Zone. If so
situated, these hazards may limit the Buyer's ability to develop the Property,
obtain insurance, or receive assistance after a disaster. The maps on which the
disclosures contained in Section 7.1(k)(i) through 7.1(k)(iv) are based only
estimate where natural hazards exist, and are not definitive indications of
whether or not a property will be affected by a natural disaster. Except as
expressly provided herein, Seller is not making and has made no representations
regarding the seismic, geological or other natural hazards affecting the
Property, or the effect thereof on the future use or development of the
Property, and Buyer should make its own inquiry and investigation of such
hazards, including confirmation whether, as of the Closing, a notice or map
identifying the Property as being located in an Earthquake Fault Zone, Seismic
Hazard Zone, Special Flood Hazard Area, Area of Potential Flooding, Fire Hazard
Severity Zone or Wildland Fire Zone has been posted in the Office of the
Recorder, County Assessor or planning agency of the City and County of San
Francisco. Further, Buyer waives, to the fullest extent permitted by law, any
disclosure requirements relating to seismic, geological and other natural
hazards imposed on Seller by California law.
(l) To Seller's Knowledge, the Environmental Documents constitute
all of the material environmental documentation concerning the Property that is
in the possession or control of AT&T and Affiliates.
(m) The TCG License Agreement is in full force and effect, and to
Seller's Knowledge, there are no uncured defaults thereunder as of the date
hereof.
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Section 7.2 Buyer's Representations and Warranties.
Buyer represents and warrants the following are true and correct as of the
Effective Date and shall be true and correct when the Closing occurs:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, prior to Closing will be
qualified to do business and in good standing in the State of California, and
shall have all necessary power, corporate and otherwise, to execute and deliver
this Agreement and to perform all obligations under this Agreement, and this
Agreement has been duly authorized by all requisite action on Buyer's part, and
this Agreement is valid and legally binding on Buyer.
(b) There is no litigation or proceeding pending that would
interfere with Buyer's ability to comply with any of Buyer's obligations under
this Agreement.
(c) In the course of Buyer's inspection of the Property, the
Building Records and Information, Buyer has not discovered any fact, that Buyer
has not disclosed to Seller in writing, that would constitute a breach by Seller
of any representation or warranty made by Seller in this Agreement, the
foregoing covenant being limited to the knowledge of Darryl Freling, Tim Jones
and Al Maher and not to other officers, agents, employees or contractors of
Buyer.
Section 7.3 Survival; No Third-Party Beneficiaries.
The representations and warranties contained in Section 7.1 and Section
7.2 of this Agreement shall survive for one year after the date on which the
Closing occurs, and are personal to the parties to this Agreement. No such
representation or warranty, nor any other provisions of this Agreement, shall
confer any rights or remedies on any third parties, nor discharge any
obligations of any third parties nor give any third party any right of
subrogation over or action
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against any party to this Agreement.
ARTICLE 8. ADJUSTMENTS AND EXPENSES
Section 8.1 Seller's Expenses.
Seller shall pay at or prior to Closing (i) the cost of the Title Report,
(ii) the premium for the Title Policy up to but not in excess of fifty cents
($0.50) per one thousand dollars ($1,000) of coverage, (iii) all state, county
and municipal real property transfer taxes and documentary stamps incident to
this sale, (v) one-half (1/2) of all escrow fees, and (vi) the costs of
recording the deed and other documents required to be recorded in connection
with the transaction herein contemplated.
Section 8.2 Buyer's Expenses.
Buyer shall pay at or prior to Closing the cost of (i) the premium for the
Title Policy that exceeds the amount that Seller is obligated to pay, (ii) all
sales and use taxes incident to this sale, (iii) the cost of the Survey, and
(iv) one-half (1/2) of all escrow fees.
Section 8.3 Closing Adjustments.
The following shall be apportioned as of midnight of the day immediately
before the Closing:
(a) Real estate and, if applicable, personal property taxes on the
basis of the fiscal year for which assessed;
(b) Water meter and sewer charges, and any other applicable public
utility charges on the basis of the fiscal year for which assessed or in
accordance with the amounts fixed with respect thereto by meter reading made as
of the Closing Date, as the case may be;
(c) License fees, if any, payable under the TCG License Agreement,
and
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(d) Value of fuel, if any, stored in the Property at the price,
including any taxes, then charged by Seller's supplier.
Seller shall be responsible for items of operating cost accruing prior to
the Closing Date and Buyer shall be responsible for items of operating cost
accruing after the Closing Date.
Section 8.4 Assessments.
If, at Closing, the Property or any part of the Property is affected by
any assessments that are or may become payable in installments, then Seller will
pay only those installments that are due and payable on or prior to the Closing.
Buyer shall assume liability for payment of all installments that are due and
payable after the Closing, and assessments during the year of Closing shall be
prorated between Buyer and Seller. Seller shall remain responsible for any
supplemental taxes that are attributable to the time period prior to the Closing
Date and that are not levied by reason of a reassessment caused by the
transaction contemplated herein.
Section 8.5 Tax Adjustment.
(a) If the Closing occurs after a tax rate for the then current tax
year is fixed, then the apportionment of taxes shall be based on the tax rate in
effect as of the day immediately prior to the date of the Closing, and Seller
shall have no obligation to make any further adjustment or apportionment or
otherwise compensate Buyer for any increase in real estate taxes resulting from
a change in the tax rate effective on or after the date of the Closing by reason
of a change of use, conveyance of the Property, or change of ownership.
(b) Seller shall be entitled to the benefits of any refunds for any
tax years prior to Closing, and shall pay all expenses for any administrative or
judicial proceedings brought at any time to secure such refunds. Buyer shall
execute all necessary documents and consents
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reasonably required by Seller in any such proceedings without cost or expense to
Seller.
(c) Any refund and associated expenses relating to the tax year
during which Closing occurs shall be apportioned between Buyer and Seller based
upon the Closing Date. Unless otherwise agreed between Buyer and Seller, if
Buyer owns the Property for fifty percent (50%) or more of the tax year Buyer
shall control any proceedings brought to secure such tax refund. In all other
cases, Seller shall control such proceedings.
Section 8.6 Post-Closing Adjustments. If any prorations or computations
made under this Article 8 are based on estimates or prove to be incorrect, then
either party shall be entitled to an adjustment to correct the same provided
that demand for correction is made in writing within forty-five (45) days after
the Closing Date, specifying with particularity the basis therefor.
ARTICLE 9. FIRE AND OTHER CASUALTY
Section 9.1 Risk of Loss.
The risk of loss or damage to the Property by Casualty shall, until
Closing, be borne by Seller. After Closing, the risk of any loss or damage to
the Property by Casualty shall be borne by Buyer.
Section 9.2 Notice of Casualty.
Seller shall promptly give Buyer written notice if all or any portion of
the Property is damaged or destroyed by Casualty prior to Closing and the extent
of such damage or destruction.
Section 9.3 Rights Upon Casualty.
If a Material Casualty occurs, either party may, by written notice to the
other given within ten (10) Days after receipt of notice of the occurrence of
such Material Casualty, elect to terminate this Agreement. If either party
terminates this Agreement under this Section 9.3, the
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Deposit with interest shall be returned to Buyer and both parties shall be
relieved and released of and from any further liability hereunder except as
otherwise provided in this Agreement. If a Material Casualty occurs and this
Agreement is not so terminated, or if there is a Casualty that is not a Material
Casualty, this Agreement shall not be affected except that Seller shall assign
to Buyer all of Seller's right, title and interest in any insurance proceeds and
claims related to the Casualty, and the Purchase Price shall be reduced by the
amount of any applicable insurance policy deductible, except and to the extent
that the insurance proceeds are paid to repair or reconstruct building elements
or components that Buyer would have been required to repair or reconstruct for
seismic upgrade purposes.
ARTICLE 10. CONDEMNATION
Section 10.1 Taking Of Less Than Substantial Part.
If, prior to the Closing, a Taking that does not involve any Substantial
Part of the Building or the Property occurs or is threatened, then the Closing
shall take place without any abatement of the Purchase Price, and neither party
shall have any right to terminate its obligations under this Agreement by reason
of the Taking. At the Closing, Seller shall assign to Buyer all of Seller's
rights to awards in respect to the Taking. Seller shall not settle or compromise
any such award without the consent of Buyer, which consent shall not be
unreasonably withheld or delayed.
Section 10.2 Taking of Substantial Part.
If, prior to the Closing, a Taking of any Substantial Part of the Building
or the Property occurs or is threatened, then either Seller or Buyer may
terminate this Agreement by notice to the other given not later than thirty (30)
Days after the date on which Seller notifies Buyer of such
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Taking or threatened Taking. If either party elects to terminate this Agreement,
Buyer shall be entitled to the return of the Deposit, with interest, and neither
party shall have any further liability to the other, except as expressly
reserved in this Agreement. If neither party elects to terminate this Agreement
as permitted above, the Closing shall take place on the terms specified in
Section 10.1.
ARTICLE 11. BROKERS
Section 11.1 Brokers.
Buyer and Seller each represents to the other that no broker or similar
party has been involved in bringing about or negotiating this transaction except
the Listing Broker. Seller shall pay a commission to the Listing Broker in
accordance with a separate written agreement between Seller and Listing Broker.
Buyer shall Indemnify AT&T and Affiliates for matters arising out of the breach
of the foregoing representation by Buyer, and from any claim by any person
(other than Listing Broker) that such person has dealt with Buyer as a broker in
connection with this transaction. Seller shall Indemnify Buyer and its partners,
shareholders, officers, directors, employees and affiliates for matters arising
out of the breach of the foregoing representation by Seller and from any claim
by any person that such person has dealt with Seller as a broker in connection
with this transaction. The provisions of this Section 11.1 shall survive the
Closing or any termination or cancellation of this Agreement.
ARTICLE 12. CONFIDENTIALITY AND USE OF NAME
Section 12.1 Confidentiality.
Prior to Closing, all Information shall be held in confidence by Buyer and
will not be published or otherwise disclosed (except (a) to Buyer's attorneys,
accountants, consultants,
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employees, investors, lenders, partners, shareholders and prospective tenants,
who shall be instructed as to the confidential nature of the Information, (b) if
disclosure is required by law or by a court of competent jurisdiction upon the
written directive or order of said court and (c) in filings with the Securities
and Exchange Commission following expiration of the Due Diligence Period as
Buyer may deem reasonably prudent or required by law). Unless the Information
was previously known to Buyer free of any obligation to accept it in confidence
or has been or is subsequently made public by Seller, the Information shall be
kept in confidence by Buyer until the Closing Date, if this transaction is
consummated, and for a period of one (1) year after the projected Closing Date
if this transaction is not consummated; and the Information may be used solely
in connection with the transaction described in this Agreement and shall not be
used by Buyer for other purposes for the term provided for in this Section.
Section 12.2 Use Of AT&T Name.
Buyer shall not use the name "AT&T" either alone or in connection with
other words or phrases with respect to Buyer's advertising or marketing of the
Property.
Section 12.3 Press Release.
Buyer shall not make any public announcement or press release concerning
this transaction without the prior written approval of Seller (which shall not
be unreasonably withheld or delayed), except as required by law or rule of any
stock exchange or as permitted by Section 12.1, and Buyer shall not use any
advertising or marketing material, either of which states or implies that AT&T
has any continuing ownership interest in any way in the Property without the
prior written approval of Seller, which shall not be unreasonably withheld or
delayed. This provision shall survive termination hereof for a period of one (1)
year.
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Section 12.4 Survival Of Seller's and Buyer's Obligations.
Seller's and Buyer's obligations under this Article 12 shall survive the
Closing or any termination or cancellation of this Agreement.
ARTICLE 13. BUILDING OPERATION
Section 13.1 Building Operation.
Prior to the Closing and so long as this Agreement remains in full force
and effect, Seller shall operate and manage the Building in accordance with
ordinary and customary practices and maintain its existing insurance coverage
with respect to the Building, undertaking and not deferring routine maintenance
and preserving to the extent reasonably possible under the circumstances
relationships with vendors, janitorial, elevator and other maintenance
contractors as well as other suppliers of goods, services and labor to or for
the operation of the Building and maintenance of the Property. Prior to the
Closing and so long as this Agreement remains in full force and effect, Seller
will refrain from offering the Property for sale or marketing the same or
negotiating with respect to or entering into any other agreement for the sale of
the Property. Seller will refrain from creating any easements, liens, mortgages,
deeds of trust, or other encumbrances or interests on the Property that will
survive Closing and will not apply for or otherwise initiate any changes to the
zoning classification of the Property. Seller's obligations under this Section
13.1 shall survive the Closing.
Section 13.2 Leases and Contracts.
From and after the Effective Date, Seller will not enter into any new
leases for all or any part of the Property or any new Contracts or materially
modify any existing leases without Buyer's prior written consent. Buyer
acknowledges that the Contracts are not assignable and that
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Seller intends to cancel them. Seller's obligations under this Section 13.2
shall survive the Closing.
ARTICLE 14. INDEMNIFICATION
Section 14.1 Seller's Indemnity.
Except with respect to environmental matters or as otherwise set forth in
this Agreement, Seller agrees to Indemnify Buyer, Buyer from any liability,
claim, demand, loss, expense or damages (each, a "Loss") (a) suffered by, or
asserted by any person or entity against, Buyer that arises from any act or
omission of Seller, its agents, employees or contractors occurring on or before
the Closing Date or (b) that arises from any breach by Seller of any obligation
related to the Property other than those obligations that by this Agreement or
any closing document required hereunder specifically become the obligation of
Buyer. Seller's obligation under this Section 14.1 shall survive the Closing.
Section 14.2 Buyer's Indemnity.
Except with respect to environmental matters or as otherwise set forth in
this Agreement, Buyer agrees to Indemnify Seller from any Loss (a) suffered by,
or asserted by any person or entity against, Seller that arises from any act or
omission of Buyer, its agents, employees or contractors occurring on or after
the Closing Date or (b) that arises from any breach by Buyer of any obligation
related to the Property other than those obligations that by this Agreement or
any closing document required hereunder specifically become the obligation of
Seller. Buyer's obligations under this Section 14.2 shall survive the Closing.
ARTICLE 15. MISCELLANEOUS
Section 15.1 Attorneys' Fees.
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The prevailing party to any action or proceeding between Buyer and Seller
with respect to the interpretation of or breach of this Agreement or the
transaction contemplated hereunder shall be entitled to have and recover all
reasonable costs, expenses, attorneys' fees, expert witness fees and other costs
of defense incurred in connection therewith, other than costs associated with
non-binding mediation, which shall be borne by the parties as set forth in
Section 15.11(b).
Section 15.2 Recordation Prohibited.
This Agreement shall not be recorded. Any recordation of this Agreement
will entitle Seller, at Seller's option, to terminate this Agreement and retain
the Deposit with any interest earned on the Deposit.
Section 15.3 Assignment.
This Agreement is personal to Buyer and shall not be assigned by Buyer
without Seller's prior written consent, which consent Seller shall have the
right to withhold in its absolute and sole discretion; provided, however, that
Buyer may assign this Agreement without Seller's prior written consent to effect
an exchange pursuant to Section 15.6 and to any affiliate of Mack-Cali Realty
Corporation. Any assignment or purported assignment of this Agreement in
violation of the foregoing shall constitute a breach hereof and entitle Seller,
at Seller's option, to terminate this Agreement and retain the Deposit with any
interest earned on the Deposit as liquidated damages.
Section 15.4 Merger.
The acceptance of a deed by Buyer shall be deemed to be a full performance
and discharge of every agreement and obligation on the part of Seller to be
performed pursuant to the provisions of this Agreement, except those, if any,
that are expressly stated to survive the
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Closing.
Section 15.5 Applicable Law.
This Agreement shall be governed by the laws of the State of California
without giving effect to its principles of conflicts of law.
Section 15.6 Exchange Of Properties.
(a) Any other provision of this Agreement notwithstanding, Seller
and Buyer each has the right to exchange the Property to qualify as a
tax-deferred exchange under the provisions of Section 1031 of the Code.
(b) Buyer shall cooperate with Seller in consummating this
transaction as an exchange, through a qualified intermediary but not by
acquiring a property designated by Seller to be exchanged; provided, however,
that (i) Buyer incurs no additional cost or expense attributable to the exchange
beyond the costs or expenses that it would incur in consummating this
transaction as a straight purchase and sale, including reasonable attorneys'
fees, deed excise taxes and recording fees; (ii) Seller shall Indemnify and hold
Buyer and its partners, shareholders, officers, directors, employees and
affiliates harmless from and against all liability arising out of Buyer's
cooperation in effecting the exchange as requested by Seller; (iii) Buyer shall
have no greater liability by reason of participating in the exchange than it
would have hereunder in consummating this transaction as a straight purchase and
sale; (iv) Buyer shall have no responsibility for the tax treatment of the
transaction or the characterization thereof for income tax purposes, and (v)
Buyer shall have no personal liability with respect to the deferred exchange and
shall not be required to purchase any replacement property.
(c) Seller shall cooperate with Buyer in consummating this
transaction as an
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exchange, through a qualified intermediary but not by acquiring a property
designated by Buyer to be exchanged; provided, however, that (i) Seller incurs
no additional cost or expense attributable to the exchange beyond the costs or
expenses that it would incur in consummating this transaction as a straight
purchase and sale, including reasonable attorneys' fees, deed excise taxes and
recording fees; (ii) Buyer shall Indemnify and hold Seller and its partners,
shareholders, officers, directors, employees and affiliates harmless from and
against all liability arising out of Seller's cooperation in effecting the
exchange as requested by Buyer; (iii) Seller shall have no greater liability by
reason of participating in the exchange than it would have hereunder in
consummating this transaction as a straight purchase and sale; (iv) Seller shall
have no responsibility for the tax treatment of the transaction or the
characterization thereof for income tax purposes; and (v) Seller shall have no
personal liability with respect to the deferred exchange and shall not be
required to purchase any replacement property.
(d) Seller and Buyer acknowledge that Buyer shall not be deemed
Seller's agent and Seller shall not be deemed Buyer's agent in connection with
said exchange. Seller and Buyer further acknowledge that all agreements in
connection with performing the exchange shall be prepared at Seller's expense by
Seller's counsel in the event Seller effectuates a 1031 exchange and at Buyer's
expense by Buyer's counsel in the event Buyer effectuates a 1031 exchange.
(e) Seller has the right to transfer Seller's interests under this
Agreement to an Intermediary and if such transfer is made, then the Intermediary
will acquire an equitable interest in the title to the Property. At the request
of Seller, Buyer agrees, within five (5) Days after request, to enter into an
assignment agreement in the form attached as Exhibit F.
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Section 15.7 Entire Agreement.
This Agreement constitutes the entire agreement between Buyer and Seller
with respect to the sale of the Property and supersedes all prior written or
oral agreements or understandings between Buyer and Seller, all of which are
merged herein.
Section 15.8 All Amendments In Writing.
This Agreement may not be modified or changed in any respect except in the
event of a written amendment executed by Buyer and Seller.
Section 15.9 Invalidity.
If any of the terms or conditions of this Agreement are determined to be
invalid, void or illegal, such determination shall in no way affect or
invalidate any of the other provisions of this Agreement.
Section 15.10 Notices.
Except as otherwise expressly stated in this Agreement, all demands,
requests, consents, approvals and other communications required or permitted to
be given under this Agreement must be in writing in order to be effective, and
must be sent by postage prepaid certified, registered or express mail, return
receipt requested, or a commercial next-business-day delivery service that
provides a written receipt, addressed to the party to be so notified, as
follows:
If to Seller: Attention: Real Estate
Dispositions Manager
AT&T Corp.
150 Mt. Airy Road
Basking Ridge, NJ 07920
with a copy to: Attention: General Attorney -
Real Estate
AT&T Corp.
150 Mt. Airy Road
Basking Ridge, NJ 07920
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with a copy to: Howard N. Ellman
Ellman, Burke, Hoffman & Johnson, P.C.
One Ecker, Suite 200
San Francisco, CA 94105
If to Buyer: Mitchell Hersh, President and Chief
Operating Officer
Mack-Cali Realty Acquisition Corp.
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, NJ 07016
with a copy to: Roger Thomas, General Counsel
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, NJ 07016
and a copy to: David J. Lowery
Jones, Day, Reavis & Pogue
2001 Ross Avenue, Suite 2300
Dallas, TX 75201
and a copy to: Darryl E. Freling
Mack-Cali Realty Corporation
3030 LBJ Freeway, Suite 1000
Dallas, TX 75234
Any such demand, request, consent, approval or other communication required or
permitted to be given under this Agreement shall be deemed given on receipt or
three (3) Business Days after mailing, whichever occurs first. Each party may
change the address for notices to such party by giving the other party a notice
of such changed address in accordance with the procedures stated in this Section
15.10. Any such demand, request, consent, approval or other communication
required or permitted to be given under this Agreement may be given on behalf of
a party by such party's attorney.
Section 15.11 Non-Binding Mediation.
(a) If a dispute arises out of or relates to this Agreement and the
parties have
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not been successful in resolving such dispute through negotiation, the parties
will attempt to resolve the dispute through non-binding mediation by submitting
the dispute to a sole mediator selected by the parties or, at the option of a
party, to mediation by the American Arbitration Association. If such dispute is
not resolved by such non-binding mediation, then, except as limited under this
Agreement, the parties shall have the right to resort to any remedies permitted
by law. All defenses based on passage of time shall be tolled during the
mediation.
(b) The direct expenses of the mediation, including the compensation
and expenses of the mediator and the fees of the American Arbitration
Association, shall be borne equally by the parties. All other costs incurred by
the parties to this Agreement, including the parties' legal expenses and their
witnesses' expenses, shall be borne by the party incurring the expense. The
parties, their representatives, other participants and the mediator shall hold
the existence, content and result of the mediation in confidence.
Section 15.12 Time.
Time is of the essence of each and every provision hereof.
[The remainder of this page is intentionally left blank].
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IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the Effective Date.
"Seller"
AT&T Corp., a New York corporation
By:
Name:
Title:
"Buyer"
MACK CALI REALTY ACQUISITION CORP., a
Delaware corporation
By:
Name:
Title:
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EXHIBIT A
(Description of the Land)
PARCEL ONE:
BEGINNING at a point on the Southeasterly line of Folsom Street, distant thereon
57 feet and 6 inches Northeasterly line of Fourth Street; running thence
Northeasterly along said line of Folsom Street 197 feet and 6 inches to the
Southwesterly line of Alice Street; thence at a right angle Southeasterly along
said line of Alice Street 160 feet to the Northwesterly line of Shipley Street;
thence at a right angle Southwesterly along said line of Shipley Street 177 feet
and 6 inches to a point distant thereon 77 feet and 6 inches Northeasterly from
the Northeasterly line of Fourth Street; thence at a right angle Northwesterly
80 feet; thence at a right angle Southwesterly 20 feet; thence at a right angle
Northwesterly 80 feet to the point of beginning.
Being a portion of 100 Vara Block No. 365
PARCEL TWO:
BEGINNING at the point of intersection of the Northeasterly line of Fourth
Street and the Southeasterly line of Folsom Street; running thence Southeasterly
along said Northeasterly line of Fourth Street 20 feet; thence at a right angle
Northeasterly 57 feet and 6 inches; thence at a right angle Northwesterly 20
feet to the Southeasterly line of Folsom Street; thence at a right angle
Southwesterly along said Southeasterly line of Folsom Street 57 feet and 6
inches to the point of beginning.
BEING a portion of 100 Vara Block No. 365.
PARCEL THREE:
BEGINNING at a point on the Northeasterly line of Fourth Street, distant thereon
20 feet Southeasterly from the Southeasterly linen of Folsom Street; running
thence Southeasterly along said Northeasterly line of Fourth Street 140.167 feet
to the Northwesterly line of Shipley Street; thence at a right angle
Northeasterly along said Northwesterly line of Shipley Street 77.50 feet; thence
at a right angle Northwesterly 80 feet; thence at a right angle Southwesterly 20
feet; thence at a right angle Northwesterly 60.167 feet to a line drawn parallel
with and perpendicularly distant 20 feet Southeasterly from the Southeasterly
line of Folsom Street; thence at a right angle Southwesterly along said parallel
line so drawn 57.50 feet to the point of beginning.
BEING a portion of 100 Vara Block No. 365.
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EXHIBIT B
(Permitted Exceptions)
1. Any matter recorded in the Official Records of the City and County of
San Francisco, California, prior to the Effective Dated, against which the Title
Company shall insure Buyer without additional cost to Buyer, provided same does
not substantially impair or restrict Buyer's Intended Use of the Property.
2. Zoning regulations and ordinances.
3. Unpaid installments of assessments not due and payable on or before the
Closing Date.
4. All matters identified as Items 1, 5, 6, 7, 8, 9, 10, 11, 12 and 13 on
Schedule B of the Title Report.
5. Unrecorded license agreement dated August 6, 1998 between AT&T Corp.,
as licensor, and TCG San Francisco, as licensee, to install, construct, own,
operate, use, maintain, repair, replace and remove fiber optic cable and other
types of telecommunications cables, wires, transmission media, wireless
transmission devices, wireless reception devices, and two transmission or
reception antennas on the roof of the Premises and associated equipment in the
locations at the Property described in the license agreement, including the
exclusive right to use a room with a floor area of approximately one hundred
square feet that is located on the basement floor of the Building for the
purpose of operating, maintaining, repairing and replacing the licensee's
facilities.
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EXHIBIT C
(Form of affidavit of nonforeign status)
Section 1445 of the United States ("U.S.") Internal Revenue Code provides
that a transferee of a U.S. real Property interest must withhold tax if the
transferor is a foreign person. To inform the transferee that the withholding of
tax is not required upon the disposition of a U.S. real property interest by
AT&T Corp., a New York corporation ("Transferor"), the undersigned hereby
certifies on behalf of Transferor that:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust or foreign estate, as those terms are defined in the U.S. Internal Revenue
Code and Income Tax Regulations.
2. Transferor's U.S. taxpayer identification number is 13-4924710.
3. Transferor's office address is 295 North Maple Avenue, Basking Ridge,
New Jersey 07920.
Transferor understands that this certification may be disclosed to the U.S.
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine or imprisonment, or both.
Under penalties of perjury, I, the undersigned individual, do hereby declare
that I have examined this certificate, and to the best of my knowledge and
belief, it is true, correct and complete; and I further declare that I have
authority to sign this certificate on behalf of Transferor.
Transferor:
AT&T Corp., a New York corporation
By:
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Name:
Title:
Dated as of: __________________, 1999
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EXHIBIT D
(Form of bill of sale)
FOR VALUABLE CONSIDERATION, as set forth in that certain Contract for the
Purchase and Sale of Real Estate between AT&T Corp., a New York corporation
("Transferor"), and Mack-Cali Realty Acquisition Corp., a Delaware corporation
("Transferee"), dated as of ____________________ 1999 (the "Agreement"),
Transferor hereby transfers to Transferee all of Transferor's right, title and
interest in and to the FF&E (as that term is defined in the Agreement) more
particularly described on the attachment hereto.
This Bill of Sale shall not supersede the Agreement and in the event of
conflict between this Bill of Sale and the Agreement, the Agreement shall
control.
The FF&E transferred under this Bill of Sale is used or surplus material
and is transferred "AS IS, WHERE IS" with all faults, latent and patent.
Transferor makes no warranties, express or implied, including any warranty of
merchantability or fitness for a particular purpose or warranty against patent,
trademark or copyright infringement, except that Transferor hereby represents
and warrants to Transferee that Transferor is the absolute owner of the FF&E,
that the FF&E is free and clear of all liens, charges and encumbrances, and that
Transferor has full right, power and authority to sell the FF&E.
IN WITNESS WHEREOF, this Bill of Sale has been executed by Transferor as
of ________________________, 1999.
AT&T Corp., a New York corporation
By:
Name:
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Title:
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EXHIBIT E
(List of FF&E)
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EXHIBIT F
(Form of assignment agreement)
THIS ASSIGNMENT AGREEMENT is made as of this _____ day of
_________________________, 1999, among AT&T Corp., a New York corporation,
having an office at 295 North Maple Avenue, Basking Ridge, New Jersey 07920
("Transferor"), MACK-CALI REALTY ACQUISITION CORP., a Delaware corporation,
having an office at 11 Commerce Drive, Cranford, New Jersey 07016 ("Buyer"), and
__________________________________, a __________________________, having an
office at ____________________________________________ ("Intermediary").
WHEREAS, on __________________, 1999, Transferor entered into that certain
Contract for the Purchase and Sale of Real Estate (the "Agreement") to sell real
estate located at 795 Folsom Street in San Francisco, California (the
"Property") to Buyer; and
WHEREAS, the Agreement provides that Transferor may transfer the Property
by means of a 1031 exchange to Buyer; and
WHEREAS, Transferor wishes to transfer its interest in the Agreement in
connection with disposing of the Property.
NOW, THEREFORE, in consideration of the mutual promises set out below, the
parties hereby agree as follows:
1. Transferor hereby assigns to Intermediary all of Transferor's equitable
interest in the Agreement. Buyer acknowledges that there has been an assignment
of the equitable interest in the Property to Intermediary and agrees to make all
payments due under the Agreement to Intermediary. The obligation to directly
deed or transfer the Property to Buyer remains with
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Transferor.
2. Intermediary hereby covenants and warrants to Buyer that Intermediary
will not transfer, assign, mortgage or hypothecate the interest that it is
receiving from Transferor. Concurrently with Buyer's receipt of the deed to the
Property, Intermediary will transfer and assign to Buyer and to Buyer's
successors and assigns whatever remaining incidents of ownership Intermediary
may have to the Property.
3. Intermediary hereby represents and warrants to, and covenants with,
Transferor that Intermediary will not amend, terminate, modify, supplement or
otherwise alter any term, condition or other provision of the Agreement without
Transferor's prior written consent.
4. Intermediary is participating in this transaction only as an
Intermediary and for purposes of any dispute regarding the Property, Transferor
and Buyer will look solely to each other with respect to resolving any such
dispute and neither one shall look to Intermediary.
5. This Assignment Agreement will be binding on, and will inure to the
benefit of, the parties and on the successors and permitted assigns of
Transferor and Buyer.
6. Except as expressly stated herein, all of the terms and conditions of
the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement.
AT&T CORP.,
Transferor
By: Date:
------------------------------- --------------------
Title:
----------------------------
MACK-CALI REALTY ACQUISITION CORP.,
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Buyer
By: Date:
------------------------------- --------------------
Title:
----------------------------
Intermediary
By: Date:
------------------------------- --------------------
Title:
----------------------------
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EXHIBIT G
(Form of the Lease)
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EXHIBIT H
(Environmental Documents)
1. AT&T Asbestos Building Survey and Management Plan, prepared for
AT&T 795 Folsom Street, San Francisco, California by Dames & Moore, 12 Commerce
Drive, Cranford, New Jersey, dated March 27, 1997.
2. Phase 1 Environmental Site Assessment, 795 Folsom Street, San
Francisco, California; prepared by AT&t Environmental Health and Safety,
Pleasanton, California 94107, dated May 20, 1998.
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EXHIBIT I
(Assignment of Leases)
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EXHIBIT J
(List Of Litigation)
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<PAGE>
SCHEDULE 1
(Permits and Licenses)
1. Permits to operate elevators issued by California Department of
Industrial Relations, Division of Occupational Safety and Health.
(a) Elevator 061679, dated 1/15/99;
(b) Elevator 061680, dated 12/29/98;
(c) Elevator 061681, dated 12/29/98;
(d) Elevator 061682, dated 12/29/98;
2. California Department of Industrial Relations, Division of
Occupational Safety and Health, permit to operate air pressure tank No.
33134-77.
3. Permits issued by San Francisco Water Department cross-connection
control section;
(a) For boiler with test date of January 15, 1998;
(b) Basement irrigation sprinkler system with test date
January 15, 1998;
(c) Detectors in the fire pump room with test date of January
15, 1997;
(d) Fire sprinklers with test date of January 15, 1998;
(e) Domestic water main system with test date of January 15,
1998.
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS 1
Section 1.1 Usage Of Defined Terms 1
Section 1.2 Specific Defined Terms 1
ARTICLE 2. TERMS OF SALE 1
Section 2.1 Purchase Price 1
Section 2.2 Deposit 1
Section 2.3 Payment of the Purchase Price 1
Section 2.4 Buyer's Right To Terminate 1
Section 2.5 Lease Of Additional Space; Additional Consideration 1
ARTICLE 3. CLOSING 1
Section 3.1 Closing 1
Section 3.2 Seller's Closing Obligations 1
Section 3.3 Buyer's Closing Obligations 1
ARTICLE 4. TITLE AND SURVEY 1
Section 4.1 Title Insurance Commitment and Survey 1
Section 4.2 Seller's Right To Extend Closing 1
Section 4.3 Limitation On Seller's Title Obligations 1
Section 4.4 Buyer's Rights In the Event Of A Title Defect 1
Section 4.5 Seller's Inability To Perform 1
ARTICLE 5. FF&E 1
Section 5.1 Works Of Art 1
Section 5.2 Sale To Buyer Of Remaining FF&E 1
ARTICLE 6. AS IS SALE 1
Section 6.1 Buyer's Access To the Property 1
Section 6.2 Buyer's Use Of Building Records 1
Section 6.3 Buyer's Obligation To Indemnify 1
Section 6.4 Buyer's Insurance 1
Section 6.5 Building Evaluation Reports 1
Section 6.6 Environmental Report 1
Section 6.7 Survival Of Buyer's Obligations 1
Section 6.8 Property To Be Sold As Is 1
ARTICLE 7. REPRESENTATIONS AND WARRANTIES 1
Section 7.1 Seller's Representations and Warranties 1
Section 7.2 Buyer's Representations and Warranties 1
Section 7.3 Survival; No Third-Party Beneficiaries 1
ARTICLE 8. ADJUSTMENTS AND EXPENSES 1
Section 8.1 Seller's Expenses 1
Section 8.2 Buyer's Expenses 1
Section 8.3 Closing Adjustments 1
Section 8.4 Assessments 1
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Section 8.5 Tax Adjustment 1
ARTICLE 9. FIRE AND OTHER CASUALTY 1
Section 9.1 Risk of Loss 1
Section 9.2 Notice of Casualty 1
Section 9.3 Rights Upon Casualty 1
ARTICLE 10. CONDEMNATION 1
Section 10.1 Taking Of Less Than Substantial Part 1
Section 10.2 Taking of Substantial Part 1
ARTICLE 11. BROKERS 1
Section 11.1 Brokers 1
ARTICLE 12. CONFIDENTIALITY AND USE OF NAME 1
Section 12.1 Confidentiality 1
Section 12.2 Use Of AT&T Name 1
Section 12.3 Press Release 1
Section 12.4 Survival Of Seller's and Buyer's Obligations 1
ARTICLE 13. BUILDING OPERATION 1
Section 13.1 Building Operation 1
Section 13.2 Leases and Contracts 1
ARTICLE 14. INDEMNIFICATION 1
Section 14.1 Seller's Indemnity 1
Section 14.2 Buyer's Indemnity 1
ARTICLE 15. MISCELLANEOUS 1
Section 15.1 Attorneys' Fees 1
Section 15.2 Recordation Prohibited 1
Section 15.3 Assignment 1
Section 15.4 Merger 1
Section 15.5 Applicable Law 1
Section 15.6 Exchange Of Properties 1
Section 15.7 Entire Agreement 1
Section 15.8 All Amendments In Writing 1
Section 15.9 Invalidity 1
Section 15.10 Notices 1
Section 15.11 Non-Binding Mediation 1
Section 15.12 Time 1
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Exhibit 10.15
1201 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C.
* * * * *
PURCHASE AND SALE AGREEMENT
BETWEEN
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES,
a New York corporation (solely on behalf of and for
the benefit of its Separate Account 16-III,
known as the "Value Enhancement Fund"),
AS SELLER
AND
MACK-CALI REALTY ACQUISITION CORP.,
a Delaware corporation
AS PURCHASER
As of June 30, 1999
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made as June 30,
1999 (the "Effective Date"), by and between THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES, a New York corporation (solely on behalf of and for the
benefit of its Separate Account 16-III, known as the "Value Enhancement Fund")
("Seller"), having its home office at 1290 Avenue of the Americas, New York, New
York 10104, and MACK-CALI REALTY ACQUISITION CORP., a Delaware corporation
("Purchaser"), having an office c/o Mack-Cali Realty Corporation, 11 Commerce
Drive, Cranford, New Jersey 07016.
W I T N E S S E T H:
65535RT65535CLE IPURCHASE AND SALE
I.1 Agreement of Purchase and Sale. Subject to the terms and conditions
hereinafter set forth, Seller agrees to sell and convey and Purchaser agrees to
purchase the following:
(1) that certain tract or parcel of land situated in Washington, D.C.,
more particularly described on Exhibit A attached hereto and made a part
hereof, together with all and singular the rights and appurtenances
pertaining to such property, including any right, title and interest of
Seller in and to adjacent streets, alleys or rights-of-way, all mineral
and water rights, all easements, licenses, and covenants, and other
appurtenances used in connection with the beneficial use and enjoyment of
the Land and the Improvements (as hereinafter defined) (the property
described in clause (a) of this Section 1.1 being herein referred to
collectively as the "Land");
(2) the buildings, structures, fixtures and other improvements on the
Land, including specifically, without limitation, that certain office
building located thereon having a street address of 1201 Connecticut
Avenue, N.W., Washington, D.C. (the property described in clause (b) of
this Section 1.1 being herein referred to collectively as the
"Improvements");
(3) all of Seller's right, title and interest in and to all tangible
personal property upon the Land or within the Improvements, including
specifically, without limitation, appliances, fixtures, furniture,
carpeting, draperies and curtains, equipment, tools and supplies, and
other items of personal property (excluding cash) used exclusively in
connection with the operation of the Land and the Improvements and only as
specifically described on Exhibit B attached hereto and made a part hereof
(the property described in clause (c) of this Section 1.1 being herein
referred to collectively as the "Personal Property");
1
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(4) all of Seller's right, title and interest in and to all agreements
listed and described on Exhibit C (the "Lease Schedule") attached hereto
and made a part hereof (all of which are in full force and effect as of
the Effective Date), pursuant to which any portion of the Land or the
Improvements is used or occupied by anyone other than Seller ("the
Leases"), together with all guaranties provided thereunder (if any) and
all rents, additional rents, reimbursements, profits, income, receipts and
the amount deposited, whether in the form of cash or letter of credit (the
"Security Deposit"), under any Lease in the nature of security for the
performance of the obligations of the tenant (individually, a "Tenant",
and collectively, "Tenants") under the Leases; and
(5) all of Seller's right, title and interest in and to (i) all assignable
contracts and agreements (collectively, the "Operating Agreements") listed
and described on Exhibit D (the "Operating Agreements Schedule") attached
hereto and made a part hereof, relating to the upkeep, repair, maintenance
or operation of the Land, the Improvements or the Personal Property which
will extend beyond the date of Closing (as such term is defined in Section
4.1 hereof), including specifically, without limitation, all assignable
equipment leases, and (ii) all assignable existing warranties and
guaranties (expressed or implied), and all permits, licenses, approvals
and telephone numbers issued or assigned to Seller in connection with the
Improvements or the Personal Property (the property described in clause
(e) of this Section 1.1 being sometimes herein referred to collectively as
the "Intangibles"); provided, however, that Purchaser shall not be
obligated to assume any management agreements, leasing commission
agreements, or any Operating Agreement (A) which Purchaser has advised
Seller in writing (not later than ten (10) days after the Effective Date)
to terminate as of Closing and which can, by its terms, be so terminated
without the payment of any penalties, fees or liquidated amounts, or (B)
which requires the payment of a penalty, fee or liquidated amount in order
to terminate the same; and further provided that with respect to any
leasing commission agreements, the respective rights and obligations of
Seller and Purchaser shall be as set forth in this Agreement;
(6) all promotional material, marketing materials, brochures, photographs
(collectively, "Promotional Materials"), books, records, tenant data,
leasing material and forms, past and current rent rolls, files,
statements, real property tax returns, market studies, keys, plans,
specifications, reports, tests and other materials of any kind owned by or
in the possession of Seller or Seller's property manager which are or may
be used by Seller in the use and operation of the Land, the Improvements
or the Personal Property (collectively, and together with the Promotional
Materials, the "Books and Records") (it being understood, however, that
such materials shall not include any materials not directly related to
leasing, maintenance and/or management of the Property such as, without
limitation, Seller's internal memoranda, financial projections, budgets,
appraisals, accounting and tax records and similar proprietary, elective
or confidential information); and
2
<PAGE>
(7) all other rights, privileges and appurtenances owned by Seller, if
any, and in any way related to the rights and interests described above in
this Section 1.1
I.2 Property Defined. The Land, the Improvements, the Personal Property, the
Leases, the Intangibles and the Books and Records and the other property
interests being conveyed hereunder and the Intangibles are hereinafter sometimes
referred to collectively as the "Property."
I.3 Permitted Exceptions. The Property shall be conveyed as required by this
Agreement, but shall be subject to the matters which are, or are deemed to be,
Permitted Exceptions pursuant to Article II hereof (herein referred to
collectively as the "Permitted Exceptions").
I.4 Purchase Price. Seller is to sell and Purchaser is to purchase the Property
for a total of THIRTY-TWO MILLION FIVE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($32,550,000.00) (the "Purchase Price").
I.5 Payment of Purchase Price. The Purchase Price, as increased or decreased by
prorations and adjustments as herein provided, shall be payable in full at
Closing in cash by wire transfer of immediately available federal funds to a
bank account designated by Seller in writing, together with wire transfer
instructions, to Purchaser not less than two (2) business days prior to the
Closing.
I.6 Earnest Money.
(a) Simultaneously with the execution and delivery of this Agreement,
Purchaser is depositing with Commercial Settlements, Inc. (the
"Escrow Agent"), having its office at 1413 K Street, N.W., 12th
Floor, Washington, D.C. 20005 Attention: Stuart S. Levin, the sum of
One Million and No/100 Dollars ($1,000,000.00) (the "Earnest Money")
in good funds, either by certified bank or cashier's check or by
federal wire transfer. Purchaser shall provide Purchaser's federal
tax identification number to Escrow Agent concurrently with the
making of such deposit. The Escrow Agent shall hold the Earnest
Money in an interest-bearing account in accordance with the terms
and conditions of this Agreement. All interest accruing on such sum
shall become a part of the Earnest Money and shall be distributed as
Earnest Money in accordance with the terms of this Agreement.
(b) In the event of termination of this Agreement prior to Closing, the
Escrow Agent shall disburse the Earnest Money in accordance with the
provisions of this Agreement governing such termination. Upon
receipt of a party's written demand for the Earnest Money, the
Escrow Agent shall promptly mail a copy of such demand to the other
party, who shall then have five (5) days to dispute the disbursement
by sending written notice of such objection to the Escrow Agent. In
the event of any dispute between Seller and Purchaser regarding the
disbursement
3
<PAGE>
of the Earnest Money, or in the event the Escrow Agent shall receive
conflicting demands or instructions with respect thereto, the Escrow
Agent shall withhold disbursement of the Earnest Money until such
dispute is resolved. Alternatively, the Escrow Agent shall be
entitled to deposit the Earnest Money into a court of general
jurisdiction in the District of Columbia or the United States
District Court for the District of Columbia, and to interplead
Seller and Purchaser in connection therewith. The costs of any such
action for interpleader shall be paid by whichever of Seller or
Purchaser is the losing party. The Escrow Agent shall not be liable
for any damage, liability or loss arising out of its services
pursuant to this Agreement, except for damage, liability or loss
resulting from the willful or negligent conduct of the Escrow Agent
or any of its officers or employees.
I.7 Independent Contract Consideration. In addition to the Earnest Money,
Purchaser shall, concurrently with its execution hereof, deliver to Seller a
check in the amount of ONE HUNDRED AND NO/100ths DOLLARS ($100.00), which amount
Seller and Purchaser agree has been bargained for as consideration for Seller's
execution and delivery of this Agreement and Purchaser's right to inspect the
Property pursuant to Article III. Such sum is in addition to and independent of
any other consideration or payment provided for in this Agreement and is
nonrefundable in all events.
65535RT65535CLE IITITLE AND SURVEY
II.1 Title Examination; Commitment for Title Insurance. Seller has obtained and
delivered to Purchaser at no cost to Purchaser and the surveyor preparing the
Survey, from Commonwealth Land Title Insurance Company (the "Title Company"), a
current ALTA title insurance commitment No. 99-1135 (the "Title Commitment")
covering the Property and a copy of each document referenced in the Title
Commitment as an exception to title to the Property. Purchaser shall have until
June 21, 1999 (the "Title Exam Deadline"), to review the Title Commitment
(regardless if such date occurs prior to the Effective Date). At Closing, at
Purchaser's expense, Purchaser shall obtain from the Title Company an Owner's
Policy of Title Insurance in the full amount of the Purchase Price pursuant to
Section 2.4 hereof.
II.2 Survey. Seller has obtained and delivered to Purchaser and the Title
Company at no cost to Purchaser a current ALTA survey of the Property prepared
by Bernard F. Locraft Civil Engineers (the "Survey") reflecting the total area
of the Property, the location of all improvements, recorded easements and
encroachments, if any, located thereon and other matters of record with respect
thereto. Purchaser shall pay any costs associated with any changes to the Survey
(or certifications thereon or updates thereto) requested by Purchaser.
II.3 Title Objections; Cure of Title Objections.
(a) Purchaser shall have until the Title Exam Deadline to notify Seller,
in writing, of such objections as Purchaser may have to anything
contained in the Title
4
<PAGE>
Commitment or the Survey. (Seller shall use good faith efforts, but
without any cost or liability to Seller, to remove or cure title
objections raised by Purchaser as to matters set forth on the Title
Commitment.) Any item contained in the Title Commitment or any
matter shown on the Survey to which Purchaser does not object prior
to the Title Exam Deadline shall be deemed a Permitted Exception. In
the event Purchaser shall notify Seller of objections to title or to
matters shown on the Survey prior to the Title Exam Deadline, Seller
shall have the right, but not the obligation, to cure such
objections; provided, however, that notwithstanding anything to the
contrary contained in this Agreement, Seller shall be obligated, at
its sole cost and expense, to take such actions as may be necessary
to cause the Title Company to delete as an exception, by payment or
other appropriate measure of satisfaction, any mechanic's lien, IRS
payment lien, judgment lien or deed of trust or other financing lien
created prior to Closing by any action or inaction of Seller, which
liens shall be deemed to be excluded from the term "Permitted
Exceptions."
(b) Within ten (10) days after receipt of Purchaser's notice of
objections, Seller shall notify Purchaser in writing whether Seller
elects to attempt to cure such objections. If Seller fails to give
Purchaser such notice of election, then Seller shall be deemed to
have elected not to attempt to cure the matter. If Seller elects to
attempt to cure, and provided that Purchaser shall not have
terminated this Agreement in accordance with Section 3.2 hereof,
Seller shall have until the date of Closing to attempt to remove,
satisfy or cure the same and for this purpose Seller shall be
entitled to a reasonable adjournment of the Closing if additional
time is required, but in no event shall the adjournment exceed
thirty (30) days after the date for Closing set forth in Section 4.1
hereof. If Seller elects not to cure any objections specified in
Purchaser's notice, or if Seller is unable to effect a cure prior to
the Closing (or any date to which the Closing has been adjourned),
Purchaser shall have the following options: (i) to accept a
conveyance of the Property subject to the Permitted Exceptions,
specifically including any matter objected to by Purchaser which
Seller is unwilling or unable to cure, and without reduction of the
Purchase Price; or (ii) to terminate this Agreement by sending
written notice thereof to Seller, and upon delivery of such notice
of termination, this Agreement shall terminate and the Earnest Money
shall be returned to Purchaser, and thereafter neither party hereto
shall have any further rights, obligations or liabilities hereunder
except to the extent that any right, obligation or liability set
forth herein expressly survives termination of this Agreement. If
Seller notifies Purchaser that Seller does not intend to attempt to
cure any title objection or objections, or if, having commenced
attempts to cure any objection or objections, Seller later notifies
Purchaser that Seller will be unable to effect a cure thereof,
Purchaser shall, within ten (10) days after such notice has been
given, notify Seller in writing whether Purchaser shall elect to
accept the
5
<PAGE>
conveyance under clause (i) or to terminate this Agreement under
clause (ii). In the event Purchaser does not so timely notify Seller
within such 10-day period, then Purchaser shall be deemed to have
elected to terminate this Agreement under clause (ii).
II.4 Conveyance of Title. As a condition of Closing, Seller shall convey and
transfer to Purchaser, and the Title Company shall insure by a standard 1970-B
ALTA Owner's Policy of Title Insurance (or its equivalent) (the "Title Policy"),
at Purchaser's sole cost, good and marketable title to the Property (as defined
in such Title Policy), in the full amount of the Purchase Price (at such rates
as Purchaser may negotiate with the Title Company), in the name of Purchaser or
Purchaser's designee, and with such endorsements as Purchaser shall reasonably
require and which the Title Company shall agree to issue to Purchaser prior to
the Title Exam Deadline (all of which shall be at Purchaser's sole expense).
Notwithstanding anything contained herein to the contrary, the Property shall be
conveyed subject only to the following matters, which shall be deemed to be
Permitted Exceptions:
(1) the rights of Tenants, as tenants only, under the Leases and any new
Leases entered into between the Effective Date and Closing and, where
required, approved by Purchaser in accordance with the terms of this
Agreement;
(2) the lien of all ad valorem real estate taxes and assessments not yet
due and payable as of the date of Closing, subject to adjustment as herein
provided;
(3) local, state and federal laws, ordinances or governmental regulations,
including but not limited to, building and zoning laws, ordinances and
regulations, now or hereafter in effect relating to the Property; and
(4) items as shown on the Title Commitment or the Survey which are not
objected to by Purchaser or which are waived by Purchaser in accordance
with Sections 2.3 or 2.5 hereof.
II.5 Pre-Closing "Gap" Title Defects. Whether or not Purchaser shall have
furnished to Seller any notice of title objections pursuant to the foregoing
provisions of this Section 2, Purchaser may, at or prior to Closing, notify
Seller in writing of any objections to title first raised by the Title Company
or the Surveyor between (a) the date which is the earlier of (i) the effective
date of Purchaser's Title Commitment referred to above or (ii) the expiration of
the Inspection Period, and (b) the date on which the transaction contemplated
herein is scheduled to close. With respect to any objections to title set forth
in such notice, Seller shall have the same option to cure and Purchaser shall
have the same option to accept title subject to such matters or to terminate
this Agreement as those which apply to any notice of objections made by
Purchaser before the expiration of the Inspection Period. If Seller elects to
attempt to cure any such matters, the date for Closing shall be automatically
extended by a reasonable additional time to effect such a cure, but in no event
shall the extension exceed thirty (30) days after the date for Closing set forth
in
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<PAGE>
Section 4.1 hereof.
65535RT65535CLE IIIINSPECTION PERIOD
III.1 Right of Inspection.
(a) During the period beginning upon the Effective Date and ending at
5:00 p.m. Eastern time on June 30, 1999, with time being of the
essence thereto (such period hereinafter referred to as the
"Inspection Period"), Purchaser shall have the right to make a
physical inspection of the Property and to examine at such place or
places at the Property, in the offices of the property manager or
elsewhere as the same may be located, any operating files maintained
by Seller or its property manager in connection with the leasing,
maintenance and/or management of the Property, including, without
limitation, the Leases, lease files, Operating Agreements, insurance
policies, bills, invoices, receipts and other general records
relating to the income and expenses of the Property, correspondence,
surveys, plans and specifications, warranties for services and
materials provided to the Property, environmental audits and similar
materials, but excluding materials not directly related to the
leasing, maintenance and/or management of the Property such as,
without limitation, Seller's internal memoranda, financial
projections, budgets, appraisals, accounting and tax records and
similar proprietary, elective or confidential information. Purchaser
understands and agrees that any on-site inspections of the Property
shall be conducted upon at least twenty-four (24) hours' prior
written notice to Seller and in the presence of Seller or its
representative. Such physical inspection shall not unreasonably
interfere with the use of the Property by Seller or its tenants nor
shall Purchaser's inspection damage the Property in any respect.
Such physical inspection shall not be invasive in any respect
(unless Purchaser obtains Seller's prior written consent, which
consent shall not be unreasonably withheld or delayed), and in any
event shall be conducted in accordance with standards customarily
employed in the industry and in compliance with all governmental
laws, rules and regulations. Seller acknowledges that Purchaser may
request the right to conduct certain customary invasive tests with
respect to testing the environmental condition of the Property.
During the Inspection Period and at all times prior to Closing,
Purchaser, its agents and contractors, shall have reasonable access
to the Property and other information pertaining thereto in the
possession or within the control of Seller or its property manager
for the purpose of performing such studies, tests, borings,
investigations and inspections as Purchaser shall deem necessary or
desirable (it being understood that physical testing shall require
Seller's prior written approval, which approval shall not be
unreasonably withheld or delayed). Following each entry by Purchaser
with respect to inspections and/or tests on the Property, Purchaser
shall restore the Property to a condition which is as near to its
original condition as existed prior to any such inspections and/or
tests. Except as
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<PAGE>
specifically set forth in Section 5.3, Purchaser's right of
inspection and the exercise of such right shall not constitute a
waiver by Purchaser of a breach of any representation, warranty,
covenant or agreement of Seller which might, or should, have been
disclosed by such inspection.
(b) Seller shall cooperate with Purchaser in Purchaser's due diligence
but Seller shall not be obligated to incur any liability or expense
in connection therewith. Purchaser shall not contact any tenants of
the Property or any governmental or quasi-governmental authorities
without obtaining Seller's prior written consent (which consent
shall not be unreasonably withheld or delayed), and Purchaser and
its agents shall not disrupt Seller's or Seller's tenants'
activities on the Property. Seller acknowledges that Purchaser shall
require contact with such parties prior to the expiration of the
Inspection Period in order to complete its due diligence. Purchaser
agrees to indemnify against and hold Seller harmless from any claim
for liabilities, costs, expenses (including reasonable attorneys'
fees actually incurred by Seller or Seller's agents or management
company), damages or injuries to the extent arising out of, or
resulting from any acts or omissions of Purchaser or Purchaser's
agents in connection with the inspection of the Property by
Purchaser or its agents (but the foregoing indemnity shall not apply
to any claims arising out of, or resulting from, the discovery by
Purchaser of any existing environmental conditions or matters).
Notwithstanding anything to the contrary in this Agreement,
Purchaser's obligation to indemnify Seller and hold Seller harmless
shall survive Closing or any termination of this Agreement. All
inspections shall occur at reasonable times agreed upon by Seller
and Purchaser.
III.2 Right of Termination. Seller agrees that in the event Purchaser determines
(such determination to be made in Purchaser's sole discretion) that the Property
is not suitable for its purposes, or for any reason or for no reason, Purchaser
shall have the right to terminate this Agreement by giving written notice
thereof to Seller prior to the expiration of the Inspection Period. If Purchaser
or Purchaser's attorneys shall give or fail to give such notice of termination
prior to expiration of the Inspection Period, then this Agreement shall
terminate and the Earnest Money shall be returned to Purchaser. Time is of the
essence with respect to the provisions of this Section 3.2.
65535RT65535CLE IVCLOSING
IV.1 Time and Place. The consummation of the transaction contemplated hereby
("Closing") shall be held at the offices of Rudnick & Wolfe, 1201 New York
Avenue, N.W., Penthouse, Washington, D.C., at 10:30 a.m. on July 15, 1999, or
such earlier date to which Seller and Purchaser may agree. At Closing, Seller
and Purchaser shall perform the obligations set forth in, respectively, Section
4.2 and Section 4.3, the performance of which obligations shall be concurrent
conditions. Notwithstanding anything in this Section 4.1 to the contrary, the
parties agree to use commercially reasonable efforts to pre-close the
transaction contemplated hereby
8
<PAGE>
(i.e., sign documents into escrow) on the business day immediately preceding the
then-scheduled date of Closing.
IV.2 Seller's Obligations at Closing. At Closing, Seller shall:
(1) deliver to Purchaser a duly executed special warranty deed with a
covenant of further assurances in recordable form (the "Deed"), conveying
the Land and Improvements, subject only to the Permitted Exceptions;
(2) deliver to Purchaser a duly executed bill of sale conveying the
Personal Property without warranty of title or use and without warranty,
expressed or implied, as to merchantability and fitness for any purpose;
(3) deliver to Purchaser all original Leases and Lease files (or complete
copies of such Leases or other documents where such documents are not in
Seller's, Lend Lease's (as defined below) or Seller's management company's
possession) and assign to Purchaser, and Purchaser shall assume from and
after Closing, the landlord/lessor interest in and to the Leases by duly
executed assignment and assumption agreement in the form attached to this
agreement as Exhibit F;
(4) deliver to Purchaser all original Operating Agreements as well as all
other documents referred to herein (or complete copies of such Operating
Agreements or other documents where such documents are not in Seller's or
Seller's management company's possession) and to the extent assignable,
assign to Purchaser, and Purchaser shall assume from and after Closing,
Seller's interest in the Operating Agreements and the other Intangibles by
duly executed assignment and assumption agreement;
(5) deliver to Purchaser all original Tenant Estoppels (as such term is
defined in Section 5.4(b) hereof) as are in Seller's possession.
Notwithstanding anything contained in this Agreement to the contrary, in
no event shall Seller be liable to Purchaser for, or deemed to be in
default hereunder by reason of, its failure to obtain any Tenant Estoppel
which Seller is required to deliver to Purchaser pursuant to Section
5.4(b) (it being understood, however, that such failure shall constitute a
non-fulfillment of a condition precedent to Purchaser's obligation to
close hereunder and Purchaser's remedies shall be as set forth in this
Agreement);
(6) join with Purchaser to execute (i) a notice in form and content
reasonably satisfactory to Purchaser and Seller which Purchaser shall send
to each tenant under each of the Leases (A) informing such tenant of the
sale of the Property and of the assignment to Purchaser of Seller's
interest in, and obligations under, the Leases (including, if applicable
any security deposits) effective from and after the Closing, and (B)
directing that all rent and other sums payable after the Closing under
each such Lease shall be paid as set forth in the notice, and (ii) a
notice in form and content reasonably satisfactory to Purchaser and Seller
which Purchaser shall send to each vendor under each of the
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Operating Agreements in effect at Closing informing such vendor of the
sale of the Property and of the assignment to Purchaser of Seller's
interest in, and obligations under, the Operating Agreements and directing
that all sums payable after the Closing under each such Operating
Agreement shall be paid as set forth in the notice;
(7) deliver to Purchaser a certificate, dated as of the date of Closing
and executed on behalf of Seller by a duly authorized officer thereof,
stating that the representations and warranties of Seller contained in
Section 5.1 hereof are true and correct in all material respects as of the
date of Closing (with appropriate modifications of those representations
and warranties made in Section 5.1 hereof to reflect any changes therein
including without limitation any changes resulting from actions under
Section 5.4 hereof) or identifying any representation or warranty which is
not, or no longer is, true and correct and explaining the state of facts
giving rise to the change. In no event shall Seller be liable to Purchaser
for, or be deemed to be in default hereunder by reason of, any breach of
representation or warranty which results from any change that (i) occurs
between the Effective Date and the date of Closing and (ii) is (A)
expressly permitted under the terms of this Agreement or (B) beyond the
reasonable control of Seller to prevent; provided, however, that the
occurrence of a change which is not expressly permitted in this Agreement
shall constitute a non-fulfilment of a condition precedent to Purchaser's
obligations to close under this Agreement, and Purchaser's remedies shall
be as set forth in this Agreement. If, despite changes or other matters
described in such certificate, Purchaser proceeds to the Closing and the
Closing occurs, then Seller's representations and warranties set forth in
this Agreement shall be deemed to have been modified by all statements
made in such certificate;
(8) deliver to Purchaser such evidence as Purchaser's counsel and/or the
Title Company may reasonably require as to the authority of the person or
persons executing documents on behalf of Seller;
(9) deliver to Purchaser an affidavit duly executed by Seller stating that
Seller is not a "foreign person" as defined in the Federal Foreign
Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act;
(10) deliver to Purchaser the Leases, Operating Agreements, Environmental
Documents (as defined below) and licenses and permits, if any, in the
possession of Seller or Seller's agents, together with all leasing and
property files and records in connection with the continued operation,
leasing and maintenance of the Property, to the extent not previously
delivered to Purchaser. Purchaser shall cooperate with Seller for a period
of seven (7) years after Closing in case of Seller's need in response to
any tax audit, tax return preparation or litigation threatened or brought
against Seller, by allowing Seller and its agents or representatives
access, upon reasonable advance notice (which notice shall identify the
nature of the information sought by Seller), and at reasonable times to
examine and make copies of any and all instruments, files and records
related to the
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period of Seller's ownership of the Property and which Seller has
delivered to Purchaser at Closing, which right shall survive the Closing;
(11) deliver to Purchaser possession and occupancy of the Property,
subject to the Permitted Exceptions;
(12) deliver such additional documents as shall be reasonably required to
consummate the transaction expressly contemplated by this Agreement, which
additional documents may include transfer and recordation tax declarations
and other tax certificates; and
(13) deliver an affidavit (and such other documents or instruments
reasonably required by the Title Company) executed by Seller (and in form
and substance reasonably satisfactory to Seller and Seller's counsel) (i)
certifying against any work done or supplies delivered to the Property
which might be grounds for a materialman's or mechanic's lien under or
pursuant to applicable law, in form sufficient to enable the Title Company
to delete any exception to any such lien, and (ii) which the Title Company
may require to eliminate the pre-printed standard exceptions in the Title
Policy;
(14) deliver such transfer and other tax declarations and returns and
information returns, duly executed and sworn to by Seller as may be
required of Seller by law in connection with the conveyance of the
Property to Purchaser (including, but not limited to, Internal Revenue
Service forms, if required);
(15) execute a closing statement setting forth the Purchase Price and all
adjustments and prorations;
(16) deliver an updated Schedule 4.4(b)(8) (delinquent rents);
(17) deliver an updated Schedule 5.1(s) (Rent Roll);
(18) deliver to Purchaser any letters of credit given by Tenants as
Security Deposits, and if requested by Purchaser, Seller shall execute
such transfer instruments in form and substance as may be required by the
issuer of such letters of credit in connection with the transfer of such
letters of credit to Purchaser; and
(19) such other documents as are required under this Agreement to be
delivered by Seller at Closing.
IV.3 Purchaser's Obligations at Closing. At Closing, Purchaser shall:
(1) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred federal funds pursuant to Section 1.5 above, it
being agreed that at Closing the Earnest
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Money shall be delivered to Seller and applied towards payment of the
Purchase Price, and it being further understood that Seller shall receive
such proceeds at its bank account no later than 3:00 p.m. Eastern time on
the date of Closing, failing which the pro-rations shall be redetermined
to coincide with the date on which said funds are received prior to 3:00
p.m. Eastern time (time being of the essence with respect to this
subparagraph);
(2) join Seller in execution of the instruments described in Sections
4.2(c), 4.2(d), and 4.2(f) above;
(3) deliver to Seller a letter duly executed by Purchaser, confirming that
Purchaser is not acquiring the Property with the assets of an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), and, if Purchaser is unable or unwilling
to make such a representation, then Purchaser shall be deemed to be in
default hereunder, and Seller shall have the right to terminate this
Agreement and to receive and retain the Earnest Money;
(4) deliver to Seller such evidence as Seller's counsel and/or the Title
Company may reasonably require as to the authority of the person or
persons executing documents on behalf of Purchaser; and
(5) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
IV.4 Credits and Prorations.
(1) The following shall be apportioned with respect to the Property as of
12:01 a.m., on the day of Closing, as if Purchaser were vested with title
to the Property during the entire day upon which Closing occurs:
(1) rents, if any, as and when collected (the term "rents" as used
in this Agreement includes all payments due and payable by
tenants under the Leases);
(2) taxes (including personal property taxes on the Personal
Property) and assessments levied against the Property;
(3) payments under the Operating Agreements;
(4) gas, electricity, water, sewer and other utility charges in
connection with the Property for which Seller is liable, if
any, such charges to be apportioned at Closing on the basis of
the most recent meter reading occurring prior to Closing (and
Seller shall use commercially reasonable efforts to cause the
utilities to read the meters as close as possible to the date
of Closing); and
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(5) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser
and a seller in the area in which the Property is located.
(2) Notwithstanding anything contained in the foregoing provisions:
(1) At Closing, Seller shall credit to the account of Purchaser
the amount of all cash security deposits held by Seller, $608
(which represents an additional security deposit for Belay &
Belay Investment, Inc.) and any interest on such security
deposits if and only to the extent required by the applicable
Lease.
(2) Any taxes paid at or prior to Closing shall be prorated based
upon the amounts actually paid. If taxes and assessments for
the current year have not been paid before Closing, Seller
shall be charged at Closing an amount equal to that portion of
such taxes and assessments (together with interest and
penalties thereon) which relates to the period before Closing
and Purchaser shall pay the taxes and assessments prior to
their becoming delinquent. Any such apportionment made with
respect to a tax year for which the tax rate or assessed
valuation, or both, have not yet been fixed shall be based
upon the tax rate and/or assessed valuation last fixed. To the
extent that the actual taxes and assessments for the current
year differ from the amount apportioned at Closing, the
parties shall make all necessary adjustments by appropriate
payments between themselves following Closing.
(3) Charges referred to in Section 4.4(a) above which have been
contracted for by a Tenant to a third party and are payable by
such Tenant directly to said third party shall not be
apportioned hereunder, and Purchaser shall accept title
subject to any of such charges unpaid and Purchaser shall look
solely to the tenant responsible therefor for the payment of
the same.
(4) Seller shall receive the entire advantage of any discounts for
the prepayment by it of any taxes, water rates or sewer rents.
(5) As to gas, electricity and other utility charges referred to
in Section 4.4(a)(iv) above, Seller may on notice to Purchaser
elect to pay one or more of all of said items accrued to the
date hereinabove fixed for apportionment directly to the
person or entity entitled thereto, and to the extent Seller so
elects, such item shall not be apportioned hereunder, and
Seller's obligation to pay such item directly in such case
shall survive the Closing.
(6) The Personal Property is included in this sale, without
further charge.
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(7) If (i) Purchaser approves any new Lease, or the renewal or
extension of an existing Lease which is not provided for
thereunder, which approval includes an approval of the costs
to be incurred by the landlord on account thereof, or (ii) a
Tenant exercises, after the Effective Date, a renewal or
extension of an existing Lease pursuant to a right set forth
therein, which exercise requires the landlord to incur certain
costs on account thereof, then Purchaser shall be responsible
for such costs and Seller shall have no responsibility
therefor. If, as of the date of Closing, Seller shall have
paid any costs for which Purchaser is responsible pursuant to
the foregoing sentence, Purchaser shall reimburse Seller
therefor at Closing. The provisions of this Section shall
survive the Closing.
(8) All moneys received from Tenants from and after the date of
Closing shall belong to Purchaser and shall be applied by
Purchaser to current rents and other charges under the Leases.
After application of such moneys to current rents and charges,
Purchaser agrees to remit to Seller any excess amounts paid by
a Tenant to the extent that such Tenant was in arrears in the
payment of rent prior to the Closing. Attached hereto as
Schedule 4.4(b)(8) is a schedule of delinquent rents as of the
Effective Date, which schedule shall be updated as of the date
of Closing.
(9) At the Closing, Seller shall deliver to Purchaser a list of
additional rent, however characterized, under each Lease,
including without limitation, real estate taxes, electrical
charges, utility costs and operating expenses (collectively,
"Additional Rents") billed to Tenants for the calendar year in
which the Closing occurs (both on a monthly basis and in the
aggregate), the basis for which the monthly amounts are being
billed and the amounts incurred by Seller on account of the
components of Additional Rents for such calendar year. Upon
the reconciliation by Purchaser of the Additional Rents billed
to Tenants, and the amounts actually incurred for such
calendar year, Seller and Purchaser shall be liable for
overpayments of Additional Rents, and shall be entitled to
payments from Tenants, as the case may be, on a pro rata basis
based upon each party's period of ownership during such
calendar year. In addition, Seller has advised Purchaser that
Brooks Brothers, Inc., is obligated to pay percentage rent in
accordance with its lease, and upon receipt by Purchaser of
any percentage rent which pertains to the period of time prior
to Closing, Purchaser shall promptly remit to Seller its
proportionate share thereof.
(10) With respect to the ongoing tenant improvement work being
performed for Radio Free Europe, Seller shall provide to
Purchaser at Closing a credit in the amount of any sums
remaining to be paid by Seller pursuant to such
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tenants' leases. With respect to the ongoing tenant
improvement work being performed for Joseph M. Del Balzo,
Seller shall credit to Purchaser at Closing an amount equal to
120% of any sums outstanding for such work as of Closing, and
the unused portion of such credit shall be reimbursed to
Seller promptly after completion and acceptance by Joseph M.
Del Balzo of the tenant improvement work for such tenant. The
amount of the credit due on account of such work shall be
based on a letter from the contractor setting forth the
amounts owed to it. The credit shall also include amounts due
for the construction management fee for such work. With
respect to Seller's obligations to such tenants for the
aforesaid tenant improvement work, Seller shall provide to
Purchaser at Closing such written documentation as Purchaser
may request for the purpose of establishing the amounts
remaining to be paid to such tenants in connection with such
work, Seller acknowledging that Purchaser is requesting the
estoppel from Radio Free Europe to set forth the amount still
due.
(3) Any errors in calculations or adjustments shall be corrected or
adjusted as soon as practicable after the Closing. The provisions of this
Section 4.4 shall survive Closing.
IV.5 Closing Costs. Seller shall pay: (a) the fees of any counsel representing
it in connection with this transaction; (b) one-half (1/2) of any escrow fee
which may be charged by the Escrow Agent or Title Company; (c) one-half (1/2) of
any transfer tax, recordation tax, grantor's tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer of the Property; (d)
the customary fees for recording the deed conveying the Property to Purchaser;
and (e) all costs incurred to repay or satisfy all liens as specifically
required by Section 2.3. Purchaser shall: (u) pay the fees of any counsel
representing Purchaser in connection with this transaction; (v) pay the premium
for the Title Policy to be issued to Purchaser by the Title Company at Closing;
(w) pay for the cost of changes to the Survey requested by Purchaser; (x) pay
one-half (1/2) of any transfer tax, recordation tax, grantor's tax, documentary
stamp tax or similar tax which becomes payable by reason of the transfer of the
Property; and (y) pay one-half (1/2) of any escrow fees charged by the Escrow
Agent or Title Company. All other costs and expenses incident to this
transaction and the closing thereof shall be paid by the party incurring such
costs and expenses. The provisions of this Section 4.5 shall survive the Closing
or any early termination of this Agreement.
IV.6 Conditions Precedent to Obligation of Purchaser. The obligation of
Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(1) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement,
including but not limited to, those
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provided for in Section 4.2.
(2) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the
date of Closing.
(3) Seller shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and
observed by Seller as of and to the date of Closing.
(4) The Title Company shall be unconditionally prepared to issue to
Purchaser a Title Policy which meets the requirements of this Agreement.
(5) The Property shall be in substantially the same condition as exists as
of the last day of the Inspection Period, subject to (i) ordinary wear and
tear, and (ii) the provisions of Article VII, it being understood that
Seller shall not be required to replace any building systems or make any
capital improvements except as expressly required by this Agreement.
(f) Zuckerman, Spaeder, Goldstein, Taylor & Kolker ("Zuckerman Spaeder")
shall have entered into a written and binding agreement in form and
substance reasonably satisfactory to Purchaser identifying the expansion
space on the 5th floor which Zuckerman Spaeder will occupy, which space
shall be unoccupied and legally allowed to be occupied; such agreement
shall also provide for a renewal of the space currently occupied by
Zuckerman Spaeder on the 8th floor, and shall provide that the term of the
expansion space and the renewal space shall be coterminous with the term
of the balance of the space occupied by Zuckerman Spaeder at the Property.
Purchaser shall have the right to reasonably approve the configuration of
the expansion space identified by Zuckerman Spaeder, and Purchaser shall
not be deemed to be unreasonable if the lineal footage along Connecticut
Avenue identified by Zuckerman Spaeder is increased by more that 5% from
the space plan annexed hereto as Exhibit H. The remaining vacant space on
the fifth floor shall be reasonably capable of being separately demised
and leased in the ordinary course of business, shall be reasonably
appropriate for office use, and shall contain not less than 5,476 square
feet. Such agreement shall set forth Zuckerman Spaeder's agreement on its
rent and any tenant improvement allowances for the expansion space, and
the rent for the renewal space during the renewal term, and shall
specifically acknowledge that such agreement satisfies Zuckerman Spaeder's
expansions rights under its Lease. At Closing Purchaser shall receive a
credit from Seller towards the Purchase Price equal to the sum of (i),
(ii) and (iii):
(i) an amount equal to $6.32 multiplied by the number of square
feet remaining on the 5th floor following approval by
Purchaser of the expansion space on such floor to be occupied
by Zuckerman Spaeder, further multiplied by 5 (reflecting an
agreed upon assumed 5 year term);
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plus
(ii) the sum of (A) with respect to the expansion space on the
fifth floor, the positive difference between $31.32 per square
foot of space to be leased by Zuckerman Spaeder and the per
square foot fixed rent to be paid by Zuckerman Spaeder during
the first year of the expansion term, multiplied by the square
footage of such expansion space and further multiplied by the
annualized term of the expansion, plus (B) with respect to the
renewal space on ---- the eighth floor, the positive
difference between $31.32 per square foot of space to be
leased by Zuckerman Spaeder on the eighth floor and the per
square foot fixed rent to be paid by Zuckerman Spaeder during
the first year of the renewal term, multiplied by the square
footage of such renewal space and further multiplied by the
annualized term of the renewal; plus
(iii) the sum of the amount, if any, by which the tenant improvement
allowance (including any sprinklering costs) for Zuckerman
Spaeder's fifth floor space exceeds $20 per square foot,
multiplied by the square footage of such expansion space, plus
the amount, if any, by which the tenant improvement allowance
(including any sprinklering costs) for Zuckerman Spaeder's
eighth floor space exceeds $10 per square foot, multiplied by
the square footage of such renewal space. In the event that
the agreement with Zuckerman Spaeder requires that the
landlord under Zuckerman Spaeder's Lease is to perform the
tenant improvement work, then, notwithstanding anything to the
contrary contained in this clause (f)(iii), Purchaser and
Seller shall mutually agree upon an amount that is equal to
150% of the estimated cost of such tenant improvement work
(including a construction management fee), which amount shall
be held in escrow pursuant to an escrow agreement mutually
satisfactory to Purchaser and Seller, and Purchaser shall not
be entitled to a credit pursuant to this clause (iii). The
cost of Zuckerman Spaeder's tenant improvement work shall be
paid from such escrow account, and any balance remaining after
the completion of such work shall promptly be paid to Seller.
The provisions of this Section 4.6(f) shall survive Closing
indefinitely.
In lieu of the expansion rights with respect to the fifth floor,
Seller agrees that if by 5:00 p.m. on Friday, July 2, 1999, Purchaser
advises Seller in writing that Purchaser will approve of Zuckerman Spaeder
occupying a portion of the 3rd floor equal to the portion which would
otherwise be taken on the 5th floor, then if by Closing Seller delivers an
agreement from Zuckerman Spaeder satisfying all of the terms and
conditions set forth above but which provides for Zuckerman Spaeder
occupying a portion of the 3rd floor rather than a portion of the 5th
floor, and the terms and conditions of such occupancy
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provide for a fixed rent of $28.70 per square foot in the first year,
increasing 2% per year, a 5 year term, and tenant improvement concessions
not to exceed $20 per square foot, then Seller will credit Purchaser with
$302,175 on account of the credits described in (i) and (ii) above and the
credit on account of the tenant improvement allowance for the fifth floor
as described in (iii) above.
(6) Seller shall have paid the second half real estate brokerage
commissions payable with respect to the lease to Joseph M. Del Balzo and
provided Purchaser with written evidence thereof.
(7) Radio Free Europe shall have either vacated the temporary space which
it is occupying pursuant to that certain letter dated March 16, 1999, or
agreed to vacate the temporary space within 15 days of the Closing, so
long as such agreement is confirmed in writing and a copy thereof is
provided to Purchaser.
(8) Seller shall have delivered to Purchaser a letter from the District of
Columbia Fire Department clarifying that there is only one (1) underground
storage tank at the Property.
(9) Seller shall have delivered or caused to be delivered to Purchaser a
reliance letter from Levine-Fricke-Recon (for the Phase I Report (as
defined below)) in form and substance reasonably satisfactory to
Purchaser.
(10) All Leases under which the Required Tenants (as defined below) lease
space shall be in full force and effect.
IV.7 Conditions Precedent to Obligation of Seller. The obligation of Seller to
consummate the transaction hereunder shall be subject to the fulfillment on or
before the date of Closing of all of the following conditions, any or all of
which may be waived by Seller in its sole discretion:
(1) Seller shall have received the Purchase Price as adjusted pursuant to
and payable in the manner provided for in this Agreement.
(2) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including
but not limited to, those provided for in Section 4.3.
(3) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of
the date of Closing.
(4) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and
observed by Purchaser as of the date of Closing.
65535RT65535CLE VREPRESENTATIONS, WARRANTIES AND COVENANTS
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V.1 Representations and Warranties of Seller. Seller hereby makes the following
representations and warranties to Purchaser:
(1) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of New York. Seller has the full right and
authority to enter into this Agreement and, subject to the provisions of
Section 10.6 hereof, to transfer all of the Property to be conveyed by
Seller pursuant hereto and to consummate or cause to be consummated the
transactions contemplated herein to be made by Seller. The person signing
this Agreement on behalf of Seller is authorized to do so. This Agreement,
when duly executed and delivered, will be the legal, valid and binding
obligation of Seller, enforceable in accordance with the terms of this
Agreement. The performance by Seller of its duties and obligations under
this Agreement and the documents and instruments to be executed and
delivered by it hereunder will not conflict with, or result in a breach
of, or default under, any provision of any of the organizational documents
of Seller or any agreements, instruments, decrees, judgments, injunctions,
orders, writs, laws, rules or regulations, or any determination or award
of any court or arbitrator, to which Seller is a party or by which its
assets are or may be bound.
(2) Pending Actions. To Seller's knowledge, there is no pending action,
suit, arbitration, unsatisfied order or judgment, governmental
investigation or proceeding against the Property or the transaction
contemplated by this Agreement (nor, to Seller's knowledge, has any such
matter been threatened in writing), which, if adversely determined, could
individually or in the aggregate have an effect on the Property or any
portion thereof or which could in any material way interfere with the
consummation by Seller of the transaction contemplated by this Agreement
or which is not covered by insurance.
(3) Leases. Seller is the lessor or landlord or the successor lessor or
landlord under the Leases. Seller has delivered to Purchaser true, correct
and complete copies of all of the Leases and any guaranties thereof.
Except as set forth in the Lease Schedule, there are no other leases or
occupancy agreements affecting the Property. Except as otherwise set forth
in the Leases, to Seller's knowledge, no presently effective rent
concessions have been given to any tenants and no rent has been paid in
advance by any tenants respecting a period subsequent to the Closing. No
tenants have asserted in writing any claims, defenses or offsets to rent
accruing from and after the date of Closing. To Seller's knowledge, except
as disclosed to Purchaser in writing, no default, delinquency or breach
exists on the part of any tenant, and to Seller's knowledge, no condition
exists which, with the passage of time or the giving of notice, or both,
will become a default. There are no defaults or breaches on the part of
Seller, as the landlord under any Lease. In the event that any Tenant
Estoppel delivered to Purchaser with respect to any Lease shall contain
any statement of fact, information or other matter which is inconsistent
with the matters stated in Seller's representations in this Section
5.1(c), the Tenant Estoppel shall control and Seller shall have no
liability for any claim based upon a breach of
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representation regarding such statement of fact, information or other
matter contained in the Tenant Estoppel. Notwithstanding anything to the
contrary contained in this Agreement, Seller does not represent or warrant
that any particular Lease will be in force or effect at Closing or that
the tenants under the Leases will have performed their obligations
thereunder. The termination of any Lease prior to Closing by reason of the
tenant's default shall not affect the obligations of Purchaser under this
Agreement in any manner or entitle Purchaser to an abatement of or credit
against the Purchase Price or give rise to any other claim on the part of
Purchaser, except that such event with respect to a Required Tenant shall
constitute a non-fulfillment of a condition precedent to Purchaser's
obligation to close hereunder and Purchaser's remedies shall be as set
forth in this Agreement.
(4) Lease Brokerage. There are no lease brokerage agreements, leasing
commission agreements or other agreements providing for payments of any
amounts for leasing activities or procuring tenants with respect to the
Property which will become due and payable from and after the date of
Closing other than as disclosed in Exhibit G attached hereto and made a
part hereof. In furtherance, and not in limitation, of the foregoing,
Seller further represents that there are no existing agreements with
brokers concerning expansions or renewals of existing Leases, except for
the lease commissions payable to Fred Ezra and Trammel Crow Real Estate
Services (and disclosed in Exhibit G), which lease commissions shall be
paid prior to Closing pursuant to Section 4.6(g). Seller shall indemnify
and hold harmless Purchaser from any claims arising from a breach of the
representation set forth in this Section 5.1(d). Seller shall use
reasonable efforts to obtain a letter from Trammel Crow Real Estate
Services that Purchaser shall have no liability to Trammel Crow for any
commissions or fees following the termination of its leasing agreement as
of Closing.
(5) No Violations. To Seller's knowledge, Seller has not received prior to
the Effective Date any written notification from any governmental or
public authority (i) that the Property is in violation of any applicable
fire, health, building, use, occupancy or zoning laws where such violation
remains outstanding and, if unaddressed, would have an adverse effect on
the Property as currently owned and operated or (ii) that any work is
required to be done upon or in connection with the Property, where such
work remains outstanding and, if unaddressed, would have an adverse effect
on the Property as currently owned and operated. In addition, to Seller's
knowledge, there are no violations, suits, investigations or judgments
relating to any violations of any laws, ordinances or regulations
affecting the Property (including, without limitation, Environmental Laws
(as hereinafter defined)), or any violations or conditions that may give
rise thereto, and to Seller's knowledge, no agency, board, bureau,
commission, department, office or body of any municipal, county, state or
federal governmental unit, or any subdivision thereof, having, asserting
or acquiring jurisdiction over all or any part of the Property or the
management, operation, use or improvement thereof (collectively, the
"Governmental Authorities") has notified Seller in writing that it
contemplates the issuance thereof, and
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to Seller's knowledge, there are no outstanding orders, judgments,
injunctions, decrees, directives or writs of any Governmental Authorities
against or involving Seller or the Property.
(6) Taxes and Assessments. True and complete copies of the most recent
real estate tax bills for the Property received by Seller have been
delivered to Purchaser. Except as disclosed to Purchaser in writing,
Seller has not filed, and has not retained anyone to file, notices of
protests against, or to commence action to review, real property tax
assessments against the Property.
(7) Condemnation. To Seller's knowledge, Seller has not received any
written notice and, to Seller's knowledge, there are no (i) pending or
contemplated annexation or condemnation proceedings, or private purchase
in lieu thereof, affecting or which may affect the Property, or any part
thereof, (ii) proposed or pending proceedings to change or redefine the
zoning classification of all or any part of the Property, (iii) proposed
or pending special assessments affecting the Property or any portion
thereof, (iv) penalties or interest due with respect to real estate taxes
assessed against the Property and (v) proposed change(s) in any road or
grades with respect to the roads providing a means of ingress and egress
to the Property. Seller agrees to furnish Purchaser with a copy of any
such notice received by Seller within two (2) days after receipt.
(8) Insurance. To Seller's knowledge, Seller has not received any written
notice from any insurance company or board of fire underwriters of any
defects or inadequacies in or on the Property or any part or component
thereof that would materially and adversely affect the insurability of the
Property or cause any material increase in the premiums for insurance for
the Property that have not been cured or repaired or require any repairs
or work in or to the Property.
(9) Environmental Matters. Except as set forth in that certain Phase I
Environmental Report prepared by Levine-Fricke-Recon and dated April 16,
1999 (as modified by that certain letter dated June 17, 1999), a copy of
which has been delivered to Purchaser (the "Phase I Report"), or as
otherwise disclosed to Purchaser in writing,
(1) Seller has not received any Notice that any Governmental
Authority (as defined in Section 5.8 below) has determined
that there are any violations of Environmental Law (as defined
in Section 5.8 below) with respect to the Property.
(2) to Seller's knowledge, there are no Hazardous Substances (as
defined in Section 5.8 below) on, under, at, emanating from or
affecting the Property, except those in compliance with all
applicable Environmental Laws (as defined in Section 5.8).
(3) no portion of the Property has ever been used by Seller or, to
Seller's
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knowledge, any current or former owner or Tenant to generate,
manufacture, refine, produce, treat, store, handle, dispose
of, transfer or process Hazardous Substances in violation of
any applicable Environmental Laws.
(4) there is no Operation and Maintenance Plan (the "O&M Plan")
with respect to any asbestos or asbestos-containing materials
at the Property.
(5) to Seller's knowledge, there are no above-ground storage tanks
or Underground Storage Tanks (as defined in Section 5.8 below)
at the Property (regardless of whether such tanks are
regulated tanks or not).
(6) Seller has provided Purchaser with all Environmental Documents
(as defined in Section 5.8 below) in the possession or control
of Seller, Lend Lease or Seller's property manager.
(10) Performance of Obligations of Landlord. To Seller's knowledge, Seller
has performed all of the obligations and observed all of the covenants
required of the landlord under the Leases. To Seller's knowledge, all
work, alterations, improvements or installations required to be made for
or on behalf of all Tenants under the Leases have in all respects been
carried out, performed and complied with, and there is no agreement with
any Tenant for the performance of any work to be done in the future. To
Seller's knowledge, no work has been performed at the Building which would
require an amendment to the certificate of occupancy for the Improvements,
and any and all work performed at the Property to the date hereof and to
the Closing Date has been and will be in accordance with the rules, laws
and regulations of all applicable authorities. All bills and claims for
labor performed and materials furnished to or for the benefit of the
Property will be paid in full on the Closing Date.
(11) Agreements. There are no service contracts, union contracts,
employment agreements, leasing commission or brokerage agreements or other
agreements affecting the Property or the operation thereof, except the
Operating Agreements. All of the Operating Agreements are unmodified and
in full force and effect without any default or claim of default by any of
the parties thereto. All sums currently due and payable by Seller under
the Operating Agreements have been fully paid (or will be paid in the
ordinary course of business) and all sums which become due and payable
between the date hereof and the Closing Date shall be fully paid on the
Closing Date. All of the Operating Agreements (with the exception of the
contract with Cameo Bronze) may be terminated on not more than thirty (30)
days notice without the payment of any fee or penalty.
(12) Employee Contracts. There are no employees working at or in
connection with the Property who are employed by Seller, nor are there any
union agreements affecting
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the Property.
(13) Bankruptcy. Seller has not made a general assignment for the benefit
of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition by Seller's creditors, suffered the
appointment of a receiver to take possession of all, or substantially all,
of such Seller's assets, suffered the attachment or other judicial seizure
of all, or substantially all, of such Seller's assets, admitted in writing
its inability to pay its debts as they come due or made an offer of
settlement, extension or composition to its creditors generally.
(14) Personal Property. The Personal Property listed on Exhibit B is now
owned and will on the Closing Date be owned by Seller free and clear of
any conditional bills of sale, chattel mortgages, security agreements or
financing statements or other security interests of any kind. Exhibit B is
a materially true, correct and complete listing of the Personal Property
which Seller has used in connection with the maintenance and operation of
the Property.
(15) Taxes. Seller has paid all Taxes (as defined herein) due and payable
prior to the Closing and filed all returns and reports required to be
filed prior to the Closing with respect to the ownership and operation of
the Property (by Seller or any predecessor entity) for which Purchaser
could be held liable or a claim made against the Property. There are no
audits or other proceedings by any Governmental Authorities pending or, to
Seller's knowledge, threatened in writing with respect to the Taxes
resulting from the ownership and operation of the Property (by it or any
predecessor entities) for which Purchaser could be held liable or a claim
made against the acquired property. Seller is not party to, and has no
liability under (including liability with respect to a predecessor
entity), any indemnification, allocation or sharing agreement with respect
to Taxes. "Taxes" mean all federal, state, county, local, foreign and
other taxes of any kind whatsoever (including, without limitation, income,
profits, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production,
transfer, license, stamp, environmental, withholding, employment,
unemployment compensation, payroll related and property taxes, import
duties and other governmental charges or assessments), whether or not
measured in whole or in part by net income, and include deficiencies,
interest, additions to tax or interest, and penalties with respect
thereto, and include expenses associated with contesting any proposed
adjustment related to any of the foregoing.
(16) No Vault Agreements or Charges. To Seller's knowledge, and except as
may be set forth on the Title Commitment, there are no vault agreements or
charges affecting any portion of the Property.
(17) Security Deposits. Attached hereto as Schedule 5.1(q) is, to Seller's
knowledge, a materially true, complete and correct listing of all Security
Deposits held by Seller, as
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landlord, under the Leases, which Security Deposits shall be held by
Seller in accordance with this Agreement and at Closing, shall be assigned
to Purchaser.
(18) No Misrepresentation. No material representation or warranty made by
Seller and contained in this Section, and no express statement contained
in any document, certificate, schedule or exhibit furnished or to be
furnished by or on behalf of Seller to Purchaser contains any materially
untrue statement of a material fact or omits to state any material fact.
(19) Rent Roll. Attached hereto as Schedule 5.1(s) is a true, correct and
complete rent roll for the Property setting forth the following: (i) the
name of each Tenant; (ii) the fixed rent actually being collected; and
(iii) the base year(s) and/or base year amount(s) for all items of rent or
additional rent billed to each Tenant on that basis. If any Tenant
provides a Tenant Estoppel (as set forth in Section 5.4(b)), then, to the
extent such Tenant Estoppel covers the matters set forth in the
immediately preceding sentence, such Tenant Estoppel shall control and the
immediately preceding sentence shall be of no further force or effect for
such Tenant.
V.2 Knowledge Defined.
(a) References to the "knowledge" of Seller shall refer only to the
actual knowledge of the Designated Employee (as hereinafter defined)
of Lend Lease Real Estate Investments, Inc. ("Lend Lease"), the
manager of the Property for Seller, and shall not be construed (by
imputation or otherwise) to refer to the knowledge of Seller, Lend
Lease or any affiliate of either of them, to any property manager,
or to any other officer, agent, manager, representative or employee
of Seller or Lend Lease or any affiliate thereof or to impose upon
such Designated Employee any duty to investigate the matter to which
such actual knowledge, or the absence thereof, pertains; provided,
however, that the Designated Employee has contacted Keith Lipton,
Jones Lang LaSalle's (the property manager) representative at the
Property, and requested that Mr. Lipton review Jones Lang LaSalle's
files relating to the Property and the representations and
warranties set forth in Section 5.1, and Mr. Lipton has advised the
Designated Employee that he has no actual knowledge of any fact or
circumstance which would cause any representation made to the
knowledge of Seller to be false. As used herein, the term
"Designated Employee" shall refer to Michael J. Daly, Jr. Seller
represents and warrants that the Designated Employee is the person
currently in the employ of either Seller or Lend Lease who possesses
the knowledge with respect to the matters contained herein.
(b) References to the "knowledge" of Purchaser shall refer only to the
actual knowledge of David Parisier ("Purchaser's Representative")
and shall not be construed (by imputation or otherwise) to refer to
the knowledge of Purchaser or
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any of its affiliates, or to any officer, agent, manager,
representative or employee of Purchaser or any affiliate thereof, or
to impose upon Purchaser's Representative any duty to investigate
the matter to which such actual knowledge, or the absence thereof,
pertains. Purchaser represents and warrants that the Purchaser's
Representative is the person currently in the employ of Purchaser
who possesses the knowledge with respect to the matters contained
herein, and such person will be actively involved with the due
diligence and underwriting activities with respect to Purchaser's
acquisition of this Property through Closing. If Mr. Parisier ceases
to be employed by Purchaser at any time prior to Closing, Purchaser
shall immediately designate a new Purchaser's Representative.
V.3 Survival of Seller's Representations and Warranties.
(a) The representations and warranties of Seller set forth in Section
5.1, as updated by the certificate of Seller to be delivered to
Purchaser at Closing in accordance with Section 4.2(g) hereof, shall
survive Closing for a period of two hundred seventy (270) days. No
claim for a breach of any representation or warranty of Seller shall
be actionable or payable (i) if the breach in question results from
or is based on a condition, state of facts or other matter which was
known to Purchaser's Representative prior to Closing, (ii) unless
the valid claims for all such breaches collectively aggregate more
than Fifty Thousand Dollars ($50,000), in which event the full
amount of such claims shall be actionable, and (iii) unless written
notice containing a description of the specific nature of such
breach shall have been given by Purchaser to Seller prior to the
expiration of said 270-day period and an action shall have been
commenced by Purchaser against Seller within sixty (60) days after
the termination of the survival period provided for above in this
Section 5.3. Purchaser agrees to first seek recovery under any
insurance policies, service contracts and Leases prior to seeking
recovery from Seller, and Seller shall not be liable to Purchaser if
Purchaser's claim is satisfied from such insurance policies, service
contracts or Leases.
(b) As used herein, the term "Cap" shall mean an amount, in total
aggregate, equal to $1,500,000. In no event shall Seller's aggregate
liability to Purchaser under this Agreement, for breach of any
representation or warranty of Seller in this Agreement or the
certificate to be delivered by Seller at Closing pursuant to Section
4.2(g) hereof or otherwise, exceed the amount of the Cap. During the
foregoing 270-day period, the Value Enhancement Fund shall maintain
$1,500,000 of assets (net of liabilities) for the purpose of
satisfying any obligations under this Section 5.3. Notwithstanding
anything to the contrary contained herein, Seller shall indemnify,
defend and hold harmless Purchaser from and against all claims,
liabilities, losses, damages, penalties and costs (including,
without limitation, reasonable attorneys' fees) which Purchaser may
incur as a result of Seller's failure to pay third parties or
Seller's breach of any
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obligation or agreement with the same, which indemnification shall
survive the Closing and shall not be subject to any monetary
limitations.
V.4 Covenants of Seller. Seller hereby covenants with Purchaser as follows:
(1) From the Effective Date hereof until the Closing or earlier
termination of this Agreement, Seller shall use commercially reasonable
efforts to operate and maintain the Property in a manner generally
consistent with the manner in which Seller has operated and maintained the
Property prior to the date hereof. In addition, Seller shall use
reasonable efforts to preserve for Purchaser the relationships of Seller
with the Tenants, suppliers and others having on-going relationships with
the Property. Seller will complete any capital expenditure program
currently in process or anticipated to be completed. Seller will not defer
taking any actions or spending any of its funds, or otherwise manage the
Property differently, due to the pending sale of the Property
(2) Seller shall use commercially reasonable efforts (but without
obligation to incur any cost or expense) to obtain and deliver to
Purchaser prior to Closing, a written estoppel certificate (each, a
"Tenant Estoppel" and collectively, the "Tenant Estoppels"), signed by
each tenant occupying space in the Property, which Tenant Estoppels (i)
shall be in the form of Exhibit E attached hereto and made a part hereof
(or, alternatively, in the form, required by the applicable Lease); (ii)
shall be dated not more than thirty (30) days prior to the date of the
Closing; (iii) shall not contain any adverse statements (other than of a
de minimis nature) relating to the operation or condition of the Property
or assert a material default on the part of Seller; and (iv) shall state
that all rent due under such Tenant's Lease has been paid through the
month in which the Closing occurs. It shall be a condition to Closing and
to Purchaser's obligation to perform hereunder that Seller deliver to
Purchaser a Tenant Estoppel for each of the following tenants (the
"Required Tenants"): Zuckerman Spaeder; Brooks Brothers; Police
Foundation; Radio Free Europe; Association of American Law Schools; Leo
Daly; and Joseph M. DelBalzo.
(3) Prior to execution by Seller of any renewal or expansion of an
existing Lease (except in connection with the exercise of a renewal or
expansion right provided in such Lease) or of any new Lease which Seller
wishes to execute between the Effective Date and the date of Closing,
Seller shall submit the relevant documentation to Purchaser for
Purchaser's approval. Prior to the expiration of the Inspection Period,
Purchaser agrees that it shall not unreasonably withhold or delay its
consent to any proposed lease or amendment; and after the expiration of
the Inspection Period, Purchaser may grant or withhold its consent in its
sole discretion. In any event, Purchaser agrees to notify Seller in
writing within five (5) business days after its receipt thereof of either
its approval or disapproval thereof, as well as any costs to be incurred
by the landlord thereunder in connection therewith. In the event Purchaser
fails to notify Seller in writing of its approval or disapproval within
the five (5) day time period for such purpose set forth
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above, such failure shall be deemed the disapproval by Purchaser. At
Closing, Purchaser shall reimburse Seller for any costs paid by Seller on
account of such renewal, expansion or new Lease approved by Purchaser.
(4) If, prior to the Closing Date, Seller shall have received from (i) any
insurance company which issued a policy with respect to the Property, (ii)
any board of fire underwriters or other body exercising similar functions,
or (iii) the holder of any mortgage, any notice requiring or recommending
any repair work to be done on the Property, Seller shall perform the same
expeditiously and diligently at its own cost and expense prior to the
Closing Date, but only so long as the cost thereof does not exceed $50,000
in the aggregate.
(5) Seller shall: (1) Promptly notify Purchaser of, and promptly deliver
to Purchaser, a copy of any Notice which Seller may receive, on or before
the date of Closing, from any Governmental Authority concerning a
violation of Environmental Laws or Discharge (as defined in Section 5.8
below) of Hazardous Substances; and (2) contemporaneously with the signing
and delivery of this Agreement, and subsequently, promptly upon receipt by
Seller or its representatives, deliver to Purchaser a true and complete
copy of all Environmental Documents.
(6) In addition to the foregoing, Seller shall not: (1) enter into any
agreement requiring Seller to do work for any Tenant after the Closing
Date without first obtaining the prior written consent of Purchaser; (2)
Accept the surrender of any Service Contract or Lease, or grant any
concession, rebate, allowance or free rent; (3) apply any Security
Deposits with respect to any Tenant in occupancy on the Closing Date; (4)
Renew, extend or modify any of the Operating Agreements without the prior
written consent of Purchaser; (5) Remove any Personal Property located in
or on the Property, except as may be required for repair and replacement.
All replacements shall be free and clear of liens and encumbrances and
shall be of quality at least equal to the replaced items and shall be
deemed included in this sale, without cost or expense to Purchaser; (6)
Cause or permit the Property, or any interest therein, to be alienated,
mortgaged, licensed, encumbered or otherwise be transferred; or (7) cause
or permit any new lien or encumbrance to be placed upon or against the
Property. Seller agree to remove, or cause to be removed, at its sole cost
and expense, any lien or encumbrance which appears of record after the
date on which the Title Commitment was issued and is not shown on the
Title Commitment.
(7) Upon request of Purchaser at any time after the date hereof (but
without any cost or expense to Seller), Seller shall assist Purchaser in
its preparation of audited financial statements, statements of income and
expense, and such other documentation as Purchaser may reasonably request,
covering the period of Seller's ownership of the Property.
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(8) Up to and including the Closing Date, Seller agrees to maintain and
keep such hazard, liability and casualty insurance policies in full force
and effect in such amounts and covering such risks sufficiently to protect
the Property and to protect, to a reasonable and prudent extent, the owner
of the Property, in such amounts as are required so as not to be deemed a
co-insurer, and for actual replacement cost, against any loss, damage,
claim or liability.
(9) Seller shall cancel, at its sole cost and expense, those Operating
Agreements which Purchaser elects not to assume and which can, by their
terms, be terminated prior to the Closing without the payment of any
termination or other penalties or charges of any type or nature.
(10) Seller shall permit Purchaser and its authorized representatives to
inspect the Books and Records of its operations concerning the Property at
all reasonable times and on reasonable advance notice. The foregoing shall
survive the Closing.
(11) All violations of statutes, ordinances, rules, regulations, orders,
codes, directives or requirements affecting the Property, whether or not
such violations are now noted in the records of or have been issued by any
Governmental Authorities, shall be complied with by Seller prior to the
Closing and the Property shall be conveyed free of any such violations,
including, without limitation, violations of Environmental Laws, provided
that the aggregate cost to Seller of complying with the foregoing shall
not exceed $50,000. If the cost to cure said violations exceeds $50,000,
Purchaser shall have the right to either (i) terminate this Agreement and
receive a full refund of the Earnest Money or (ii) proceed to Closing, and
at such event Purchaser shall receive a $50,000 credit from Seller.
Notwithstanding the immediately preceding sentence, in the event that
Purchaser elects to terminate this Agreement pursuant to clause (i) above,
then Seller shall have the right to cure said violations by paying the
entire cost to cure said violation and Purchaser and Seller shall proceed
to Closing (and Purchaser's election to terminate this Agreement shall be
of no force or effect).
V.5 Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to Seller:
(1) Purchaser is not acquiring the Property with the assets of an employee
benefit plan as defined in Section 3(3) of ERISA.
(2) Subject to the provisions of Section 10.6 hereof, Purchaser has the
full right, power and authority to purchase the Property as provided in
this Agreement and to carry out Purchaser's obligations hereunder, and all
requisite action necessary to authorize Purchaser to enter into this
Agreement and to carry out its obligations hereunder have been, or by the
Closing will have been, taken. The person signing this Agreement on behalf
of Purchaser is authorized to do so.
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(3) There is no action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending against Purchaser which, if
adversely determined, could individually or in the aggregate materially
interfere with the consummation of the transaction contemplated by this
Agreement.
V.6 Survival of Purchaser's Representations and Warranties. The representation
and warranties of Purchaser set forth in Section 5.5(a) shall survive Closing
and shall be a continuing representation and warranty without limitation. All
other representations and warranties of Purchaser shall survive Closing for a
period of one hundred eighty (180) days.
V.7 Covenants of Purchaser. Purchaser hereby covenants with Seller as follows:
(1) If Purchaser, in connection with its investigation of the Property
during the Inspection Period, inspects the Property for the presence of
Hazardous Substances (as defined in Section 5.1(i) hereof), and if
Purchaser terminates this Agreement during the Inspection Period, then
Purchaser shall furnish to Seller copies of any reports received by
Purchaser in connection with any such inspection. Purchaser hereby assumes
full responsibility for such inspections and, except for claims based on
representations or warranties contained in Section 5.1(i), irrevocably
waives any claim against Seller arising from the presence of Hazardous
Substances on the Property. If Purchaser terminates this Agreement during
the Inspection Period, Purchaser shall also furnish to Seller copies of
any other reports received by Purchaser relating to any other inspections
of the Property conducted on Purchaser's behalf, if any (including,
specifically, without limitation, any reports analyzing compliance of the
Property with the provisions of the Americans with Disabilities Act
("ADA"), 42 U.S.C. ss.12101, et seq., if applicable), other than those
reports which are confidential or proprietary in nature. The provisions of
this Section shall survive Closing or any early termination of this
Agreement.
(2) Purchaser shall, at least twenty-four (24) hours prior to any entry
onto the Property, in connection with its investigation of the Property
during the Inspection Period, provide Seller with sufficient evidence to
show that Purchaser and its agents or representatives who are to enter
upon the Property are adequately covered by policies of insurance issued
by a carrier reasonably acceptable to Seller insuring Purchaser, Seller
and Seller's advisors and property manager against any and all liability
arising out of Purchaser's or its agents' or representatives' entry
(including, without limitation, any loss or damage to the Property, with
coverage in the amount of not less than $5,000,000 per occurrence).
Purchaser agrees that it will cause any such person accessing the Property
to be covered by not less than $5,000,000 liability insurance insuring all
activity and conduct of such person while exercising such right of access.
Purchaser represents and warrants that it carries not less than $5,000,000
general liability insurance with a contractual liability endorsement which
insures its indemnity obligations under this Agreement, which names Seller
and Seller's advisors and property manager of the Property as additional
insureds thereunder. The provisions of this Section shall survive
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Closing or any early termination of this Agreement.
V.8 Environmental Definitions.
(1) "Hazardous Substances" shall include, without limitation, any
regulated substance, toxic substance, hazardous substance, hazardous
waste, pollution, pollutant or contaminant, as defined or referred to in
the "Tanks Laws" as defined below; the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. ss.6901 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. ss.9601 et seq. ("CERCLA"); the Water Pollution and Control Act, 33
U.S.C. ss.1251 et seq.; together with any amendments thereto, regulations
promulgated thereunder and all substitutions thereof, as well as words of
similar purport or meaning referred to in any other applicable federal,
state, county or municipal environmental statute, ordinance, code, rule or
regulation, including, without limitation, lead, radon, asbestos,
polychlorinated biphenyls, urea formaldehyde and petroleum products and
petroleum based derivatives. Where a statute, ordinance, code, rule or
regulation defines any of these terms more broadly than another, the
broader definition shall apply.
(2) "DCEHA" shall mean the District of Columbia Environmental Health
Administrator or its successor.
(3) "Discharge" shall mean the releasing, spilling, leaking, leaching,
disposing, pumping, pouring, emitting, emptying, treating or dumping of
Hazardous Substances at, into, onto or migrating from or onto the
Property, regardless of whether the result of an intentional or
unintentional action or omission.
(4) "Environmental Documents" shall mean all environmental documentation
in the possession or under the control of Seller concerning the Property,
or its environs, including without limitation, all sampling plans, cleanup
plans, preliminary assessment plans and reports, site investigation plans
and reports, remedial investigation plans and reports, remedial action
plans and reports, or the equivalent, operation and maintenance plans,
asbestos abatement reports, sampling results, sampling result reports,
data, diagrams, charts, maps, analysis, conclusions, quality
assurance/quality control documentation, correspondence to or from any
Governmental Authority, submissions to any Governmental Authority and
directives, orders, approvals and disapprovals issued by any Governmental
Authority.
(5) "Environmental Laws" shall mean each and every applicable federal,
state, county or municipal statute, ordinance, rule, regulation, order,
code, directive or requirement, together with all successor statutes,
ordinances, rules, regulations, orders, codes, directives or requirements,
of any Governmental Authority in any way related to Hazardous Substances.
(6) "Governmental Authority" shall mean the federal, state, District of
Columbia,
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county or municipal government, or any department, agency, commission,
bureau or other similar type body obtaining authority therefrom or created
pursuant to any laws, ordinances, rules, regulations, orders, codes,
directives or requirements.
(7) "Notice" shall mean, in addition to its ordinary meaning, any written
communication of any nature, whether in the form of correspondence,
memoranda, order, directive or otherwise.
(8) "Tank Laws" shall mean the D.C. Code Ann. ss.6-995.1 et seq., and the
federal underground storage tank law (Subtitle I) of the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901 et seq.,
together with any amendments thereto, regulations promulgated thereunder,
and all substitutions thereof, and any successor legislation and
regulations.
(9) "Underground Storage Tank" shall mean each and every "underground
storage tank", whether or not subject to the Tank Laws, as well as the
"monitoring system", the "leak detection system", the "discharge detection
system" and the "tank system" associated with the "underground storage
tank", as those terms are defined by the Tank Laws.
65535RT65535CLE VIDEFAULT
VI.1 Default by Purchaser. If the Closing shall fail to occur on account of
Purchaser's default under this Agreement, Seller shall have the right to
terminate this Agreement and to receive and retain the Earnest Money hereunder
as liquidated damages, and not as a penalty or forfeiture, as Seller's sole and
exclusive remedy under this Agreement, at law or in equity, on account of
Purchaser's default hereunder. Upon receipt of the Earnest Money by Seller, this
Agreement shall terminate and the parties shall be relieved of any further
obligations or liabilities to the other hereunder, except for any right,
obligation or liability set forth herein which expressly survives termination of
this Agreement.
VI.2 Default by Seller. In the event that Seller fails to consummate this
Agreement for any reason other than Purchaser's default or the permitted
termination of this Agreement by Seller or Purchaser as herein expressly
provided, Purchaser shall be entitled, as its sole remedy, either (a) to receive
the Earnest Money and, if Seller is in default under this Agreement,
reimbursement from Seller for Purchaser's actual third-party out-of-pocket costs
and expenses (including reasonable attorneys' fees) up to $50,000, in which
event this Agreement shall terminate and Seller shall be released from any and
all liability under this Agreement (except for those rights, obligations or
liabilities set forth in this Agreement which expressly survive termination of
this Agreement), or (b) to enforce specific performance of Seller's obligation
to execute and deliver the documents required to convey the Property to
Purchaser, it being understood and agreed that the remedy of specific
performance shall not be available to enforce any other obligation of Seller
hereunder; provided, however, provided, however, that if, as a result of any act
or
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omission of Seller, Purchaser pursues, but cannot be granted, a decree of
specific performance by a court of competent jurisdiction, then, and only in
such instance, may Purchaser seek such other remedies as are available to
Purchaser at law or in equity. Such act or omission would include, by way of
example and not limitation, the conveyance of the Property to a third party, the
execution of a lease modification or amendment or new Lease (in violation of the
provisions of Section 5.4(c)) or the failure to satisfy a lien which Seller has
expressly agreed herein to satisfy and discharge. Except as expressly provided
herein, Purchaser expressly waives its rights to seek damages in the event of
Seller's default hereunder. Purchaser shall be deemed to have elected to
terminate this Agreement and receive back the Earnest Money if Purchaser fails
to file suit for specific performance against Seller in a local or Federal court
in the District of Columbia, on or before sixty (60) days following the date
upon which Closing was to have occurred.
65535RT65535CLE VIIRISK OF LOSS
VII.1 Minor Damage. In the event of loss or damage to the Property or any
portion thereof which is not "major" (as hereinafter defined), this Agreement
shall remain in full force and effect provided Seller performs any necessary
repairs or, at Seller's option, assigns to Purchaser all of Seller's right,
title and interest to any claims and proceeds Seller may have with respect to
any casualty insurance policies or condemnation awards relating to the premises
in question. In the event that Seller elects to perform repairs upon the
Property, Seller shall use reasonable efforts to complete such repairs promptly,
subject to Purchaser's reasonable supervision, and the date of Closing shall be
extended a reasonable time in order to allow for the completion of such repairs.
If Seller elects to assign a casualty claim to Purchaser, then the Purchase
Price shall be reduced by an amount equal to the deductible amount under
Seller's insurance policy. Upon Closing, full risk of loss with respect to the
Property shall pass to Purchaser.
VII.2 Major Damage. In the event of a "major" loss or damage to any portion of
the Property, Seller shall send written notice thereof to Purchaser. Purchaser
shall have ten (10) business days after its receipt of such notice from Seller
to terminate this Agreement by written notice to Seller. If Purchaser terminates
this Agreement, then the Earnest Money shall be returned to Purchaser promptly.
If Purchaser does not terminate this Agreement within such ten-day period, then
Purchaser shall be deemed to have elected to proceed with Closing, in which
event Seller shall, at Seller's option, either (a) perform any necessary
repairs, or (b) assign to Purchaser all of Seller's right, title and interest to
any claims and proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in question. In the
event that Seller elects to perform repairs upon the Property, Seller shall use
reasonable efforts to complete such repairs promptly and the date of Closing
shall be extended a reasonable time in order to allow for the completion of such
repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase
Price shall be reduced by an amount equal to the deductible amount under
Seller's insurance policy. Upon Closing, full risk of loss with respect to the
Property shall pass to Purchaser.
VII.3 Definition of "Major" Loss or Damage. For purposes of Sections 7.1 and
7.2, "major"
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loss or damage refers to the following: (i) loss or damage to the Property or
any portion thereof such that the cost of repairing or restoring the premises in
question to a condition substantially identical to that of the premises in
question prior to the event of damage would be, in the opinion of an architect
selected by Seller and reasonably approved by Purchaser, equal to or greater
than Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), and (ii) any
loss due to a condemnation of any portion of the Property. If Purchaser does not
give notice to Seller of Purchaser's reasons for disapproving an architect
within five (5) business days after receipt of notice of the proposed architect,
Purchaser shall be deemed to have approved the architect selected by Seller.
65535RT65535CLE VIIICOMMISSIONS
VIII.1 Brokerage Commissions. In the event the transaction contemplated by this
Agreement is consummated, but not otherwise, Seller agrees (i) to pay to Cassidy
& Pinkard/Sonnenblick-Goldman (the "Broker") at Closing a brokerage commission
pursuant to a separate written agreement between Seller and Broker and (ii) to
indemnify, defend and hold Purchaser harmless from and against any loss or
damage (including attorneys' fees) which Purchaser may suffers on account of any
claims by the Broker. Each party agrees that should any claim be made for
brokerage commissions or finder's fees by any broker or finder other than the
Broker by, through or on account of any acts of said party or its
representatives, said party will indemnify and hold the other party free and
harmless from and against any and all loss, liability, cost, damage and expense
in connection therewith. The provisions of this section shall survive Closing or
earlier termination of this Agreement.
65535RT65535CLE IXDISCLAIMERS AND WAIVERS
IX.1 No Reliance on Documents. Except as expressly stated herein, Seller makes
no representation or warranty as to the truth, accuracy or completeness of any
materials, data or information delivered by Seller to Purchaser in connection
with the transaction contemplated hereby. Purchaser acknowledges and agrees that
all materials, data and information delivered by Seller to Purchaser in
connection with the transaction contemplated hereby are provided to Purchaser as
a convenience only and that any reliance on or use of such materials, data or
information by Purchaser shall be at the sole risk of Purchaser, except as
otherwise expressly stated herein. Without limiting the generality of the
foregoing provisions, Purchaser acknowledges and agrees that, except as to
Purchaser's right to rely upon any environmental or other report to the extent
that the person or entity which prepared the report authorizes Purchaser to rely
thereon, (a) any environmental or other report with respect to the Property
which is delivered by Seller to Purchaser shall be for general informational
purposes only, (b) Purchaser shall not have any right to rely on any such report
delivered by Seller to Purchaser, but rather will rely on its own inspections
and investigations of the Property and any reports commissioned by Purchaser
with respect thereto, and (c) neither Seller, any affiliate of Seller nor the
person or entity which prepared any such report delivered by Seller to Purchaser
shall have any liability to Purchaser for any inaccuracy in or omission from any
such report.
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IX.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (WHICH
EXCEPTION SHALL MODIFY ALL OF THE STATEMENTS SET FORTH IN THIS SECTION 9.2), IT
IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR
IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER'S LIMITED WARRANTY OF TITLE TO BE
SET FORTH IN THE DEED), ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR
ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION,
GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS,
THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER
OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON
CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE
PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED OTHERWISE IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY
ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR
WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS
PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY
AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO
ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL
RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF
SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH
IN THIS AGREEMENT. UPON CLOSING, PURCHASER SHALL ASSUME (AS BETWEEN PURCHASER
AND SELLER) THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO,
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CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT
HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING,
SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER'S
OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT),
LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND
COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY
ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PROPERTY, EXCEPT FOR A VIOLATION OF A REPRESENTATION OR
WARRANTY MADE BY SELLER IN THIS AGREEMENT. PURCHASER AGREES THAT SHOULD ANY
CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL
CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SELLER SHALL
HAVE NO RESPONSIBILITY TO PURCHASER FOR THE COST OR EXPENSE OF SUCH CLEAN-UP,
REMOVAL OR REMEDIATION.
65535RT65535CLE XMISCELLANEOUS
X.1 Confidentiality. For purposes of this Agreement and the transactions
contemplated hereunder, Seller and Purchaser agree that they and their
respective agents and representatives shall be bound by the terms and conditions
of that certain letter agreement dated March 10, 1999, between Purchaser and the
Broker (as hereinafter defined) and attachments thereto (collectively, the
"Confidentiality Agreement"), and the terms and conditions of the
Confidentiality Agreement are incorporated herein its entirety. In the event of
a breach or threatened breach of this Section 10.1 by Seller or Purchaser or
their agents or representatives, the non-breaching party shall be entitled to an
injunction restraining the breaching party or its agents or representatives from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the non-breaching from pursuing any other
available remedy at law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive Closing or any early termination
of this Agreement
X.2 Public Disclosure. Prior to Closing, any release to the public of
information with respect to the sale contemplated herein or any matters set
forth in this Agreement will be made only in the form approved by Purchaser and
Seller and their respective counsel, which approval shall not be unreasonably
withheld or delayed. The provisions of this Section shall survive Closing or any
early termination of this Agreement.
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X.3 Discharge of Obligations. The acceptance of the Deed by Purchaser shall be
deemed to be a full performance and discharge of every representation and
warranty made by Seller herein and every agreement and obligation on the part of
Seller to be performed pursuant to the provisions of this Agreement, except
those which are herein specifically stated to survive Closing.
X.4 Assignment. Purchaser may not assign its rights under this Agreement without
first obtaining Seller's written approval, which approval may be given or
withheld in Seller's sole discretion; provided, however, that Purchaser may
assign this Agreement to an entity which is affiliated (i) with Purchaser or
(ii) with any entity under the common control of the entity controlling
Purchaser. In the event of an assignment by Purchaser to any such entity,
Purchaser shall advise Seller prior to the Closing. Under no circumstances shall
Purchaser have the right to assign this Agreement to any person or entity owned
or controlled by an employee benefit plan if Seller's sale of the Property to
such person or entity would, in the reasonable opinion of Seller's ERISA
advisor, create or otherwise cause a "prohibited transaction" under ERISA. In
the event Purchaser assigns this Agreement or transfers any ownership interest
in Purchaser, and such assignment or transfer would make the consummation of the
transaction hereunder a "prohibited transaction" under ERISA and necessitate the
termination of this Agreement then, notwithstanding any contrary provision which
may be contained herein, Seller shall have the right to pursue any remedy
available at law or in equity as a result of such assignment or transfer. Any
transfer, directly or indirectly, of any stock, partnership interest or other
ownership interest in Purchaser without Seller's written approval, which
approval may be given or withheld in Seller's sole discretion, shall constitute
a default by Purchaser under this Agreement.
X.5 Notices. Any notice pursuant to this Agreement shall be given in writing by
(a) personal delivery, or (b) reputable overnight delivery service with proof of
delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile transmission sent to
the intended addressee at the address set forth below, or to such other address
or to the attention of such other person as the addressee shall have designated
by written notice sent in accordance herewith, and shall be deemed to have been
given either at the time of personal delivery, or, in the case of expedited
delivery service or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or, in the case of facsimile
transmission, as of the date of the facsimile transmission provided that an
original of such facsimile is also sent to the intended addressee by means
described in clauses (a), (b) or (c) above. Notices may be given by counsel for
the parties and such notices shall be deemed given by Purchaser or Seller as the
case may be. Unless changed in accordance with the preceding sentence, the
addresses for notices given pursuant to this Agreement shall be as follows:
If to Seller: The Equitable Life Assurance Society
of the United Statesc/o Lend Lease
Real Estate Investments, Inc.
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600 14th Street, N.W., Suite 725
Washington, D.C. 20005 Attention:
Michael J. Daly, Jr. Phone: (202)
783-1466Telecopy: (202) 783-1841
with a copy to: Rudnick & Wolfe 1201 New York Avenue,
N.W. Washington, D.C. 20005 Attention:
Frederick L. Klein Phone: (202)
712-7275Telecopy: (202) 712-7222
If to Purchaser: c/o Mack-Cali Realty Corporation 11
Commerce DriveCranford, New Jersey
07016 Attention: Mitchell E. Hersh
Phone: (908) 272-8000 Telecopy: (908)
272-6755
and
c/o Mack-Cali Realty Corporation 11
Commerce DriveCranford, New Jersey
07016 Attention: Roger W. Thomas
Phone: (908) 272-8000 Telecopy: (908)
272-6755
with a copy to: Pryor Cashman, Sherman & Flynn410 Park
AvenueNew York, New York
10022Attention: Andrew S. Levine
Phone: (212) 326-0414 Telecopy: (212)
326-0806
If to Escrow Agent: Commonwealth Land Title Insurance
Company c/o Commercial Settlements,
Inc. 1413 K Street, N.W. Washington,
DC 20005
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Attention: Stuart S. Levin
Phone: (202) 312-5111 Telecopy: (202)
737-4108
X.6 Binding Effect. This Agreement shall not be binding in any way upon Seller
unless and until (a) Seller shall execute and deliver the same to Purchaser, (b)
each stage of Seller's investment approval process has approved this
transaction, and (c) Seller's Investment Committee has thereafter given its
written approval thereof. If (A) Seller has not given Purchaser written notice
(the "Approval Notice") of such approvals on or before 3:00 p.m. (Eastern time)
June 30, 1999 (the "Approval Deadline"), or (B) prior to the Approval Deadline
Seller notifies Purchaser in writing that this Agreement has been disapproved by
the persons or entities referred to in clauses (b) or (c) of the preceding
sentence, then (x) this Agreement shall be deemed terminated and Purchaser shall
be entitled to the return of the Earnest Money and (y) Seller shall reimburse
Purchaser for its reasonable costs and expenses incurred up to and including the
date of such termination (including reasonable attorneys' fees), provided that
such reimbursement shall not exceed $50,000. It is understood and agreed that at
each stage of Seller's investment approval process, Seller or its investment
advisor, Lend Lease, shall each have the right, in its unfettered discretion, to
disapprove the transaction contemplated by this Agreement for any reason
whatsoever, without obligation thereafter to proceed to the next stage of
Seller's investment approval process. Seller's approval of this Agreement shall
be evidenced only by both Seller's execution of this Agreement and Seller's
sending of the Approval Notice to Purchaser prior to the Approval Deadline and,
accordingly, Purchaser acknowledges and agrees that Purchaser cannot and will
not rely upon any other statement or action of Seller or its representatives as
evidence of Seller's approval of this Agreement or the subject matter hereof.
X.7 Modifications. This Agreement cannot be changed orally, and no executory
agreement shall be effective to waive, change, modify or discharge it in whole
or in part, unless such executory agreement is in writing and is signed by the
parties against whom enforcement of any waiver, change, modification or
discharge is sought.
X.8 Tenant Notification Letters. Purchaser shall deliver to each and every
tenant of the Property under a Lease thereof a signed statement acknowledging
Purchaser's receipt and responsibility for each tenant's security deposit (to
the extent delivered by Seller to Purchaser at Closing), if any, all in
compliance with and pursuant to the applicable provisions of applicable law. The
provisions of this paragraph shall survive Closing.
X.9 Calculation of Time Periods. Unless otherwise specified, in computing any
period of time described in this Agreement, the day of the act or event after
which the designated period of time begins to run is not to be included and the
last day of the period so computed is to be included, unless such last day is a
Saturday, Sunday or legal holiday under the laws of the District of Columbia, in
which event the period shall run until the end of the next day which is
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neither a Saturday, Sunday or legal holiday. The final day of any such period
shall be deemed to end at 5 p.m., local time.
X.10 Successors and Assigns. The terms and provisions of this Agreement are to
apply to and bind the permitted successors and assigns of the parties hereto.
X.11 Entire Agreement. This Agreement, including the Exhibits, contains the
entire agreement between the parties pertaining to the subject matter hereof and
fully supersedes all prior written or oral agreements and understandings between
the parties pertaining to such subject matter.
X.12 Further Assurances. Each party agrees that it will without further
consideration execute and deliver such other documents and take such other
action, whether prior or subsequent to Closing, as may be reasonably requested
by the other party to consummate more effectively the purposes or subject matter
of this Agreement. Without limiting the generality of the foregoing, Purchaser
shall, if requested by Seller, execute acknowledgments of receipt with respect
to any materials delivered by Seller to Purchaser with respect to the Property.
The provisions of this Section 10.12 shall survive Closing.
X.13 Counterparts; Faxed Signatures. This Agreement may be executed in
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement. Faxed signatures shall have the same binding effect as
original signatures.
X.14 Severability. If any provision of this Agreement is determined by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement shall nonetheless remain in full force and effect.
X.15 Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE DISTRICT OF COLUMBIA
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF THE DISTRICT OF
COLUMBIA. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY COURT OF GENERAL JURISDICTION SITTING IN THE DISTRICT OF COLUMBIA IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL
BE HEARD AND DETERMINED IN A COURT OF GENERAL JURISDICTION IN THE DISTRICT OF
COLUMBIA. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10.15
SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED HEREUNDER OR THE EARLY
TERMINATION OF THIS AGREEMENT.
X.16 No Third Party Beneficiary. The provisions of this Agreement and of the
documents to be executed and delivered at Closing are and will be for the
benefit of Seller and Purchaser only and are not for the benefit of any third
party, and accordingly, no third party shall have the right
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to enforce the provisions of this Agreement or of the documents to be executed
and delivered at Closing.
X.17 Exhibits and Schedules. The following schedules or exhibits attached hereto
shall be deemed to be an integral part of this Agreement:
(1) Exhibit A - Legal Description of the Land
(2) Exhibit B - Personal Property
(3) Exhibit C - Lease Schedule
(4) Exhibit D - Operating Agreements Schedule
(5) Exhibit E - Tenant Estoppel Form
(6) Exhibit F - Form of Assignment and Assumption Agreement
(7) Exhibit G - Leasing Commission Schedule
(8) Schedule 4.4(b)(8) - Schedule of Delinquent Rents
(9) Schedule 5.1(q) - Schedule of Security Deposits
(10) Schedule 5.1(s) - Rent Roll
X.18 Captions. The section headings appearing in this Agreement are for
convenience of reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
X.19 Construction. The parties acknowledge that the parties and their counsel
have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
X.20 Termination of Agreement. It is understood and agreed that if either
Purchaser or Seller terminates this Agreement pursuant to a right of termination
granted hereunder, such termination shall operate to relieve Seller and
Purchaser from all obligations under this Agreement, except for such obligations
as are specifically stated herein to survive the termination of this Agreement.
X.21 Survival. The provisions of the following Sections of this Agreement shall
survive Closing and shall not be merged into the execution and delivery of the
Deed: 3.1; 4.2(j); 4.4; 4.5; 4.6(f); 5.1; 5.3; 5.6; 5.7; 8.1; 9.1; 9.2; 10.1;
10.2; 10.5; 10.8; 10.12; 10.15; and 10.22. The foregoing is in addition to and
not in exclusion of any survival provisions that may elsewhere be set forth in
this Agreement.
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X.22 Separate Account. Notwithstanding anything to the contrary in this
Agreement or in any document delivered by Seller in connection with the
consummation of the transaction contemplated hereby, it is expressly understood
and agreed that The Equitable Life Assurance Society of the United States is
acting solely on the behalf, and for the benefit, of Separate Account 16-III and
Seller's liability shall be, and is, limited to, and payable and collectible
only out of, assets allocated to, or held by Seller for the benefit of, Separate
Account 16-III (including, without limitation, the subject property) and no
other property or asset of Seller or of any of Seller's directors, officers,
employees, agents, shareholders, contractholders or policyholders, shall be
subject to any lien, levy, execution, setoff, or other enforcement procedure for
satisfaction of any right or remedy of Purchaser in connection with the
transaction contemplated hereby.
X.23 Soil Disclosure. Pursuant to Section 45-508(b) of the District of Columbia
Code, Purchaser is hereby advised by Seller that the characteristic of the soil
of the Property as described by the Soil Conservation Service of the United
States Department of Agriculture in the Soil Survey of the District of Columbia
published in 1976, as the same may be amended from time to time, and as shown on
the Soil Maps of the District of Columbia at the back of that publication, is
Urban Land-Not Rated. For further information, Purchaser can contact a soil
testing laboratory, the District of Columbia Department of Environmental
Services, or the Soil Conservation Service of the United States Department of
Agriculture. The foregoing is given pursuant to District of Columbia statutory
requirements and does not constitute either (i) a representation of warranty by
Seller as to soil characteristic or condition, or (ii) a limitation on
Purchaser's right to inspect and study the soil characteristic and condition
pursuant to Section 3.1 of this Agreement.
X.24 UST Disclosure. In accordance with the requirements of the District of
Columbia Underground Storage Tank Management Act of 1990, as amended by the
District of Columbia Underground Storage Tank Management Act of 1990 Amendment
Act of 1992 (D.C. Code Section 6-995.1 et seq.) (the "UST Act") and the D.C.
Underground Storage Tank Regulations, 20 DCMR Chapters 55-68 (the
"Regulations"), Seller has knowledge, and has informed Purchaser, that during
Seller's ownership of the Property (except as disclosed in the Phase I Report),
no underground storage tanks were removed from the Property, and no underground
storage tanks currently exist on the Property. The foregoing is given pursuant
to District of Columbia statutory and regulatory requirements and does not
constitute either (i) a representation of warranty by Seller as to the presence
or removal of underground storage tanks, or (ii) a limitation on Purchaser's
right to inspect and study the environmental condition of the Property pursuant
to Section 3.1 of this Agreement. Information pertaining to underground storage
tanks and underground storage tank removals of which the District of Columbia
Government has received notification may be on file with the Department of
Consumer and Regulatory Affairs, Environmental Regulation Administration,
Underground Storage Tank Branch, 2100 Martin Luther King, Jr., Avenue, S.E.,
Washington, DC (Telephone: 202/404-1167).
X.25 Underground Facilities Compliance. In accordance with the District of
Columbia
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Underground Facilities Protection Act, as amended (D.C. Code Sections 43-1701 et
seq.) (the "Underground Facilities Act"), Purchaser shall be solely responsible
for providing any notifications required therein prior to performing any
excavation on the Property pursuant to Section 3.1 above, and any work performed
by or on behalf of Purchaser at the Property pursuant to Section 3.1 shall be
strictly in accordance with the Underground Facilities Act. Purchaser hereby
indemnifies Seller against and holds Seller harmless from any and all liability,
cost, damage or expense (including attorneys fees) suffered or incurred by
Seller on account of a violation by Purchaser of the foregoing requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the Effective Date.
SELLER:
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES,a New
York corporation (solely on behalf of and for
the benefit of its Separate Account 16-III, known as
the "Value Enhancement Fund")
By:
---------------------------------------------------
Michael J. Daly, Jr.
Investment Officer
PURCHASER:
MACK-CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By:
---------------------------------------------------
Name:
-------------------------------------------------
Title:
-----------------------------------------------
The undersigned agrees to serve as the Escrow Agent and to be bound by the
provisions of Section 1.6 of this Agreement.
ESCROW AGENT:
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COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:
---------------------------------------------------
Stuart S. Levin
Vice President
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Exhibit A
LEGAL DESCRIPTION OF THE LAND
All that certain lot or parcel or land situated, lying and being in the City of
Washington, District of Columbia and being more particularly described as
follows:
Part of Lots Eleven (11) and Twelve (12) in A. Jardin and George H. Williams'
subdivision of Square One Hundred Fifty-nine (159), as per plat recorded in
Liber W.B.M. at folio 21 in the Office of the Surveyor for the District of
Columbia; also Lots Forty-nine (49) and Fifty (50) in Mariana V. Lothrop's
subdivision of lots in Square 159, as per plat recorded in Liber 12 at folio 173
of said Surveyor's Office Records, all of said parcel being more particularly
described as follows:
Beginning at the Southwesterly corner of Lot 12, being the intersection of the
Northerly line of Rhode Island Avene with the Easterly line of Connecticut
Avenue, thence Northwesterly with the line of Connecticut Avenue, a distance of
87.22 feet; thence Easterly and parallel with the line of Rhode Island Avenue, a
distance of 80.80 feet to the Westerly line of Lot 50; thence Northerly with
said Westerly line of Lot 50 a measured distance of 22.03 feet to the Northwest
corner of said Lot; thence Easterly with the Northerly lines of Lots 50 and 49,
being also partly along the Southerly line of an alley (closed), a distance of
100.00 feet to the Westerly line of an 18-foot public alley; thence
Southeasterly along the Westerly line of said alley, a distance of 109.21 feet
to the Northerly line of Rhode Island Avenue, being also the Southeasterly
corner of Lot 49; thence Westerly along the Northerly line of Rhode Island
Avenue, a distance of 180.00 feet to the Southwesterly corner of Lot 12 and the
place of beginning.
Note: At the date hereof said land is now known for assessment and taxation
purposes as Lot 855 in Square 159.
44
<PAGE>
Exhibit B
PERSONAL PROPERTY
1 set combination wrenches 2 telephones
1 short cut hack saw 4 nextel radios
1 hack saw 1 wet vac
1 framing square 1 mighty mite vac
1 roto split 2 pip wrenches
1 set assorted wrenches 2 pair acid protectant rubber gloves
1 2 foot level 1 push cart
1 torpedo level 1 3-foot ladder
3 pair safety glasses 1 6-foot ladder
1 set assorted hand tools 1 8-foot ladder
1 hammer drill 1 10-foot ladder
1 skill saw 1 12-foot ladder
1 battery drill Extension cords
1 refrigeration evacuation machine 1 tank compressed nitrogen
1 portable air compressor 1 hand truck
1 snow blower
1 set screw drivers
1 bench grinder
1 bench vice
1 fish tape
1 file pack
1 nut driver pack
3 sets ear protection
1 key cut machine
1 re-key kit
1 tap & die set
1 volt & amp meter
1 3/8 drive socket set
1 1/4 drive socket set
1 offset pipe wrench
1 office desk
4 chairs
1 refrigerator hole saw kit
1 refrigerator gauges
1 caulk gun
1 refrigerator
1 microwave
1 fax machine
1 salt spreader
45
<PAGE>
Exhibit C
LEASE SCHEDULE
I. Association of American Law Schools
1. Office Lease Agreement by and between Baput-DC Limited Partnership
and Association of American Law Schools, dated November 28, 1989.
2. First Amendment to Office Lease Agreement, dated September 16, 1991.
3. Second Amendment to Office Lease Agreement, dated December 10, 1991.
4. Third Amendment to Office Lease Agreement by and between The
Equitable Life Assurance Society of the United States and
Association of American Law Schools, dated June 3, 1998.
II. Belay & Belay Investment, Inc.
1. Retail Lease Agreement by and between Baput-DC Limited Partnership
and Marketing Consulting Services, Inc., dated December ____, 1987.
2. Assignment of Lease by and between Marketing Consulting Services,
Inc. and Belay & Belay Investment, Inc., dated September 27, 1989.
3. First Amendment to Retail Lease Agreement, dated November 25, 1992.
4. Second Amendment to Retail Lease Agreement, dated December 21, 1998.
III. Brooks Brothers, Inc.
1. Retail Lease Agreement by and between The Equitable Life Assurance
Society of the United States and Brooks Brothers, Inc., dated
January 22, 1998.
IV. Joseph M. Del Balzo
1. Office Lease Agreement by and between The Equitable Life Assurance
Society of the United States and Joseph M. Del Balzo, dated March 9,
1999.
2. Temporary Occupancy Agreement by and between The Equitable Life
Assurance Society of the United States and Joseph M. Del Balzo,
dated March 9, 1999.
V. Leo A. Daly Company
1. Office Lease Agreement by and between Baput-DC Limited Partnership
and Leo A. Daly Company, dated November 15, 1985.
2. First Amendment to Office Lease Agreement, dated April 30, 1987.
3. Second Amendment to Office Lease Agreement, dated May 23, 1988.
46
<PAGE>
4. Third Amendment to Office Lease Agreement, dated December 19, 1990.
5. Fourth Amendment to Office Lease Agreement, dated March 13, 1992.
6. Fifth Amendment to Office Lease Agreement by and between The
Equitable Life Assurance Society of the United States and Leo A.
Daly Company, dated October 24, 1997.
VII. Pathfinder International
1. Office Lease Agreement by and between The Equitable Life Assurance
Society of the United States and Pathfinder International, dated
January 11, 1996.
VIII. Police Foundation
1. Office Lease Agreement by and between The Equitable Life Assurance
Society of the United States and Police Foundation, dated March 31,
1997.
VIIII. RFE/RL, Inc.
1. Office Lease Agreement by and between Baput-DC Limited Partnership
and RFE/RL, Inc., dated August 19, 1985.
2. First Amendment to Office Lease Agreement, dated July 15, 1988.
3. Second Amendment to Office Lease Agreement, dated March 14, 1989.
4. Third Amendment to Office Lease Agreement, dated December 28, 1989.
5. Fourth Amendment to Office Lease Agreement by and between Rds 1201
Connecticut Associates, L.P. and RFE/RL, Inc., dated April 30, 1992.
6. Fifth Amendment to Office Lease Agreement, dated October 15, 1993.
7. Sixth Amendment to Office Lease Agreement by and between The
Equitable Life Assurance Society of the United States and RFE/RL,
Inc., dated January 23, 1995.
8. Seventh Amendment to Office Lease Agreement, dated May 27, 1998.
9. Temporary Occupancy Agreement.
IX. Zuckerman, Spaeder, Goldstein, Taylor & Kolker
1. Office Lease Agreement by and between Rds 1201 Connecticut
Associates, L.P. and Zuckerman, Spaeder, Goldstein, Taylor & Kolker,
dated October 4, 1993.
2. First Amendment to Office Lease Agreement by and between The
Equitable Life Assurance Society of the United States and Zuckerman,
Spaeder, Goldstein, Taylor & Kolker, dated April 29, 1994.
3. Second Amendment to Office Lease Agreement, dated August 30, 1994.
4. Third Amendment to Office Lease Agreement by and between The
Equitable Life
47
<PAGE>
Assurance Society of the United States and Zuckerman, Spaeder,
Goldstein, Taylor & Kolker, L.L.P., dated June 3, 1998.
X. Federal Express
1. Placement Agreement by and between The Equitable Life Assurance
Society of the United States and Federal Express Corporation,
commencing on May 1, 1996.
48
<PAGE>
Exhibit D
OPERATING AGREEMENTS SCHEDULE
1. Cleaning services contract with Total Quality Service.
2. Concierge services contract with Classic Concierge.
3. Interior landscaping contract with Rolling Greens.
4. Uniform contract with Cintas.
5. Elevator maintenance agreement with Otis Elevator Company.
6. Metal refinishing contract with Cameo Bronze.
7. Water treatment contract with ECOLAB, Inc.
8. Trash removal contract with Waste Management, Inc.
9. Pest control contract with Owl Pest Control.
10. Access Control contract with Kastle Systems, Inc.
11. Marble refinishing contract with Total Quality Service.
12. Lobby Floral Arrangements contract with Rolling Greens.
13. Leasing Management Agreement by and between The Equitable Life Assurance
Society of the United States and Trammell Crow Real Estate Services, Inc.,
dated March 27, 1996 (To be terminated at Seller's expense prior to
Closing).
14. Construction Management Agreement by and between The Equitable Life
Assurance Society of the United States and Technical Property Services,
Inc., dated December 1, 1995 (only to the extent that the work to be
performed is pursuant to the Del Balzo lease).
15. Work Agreement by and between The Equitable Life Assurance Society of the
United States and STAT Construction, Inc. (only to the extent that the
work to be performed is pursuant to the Del Balzo lease).
49
<PAGE>
Exhibit E
TENANT ESTOPPEL CERTIFICATE
[Date]
Mack-Cali Realty Acquisition Corp.
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, NJ 07016
Property: 1201 Connecticut Avenue,
N.W Washington, D.C. 20036
The undersigned, as Tenant under that certain lease dated ________________
(the "Lease"), made with __________________ ("Landlord") does hereby certify to
Mack-Cali Realty Acquisition Corp. and its successors and assigns (collectively,
"Purchaser") and to any lender or mortgagee of Purchaser with respect to
Purchaser's acquisition of the Property of which the Demised Premises (as
hereinafter defined) form a part:
1. That the premises leased by Tenant (the "Demised Premises") at the
Property pursuant to the Lease are described as:
___________ square feet on the _____ floor
2. That the Lease is now in full force and effect and has not has not been
modified, changed, altered or amended in any respect, except as set forth
below, and is the only Lease or agreement between the undersigned and
Landlord affecting the Demised Premises (if none, state "none"). A true
and complete copy of the Lease, together with any and all modifications,
amendments and/or assignments thereto, are annexed hereto as Exhibit A.
There are no subleases for the Demised Premises;
3. That the Demised Premises have been completed in accordance with the terms
of the Lease; that Tenant has accepted possession of the Demised Premises;
and that Tenant now occupies the same and is open for business. All
improvements, alterations or additions to be constructed in the Demised
Premises by Landlord pursuant to the Lease have been completed and
accepted by Tenant and any other items of an executory nature have been
completed in accordance with the terms of the Lease. All contributions
required from Landlord for improvements to the Demised Premises have been
paid in full to Tenant;
50
<PAGE>
4. That the original Lease term began on ______________, 19______ and will
expire on _____________________; that Tenant pays rent on a current basis
and rent has been paid through ________________; that no rent has been
paid by Tenant for more than one month in advance; that the rent payable
under the Lease is the amount of fixed rent provided thereunder, which is
annual fixed rent payable to Landlord of $_______________; that as of the
date hereof, additional rent of $_______________ is payable to Landlord on
account of utility costs, real estate taxes and operating expenses; that
the base amount for such additional rent is $_____________ (or the base
year is __________); that there is no claim or basis for an adjustment
thereto; and that the amounts of fixed and additional rent are being paid
on a current basis;
5. That Tenant has paid to Landlord a security deposit of $______________,
and Tenant has no knowledge of any claim made by Landlord against the
security deposit;
6. That Tenant has not given Landlord any notice of any claim arising under
the Lease nor any notice of a default on the part of Landlord under the
Lease which has not been cured. There are no defaults by Landlord under
the Lease as of the date hereof. As of the date hereof, the undersigned is
entitled to no credit, no free rent and no offset, counterclaim or
deduction in rent;
7. That Tenant has _______ option(s) to renew the Lease for a period of
_______ years upon the terms set forth in the Lease, and that none of such
options have been exercised except (if none, state "none") _____________;
8. That Tenant has (i) no option to expand into additional space in the
Property, (ii) no right of first refusal of any space in the Property; or
(iii) no option to acquire all or any part of the Property;
9. That the full name and current mailing address for Tenant, and the address
for all notices to Tenant, are as follows:
10. Except as set forth on Exhibit B, Tenant does not use, store, manufacture,
generate, handle or dispose of at the Property, any chemical, element or
compound which is identified or classified as a regulated substance, toxic
substance, hazardous substance, hazardous waste, pollution, pollutant,
toxic pollutant, contaminant, solid waste or special waste (collectively,
"Hazardous Materials") under any law, ordinance, rule, regulation, order,
directive or requirement of any governmental authority (collectively,
"Laws"), other than small quantities of household cleaning and office
supplies. To the extent Hazardous Materials are set forth on Exhibit B,
each of such Hazardous Materials is used, stored, manufactured, generated,
handled and disposed of in accordance with Laws; and
11. That no actions, whether voluntary or otherwise, are pending against the
undersigned
51
<PAGE>
under the bankruptcy laws of the United States or any State thereof.
Dated ____________, 1999 TENANT:
________________________________
a ______________________________
By:
-----------------------------------
Name:
Title:
Address:
52
<PAGE>
Exhibit F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF AGREEMENT (this "Assignment") is made as
of _________, 1999, by and between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES, a New York corporation (solely on behalf of and for the benefit
of its Separate Account 16-III, known as the "Value Enhancement Fund")
("Assignor"), and [__________________], a [_________________] ("Assignee").
RECITALS
A. Concurrently with the execution and delivery of this Assignment,
Assignor is conveying to Assignee, by Special Warranty Deed (the "Deed"), that
certain tract of land (collectively, the "Land") more specifically described in
Exhibit A attached hereto and made a part hereof for all purposes, together with
the improvements located thereon (the "Improvements"), and by Bill of Sale and
Assignment (the "Bill of Sale"), all of the personal property owned by Assignor
upon the Land or within or upon the Improvements (the "Personal Property").
B. Assignor desires to assign, transfer and convey to Assignee, and
Assignee desires to accept and obtain, all of Assignor's right, title and
interest in and to the Assigned Properties (as hereinafter defined), subject to
the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration in hand paid by
Assignee to Assignor, and the mutual covenants set forth herein, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby SELL, ASSIGN,
CONVEY, TRANSFER, SET OVER and DELIVER unto Assignee all of Assignor's right,
title and interest in and to the following (collectively, the "Assigned
Properties"):
(a) the leases described in Exhibit B attached hereto and made a part
hereof (collectively, the "Leases"); and
(b) the assignable contracts and agreements described in Exhibit C
attached hereto and made a part hereof (collectively, the "Operating
Agreements"), together with (i) all assignable existing warranties and
guaranties (expressed or implied) issued to Assignor in connection with the
Improvements or the Personal Property and (ii) all transferable consents,
authorizations, variances or waivers, licenses, permits and approvals, if any;
provided, however, that Assignor makes no representation or warranty with
respect to the assignability of or any other matter relating to any of the
foregoing, except as set forth in the Purchase Agreement (as defined below).
53
<PAGE>
TO HAVE AND TO HOLD the foregoing described Assigned Properties unto
Assignee, its successors and assigns, forever.
This Assignment is made by Assignor and accepted by Assignee subject to
the provisions set forth in the Purchase and Sale Agreement, dated as of
[___________], 1999, between Assignor and Assignee (together with all amendments
and addenda thereto, if any, the "Purchase Agreement").
By execution of this Assignment, Assignee assumes and agrees to perform
all of the covenants, agreements and obligations under the Assigned Properties
binding on Assignor or the Land, Improvements, or Personal Property (such
covenants, agreements and obligations being herein collectively referred to as
the "Contractual Obligations"), as such Contractual Obligations shall arise or
accrue from and after the date of this Assignment. Without limiting the
generality of the immediately preceding sentence, Assignee acknowledges the
receipt of the security deposits required by the Leases described in the
schedule of security deposits attached to Exhibit B. Assignee hereby agrees to
indemnify, hold harmless and defend Assignor from and against any and all
obligations, liabilities, costs and claims (including reasonable attorney's
fees) arising as a result of or with respect to any of the Contractual
Obligations that are attributable to the period of time from and after the date
of this Assignment.
Assignor agrees to indemnify, hold harmless and defend Assignee from and
against any and all obligations, liabilities, costs and claims (including
reasonable attorney's fees) arising as a result of or with respect to any of the
Contractual Obligations that are attributable to the period of time prior to the
date of this Assignment.
ASSIGNEE ACKNOWLEDGES THAT IT HAS INSPECTED THE ASSIGNED PROPERTIES AND
THAT THIS ASSIGNMENT IS MADE BY ASSIGNOR AND ACCEPTED BY ASSIGNEE WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, AND
WITHOUT RECOURSE AGAINST ASSIGNOR, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN
THE PURCHASE AGREEMENT.
This Assignment may be executed in counterparts, and all such executed
counterparts shall constitute the same agreement. It shall be necessary to
account for only one such counterpart in proving this Assignment.
EXECUTED to be effective as of the date set forth above.
ASSIGNOR:
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES, a New York
54
<PAGE>
corporation, solely on behalf of and for the benefit
of its Separate Account 16-III, known as the "Value
Enhancement Fund"
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
ASSIGNEE:
[____________________________],
a [________________________]
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
List of Attachments:
Exhibit A - Property Description
Exhibit B - Lease Schedule
Exhibit C - Operating Agreements Schedule
55
<PAGE>
Exhibit G
LEASE BROKERAGE COMMISSIONS
1. Leasing Management Agreement by and between The Equitable Life Assurance
Society of the United States and Trammell Crow Real Estate Services, Inc.,
dated March 27, 1996 (to be terminated at Seller's expense prior to
Closing).
2. Leasing Commission payable to Trammell Crow Real Estate Services, Inc.,
and Fred Ezra pursuant to the Joseph M. Del Balzo Lease (payable by
Seller).
56
<PAGE>
Exhibit H
5TH FLOOR SPACE PLAN
(Attached)
57
<PAGE>
Schedule 4.4(b)(8)
SCHEDULE OF DELINQUENT RENTS
(Attached)
58
<PAGE>
Schedule 5.1(q)
SCHEDULE OF SECURITY DEPOSITS
(Attached)
59
<PAGE>
Schedule 5.1(s)
RENT ROLL
(Attached)
60
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 17,679
<SECURITIES> 0
<RECEIVABLES> 7,044
<ALLOWANCES> 346
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,546,855
<DEPRECIATION> 220,152
<TOTAL-ASSETS> 3,538,595
<CURRENT-LIABILITIES> 0
<BONDS> 1,494,985
0
0
<COMMON> 0
<OTHER-SE> 1,917,197
<TOTAL-LIABILITY-AND-EQUITY> 3,538,595
<SALES> 0
<TOTAL-REVENUES> 271,864
<CGS> 0
<TOTAL-COSTS> 126,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,319
<INCOME-PRETAX> 66,134
<INCOME-TAX> 0
<INCOME-CONTINUING> 66,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,750
<EPS-BASIC> 0.87
<EPS-DILUTED> 0.87
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 17,679
<SECURITIES> 0
<RECEIVABLES> 7,044
<ALLOWANCES> 346
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,546,855
<DEPRECIATION> 220,152
<TOTAL-ASSETS> 3,538,598
<CURRENT-LIABILITIES> 0
<BONDS> 1,494,985
0
0
<COMMON> 0
<OTHER-SE> 1,917,197
<TOTAL-LIABILITY-AND-EQUITY> 3,538,598
<SALES> 0
<TOTAL-REVENUES> 136,975
<CGS> 0
<TOTAL-COSTS> 63,729
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,697
<INCOME-PRETAX> 25,321
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,686
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.32
</TABLE>
