SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 31, 1996
Cali Realty Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-13274 22-3305147
- --------------------------------------------------------------------------------
(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code (908) 272-8000
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5, Other Events
From November 4, 1996 through December 30, 1996, Cali Realty Corporation and
subsidiaries (the "Company") acquired through five individual transactions with
separate, unrelated sellers two three-building office complexes, a two-building
office complex and two individual office buildings (the "Acquisitions").
The aggregate initial acquisition cost of the Acquisitions was approximately
$403.9 million. The Company funded the aggregate initial acquisition cost with
cash, which was made available primarily from proceeds of a public common stock
offering of 17,537,500 shares on November 22, 1996, (the "November 1996
Offering") and with the assumption of mortgage debt.
The following summarizes the Company's Acquisitions:
On November 4, 1996, the Company acquired the property known as the Harborside
Financial Center ("Harborside"), a 1.9 million square foot office complex
located in Jersey City, New Jersey for an initial acquisition cost of
approximately $286.7 million. The purchase price included the assumption of
existing and seller-provided financing aggregating $150.0 million. The existing
financing of approximately $107.9 million bears interest at a fixed rate of 7.32
percent for a term of approximately nine years. The seller-provided financing of
approximately $42.1 million also has a term of nine years and initially bears
interest at a rate of 6.99 percent. The interest rate on the seller-provided
financing will be reset at the end of the third and sixth loan years based on
the yield of the three year treasury obligation at that time, with spreads of
110 basis points in years four through six and 130 basis points in years seven
through maturity. The balance of the initial acquisition cost, totaling
approximately $136.7 million, was paid in cash and was financed substantially
through drawings on the Company's credit facilities. The borrowings on the
Company's credit facilities for the acquisition of Harborside were subsequently
repaid from the net proceeds received from the November 1996 Offering. As part
of the purchase, the Company also acquired 11.3 acres of land fully zoned and
permitted for an additional 4.1 million square feet of development and the water
rights associated with 27.4 acres of land extending into the Hudson River
immediately east of Harborside, including two piers with an area of 5.8 acres.
The terms of the acquisition of the vacant parcels provide for payments (with an
estimated net present value of approximately $5.3 million) to be made to the
seller for development rights ("Development Rights Contingent Obligation") if
and when the Company commences construction on the site during the next several
years. However, the agreement provides, among other things, that even if the
Company does not commence construction, the seller may nevertheless require the
Company 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.
On November 7, 1996, the Company acquired Five Sentry Parkway East & West ("Five
Sentry"), a two-building office complex comprised of approximately 131,000 net
rentable square feet located in Plymouth Meeting, Montgomery County,
Pennsylvania for approximately $12.4 million in cash, which was drawn from one
of the Company's credit facilities. The borrowing on the credit facility
<PAGE>
for the acquisition of Five Sentry was subsequently repaid from the net proceeds
received from the November 1996 Offering.
On December 10, 1996, the Company acquired 300 Tice Boulevard ("Whiteweld"), a
230,000 net rentable square foot office building located in Woodcliff Lake,
Bergen County, New Jersey, for approximately $35.0 million in cash, made
available from the net proceeds received from the November 1996 Offering.
On December 16, 1996, the Company acquired One Bridge Plaza ("One Bridge"), a
200,000 net rentable square foot office building located in Fort Lee, Bergen
County, New Jersey, for approximately $26.8 million in cash, made available from
the net proceeds received from the November 1996 Offering.
On December 17, 1996, the Company acquired the International Court at Airport
Business Center ("Airport Center"), a three-building office complex comprised of
approximately 370,000 net rentable square feet located in Lester, Delaware
County, Pennsylvania for approximately $43.0 million in cash, made available
from the net proceeds received from the November 1996 Offering.
Each of the Acquisitions were pursuant to individual agreements for the sale and
purchase of each property between each selling entity and the Company. The
factors considered by the Company in determining the price to be paid included
their historical and expected cash flow, nature of the tenants and terms of
leases in place, occupancy rates, opportunities for alternative and new
tenancies, current operating costs and real estate taxes on the properties and
anticipated changes therein under Company ownership, the physical condition and
locations of the properties, the anticipated effect on the Company's financial
results (including particularly funds from operations) and the ability to
sustain and potentially increase its distributions to Company stockholders, and
other factors. The Company took into consideration capitalization rates at which
it believes other comparable office buildings had recently sold, but determined
the price it was willing to pay primarily on the factors discussed above
relating to the properties themselves and their fit with the Company's
operations. No separate independent appraisals were obtained in connection with
the acquisition of the properties by the Company. The Company, after
investigation of the properties, is not aware of any material factors, other
than those enumerated above, that would cause the financial information reported
not to be necessarily indicative of future operating results.
Pursuant to the Company's Registration Statement on Form S-3 (File No.
333-09081), on November 22, 1996, the Company completed an underwritten public
offering and sale of 17,537,500 shares of its common stock using several
different underwriters to underwrite such public offer and sale (which included
an exercise of the underwriters' over-allotment option of 2,287,500 shares). The
Company received approximately $441.0 million in net proceeds (after offering
costs) from the November 1996 Offering, and has used such funds to acquire
certain of the Acquisitions, pay down outstanding borrowings on its revolving
credit facilities, and invest the excess funds in short-term investments.
<PAGE>
Item 7, Financial Statements, Pro Forma Financial Information and Exhibits
As of December 30, 1996, the Company has purchased twenty office buildings and
three portfolios of office buildings and office/flex space since its formation
in 1994; one office building in 1994, four office buildings and three portfolios
in 1995, and fifteen office buildings in 1996.
(a) Financial Statements
The following summarizes the financial information included in this
report:
(1) Interim Statement of Revenue and Certain Operating Expenses for
Harborside for the nine months ended September 30, 1996 (unaudited),
(2) Interim Statement of Revenue and Certain Expenses for Five Sentry
for the nine months ended September 30, 1996 (unaudited),
(3) Interim Statement of Revenue and Certain Expenses for Whiteweld for
the nine months ended September 30, 1996 (unaudited),
(4) Audited Statement of Revenue and Certain Expenses for the year ended
December 31, 1995 and interim financial information for the nine
months ended September 30, 1996 (unaudited) for One Bridge, and an
(5) Interim Combined Statement of Revenue and Certain Expenses for
Airport Center for the nine months ended September 30, 1996
(unaudited).
Note: Audited Statements for the year ended December 31, 1995 for Harborside,
Five Sentry, Whiteweld and Airport Center were previously included in the
Company's two Current Reports on Form 8-K, both filed on October 29, 1996 (both
file no. 1-13274).
(b) Pro Forma Financial Information (unaudited)
Unaudited pro forma financial information for the Company is presented as
follows:
o Condensed consolidated balance sheet as of September 30, 1996.
o Condensed consolidated statements of operations for the nine
months ended September 30, 1996 and the year ended December 31,
1995.
(c) Exhibits
Exhib. No. 10.57:
Sale Agreement between Metropolitan Life Insurance Company, a New York
corporation, as Seller, and Cali Realty Acquisition Corp., a Delaware
corporation, as Purchaser, as of November 26, 1996.
Exhib. No. 10.58:
Amendment to Sale Agreement as of December 4, 1996, by and between
Metropolitan Life Insurance Company, a New York corporation, and Cali
Realty Acquisition Corp., a Delaware corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Cali Realty
Corporation has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALI REALTY CORPORATION
December 31, 1996 By: /s/ Thomas A. Rizk
------------------
Thomas A. Rizk
President and Chief Executive Officer
December 31, 1996 By: /s/ Barry Lefkowitz
-------------------
Barry Lefkowitz
Vice President - Finance and
Chief Financial Officer
<PAGE>
CALI REALTY CORPORATION
Index to Financial Statements
- --------------------------------------------------------------------------------
THE ACQUISITIONS
Harborside:
Statement of Revenue and Certain Operating Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
Five Sentry:
Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
Whiteweld:
Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
One Bridge:
Report of Independent Accountants..........................................
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1995 (audited)...........................
The Nine Months Ended September 30, 1996 (unaudited)................
Notes to Statements of Revenue and Certain Expenses.......................
Airport Center:
Combined Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
CALI REALTY CORPORATION
Pro Forma (unaudited):
Condensed Consolidated Balance Sheet as of September 30, 1996..............
Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 1996 and for the Year Ended
December 31, 1995......................................................
<PAGE>
<TABLE>
<CAPTION>
HARBORSIDE FINANCIAL CENTER
Statement of Revenue and Certain Operating Expenses
For the nine-month period ended September 30, 1996 (Unaudited)
<S> <C>
Revenue:
Base rent ...................................................... $24,474,056
Escalations .................................................... 6,277,834
Other income ................................................... 199,643
-----------
Total revenue ................................... 30,951,533
-----------
Certain operating expenses:
Real estate taxes .............................................. 2,722,888
Utilities ...................................................... 812,106
Operating services ............................................. 3,016,131
Other property ................................................. 1,675,351
-----------
Total operating expenses ........................ 8,226,476
-----------
Excess of revenue over certain operating expenses $22,725,057
===========
The accompanying notes are an integral part of this summary.
</TABLE>
<PAGE>
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses
1. Organization and Nature of Business:
The property known as Harborside Financial Center ("Harborside") is a
three building office complex (Plazas I, II, and III) located in Jersey
City, New Jersey. At September 30, 1996 Harborside consists of
undeveloped land and three operating office buildings which are
approximately 95 percent leased.
Harborside was owned by several partnerships, which were directly or
indirectly owned by a Pension Trust which is managed by Jones Lang
Wootton Realty Advisors under an investment advisory contract. On
November 4, 1996, Harborside was sold to subsidiaries of Cali Realty
Corporation.
2. Basis of Presentation:
The Statement of Revenue and Certain Operating Expenses (the "Historical
Summary") has been prepared for the purpose of complying with the
provisions of Article 3.14 of Regulation S-X promulgated by the
Securities and Exchange Commission. This historical summary includes the
historical revenue and certain operating expenses of Harborside,
exclusive of interest income, mortgage interest expense and depreciation
and amortization, which may not be comparable to the corresponding
amounts reflected in the future operations of Harborside.
The preparation of financial statements in conformity with generally
accepted accounting principles requires Harborside's 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 revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
Harborside's operations consist of rental income earned from tenants
under leasing arrangements which generally provide for minimum rents,
escalations and charges to tenants for their pro rata share of real
estate taxes and operating expenses. All leases have been accounted for
as operating leases. Rental income is recognized by amortizing the
aggregate lease payments on the straight-line basis over the entire terms
of the leases.
<PAGE>
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses, Continued
3. Leases:
Harborside is leased to tenants under various noncancelable operating
leases with unexpired terms ranging from 1 to 17 years. Minimum future
rentals on noncancelable leases which extend for more than one year at
September 30, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Three months ended December 31, 1996 $ 7,420,000
Year ended December 31, 1997 29,609,000
1998 31,098,000
1999 30,755,000
2000 26,900,000
Thereafter 178,549,000
------------
$304,331,000
============
</TABLE>
Certain leases have provisions for additional rent based on operating
expenses and real estate taxes. Such amounts are reflected in the
Historical Summary as escalation revenue. Minimum rentals above do not
include recovery of operating expenses and real estate taxes.
Included in minimum future rentals are approximately $91 million from the
American Institute of Certified Public Accountants, $41 million from Bank
of Tokyo, $39 million from Dean Witter Trust Company, $32 million from
Telerate Systems Incorporated, and $20 million from BT Harborside Inc.,
five major tenants who paid approximately $4.8 million, $2.7 million,
$3.8 million, $7.6 million, and $2.2 million, respectively, in base and
additional rent during 1996 and who occupy approximately 13 percent, 7
percent, 10 percent, 20 percent and 21 percent of the leasable space,
respectively.
Also included in future minimum rentals is approximately $28 million from
Kinney Parking Systems, which operates the parking facility, and paid
approximately $2.2 million in base rent for the nine months ended
September 30, 1996.
4. Related Parties:
Institutional Realty Management, LLC ("IRM"), which replaced Jones Lang
Wootton USA ("JLW-USA") during April 1996, provides property management
services to Harborside. For its services IRM and JLW-USA received a
management fee up to 5% of gross income collected, as defined in the
management agreements. For the nine-month period ended September 30,
1996, fees incurred under these agreements amounted to $1,127,799, which
is included in other property costs in the Historical Summary.
<PAGE>
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses, Continued
5. Tax Abatements:
On May 12, 1988, tax abatements for Harborside were obtained from the
Municipal Council of the City of Jersey City. The abatements, which
commenced in 1990, are for a term of 15 years and have been granted in
consideration for annual service charges in lieu of real estate taxes on
the building. The service charges for the buildings are equal to 2
percent of Total Project Costs, as defined, in year one and increase by
$75,000 per annum through year fifteen. Total Project Costs, as defined,
for Plaza II and III are $148,712,000. The service charges for the
remaining undeveloped parcels will be equal to 2 percent of Total Project
Costs for each unit in year one and increase to 3 percent by year
fifteen. In addition, BT Harborside Inc., a tenant which occupies space
in Plaza I, obtained its own tax abatement.
Pursuant to Section 7 of the Financial Agreement Urban Renewal
Corporations or Association Annual Service Charge in Lieu of Taxes, dated
September 28, 1988 between the owners of Harborside and the City of
Jersey City in the State of New Jersey, Harborside is required to pay
Jersey City Excess Profits, as defined. No payments for Excess Profits
were due to Jersey City for the nine-month period ended September 30,
1996.
<PAGE>
<TABLE>
<CAPTION>
FIVE SENTRY PARKWAY EAST AND WEST
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
Revenue
Base rents .............................................. $1,467,522
----------
Certain expenses
Real estate taxes ...................................... 130,742
Utilities .............................................. 27,718
Operating services ..................................... 288,611
General and administrative ............................. 78,198
----------
525,269
----------
Revenue in excess of certain expenses .................... $ 942,253
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
</TABLE>
<PAGE>
FIVE SENTRY PARKWAY EAST AND WEST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenues and certain
expenses, Five Sentry Parkway East and West (the "Properties") are two
office buildings located in Plymouth Meeting, Montgomery County,
Pennsylvania in an office park known as Sentry Parkway which were
acquired by a subsidiary of Cali Realty Corporation (the "Company") on
November 7, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying statement of revenue and certain expenses has
been prepared on the accrual basis of accounting.
The accompanying financial statement is not representative of
the actual operations for the period presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Properties have been excluded.
Revenues excluded consist of interest and other revenues
unrelated to the continuing operations of the Properties.
Expenses excluded consist of depreciation of the building and
improvements, and amortization of organization and other
intangible costs and other expenses not directly related to the
future operations of the Properties.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period.
Actual results could differ from these estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the
terms of the respective leases.
<PAGE>
FIVE SENTRY PARKWAY EAST AND WEST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
(continued)
3. LEASES
Leases for the Properties have various remaining lease terms of up to
six years with options to certain tenants for renewal. Minimum rental
amounts for certain leases increase as set forth under the terms of
each lease. Future minimum rents to be received over the next five
years and thereafter from tenants as of September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Three months ended December 31, 1996 $ 516,561
Year ended December 31, 1997 2,054,709
Year ended December 31, 1998 1,911,808
Year ended December 31, 1999 1,692,182
Year ended December 31, 2000 1,503,396
Thereafter 523,824
-----------
$ 8,202,480
===========
</TABLE>
For the nine months ended September 30, 1996, two tenants contributed
88.9 percent of base rents. Merck & Co. contributed 73.7 percent and
Selas Fluid Processing Corp. contributed 15.2 percent of the base rents
for the nine months ended September 30, 1996.
4. GENERAL AND ADMINISTRATIVE EXPENSES
The Properties incurred management fees based on three and one-quarter
percent of revenues received which totaled $49,807 for the nine months
ended September 30, 1996.
5. INTERIM STATEMENTS
The interim financial data for the nine months ended September 30, 1996 is
unaudited; however, in the opinion of management, the interim data includes all
adjustments, consisting only of normally recurring adjustments, necessary for a
fair statement of the results for the interim period. The results for the period
presented are not necessarily indicative of the results to be expected for the
entire fiscal year or any other period.
<PAGE>
<TABLE>
<CAPTION>
WHITEWELD CENTRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
Revenue
Base rents ............................................. $2,986,058
Recoveries from tenants ................................ 249,616
----------
3,235,674
----------
Certain Expenses
Real estate taxes ...................................... 342,563
Utilities .............................................. 560,345
Operating services ..................................... 465,299
General and administrative ............................. 153,158
----------
1,521,365
----------
Revenue in excess of certain expenses .................... $1,714,309
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
</TABLE>
<PAGE>
WHITEWELD CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenue and certain
expenses, Whiteweld Centre (the "Property") is an office building
located in Woodcliff Lake, New Jersey acquired by a subsidiary of Cali
Realty Corporation (the "Company") on December 10, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying statements of revenue and certain expenses have
been prepared on the accrual basis of accounting.
The accompanying financial statements are not representative of
the actual operations or the period presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Property have been excluded.
Revenues excluded consist of interest unrelated to the continuing
operations of the Property. Expenses excluded consist of
depreciation of the building and improvements, and amortization
of organization and other intangible costs and other expenses not
directly related to the future operations of the Property.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-lined basis over the
terms of the lease. Certain lease agreements contain provisions
which provide for reimbursements by tenants of real estate taxes,
utility and other operating costs, generally over established
base year amounts, as defined in the tenant lease.
3. LEASES
Leases for the Property have various lease terms up to twelve years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease.
<PAGE>
WHITEWELD CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (continued)
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31, 1996 $ 3,959,970
Year ended December 31, 1997 4,097,187
Year ended December 31, 1998 3,416,332
Year ended December 31, 1999 3,032,853
Year ended December 31, 2000 2,796,151
Thereafter 3,705,724
------------
$ 21,008,217
============
</TABLE>
For the nine months ended September 30, 1996, four tenants contributed
63.4 percent of base rents as follows:
<TABLE>
<CAPTION>
<S> <C>
Xerox Corp. 19.5%
Medco Containment Services, Inc. 17.9
Chase Manhattan Mortgage Corp. 13.7
Comdisco, Inc. 12.3
----
63.4%
====
</TABLE>
4. GENERAL AND ADMINISTRATIVE EXPENSES
During the period covered by this statement, the Property was
owner-managed and in lieu of management fees, incurred payroll and
related costs, which are included in general and administrative
expenses of $98,480 for the nine months ended September 30, 1996.
5. INTERIM STATEMENT
The interim financial data for the nine months ended September 30, 1996
is unaudited; however, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not
necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain Expenses
for the property known as One Bridge Plaza for the year ended December 31, 1995.
This financial statement is the responsibility of management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of Cali
Realty Corporation) and is not intended to be a complete presentation of One
Bridge Plaza revenues and expenses.
In our opinion the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses for One Bridge Plaza,
on the basis described in Note 2, for the year ended December 31, 1995, in
conformity with generally accepted accounting principles ("GAAP").
/s/ Schonbraun Safris Sternlieb & Co., L.L.C.
---------------------------------------------
SCHONBRAUN SAFRIS STERNLIEB & CO., L.L.C.
Certified Public Accountants
Roseland, New Jersey
December 16, 1996
<PAGE>
<TABLE>
<CAPTION>
ONE BRIDGE PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
<S> <C>
Revenue
Base rents ............................................. $3,274,888
Recoveries from tenants ................................ 288,203
----------
3,563,091
----------
Certain Expenses
Real estate taxes ...................................... 467,654
Utilities .............................................. 416,766
Operating services ..................................... 553,990
General and administrative ............................. 258,721
----------
1,697,131
----------
Revenue in excess of certain expenses .................... $1,865,960
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
</TABLE>
<PAGE>
ONE BRIDGE PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. Organization and Operation of Property
For the purpose of the accompanying statements of revenue and certain
expenses, One Bridge Plaza (the "Property") is an office building
located in Fort Lee, New Jersey acquired by a subsidiary of Cali Realty
Corporation (the "Company") on December 16, 1996.
2. Summary of Significant Accounting Policies
a. Basis of Presentation
The accompanying statements of revenue and certain expenses have
been prepared on the accrual basis of accounting.
The accompanying financial statements are not representative of
the actual operation for the periods presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Property, have been excluded.
Revenues excluded consist of interest unrelated to the continuing
operations of the Property. Expenses excluded consist of
depreciation of the building and improvements, and amortization
of organization and other intangible costs and other expenses not
directly related to the future operations of the Property.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the terms
of the lease. Certain lease agreements contain provisions which
provide for reimbursements by tenants of real estate taxes,
utility and other operating costs, generally over established
base year amounts, as defined in the tenant lease.
3. LEASES
Leases for the Property have various lease terms up to twelve years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease.
<PAGE>
ONE BRIDGE PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
3. LEASES (continued)
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 3,481,190
1997 3,683,213
1998 3,706,315
1999 3,558,219
2000 3,033,475
Thereafter 8,269,675
-----------
$25,732,087
===========
</TABLE>
For the year ended December 31, 1995 and the nine months ended
September 30, 1996, three tenants contributed an aggregate of 41.0
percent and 48.2 percent of base rents, respectively, as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
1995 1996
---- ----
<S> <C> <C>
Bozell Worldwide 16.9% 19.0%
Complete Executive Offices 10.4 13.6
Broadview Associates 13.7 15.6
---- ----
41.0% 48.2%
==== ====
</TABLE>
4. GENERAL AND ADMINISTRATIVE EXPENSES
During the periods covered by these statements, the Property incurred
management fees based on 1.5 percent of rent collections through
November 14, 1995 and one percent thereafter. These fees amounted to
$53,478 and $34,116 for the year ended December 31, 1995 and nine
months ended September 30, 1996, respectively. In addition to
management
<PAGE>
4. GENERAL AND ADMINISTRATIVE EXPENSES (continued)
fees, general and administrative expenses includes salaries and related
costs amounting to $69,649 and $51,378 for the year ended December 31,
1995 and nine months ended September 30, 1996, respectively.
5. INTERIM STATEMENT
The interim financial data for the nine months ended September 30, 1996
is unaudited; however, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not
necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
<PAGE>
<TABLE>
<CAPTION>
ONE BRIDGE PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
Revenue
Base rents ............................................. $2,625,711
Recoveries from tenants ................................ 250,454
----------
2,876,165
----------
Certain expenses
Real estate taxes ...................................... 329,175
Utilities .............................................. 331,614
Operating services ..................................... 489,009
General and administrative ............................. 155,676
----------
1,305,474
----------
Revenue in excess of certain expenses .................... $1,570,691
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Court at Airport Business Center
Combined Statement of Revenue and Certain Expenses (Unaudited)
The period from January 1, 1996 to September 30, 1996
<S> <C>
Revenue:
Base rents ............................................. $5,399,886
Escalations and recoveries from tenants ................ 757,984
Other .................................................. 30,454
----------
6,188,324
Certain expenses:
Real estate taxes ...................................... 603,513
Utilities .............................................. 814,725
Operating services ..................................... 948,613
General and administrative ............................. 287,248
----------
2,654,099
----------
Revenue in excess of certain expenses ...................... $3,534,225
==========
See accompanying notes.
</TABLE>
<PAGE>
International Court at Airport Business Center
Notes to Combined Statement of Revenue and Certain Expenses
(Unaudited)
The period from January 1, 1996 to September 30, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The International Court at Airport Business Center (the "Airport Center")
consists of three individual multi-tenant office buildings in the Airport
Business Center located in Lester, Pennsylvania. The Airport Center properties
have been acquired by a subsidiary of Cali Realty Corporation, who will
subsequently file a Current Report on Form 8-K with the Securities and Exchange
Commission.
Basis of Presentation
The accompanying unaudited interim statement has been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. The accounts of
each of the properties comprising the Airport Center are combined in the
statement of revenue and certain expenses. There are no inter-property accounts
to be eliminated. The financial statement is not representative of the actual
operations for the period presented as certain expenses that may not be
comparable to the expenses expected to be incurred in the proposed future
operations of the Airport Center have been excluded. Expenses excluded consist
of interest, amortization, professional fees, and other costs not directly
related to the future operations of the Airport Center.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Revenue Recognition
Base rents are recognized on a straight-line basis over the term of the lease.
<PAGE>
International Court at Airport Business Center
Notes to Combined Statement of Revenue and Certain Expenses
(Unaudited) (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Unaudited Interim Financial Statement
In the opinion of the management of the Airport Center, all adjustments and
eliminations, consisting only of normal recurring adjustments, necessary to
present fairly the combined statement of revenue and certain expenses of the
Airport Center for the period from January 1, 1996 to September 30, 1996, have
been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
2. Properties
The three multi-tenant office properties comprising the Airport Center are as
follows:
<TABLE>
<CAPTION>
Property Name Location
------------- --------
<S> <C>
International Court I Lester, PA
International Court II Lester, PA
International Court III Lester, PA
</TABLE>
3. Related Party Transactions
The Airport Center is managed by The Henderson Group and are related by way of
common ownership (the Henderson Family). The Airport Center has engaged in
transactions with affiliates of the Henderson Group as follows:
<TABLE>
<CAPTION>
The period from
January 1, 1996 to
September 30, 1996
------------------
<S> <C>
Base rents .................................................... $178,262
Escalations and recoveries from tenants ....................... $ 32,346
Repair and maintenance expense (operating services) ........... $167,805
Management fees (general and administrative) .................. $185,906
Marketing fee expense (general and administrative) ............ $ 33,192
Management fees are charged based upon 3% of rents collected.
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of September 30, 1996 (in thousands)
The following unaudited pro forma condensed consolidated balance sheet is
presented as if the purchase of the Acquisitions by the Company and the November
1996 Offering of 17,537,500 shares of common stock had occurred on September 30,
1996. This unaudited pro forma condensed consolidated balance sheet should be
read in conjunction with the pro forma condensed consolidated statement of
operations of the Company and the historical financial statements and notes
thereto of the Company included in the Company's Form 10-K for the year ended
December 31, 1995 and the Company's Form 10-Q for the nine months ended
September 30, 1996, respectively.
The pro forma condensed consolidated balance sheet is unaudited and is not
necessarily indicative of what the actual financial position of the Company
would have been had the aforementioned transactions actually occurred on
September 30, 1996, nor does it purport to represent the future financial
position of the Company.
<TABLE>
<CAPTION>
Company
Company Pro Forma Pro Forma
ASSETS Historical Adjustments(a) (unaudited)
- ------ ---------- -------------- -----------
<S> <C> <C> <C>
Rental property, net ..................... $ 376,468 $ 409,135 $ 785,603
Cash and cash equivalent ................. 10,351 187,117 197,468
Unbilled rents receivable ................ 18,959 -- 18,959
Restricted cash .......................... 2,650 -- 2,650
Other assets ............................. 13,411 -- 13,411
---------- ---------- ----------
Total assets ............................. $ 421,839 $ 596,252 $1,018,091
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and loans payable .............. $ 112,856 $ 155,252 $ 268,108
Dividends and distributions payable ...... 9,615 -- 9,615
Accounts payable and accrued expenses .... 3,492 -- 3,492
Rents received in advance
and security deposits .................. 3,819 -- 3,819
Accrued interest payable ................. 349 -- 349
---------- ---------- ----------
Total liabilities ........................ $ 130,131 $ 155,252 $ 285,383
---------- ---------- ----------
Minority interest of unitholders in
Operating Partnership .................. 27,375 -- 27,375
Common stock, $.01 a value ............... 187 175 362
Additional paid in capital ............... 263,690 440,825 704,515
Retained earnings ........................ 456 -- 456
---------- ---------- ----------
Total stockholders' equity ............... 264,333 441,000 705,333
---------- ---------- ----------
Total liabilities and stockholders' equity $ 421,839 $ 596,252 $1,018,091
========== ========== ==========
</TABLE>
See accompanying footnote on subsequent page.
<PAGE>
(a) Represents the purchase cost of the Acquisitions for $409,135. Included in
the cost of the Acquisitions and as a corresponding liability is the
Development Rights Contingent Obligation with a net present value of
approximately $5,252. The initial acquisition cost of Harborside was
financed with a combination of assumed mortgage debt of $107,912,
seller-provided mortgage debt of $42,088, and approximately $136,700 in
cash made available through the Company's revolving credit facilities. In
addition, adjustments reflect the net proceeds (after offering costs) from
the November 1996 Offering of $441,000. The net proceeds from the offering
are reflected as being used to reduce the outstanding borrowings under the
Company's revolving credit facilities and fund the Acquisitions, and the
balance is held in cash and cash equivalents.
<PAGE>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Nine Months Ended September 30, 1996
And the Year Ended December 31, 1995
The unaudited pro forma condensed consolidated statements of operations for the
nine months ended September 30, 1996 and the year ended December 31, 1995 are
presented as if each of the following had occurred on January 1, 1995 (i) the
partial prepayment by the Company of its Mortgage Financing ("Partial
Prepayment") in 1996, (ii) the disposition by the Company of its property at 15
Essex Road in Paramus, New Jersey ("Essex Road") in 1996, (iii) the acquisition
by the Company of 103 Carnegie, Rose Tree and the Mount Airy Road Buildings in
1996, (iv) the net proceeds received by the Company as a result of its common
stock offering of 3,450,000 shares on August 13, 1996 (the "August 1996
Offering"), (v) the purchase by the Company of the Acquisitions, (vi) the net
proceeds received by the Company as a result of the November 1996 Offering,
(vii) the acquisition by the Company of the properties purchased during 1995,
(viii) the net proceeds received by the Company as a result of its common stock
offering on November 17, 1995, and (ix) the purchase by the Company on March 8,
1995 of 100,000 shares of its common stock for constructive retirement. Items
(i) through (iv) above are to be collectively referred to as the "YTD Sept. 1996
Events," items (v) and (vi) are to be collectively referred to as the "Reported
Events", and items (iv), (vi) and (viii) are to be collectively referred to as
the "Offerings".
Such pro forma information is based upon the historical unaudited consolidated
results of operations of the Company for the nine months ended September 30,
1996 and the historical consolidated results of operations of the Company for
the year ended December 31, 1995, after giving effect to the transactions
described above. The pro forma condensed consolidated statements of operations
should be read in conjunction with the pro forma condensed consolidated balance
sheet of the Company and the historical financial statements and notes thereto
of the Company included in the Company's Form 10-K for the year ended December
31, 1995 and the Company's Form 10-Q for the nine months ended September 30,
1996, respectively.
The unaudited pro forma condensed consolidated statements of operations are not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the transactions had been completed as set forth above,
nor does it purport to represent the Company's results of operations for future
periods.
<PAGE>
<TABLE>
<CAPTION>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands, except per share amount)
(unaudited)
Pro Forma Adj.
for YTD Pro Forma Adj.
Company Sept. 1996 for Reported Company
REVENUES Historical Events (a) Sub-total Events (b) Pro Forma
- -------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Base rents ....................................... $ 51,713 $ 2,100 $ 53,813 $ 40,605 $ 94,418
Escalations and recoveries from tenants .......... 9,646 210 9,856 7,536 17,392
Parking and other ................................ 1,453 -- 1,453 230 1,683
Interest income .................................. 282 -- 282 -- 282
-------- -------- -------- -------- --------
Total revenues ................................... 63,094 2,310 65,404 48,371 113,775
-------- -------- -------- -------- --------
EXPENSES
Real estate taxes ................................ 6,342 270 6,612 4,130 10,742
Utilities ........................................ 5,965 180 6,145 2,547 8,692
Operating services ............................... 7,952 163 8,115 5,208 13,323
General and administrative ....................... 3,427 94 3,521 2,349 5,870
Depreciation and amortization .................... 10,655 284 10,939 6,605 17,544
Interest expense (c) ............................. 8,288 n/a 8,288 6,177 14,465
-------- -------- -------- -------- --------
Total expense ................................... 42,629 991 43,620 27,016 70,636
-------- -------- -------- -------- --------
Income before gain on sale of rental
property, minority interest and
extraordinary item ........................... 20,465 1,319 21,784 21,355 43,139
Gain on sale of rental property .................. 5,658 (5,658) -- -- --
Minority interest (d) ............................ 3,866 n/a 3,866 (38) 3,828(d)
-------- -------- -------- -------- --------
Income before extraordinary item ................. $ 22,257 ($ 4,339) $ 17,918 $ 21,393 $ 39,311
======== ======== ======== ======== ========
Pro forma weighted average common shares outstanding (e) 27,892(e)
======
Pro forma income before extraordinary item per common share $1.41
=====
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(a) Reflects:
Revenues and expenses of the properties acquired from January 1, 1996 through
July 23, 1996 for the period January 1, 1996 through the dates of acquisition,
as follows:
<TABLE>
<CAPTION>
Base Escalations/ Real Estate Operating General and
Property Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- -------- ---- -------- ---------- ----- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carnegie March 20, 1996 $ 386 $ 31 $ 54 $ 56 $ 58 $ 11 $ 49
Rose Tree May 2, 1996 1,312 115 165 180 179 43 215
Mount Airy Buildings July 23, 1996 665 101 101 -- 4 51 107
------ ---- ---- ---- ---- ---- ----
$2,363 $247 $320 $236 $241 $105 $371
------ ---- ---- ---- ---- ---- ----
</TABLE>
Revenues and expenses of the property disposed of in 1996 for the period January
1, 1996 through the disposition date, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Real Estate Operating General and
Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- ----- ---- -------- ---------- ----- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Essex Road March 20, 1996 ($263) ($37) ($50) ($56) ($78) ($11) ($81)
----- ---- ---- ---- ---- ---- ----
</TABLE>
Reduction of expenses as a result of the Partial Prepayment in 1996 for the
period January 1, 1996 through March 12, 1996, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Real Estate Operating General and
Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- ----- ---- -------- ---------- ----- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Partial Prepayment March 12, 1996 -- -- -- -- -- -- ($6)
------ ---- ---- ---- ---- --- ----
Total Pro Forma Adj. for
YTD Sept. 1996 Events $2,100 $210 $270 $180 $163 $94 $284
====== ==== ==== ==== ==== === ====
See accompanying footnotes on the subsequent page.
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(b) Reflects:
Revenues and expenses of the Acquisitions for the nine months ended September
30, 1996, as follows:
<TABLE>
<CAPTION>
Acquisition Base Escalations/ Other Real Estate
Property Date Rents (1) Recoveries Income Taxes Utilities
- -------- ---- --------- ---------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Harborside November 4, 1996 $27,780 $6,278 $200 $2,723 $ 812
Five Sentry November 7, 1996 1,546 -- -- 131 28
Whiteweld December 10, 1996 3,038 250 -- 343 560
One Bridge December 16, 1996 2,808 250 -- 329 332
Airport Center December 17, 1996 5,433 758 30 604 815
------- ------ ---- ------ -----
Total Pro Forma Adj.
for Reported Events $40,605 $7,536 $230 $4,130 $2,547
======= ====== ==== ====== ======
<CAPTION>
Operating General and
Property Services Administrative Depreciation (2)
- -------- -------- -------------- ----------------
Harborside $3,016 $1,675 $4,737
Five Sentry 289 78 198
Whiteweld 465 153 558
One Bridge 489 156 427
Airport Center 949 287 685
------ ------ ------
Total Pro Forma Adj.
for Reported Events $5,208 $2,349 $6,605
====== ====== ======
(1) Pro forma base rents are presented on a straight-line basis.
(2) Depreciation is based on the building-related portion of the purchase price
and associated costs depreciated using the straight-line method over a
40-year life.
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(c) The pro forma adjustments to interest expense reflect interest on
mortgage debt assumed with certain acquisitions and the use of proceeds
from the Offerings to pay down outstanding borrowings on the Company's
credit facilities. Pro forma interest expense is computed as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the Partial $ 3,645
Prepayment (fixed interest rate of 8.02 percent on $44,313 and variable
rate of 30-day LIBOR plus 100 basis points on $20,195; weighted average
interest rate used is 6.47 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1,154
1995 (fixed interest rate of 8.25 percent on average outstanding
principal balance of approximately $18,654)
Interest expense on mortgages assumed with Harborside acquisition on 8,131
November 4, 1996 (fixed interest rate of 7.32 percent on $107,912 and
initial rate of 6.99 percent on $42,088)
Interest expense on outstanding borrowings on the Company's credit 1,535
lines (a variable rate of 30-day LIBOR plus 150 basis points during the
period on $29,805; weighted average interest rate used is 6.87 percent)
-------
Total pro forma interest expense for nine months ended September 30,
1996: $14,465
=======
</TABLE>
Interest expense can be effected by increases and decreases in the
variable interest rates under the Company's various floating rate debt.
For example, a one-eighth percent change in such variable interest
rates will result in a $86 change for the nine months ended September
30, 1996.
(d) Represents the pro forma income allocated to the estimated 8.87 percent
pro forma weighted average minority interest (Units) in Cali Realty
L.P. (the Operating Partnership).
(e) Pro forma weighted average shares outstanding is computed assuming that
the Offerings occurred as of January 1, 1995 and that shares were not
issued in excess of amounts needed to fund the Acquisitions and pay
down the credit facilities.
<PAGE>
<TABLE>
<CAPTION>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands, except per share amount)
(unaudited)
Pro Forma Pro Forma
Adj. for 1995 Adj. for YTD
Company Acquired Sept. 1996
REVENUES Historical Properties (a) Sub-total Events (b) Sub-total
- -------- ---------- -------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Base rents $50,808 $12,961 $63,769 $5,197 $68,966
Escalations and recoveries from tenants 9,504 2,684 12,188 487 12,675
Parking and other 1,702 -- 1,702 -- 1,702
Interest income 321 -- 321 -- 321
------- ------- ------- ------ -------
Total revenues 62,335 15,645 77,980 5,684 83,664
------- ------- ------- ------ -------
EXPENSES
- --------
Real estate taxes 5,856 1,821 7,677 653 8,330
Utilities 6,330 939 7,269 580 7,849
Operating services 8,519 1,354 9,873 337 10,210
General and administrative 3,712 519 4,231 186 4,417
Depreciation and amortization 12,111 2,201 14,312 654 14,966
Interest expense (d) 8,661 n/a 8,661 n/a 8,661
------- ------- ------- ------ -------
Total expenses 45,189 6,834 52,023 2,410 54,433
------- ------- ------- ------ -------
Income before minority interest 17,146 8,811 25,957 3,274 29,231
Minority interest (e) 3,508 n/a 3,508 n/a 3,508
------- ------- ------- ------ -------
Net income $13,638 $8,811 $22,449 $3,274 $25,723
======= ====== ======= ====== =======
Pro forma weighted average common
shares outstanding (f)
Pro forma net income per common share
<PAGE>
<CAPTION>
Pro Forma
Adj. for
Reported Company
REVENUES Events(C) Pro Forma
- -------- -------- ---------
<S> <C> <C>
Base rents $51,055 $120,021
Escalations and recoveries from tenants 11,053 23,728
Parking and other 210 1,912
Interest income -- 321
------- --------
Total revenues 62,318 145,982
------- --------
EXPENSES
- --------
Real estate taxes 5,931 14,261
Utilities 3,314 11,163
Operating services 6,790 17,000
General and administrative 3,445 7,862
Depreciation and amortization 8,812 23,778
Interest expense (d) 11,263 19,924
------- --------
Total expenses 39,555 93,988
------- --------
Income before minority interest 22,763 51,994
Minority interest (e) 1,234 4,742(e)
------- --------
Net income $21,529 $47,252
======= =======
Pro forma weighted average common
shares outstanding (f) 27,812(f)
------
Pro forma net income per common share $1.70
=====
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(a) Reflects revenues and expenses of the properties acquired in 1995 for the
period January 1, 1995 through the date of acquisition, as follows:
<TABLE>
<CAPTION>
Acquisition Base Escalations/ Real Estate
Property Date Rents (1) Recoveries Taxes Utilities
- -------- ---- --------- ---------- ----- ---------
<S> <C> <C> <C> <C> <C>
1717 Rt. 208 Fair Lawn, NJ March 3, 1995 $ 564 $ 61 $ 48 $ 62
400 Rella Blvd Montebello, NY April 11, 1995 874 68 121 132
5 Vaughn Dr. Princeton, NJ July 21, 1995 1,031 100 126 93
New Jersey Resources Nov 8, 1995 6,004 954 802 506
Commerce Center Totowa, NJ Nov 6, 1995 2,942 786 407 71
Horizon Center Business Park Nov 8, 1995 1,546 715 317 75
------ ------ ------ ----
Total Pro Forma Adj. for
1995 Acquired Properties $12,961 $2,684 $1,821 $939
======= ====== ====== ====
<CAPTION>
General and Operating
Property Administrative Depreciation (2) Services
- -------- -------------- ---------------- --------
<S> <C> <C> <C>
1717 Rt. 208 Fair Lawn, NJ $ 64 $ 25 $81
400 Rella Blvd Montebello, NY 100 29 85
5 Vaughn Dr. Princeton, NJ 127 40 137
New Jersey Resources 591 202 1,046
Commerce Center Totowa, NJ 295 147 586
Horizon Center Business Park 177 76 266
------ ---- ------
Total Pro Forma Adj. for
1995 Acquired Properties $1,354 $519 $2,201
====== ==== ======
</TABLE>
<PAGE>
(b) Reflects:
Revenues and expenses of the properties acquired from January 1, 1996 through
September 30, 1996 for the period January 1, 1995 through December 31, 1995, as
follows:
<TABLE>
<CAPTION>
Base Escalations/ Real Estate Operating General and
Property/Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- -------------- ---- -------- ---------- ----- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carnegie March 20, 1996 $1,538 $159 $248 $246 $207 $ 46 $ 195
Rose Tree May 2, 1996 3,990 367 455 549 451 141 633
Mount Airy Buildings July 23, 1996 1,130 183 183 -- 6 52 189
------ ---- ---- ---- ---- ---- ------
$6,658 $709 $886 $795 $664 $239 $1,017
------ ---- ---- ---- ---- ---- ------
</TABLE>
Revenues and expenses of the property disposed of in 1996 for the period January
1, 1995 through December 31, 1995, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Essex Road March 20, 1996 ($1,461) ($222) ($233) ($215) ($327) ($53) ($334)
------- ----- ----- ----- ----- ---- -----
</TABLE>
Revenues and expenses related to the Partial Prepayment in 1996 for the period
January 1, 1995 through December 31, 1995, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Partial Prepayment March 12, 1996 -- -- -- -- -- -- (29)
------ ---- ---- ---- ---- ---- ----
Total Pro forma Adj. for
YTD Sept. 1996 Events $5,197 $487 $653 $580 $337 $186 $654
====== ==== ==== ==== ==== ==== ====
See accompanying footnotes on the subsequent page.
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(continued)
(c) Reflects:
Revenues and expenses of the Acquisitions for the period January 1, 1995 through
December 31, 1995, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Other Real Estate
Property/Event Date Rents(1) Recoveries Income Taxes Utilities
- -------------- ---- -------- ---------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Harborside November 4, 1996 $34,782 $ 9,369 $182 $4,081 $1,109
Five Sentry November 7, 1996 2,055 -- -- 173 35
Whiteweld December 10, 1996 3,625 359 -- 468 698
One Bridge Plaza December 16, 1996 3,508 288 -- 468 417
Airport Center December 17, 1996 7,085 1,037 28 741 1,055
------- ------ ---- ------ ------
Total Pro Forma Adj. for
1996 Reported Events $51,055 $11,053 $210 $5,931 $3,314
======= ======= ==== ====== ======
<CAPTION>
Operating General and
Property/Event Services Administrative Depreciation(2)
- -------------- -------- -------------- --------------
<S> <C> <C> <C>
Harborside $4,203 $2,530 $6,316
Five Sentry 357 101 264
Whiteweld 524 147 748
One Bridge Plaza 554 259 570
Airport Center 1,152 408 914
------ ------ ------
Total Pro Forma Adj. for
1996 Reported Events $6,790 $3,445 $8,812
====== ====== ======
(1) Pro forma base rents are presented on a straight-line basis calculated from
January 1, 1995 forward.
(2) Depreciation is based on building-related portion of the purchase price and
associated costs depreciated using the straight-line method over a 40-year life.
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(continued)
(d) The pro forma adjustments to interest expense reflect interest on
mortgage debt assumed with certain acquisitions, the effect of the
Partial Prepayment, and the use of proceeds from the Offerings to pay
down outstanding borrowings on the Company's credit facilities. Pro
forma interest expense is computed as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the Partial $ 4,962
Prepayment (fixed interest rate of 8.02 percent on $44,313 and variable
rate of 30-day LIBOR plus 100 basis points on $20,195; weighted average
interest rate used is 6.97 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1,539
1995 (fixed interest rate of 8.25 percent on average outstanding
principal balance of approximately $18,654)
Interest expense on mortgages assumed with Harborside acquisition on 10,840
November 4, 1996 (fixed interest rate of 7.32 percent on $107,912 and
initial rate of 6.99 percent on $42,088)
Additional interest expense incurred as a result of the Partial Prepay- 257
ment on March 12, 1996
Interest expense on outstanding borrowings on the Company's credit lines 2,326
(a variable rate decreasing from 30-day LIBOR plus 275 basis point to
30-day LIBOR 150 basis points during the period on $29,805; weighted
average interest rate used is 7.80 percent)
-------
Total 1995 pro forma interest expense $19,924
=======
</TABLE>
Interest expense can be effected by increases and decreases in the
variable interest rates under the Company's various floating rate debt.
For example, a one-eighth percent change in such variable interest rates
will result in a $115 change for the year ended December 31, 1995.
(e) Represents the pro forma income allocated to the estimated 9.12 percent
pro forma weighted average minority interest (Units) in Cali Realty L.P.
(the Operating Partnership).
(f) Pro forma weighted average shares outstanding is computed assuming that
the Offerings occurred as of January 1, 1995 and that shares were not
issued in excess of amounts needed to fund the Acquisitions and pay
down the credit facilities.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Cali Realty Corporation on Forms S-3 (File Nos. 333-09875, 333-09081, 33-96542,
and 33-96538) and Form S-8 (File Nos. 33-91822 and 333-18725) of our report
dated December 16, 1996 on our audit of the Statement of Revenue and Certain
Expenses for One Bridge Plaza which report is included in this Current Report on
Form 8-K.
/s/ Schonbraun Safris Sternlieb & Co., L.L.C.
- ---------------------------------------------
Schonbraun Safris Sternlieb & Co., L.L.C.
Roseland, New Jersey
December 31, 1996
<PAGE>
Exhibit Index
Exhibit
Number Exhibit Title
- ------ -------------
10.57 Sale Agreement between Metropolitan Life Insurance
Company, a New York corporation, as Seller, and
Cali Realty Acquisition Corp., a Delaware corporation,
as Purchaser, as of November 26, 1996
10.58 Amendment to Sale Agreement as of December 4, 1996,
by and between Metropolitan Life Insurance Company,
a New York corporation, and Cali Realty Acquisition Corp.,
a Delaware corporation.
EXHIBIT NUMBER
10.57
<PAGE>
ONE BRIDGE PLAZA
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER,
AND
CALI REALTY ACQUISITION CORP.,
a Delaware corporation,
AS PURCHASER
As of November 26, 1996
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of November 26,
1996 (the "Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation ("Seller"), and CALI REALTY ACQUISITION CORP., a Delaware
corporation ("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms
and conditions hereinafter set forth, Seller agrees to sell and convey to
Purchaser, and Purchaser agrees to purchase from Seller, the following:
(a) that certain tract or parcel of land situated in Bergen
County, New Jersey, more particularly described in Exhibit A attached hereto and
made a part hereof, together with all rights and appurtenances pertaining to
such property, including any right, title and interest of Seller in and to
adjacent streets, alleys, rights-of-way, easements, and any appurtenances and
other rights and benefits belonging, or in any way related thereto (the property
described in clause (a) of this Section 1.1 being herein referred to
collectively as the "Land");
(b) the buildings, structures, fixtures, equipment and other
improvements affixed to or located on the Land, including without limitation,
all mechanical, electrical, heating, ventilation, air conditioning, plumbing,
elevator and escalator fixtures, systems and equipment, excepting and excluding
fixtures owned by a tenant which does not become the property of Seller, as
landlord, under a lease with such tenant, or by operation of law (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to
all tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements,
which personal property includes without limitation the personal property listed
on Exhibit B attached hereto (the property described in clause (C) of this
Section 1.1 being herein referred to collectively as the "Personal Property");
provided, however, that no portion of the Purchase Price (as defined in Section
1.3 hereof) is being allocated to or paid for the Personalty;
(d) All of Seller's estate, right, title and interest, if any, in
and to any land lying in the bed of any street, road, avenue, alley, way or
boulevard which abuts the Land, including any strips and gores between the Land
and abutting properties, and all right, title and interest of Seller, if any, in
and to any award made or to be made in lieu thereof and in and to any award for
damage to the Land or the Improvements by reason of any change of grade in any
street, road, avenue, way or boulevard;
<PAGE>
(e) any and all of Seller's right, title and interest in and to
the leases, licenses and occupancy agreements covering all or any portion of the
Real Property, to the extent they are in effect on the date of the Closing (as
such term is defined in Section 4.1 hereof) (the property described in clause
(d) of this Section 1.1 being herein referred to collectively as the "Leases"),
together with all rents and other sums due thereunder (the "Rents") and any and
all security deposits in Seller's possession in connection therewith (the
"Security Deposits"); and
(f) any and all of Seller's right, title and interest in and to
(i) copies of all plans, specifications, architectural and engineering drawings,
prints, surveys, soil and substrata studies, relating to the Land, Improvements
or Personal Property in Seller's possession, (ii) all non-proprietary operating
manuals and books, data and records regarding the Property and its component
systems in Seller's possession, (iii) all assignable contracts and agreements
(collectively, the "Operating Agreements") listed and described on Exhibit C
attached hereto and made a part hereof, relating to the upkeep, repair,
maintenance or operation of the Land, Improvements or Personal Property, (iv)
all assignable existing warranties and guaranties (express or implied) issued to
Seller in connection with the Improvements or the Personal Property, (v) all
assignable existing permits, licenses, certificates of occupancy, approvals and
authorizations issued by any governmental authority in connection with the
Property, and (vi) the non-exclusive right to the name "One Bridge Plaza" (the
property described in clause (f) of this Section 1.1 being sometimes herein
referred to collectively as the "Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are
hereinafter sometimes referred to collectively as the "Real Property." The Land,
the Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property."
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to
purchase the Property for the amount of TWENTY-SEVEN MILLION AND 00/100 DOLLARS
($27,000,000.00) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price (which
amount shall include the Deposit, as defined in Section 1.5 hereof, and which
Deposit shall be credited against the Purchase Price at the Closing), 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
funds to a bank account designated by Seller in writing to Purchaser at least
three (3) days prior to the Closing.
Section 1.5 Deposit. Purchaser is depositing with Stewart Title
Guaranty Company (hereinafter sometimes referred to as the "Escrow Agent" or the
"Title Company"), having an office at Crossroads Corporate Center, One
International Boulevard, Suite 600, Mahwah, New Jersey 07495 Attention: Jeffrey
C. Louis, (a) simultaneously with the execution and delivery of this Agreement,
the sum of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) (the "Initial
Deposit"), and (b) in the event that Purchaser gives Seller an Investigation
Notice (as defined in Section 3.3 hereof) no later than December 3, 1996 stating
Purchaser's intention to proceed hereunder, the sum of TWO MILLION TWO HUNDRED
THOUSAND AND 00/100 DOLLARS ($2,200,000.00) (the "Additional Deposit") in good
funds, either by check or by federal wire transfer (the Initial Deposit and the
Additional Deposit being hereinafter collectively referred to as the "Deposit").
The Escrow Agent shall hold the Initial Deposit and Additional Deposit in an
<PAGE>
interest-bearing account reasonably acceptable to Seller and Purchaser, in
accordance with the terms and conditions of this Agreement. All interest on the
Deposit shall be deemed income of Purchaser, and Purchaser shall be responsible
for the payment of all costs and fees imposed on the Deposit account. The
Deposit and all accrued interest shall be distributed in accordance with the
terms of this Agreement. The failure of Purchaser to timely deliver any portion
of the Deposit hereunder shall entitle Seller, at Seller's sole option, to
terminate this Agreement immediately and the Initial Deposit, if previously
deposited with Escrow Agent, shall be refunded to Purchaser. Any interest earned
on the Deposit shall be credited to Purchaser at the Closing. If the transaction
contemplated by this Agreement closes in accordance with the terms and
conditions of this Agreement, at the Closing, the Deposit shall be delivered by
Escrow Agent to Seller as payment towards the Purchase Price. If the transaction
contemplated by this Agreement fails to close, the Deposit shall be delivered by
Escrow Agent to the party entitled to the same pursuant to the terms of this
Agreement and the accrued interest shall be delivered by Escrow Agent to
Purchaser.
Section 1.6 Escrow Agent. Escrow Agent shall hold and dispose of
the Deposit in accordance with the terms of this Agreement. Seller and Purchaser
agree that the duties of the Escrow Agent hereunder are purely ministerial in
nature and shall be expressly limited to the safekeeping and disposition of the
Deposit in accordance with this Agreement. Escrow Agent shall incur no liability
in connection with the safekeeping or disposition of the Deposit for any reason
other than Escrow Agent's willful misconduct or gross negligence. If only one
party makes demand for payment of the Deposit, Escrow Agent shall promptly give
written notice to the other party of such demand. Escrow Agent is authorized and
directed to honor such demand unless the other party objects to Escrow Agent in
writing within ten (10) days after receipt of Escrow Agent's notice. In the
event that Escrow Agent shall be in doubt as to its duties or obligations with
regard to the Deposit, or in the event that Escrow Agent receives conflicting
instructions from Purchaser and Seller with respect to the Deposit, Escrow Agent
shall not be required to disburse the Deposit and may, at its option, continue
to hold the Deposit until both Purchaser and Seller agree as to its disposition,
or until a final judgment is entered by a court of competent jurisdiction
directing its disposition, or Escrow Agent may interplead the Deposit in
accordance with the laws of the state in which the Property is located.
Escrow Agent shall not be responsible for any interest on the
Deposit except as is actually earned, or for the loss of any interest resulting
from the withdrawal of the Deposit prior to the date interest is posted thereon.
Escrow Agent shall execute this Agreement solely for the purpose
of being bound by the provisions of Sections 1.5 and 1.6 hereof.
ARTICLE II
TITLE AND SURVEY
Section 2.1 Existing Title and Survey Matters. Purchaser
acknowledges and agrees that: (a) Purchaser has obtained prior to the Effective
Date: (i) a title insurance policy (the "Owner's Title Policy") dated November
8, 1996 and issued by Stewart Title Guaranty Company (Case Number US 2126); and
(ii) a copy of the land title survey prepared by Boswell Engineering dated
September 20, 1996, for the Land and the Improvements (the "Survey"); (b)
<PAGE>
Purchaser has had an opportunity, prior to the Effective Date, to order and
receive its own title report from the Title Company and survey for the Land and
the Improvements; and (C) the matters (the "Existing Title And Survey Matters")
set forth on Exhibit R attached hereto and made a part hereof, have been agreed
to and accepted by Purchaser. Seller agrees that title to the Real Property
shall be delivered to Purchaser subject only to the title exceptions shown on
Exhibit R and Purchaser has agreed to and accepted the same.
Section 2.2 Pre-Closing "Gap" Title Defects. Purchaser may, at or
prior to Closing, notify Seller in writing (the "Gap Notice") of any objections
to title that are not Permitted Exceptions (as defined in Section 2.3) (a)
raised by the Title Company between the Effective Date and the Closing and (b)
not disclosed by the Title Company or otherwise known to Purchaser prior to the
Effective Date (collectively, "Defects"); provided that Purchaser must notify
Seller of any such Defect within a reasonable time (but not more than five (5)
business days) of being made aware of the existence of such Defect. If Purchaser
sends a Gap Notice to Seller, Seller shall have ten (10) business days after
receipt of the Gap Notice to notify Purchaser (a) that Seller will remove any
Defect described therein from title on or before the Closing; provided that
Seller may extend the Closing for such period as shall be required to effect
such cure, but not beyond thirty (30) days; or (b) that Seller elects not to
cause any such Defect to be removed. The procurement by Seller of an endorsement
to the Title Policy (as defined in Section 2.4 hereof) insuring Purchaser
against any Defect which was disapproved pursuant to this Section 2.2 shall be
deemed a cure by Seller of such disapproval. If Seller gives Purchaser notice
under clause (b) above, Purchaser shall have ten (10) business days in which to
notify Seller that Purchaser will nevertheless proceed with the purchase and
take title to the Property subject to such Defects, or that Purchaser will
terminate this Agreement (it being understood and agreed that if Purchaser shall
fail to notify Seller of its election within said ten-day period, then Purchaser
shall be deemed to have elected to terminate this Agreement). If this Agreement
is terminated pursuant to the foregoing provisions of this paragraph, then (1)
neither party shall have any further rights or obligations hereunder (except for
any indemnity obligations of either party pursuant to the other provisions of
this Agreement), (2) Seller shall direct Escrow Agent to refund the Deposit to
Purchaser, and (3) Seller shall refund to Purchaser all charges made for (i)
examining the title; (ii) any appropriate additional municipal searches made in
accordance with this Agreement; and (iii) survey and survey inspection charges.
Notwithstanding anything hereinbefore provided to the contrary, in all events,
Purchaser shall be deemed to have objected to, and Seller, shall be obligated to
discharge and remove, the following title exceptions: (i) any title exceptions
which are mortgages or similar encumbrances entered into by Seller; (ii) any
title exceptions created by Seller after the date hereof and prior to the
Closing; (iii) any title exceptions which can be removed or cured solely by the
payment of money, provided the aggregate cost thereof does not exceed ONE
HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($150,000.00); and (iv) those title
exceptions shown in the Owner's Title Policy that are not shown on Exhibit R.
Section 2.3 Permitted Exceptions. The Property shall be conveyed
subject to the following matters, which are hereinafter referred to as the
"Permitted Exceptions":
(a) those matters that either are not objected to in writing as
provided in Section 2.2 hereof, or if objected to in writing by Purchaser, are
those which Seller has elected not to remove or cure (to the extent that Seller
may make such election under this Agreement), or has been unable to remove or
cure, and subject to which Purchaser has elected or is deemed to have elected to
accept the conveyance of the Property;
<PAGE>
(b) the rights of tenants under the Leases;
(c) 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;
(d) 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
(e) the Existing Title And Survey Matters.
Section 2.4 Conveyance of Title.
(a) At Closing, Seller shall convey and transfer to Purchaser
insurable title (as that term is hereinafter defined) to the Land and
Improvements (i.e., that portion which constitutes real property) in recordable
form, subject to no liens, claims, encumbrances, rights-of-way, easements,
restrictions, reservations, covenants, conditions, claims, liabilities, charges,
reversions or other agreements or any other matter affecting title, except for
the Permitted Exceptions, and such other facts any updated survey or survey
inspections thereof would show, provided such other state of facts do not affect
insurable title or materially restrict or prohibit the maintenance or use of the
Improvements for their present purposes. The words "insurable title" and
"insurable" as used in this Agreement are hereby defined to mean title which is
insurable at standard rates (without special premium) by the Title Company or
another national title company without exception other than the Permitted
Exceptions, and standard printed policy and survey exceptions. Evidence of
delivery of such title shall be the issuance by the Title Company, or another
national title company, of an ALTA (10-17-92) Owner's Policy of Title Insurance
(the "Title Policy") covering the Real Property, in the full amount of the
Purchase Price, subject only to the Permitted Exceptions.
(b) Seller shall comply with all notes or notices of violations
of law or municipal ordinances, orders or requirements noted in or issued by any
governmental department having authority as to lands, buildings, fire, health
and labor conditions affecting the Property (hereinafter collectively referred
to as "Laws") as of the Effective Date. Seller shall comply with all notes or
notices of violations of Law arising between the Effective Date and the Closing
provided that the aggregate cost of removing such violations and performing any
related repairs does not exceed FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00).
The Property shall be transferred free of them at the Closing. Seller shall
furnish Purchaser with any authorizations necessary to make the searches that
could disclose these matters. Notwithstanding the forgoing, to the extent that
any of the Leases requires the tenants thereunder to comply with Laws, Seller
shall have no obligation to cure any violations of Laws prior to the Closing
which are the obligations of such tenants to cure pursuant to the terms of the
Leases; provided, however, that Seller shall notify any tenant of a violation
caused by such tenant and shall take all actions reasonably necessary to cause
the tenant to cure the same in the manner required under the terms of such
tenant's Lease. Notwithstanding anything hereinbefore provided to the contrary,
in the event that either (1) the aggregate cost of removing violations of Law
arising between the date of this Agreement and the Closing (which are not the
obligation of any tenant to cure) and performing any related repairs exceeds
<PAGE>
FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00), or (2) after November 27, 1996 a
tenant causes a violation of Law [or, after November 27, 1996, Purchaser becomes
aware of a violation of Law caused by a tenant which Purchaser could not, in the
exercise of due diligence, have been made aware of during the Inspection Period
(as defined in Section 3.3)] which is not cured by the Closing and such
violation is capable of being cured by an expenditure of money whose cost is
estimated to exceed FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00), then
Purchaser may, at its option, (a) terminate this Agreement by written notice to
Seller, in which event neither party shall have any further rights or
obligations hereunder (except for any indemnity obligations of either party
pursuant to the other provisions of this Agreement) and the sole liability of
Seller shall be as provided in the fifth sentence of Section 2.2 above, or (b)
subject to the terms of this Section 2.4(b), Purchaser may purchase the Property
with such violations.
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Right of Inspection. Purchaser acknowledges and
agrees that it has had an opportunity, prior to the Effective Date, to make any
and all physical and other inspections of the Property as Purchaser has deemed
necessary and/or appropriate in connection with the transaction contemplated by
this Agreement, and that Purchaser has agreed, subject to the next sentence and
the provisions of Article VII hereof, to accept the Property at the Closing in
the condition that exists on the Effective Date, reasonable wear and tear
excepted. Seller acknowledges and agrees that Purchaser has not completed its
review of, and has not, as of the Effective Date approved of, any of the
component systems that may be related to the perimeter leaking, including the
building skin, roof, cover, flashing details, parapet - shroud and exterior wall
systems, or the terms and conditions of that certain Electric Energy Savings
Purchase Agreement dated August 31, 1994 (the "Electric Agreement"). Seller
acknowledges and agrees that Purchaser shall have the right to make additional
physical and other inspections of the Property after the Effective Date in
accordance with the terms of that certain access agreement dated November 8,
1996 between Seller and Purchaser. Seller agrees to extend the right of access
to the Property under the foregoing access agreement from November 15, 1996 to
the date of the Closing.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT
(1) PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT
D ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS
TO PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER
ACKNOWLEDGES AND AGREES THAT IT HAS CONDUCTED, PRIOR TO THE EFFECTIVE DATE, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMED SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE, AND
PURCHASER HAS APPROVED OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY.
<PAGE>
Section 3.3 Right of Termination. During the period beginning
upon the Effective Date and ending at 5:00 p.m. (local time at the Property) on
December 3, 1996 (hereinafter referred to as the "Inspection Period"), Purchaser
shall have the right to examine at the Property (or the property manager's
office, as the case may be) documents and files located at the Property or the
property manager's office concerning the leasing, maintenance and operation of
the Property, but excluding Seller's partnership or corporate records, internal
memoranda, financial projections, budgets, appraisals, accounting and tax
records and similar proprietary, confidential or privileged information
(collectively, the "Confidential Documents"). If based upon its examination of
the Confidential Documents, Purchaser determines in its sole discretion that the
Property or any aspect thereof is unsuitable for Purchaser's acquisition,
Purchaser shall have the right to terminate this Agreement as hereinafter
provided in the first paragraph of this Section 3.3. Purchaser shall elect to
either proceed with the purchase of the Property or terminate this Agreement by
giving written notice of its intention to Seller and Escrow Agent (the
"Investigation Notice") no later than December 3, 1996. In the event that the
Investigation Notice is not received by Seller by December 3, 1996 (time being
of the essence), Purchaser shall be deemed to have elected not to proceed
hereunder. If (i) Seller shall not have received the Investigation Notice by
December 3, 1996, or (ii) Seller shall have received the Investigation Notice by
December 3, 1996 stating Purchaser's intention not to proceed hereunder (time
being of the essence), then neither party shall have any further rights or
obligations hereunder (except for any indemnity obligations of either party
pursuant to the other provisions of this Agreement), and Seller shall direct and
authorize Escrow Agent to promptly return the Initial Deposit to Purchaser and
each party shall bear its own costs incurred hereunder. If Purchaser gives
Seller, no later than December 3, 1996, an Investigation Notice stating
Purchaser's intention to proceed hereunder accompanied by the Additional
Deposit, then Purchaser shall be deemed to have elected to proceed with the
purchase of the Property pursuant to the terms hereof.
Purchaser shall also have the following rights to terminate this
Agreement: (i) at any time during the period from the Effective Date to December
3, 1996, in the event that the condition of any of the component systems that
may be related to the perimeter leaking, including the building skin, roof,
cover, flashing details, parapet-shroud and exterior wall systems, is
unacceptable to Purchaser, or if the terms and conditions of the Electric
Agreement are satisfactory to Purchaser, and (ii) at any time during the period
from the Effective Date up to and including the date of the Closing, in the
event that any of the representations and warranties of Seller in Section 5.1
hereof, without taking into account the knowledge standard, is incorrect. If
this Agreement is terminated by Purchaser in accordance with the immediately
preceding sentence, Seller shall direct and authorize Escrow Agent to promptly
return the Deposit, or portion thereof previously deposited with Escrow Agent,
to Purchaser, and each party shall bear its own costs incurred hereunder.
Section 3.4 Review of Tenant Estoppels. Seller shall deliver to
each tenant of the Property an estoppel certificate in substantially the form of
Exhibit E attached hereto (the "Tenant Estoppels"), and shall request that the
tenants complete and sign the Tenant Estoppels and return them to Seller. Seller
shall deliver copies of the completed Tenant Estoppels to Purchaser as Seller
receives them by means of transmittal letters that indicate that Purchaser has
five (5) business days to object to the Tenant Estoppels sent therewith.
Purchaser shall notify Seller within five (5) business days of receipt of any
<PAGE>
Tenant Estoppel in the event Purchaser determines such Tenant Estoppel is not
acceptable to Purchaser along with the reasons for such determination. In the
event that Seller's transmittal letter indicates that Purchaser has five (5)
business days to object to the Tenant Estoppels delivered therewith and
Purchaser fails to give such notice within such five (5) business day period,
then any such Tenant Estoppel shall be deemed to be acceptable to Purchaser. In
the event that Seller fails to obtain the Tenant Estoppels (or in lieu thereof,
at Seller's option, Seller estoppels therefor) that are satisfactory to
Purchaser with respect to tenants of the Property that meet the tenant estoppel
standards described on Exhibit F attached hereto on or before five (5) days
prior to Closing, Purchaser shall have the right to terminate this Agreement by
written notice to Seller. If this Agreement is terminated pursuant to the
foregoing provisions of this paragraph, then neither party shall have any
further rights or obligations hereunder (except for any indemnity obligations of
either party pursuant to the other provisions of this Agreement), the Deposit
shall be returned to Purchaser, and the sole liability of Seller shall be as
provided in the fifth sentence of Section 2.2 above. If Purchaser fails to give
Seller a notice of termination as set forth above, Purchaser shall be deemed to
have approved the Tenant Estoppels (and Seller estoppels, if applicable) and to
have elected to proceed with the purchase of the Property pursuant to the terms
hereof. Any Tenant Estoppel which is received from a tenant after Seller
provides its own estoppel may be substituted for Seller's estoppel and Seller
shall have no further liability thereunder, provided that such Tenant Estoppel
contains no changes or, if changed, is otherwise reasonably acceptable to
Purchaser. The provisions of this Section 3.4 shall survive the Closing.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at Seller's offices at 200
Park Avenue, 12th floor, New York, NY, and at Seller's option, on either
December 16, 1996 or January 15, 1997. Seller shall notify Purchaser in writing
no later than December 9, 1996 as to which of the foregoing dates it has
selected for the Closing. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deed shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein.
Section 4.2 Seller's Obligations at Closing. At Closing, Seller
shall:
(a) deliver to Purchaser a duly executed and acknowledged bargain
and sale deed (the "Deed") in the form attached hereto as Exhibit G, conveying
the Land and Improvements, subject only to the Permitted Exceptions. At Seller's
option, and for convenience, Seller may omit from the Deed the recital of any or
all of the "subject to" clauses concerning the Permitted Exceptions, but the
same shall nevertheless survive the Closing and delivery of the Deed. The terms
of the immediately preceding sentence shall survive the Closing and the delivery
of the Deed;
(b) deliver to Purchaser a duly executed and acknowledged bill of
sale (the "Bill of Sale") conveying the Personal Property without warranty of
title or use and without warranty, express or implied, as to merchantability and
fitness for any purpose and in the form attached hereto as Exhibit H;
<PAGE>
(c) assign to Purchaser, and Purchaser shall assume, the
landlord/lessor interest in and to the Leases, Rents and Security Deposits, and
any and all obligations to pay leasing commissions and finder's fees with
respect to the Leases and amendments, renewals and expansions thereof, to the
extent provided in Section 4.4(b)(v) hereof, by a duly executed and acknowledged
assignment and assumption agreement (the "Assignment of Leases") in the form
attached hereto as Exhibit I pursuant to which (i) Seller shall indemnify
Purchaser and hold Purchaser harmless from and against any and all claims
pertaining thereto arising prior to Closing and (ii) Purchaser shall indemnify
Seller and hold Seller harmless from and against any and all claims pertaining
thereto arising from and after the Closing, including without limitation, claims
made by tenants with respect to tenants' Security Deposits to the extent paid,
credited or assigned to Purchaser;
(d) to the extent assignable, assign to Purchaser, and Purchaser
shall assume, Seller's interest in the Operating Agreements and the other
Intangibles by a duly executed and acknowledged assignment and assumption
agreement (the "Assignment of Contracts") in the form attached hereto as Exhibit
J pursuant to which (i) Seller shall indemnify Purchaser and hold Purchaser
harmless from and against any and all claims pertaining thereto arising prior to
Closing and (ii) Purchaser shall indemnify Seller and hold Seller harmless from
and against any and all claims pertaining thereto arising from and after the
Closing;
(e) join with Purchaser to execute a notice (the "Tenant Notice")
in the form attached hereto as Exhibit K, which Purchaser shall send to each
tenant under each of the Leases promptly after the Closing, 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), and directing that all Rent and other sums
payable after the Closing under each such Lease be paid as set forth in the
notice;
(f) In the event that any representation or warranty of Seller
needs to be modified, deliver to Purchaser a certificate, dated as of the date
of Closing and executed on behalf of Seller by a duly authorized officer
thereof, 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
Closing, and (ii) is expressly permitted pursuant to this Agreement or is beyond
the reasonable control of Seller to prevent; provided, however, that the
occurrence of a change shall constitute the non-fulfillment of the condition set
forth in Section 4.6(b) hereof and shall entitle Purchaser to receive the return
of the Deposit plus reimbursement by Seller to Purchaser of Purchaser's actual
out-of-pocket expenses in connection with any such default or breach (but in no
event shall such reimbursement exceed the sum of $25,000.00), which return and
reimbursement shall operate to terminate this Agreement and release Seller from
any and all liability hereunder. If, despite changes or other matters described
in such certificate, the Closing occurs, Seller's representations and warranties
set forth in this Agreement shall be deemed to have been modified by all
statements made in such certificate;
(g) deliver to Purchaser such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Seller;
<PAGE>
(h) deliver to Purchaser a certificate in the form attached
hereto as Exhibit L 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;
(i) deliver to Purchaser an original (or a photocopy, to the
extent an original is not in the possession of Seller or its managing agent for
the Property) executed counterpart of each of the Leases and the Operating
Agreements, together with such leasing and property files and records located at
the Property or the property manager's office which are material in connection
with the continued operation, leasing and maintenance of the Property, but
excluding any Confidential Documents. For a period of three (3) years after the
Closing, Purchaser shall allow Seller and its agents and representatives access
without charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance notice and at all reasonable times, to examine
and make copies of any and all such files, records and documents, which right
shall survive the Closing. Seller shall upon request of Purchaser after Closing,
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;
(j) deliver such affidavits, including without limitation an
affidavit of title, as may be customarily and reasonably required by the Title
Company, in a form reasonably acceptable to Seller;
(k) deliver to Purchaser possession and occupancy of the
Property, subject only to the Permitted
Exceptions;
(l) deliver to Purchaser a Letter of Non-Applicability issued by
the State of New Jersey Department of Environmental Protection and Energy with
respect to the Property, which letter confirms the non-applicability of the
Industrial Site Recovery Act (formerly known as the New Jersey Environmental
Cleanup Responsibility Act) and the regulations promulgated thereunder with
respect to the Property;
(m) execute and acknowledge a closing statement acceptable to
Seller and Purchaser;
(n) deliver all 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 1099-S
and 1096;
(o) deliver all non-proprietary books, records, plans,
specifications, drawings, permits, business licenses, certificates of occupancy,
keys (with appropriate identification), and other documents or items, if any, in
Seller's possession or control and relating to the operation of the Property;
and
(p) deliver such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement.
<PAGE>
Section 4.3 Purchaser's Obligations at Closing. At Closing,
Purchaser shall:
(a) pay to Seller the full amount of the Purchase Price (it being
understood that a portion of the Purchase Price may be payable by the
disbursement by Escrow Agent of the Deposit to Seller at the Closing in
immediately available wire transferred funds), as increased or decreased by
prorations and adjustments as herein provided, in immediately available wire
transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment of Leases,
Assignment of Contracts and Tenant Notices;
(c) In the event that any representation or warranty of Purchaser
set forth in Sections 5.5(a) or (b) hereof needs to be modified due to changes
since the Effective Date, deliver to Seller a certificate, dated as of the date
of Closing and executed on behalf of Purchaser by a duly authorized
representative thereof, identifying any such 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 Purchaser be liable to Seller for, or be
deemed to be in default hereunder by reason of, any breach of representation or
warranty set forth in Sections 5.5(a) or (b) hereof which results from any
change that (i) occurs between the Effective Date and the date of Closing and
(ii) is expressly permitted under the terms of this Agreement or is beyond the
reasonable control of Purchaser to prevent; provided, however, that the
occurrence of a change which is not permitted hereunder or is beyond the
reasonable control of Purchaser to prevent shall, if materially adverse to
Seller, constitute the non-fulfillment of the condition set forth in Section
4.7(C) hereof; if, despite changes or other matters described in such
certificate, the Closing occurs, Purchaser's representations and warranties set
forth in this Agreement shall be deemed to have been modified by all statements
made in such certificate;
(d) deliver to Seller such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Purchaser;
(e) deliver such affidavits as may be customarily and reasonably
required by the Title Company, in a form reasonably acceptable to Purchaser;
(f) execute a closing statement acceptable to Purchaser and
Seller; and
(g) deliver such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) All income and expenses of the Property shall be apportioned
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. Such prorated
items shall include without limitation the following:
(i)all Rents, if any;
<PAGE>
(ii)taxes, sewer rents, street vault charges and assessments,
if any, on the basis of the fiscal year or period for which
assessed, except that if the Closing shall occur before the
tax rate, sewer rent, street vault charges or assessment is
fixed, then the apportionment of taxes, sewer rents, street
vault charges or assessments shall be upon the basis of the
tax rate, sewer rent, street vault charge or assessment for
the next preceding year applied to the latest assessed
valuation available at the time of Closing;
(iii) utility charges 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 (dated
not more than fifteen (15) days prior to Closing), subject
however to readjustment, as hereinafter provided, or, if
unmetered, on the basis of a current bill for each such
utility. The reading taken subsequent to, and as soon as
possible following, the Closing will then be apportioned on a
per diem basis from the date of such reading immediately
prior thereto and Seller shall either pay the undercharge to
Purchaser, or be reimbursed the overcharge by Purchaser based
upon a comparison of the readings taken prior and subsequent
to the Closing;
(iv)all amounts payable under brokerage agreements and
Operating Agreements, pursuant to the terms of this
Agreement; and
(v)any other operating expenses or other items pertaining to
the Property which are customarily prorated between a
purchaser and a seller in the county in which the Property is
located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i)At Closing, (A) Seller shall, at Seller's option, either
deliver to Purchaser any Security Deposits actually held by
Seller pursuant to the Leases or credit to the account of
Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against
delinquent Rents or otherwise as provided in the Leases), and
(B) Purchaser shall credit to the account of Seller all
refundable cash or other deposits posted with utility
companies serving the Property which Seller has assigned to
Purchaser, or, at Seller's option, Seller shall be entitled
to receive and retain such refundable cash and deposits;
(ii)Any taxes paid at or prior to Closing shall be prorated
based upon the amounts actually paid. If taxes and
assessments due and payable during the year of Closing have
not been paid before Closing, Seller shall be charged at
Closing an amount equal to that portion of such taxes and
assessments 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
<PAGE>
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 within thirty (30) days after such amounts
are determined following Closing, subject to the provisions
of Section 4.4(d) hereof;
(iii)Charges referred to in Section 4.4(a) hereof which are
payable by any tenant to a 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;
(iv)As to utility charges referred to in Section 4.4(a)(iii)
hereof, 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 or any termination of this Agreement;
(v)Purchaser shall be responsible for the payment of (A) all
Tenant Inducement Costs (as hereinafter defined) and leasing
commissions which become due and payable (whether before or
after Closing) as a result of any new Leases, or any
renewals, amendments or expansions of existing Leases, signed
during the Lease Approval Period (as hereinafter defined)
and, if required, approved or deemed approved in accordance
with Section 5.4 hereof; and (B) all Tenant Inducement Costs
and leasing commissions with respect to new Leases, or
renewals, amendments or expansions of existing Leases, signed
or entered into from and after the date of Closing; and (C)
all Tenant Inducement Costs and leasing commissions listed on
Exhibit M attached hereto; and (D) building capital costs for
the projects listed on Exhibit M for work to be performed
during the period from and after the date of Closing. If, as
of the date of Closing, Seller shall have paid any Tenant
Inducement Costs, leasing commissions or building capital
costs for which Purchaser is responsible pursuant to the
foregoing provisions, Purchaser shall reimburse Seller
therefor at Closing. For purposes hereof, the term "Tenant
Inducement Costs" shall mean any out-of-pocket payments
required under a Lease to be paid by the landlord thereunder
to or for the benefit of the tenant thereunder which is in
the nature of a tenant inducement, including specifically,
<PAGE>
without limitation, tenant improvement costs, lease buyout
costs, and moving, design, refurbishment and club membership
allowances. The term "Tenant Inducement Costs" shall not
include loss of income resulting from any free rental period,
it being agreed that Seller shall bear the loss resulting
from any free rental period until the date of Closing and
that Purchaser shall bear such loss from and after the date
of Closing. For purposes hereof, the term "Lease Approval
Period" shall mean the period from the Effective Date until
the date of Closing;
(vi) Unpaid and delinquent Rent collected by Seller and
Purchaser after the date of Closing shall be delivered as
follows: (a) if Seller collects any unpaid or delinquent Rent
for the Property, Seller shall, within fifteen (15) days
after the receipt thereof, deliver to Purchaser any such Rent
which Purchaser is entitled to hereunder relating to the date
of Closing and any period thereafter, and (b) if Purchaser
collects any unpaid or delinquent Rent from the Property,
Purchaser shall, within fifteen (15) days after the receipt
thereof, deliver to Seller any such Rent which Seller is
entitled to hereunder relating to the period prior to the
date of Closing. Seller and Purchaser agree that (i) all
delinquent Rent received by Seller or Purchaser within the
first ninety (90) day period after the date of Closing shall
be applied (1) first to one month's delinquent Rent, if any,
in the order of maturity, (2) then to one month's current
Rent, and (3) then to one month's delinquent Rent, and (ii)
all Rent received by Seller or Purchaser after the first
ninety (90) day period after the date of Closing shall be
applied first to current Rent and then to delinquent Rent, if
any, in the inverse order of maturity. Purchaser will make a
good faith effort after Closing to collect all Rents in the
usual course of Purchaser's operation of the Property, but
Purchaser will not be obligated to institute any lawsuit or
other collection procedures to collect delinquent Rents.
Seller may attempt to collect any delinquent Rents owed
Seller and may institute any lawsuit or collection
procedures, but may not evict any tenant or terminate any
Lease. In the event that there shall be any Rents or other
charges under any Leases which, although relating to a period
prior to Closing, do not become due and payable until after
Closing or are paid prior to Closing but are subject to
adjustment after Closing (such as year end common area
expense reimbursements and the like), then any Rents or
charges of such type received by Purchaser or its agents or
Seller or its agents subsequent to Closing shall, to the
extent applicable to a period extending through the Closing,
be prorated between Seller and Purchaser as of Closing and
Seller's portion thereof shall be remitted promptly to
<PAGE>
Seller by Purchaser.
(c) Except as otherwise provided herein, any revenue or expense
amount which cannot be ascertained with certainty as of Closing shall be
prorated on the basis of the parties' reasonable estimates of such amount, and
shall be the subject of a final proration ninety (90) days after Closing, or as
soon thereafter as the precise amounts can be ascertained. Purchaser shall
promptly notify Seller when it becomes aware that any such estimated amount has
been ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
(d) Subject to the final sentence of Section 4.4(C) hereof, the
provisions of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns,
questionnaires and other documents as shall be required with regard to all
applicable real property transaction taxes imposed by applicable federal, state
or local law or ordinance;
(b) Seller shall pay the fees of any counsel representing Seller
in connection with this transaction. Seller shall also pay the following costs
and expenses:
(i) one-half of the escrow fee, if any, which may be charged
by the Title Company;
(ii) any transfer tax, sales tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer
of the Property; and
(iii) the fees for Seller's Broker.
(c) Purchaser shall pay the fees of any counsel representing
Purchaser in connection with this transaction. Purchaser shall also pay the
following costs and expenses:
(i) one-half of the escrow fee, if any, which may be charged
by the Title Company;
(ii) the fee for the title examination and the Title
Commitment and the premium for the Owner's Policy of Title
Insurance to be issued to Purchaser by the Title Company at
Closing, and all endorsements thereto;
(iii) the cost of the Survey;
(iv) the fees for recording the Deed; and
(v) the fees for Purchaser's Broker, if any.
(d) The Personal Property is included in this sale without
charge;
<PAGE>
(e) All costs and expenses incident to this transaction and the
closing thereof, and not specifically described above, shall be paid by the
party incurring same; and
(f) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 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:
(a) 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 provided for in Section 4.2 hereof;
(b) 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 (with appropriate modifications permitted under this Agreement);
(c) 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 the date of Closing; and
(d) Title Company is unconditionally prepared to issue to
Purchaser a title policy meeting the requirements set forth in Section 2.4(a)
hereof for an "insurable title".
Section 4.7 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:
(a) Seller shall have received the Purchase Price as adjusted as
provided herein, pursuant to and payable in the manner provided for in this
Agreement;
(b) 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 hereof;
(c) 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 (with appropriate modifications permitted under this
Agreement); and
(d) 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.
<PAGE>
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller
hereby makes the following representations and warranties to Purchaser as of the
Effective Date, which representations and warranties shall be deemed to have
been made again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller is duly organized, validly
existing and qualified and empowered to conduct its business. Seller has the
full right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so. Neither the execution and delivery of this
Agreement nor its performance by Seller will conflict with or result in the
breach of any contract, agreement, law, rule or regulation to which Seller is a
party or by which Seller is bound. This Agreement is valid and enforceable
against Seller in accordance with its terms and each instrument to be executed
by Seller pursuant to this Agreement or in connection herewith will, when
executed and delivered, be valid and enforceable against Seller in accordance
with its terms;
(b) Pending Actions. To Seller's knowledge, Seller has not
received written notice of any pending action, suit, arbitration, unsatisfied
order or judgment, government investigation or proceeding affecting the
Property;
(c) Operating Agreements. To Seller's knowledge, the Operating
Agreements listed on Exhibit C are all of the agreements concerning the
operation and maintenance of the Property entered into by Seller and affecting
the Property, except those operating agreements that are not assignable or are
to be terminated by Seller within thirty (30) days after the Closing, and except
any agreement with Seller's property manager, which shall be terminated by
Seller. The copies of the Operating Agreements which will be assigned and
delivered to Purchaser by Seller will be true and complete copies. To Seller's
knowledge, neither party is in material default under the terms of any of the
Operating Agreements;
(d) Lease Brokerage. To Seller's knowledge, there are no
agreements with brokers providing for the payment from and after the Closing by
Seller or Seller's successor-in-interest of leasing commissions or fees for
procuring tenants with respect to the Property, except as disclosed in Exhibit N
hereto;
(e) Condemnation. To Seller's knowledge, neither Seller nor
Seller's property manager has received any written notice of any pending or
proposed condemnation proceedings relating to the Property;
(f) Litigation. To Seller's knowledge, except as set forth on
Exhibit O attached hereto, and except proceedings for the collection of
delinquent rentals from tenants and proceedings related to claims for personal
injury or damage to property due to events occurring at the Property, Seller has
not received written notice of any pending litigation which has been filed
against Seller that arises out of the ownership of the Property;
<PAGE>
(g) Violations. To Seller's knowledge, except as set forth on
Exhibit P attached hereto, neither Seller nor Seller's property manager has
received written notice of any uncured violation of any federal, state or local
law (including without limitation environmental laws) from any governmental or
quasi-governmental agency or authority relating to the construction, use or
operation of the Property;
(h) Leases. To Seller's knowledge, the rent roll attached hereto
as Exhibit Q is accurate in all material respects, and lists all of the leases
currently affecting the Property. The copies of the Leases which will be
assigned and delivered to Purchaser by Seller will be true and complete copies.
To Seller's knowledge, except as set forth on Exhibit Q, neither Seller nor any
tenant under its Lease is in default under such Lease, and to Seller's
knowledge, no event or condition exists which with the giving of notice, passage
of time or both will constitute such a default. Seller has not assigned the
Leases to any other party. Seller has delivered to Purchaser a true and complete
copy of each Lease set forth on Exhibit Q. To Seller's knowledge, except as set
forth on Exhibit Q, there are no other agreements with any tenant regarding its
occupancy of any space in the Property. The list of Security Deposits set forth
on Exhibit Q is a correct and complete list of all of the security deposits from
any tenant regarding its occupancy of any space in the Property;
(i) Union Contracts; Employees. To Seller's knowledge, there are
no union contracts or collective bargaining agreements affecting the Property
which will be binding upon Purchaser subsequent to the Closing. There will be no
employees of Seller or its property manager at the Property after the Closing;
and
(j) Environmental Reports. To Seller's knowledge, the copies of
the environmental reports listed on Exhibit D and which have been delivered to
Purchaser are true and complete copies.
Section 5.2 Knowledge Defined. References to the "knowledge" of
Seller shall refer only to the current actual knowledge of the Designated
Employees (as hereinafter defined) of Seller, and shall not be construed, by
imputation or otherwise, to refer to the knowledge of Seller or any affiliate of
Seller, to any property manager, or to any other officer, agent, manager,
representative or employee of Seller or any affiliate thereof or to impose upon
such Designated Employees any duty to investigate the matter to which such
actual knowledge, or the absence thereof, pertains [except with respect to the
representations and warranties set forth in Sections 5.1(c), 5.1(e), 5.1(g) and
5.1(i) as to which such Designated Employees shall undertake due inquiry, which
shall be deemed to mean only due inquiry of Seller's property manager]. As used
herein, the term "Designated Employees" shall refer to W. Mark Keeney and Robert
LoCascio.
Section 5.3 Survival of Seller's Representations and Warranties.
The representations and warranties of Seller set forth in Section 5.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement, 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 if the breach in question results from or is based on a condition, state
of facts or other matter which was known to Purchaser prior to Closing. Seller
shall have no liability to Purchaser for a breach of any representation or
warranty (a) unless the valid claims for all such breaches collectively
aggregate more than TWO HUNDRED THOUSAND AND 00/100 DOLLARS ($200,000.00), in
which event the full amount of such valid claims shall be actionable, up to the
<PAGE>
Cap (as defined in this Section), and (b) 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 two hundred seventy (270)
day period and an action shall have been commenced by Purchaser against Seller
within three hundred sixty (360) days of Closing. 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. As used herein, the term "Cap" shall mean the total aggregate amount
of TWO MILLION AND 00/100 DOLLARS ($2,000,000.00).
Section 5.4 Covenants of Seller. Seller hereby covenants with
Purchaser as follows:
(a) From the Effective Date hereof until the Closing or earlier
termination of this Agreement, Seller shall maintain (or cause the maintenance
of) the Property in its present condition, ordinary wear and tear and casualty
excepted, and continue normal operations on the Property;
(b) Except as provided hereinbelow, a copy of any amendment,
renewal or expansion of an existing Lease or of any new Lease which Seller
wishes to execute between the Effective Date and the date of Closing will be
submitted to Purchaser prior to execution by Seller. Purchaser agrees to notify
Seller in writing within five (5) business days after its receipt thereof of
either its approval or disapproval thereof, including all Tenant Inducement
Costs and leasing commissions to be incurred in connection therewith. In the
event Purchaser's notice, as aforesaid, is given on or prior to December 3,
1996, and in such notice Purchaser indicates that it does not approve the
amendment, renewal or expansion of the existing Lease or the new Lease, which
approval shall not be unreasonably withheld, Seller shall nonetheless, with
regard to the lease transactions set forth on Exhibit M only, have the right to
execute such new Lease, amendment, renewal or expansion, as the case may be, and
Purchaser shall be deemed to have approved such agreement. In the event
Purchaser's notice, as aforesaid, either (i) does not relate to any of the lease
transactions set forth on Exhibit M and is given on or prior to December 3,
1996, or (ii) is given after December 3, 1996, and in such notice Purchaser
indicates that it does not approve the amendment, renewal or expansion of the
existing Lease or the new Lease, which approval shall not be unreasonably
withheld, Seller shall may not execute such amendment, renewal or expansion of
an existing Lease or such new Lease, as the case may be. In the event Purchaser
fails to notify Seller in writing of its approval or disapproval within the five
(5) business day period set forth above, Purchaser shall be deemed to have
approved such new Lease, amendment, renewal or expansion. At Closing, Purchaser
shall reimburse Seller for any Tenant Inducement Costs, leasing commissions or
other expenses, including legal fees, incurred by Seller pursuant to an
amendment, a renewal, an expansion or a new Lease approved (or deemed approved)
by Purchaser;
(c) Not cause or permit the Property, or any interest therein, to
be alienated, encumbered (other than by mechanic's or materialman's liens or
claims which are removed or bonded against prior to Closing) or otherwise
transferred, mortgaged, pledged or hypothecated;
(d) Except for those Operating Agreements which Purchaser
notifies Seller at the end of the Inspection Period should not be terminated,
Seller will cause to be terminated or cancelled at or prior to Closing any
Operating Agreements relating to the operation or maintenance of the Property,
including, without limitation, the management agreement for the Property;
<PAGE>
(e) Not enter into any union contracts or collective bargaining
agreements which will be binding upon Purchaser or the Property subsequent to
the Closing;
(f) Maintain (or cause the maintenance of) all casualty,
liability and hazard insurance currently in force with respect to the Property;
(g) From the Effective Date hereof until the Closing or earlier
termination of this Agreement, Seller shall cause the work under the projects
listed on Exhibit M to be performed and paid for. In the event that any of such
projects is not completed by the Closing, Purchaser shall assume the owner's
interest under the agreement for any such project for the period from and after
the date of Closing. Seller shall not make any further payments to any
contractor performing the work described on Exhibit M without Purchaser's
consent, which consent shall not be unreasonably withheld. Purchaser shall
receive a credit against the Purchase Price at Closing equal to that listed on
page 2 of Exhibit M (Balance to Complete), to the extent such payments have not
been made by Seller prior to Closing; and
(h) From the Effective Date hereof until the Closing, use good
faith efforts to complete a 5 year elevator inspection for the elevators in the
Improvements.
Section 5.5 Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and warranties to Seller as
of the Effective Date, which representations and warranties shall be deemed to
have been made again as of the Closing, subject to Section 4.3(C) hereof:
(a) Organization and Authority. Purchaser is duly organized,
validly existing and qualified and empowered to conduct its business, and has
full power and authority to enter into and fully perform and comply with the
terms of this Agreement.
Neither the execution and delivery of this Agreement nor its performance by
Purchaser will conflict with or result in the breach of any contract, agreement,
law, rule or regulation to which Purchaser is a party or by which Purchaser is
bound. This Agreement is valid and enforceable against Purchaser in accordance
with its terms and each instrument to be executed by Purchaser pursuant to this
Agreement or in connection herewith will, when executed and delivered, be valid
and enforceable against Purchaser in accordance with its terms. The person
signing this Agreement on behalf of Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, 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.
(c) ERISA. As of the Closing, (1) Purchaser will not be an
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is subject to Title I
of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (each of the foregoing hereinafter referred to
collectively as "Plan"), and (2) the assets of the Purchaser will not constitute
"plan assets" of one or more such Plans within the meaning of Department of
Labor ("DOL") Regulation Section 2510.3- 101.
<PAGE>
As of the Closing, if Purchaser is a "governmental plan" as
defined in Section 3(32) of ERISA, the closing of the sale of the Property will
not constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and
not on account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any
entity, person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of
sale to any entity, person, or Plan which will cause a violation of ERISA.
(d) Source of Funds. No portion of the funds to be used to
purchase the Property shall be derived from any source which might subject said
funds to civil or criminal forfeiture.
Section 5.6 Survival of Purchaser's Representations and
Warranties. The representations and warranties of Purchaser set forth in Section
5.5 hereof as updated as of the Closing in accordance with the terms of this
Agreement, shall survive Closing for a period of two hundred seventy (270) days.
Purchaser shall have no liability to Seller for a breach of any representation
or warranty unless written notice containing a description of the specific
nature of such breach shall have been given by Seller to Purchaser prior to the
expiration of said two hundred seventy (270) day period and an action shall have
been commenced by Seller against Purchaser within three hundred sixty (360) days
of Closing.
ARTICLE VI
DEFAULT
Section 6.1 Default by Purchaser. In the event the sale of the
Property as contemplated hereunder is not consummated due to Purchaser's default
hereunder, Seller shall be entitled, as its sole and exclusive remedy, to
terminate this Agreement and receive the Deposit as liquidated damages for the
breach of this Agreement, it being agreed between the parties hereto that the
actual damages to Seller in the event of such breach are impractical to
ascertain and the amount of the Deposit is a reasonable estimate thereof.
Section 6.2 Default by Seller. In the event the sale of the
Property as contemplated hereunder is not consummated due to Seller's default
hereunder, or if Seller shall breach any of its representations, warranties,
covenants or obligations under this Agreement, Purchaser shall be entitled, as
its sole remedy, either (a) to receive the return of the Deposit plus
reimbursement by Seller to Purchaser of Purchaser's actual out-of-pocket
expenses in connection with any such default or breach, provided, however, that
such reimbursement shall not in any event exceed the sum of $25,000.00, which
return and reimbursement shall operate to terminate this Agreement and release
Seller from any and all liability hereunder, or (b) to enforce specific
performance of Seller's obligation to convey the Property to Purchaser in
accordance with the terms of this Agreement, it being understood and agreed that
the remedy of specific performance shall not be available to enforce any other
obligation of Seller hereunder. Purchaser expressly waives its rights to seek
<PAGE>
damages in the event of Seller's default hereunder. Purchaser shall be deemed to
have elected to terminate this Agreement and receive back the Deposit and the
foregoing expenses if Purchaser fails to file suit for specific performance
against Seller in a court having jurisdiction in the county and state in which
the Property is located, on or before sixty (60) days following the date upon
which Closing was to have occurred.
Section 6.3 Recoverable Damages. Notwithstanding Sections 6.1 and
6.2 hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the
damages recoverable by either party against the other party due to the other
party's obligation to indemnify such party in accordance with this Agreement.
ARTICLE VII
RISK OF LOSS
Section 7.1 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 that 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 in and 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 lesser of the deductible amount under
Seller's insurance policy or the cost of such repairs as determined in
accordance with Section 7.3 hereof. Upon Closing, full risk of loss with respect
to the Property shall pass to Purchaser. The risk of loss until the Closing is
retained by Seller, but without any obligation or liability by Seller to repair
or restore the Property.
Section 7.2 Major Damage. In the event of a "Major" loss or
damage, either Seller or Purchaser may terminate this Agreement by written
notice to the other party, in which event the Deposit shall be returned to
Purchaser. Seller may elect to terminate this Agreement by written notice to
Purchaser given within ten (10) days after Seller sends Purchaser written notice
of the occurrence of such Major loss or damage (which notice shall state the
cost of repair or restoration thereof as opined by an architect in accordance
with Section 7.3 hereof). Purchaser may elect to terminate this Agreement either
by (a) written notice to Seller of such termination given within ten (10) days
after Seller sends Purchaser written notice of the occurrence of such Major loss
or damage, or (b) failing to give Seller written notice during such ten (10) day
period. In the event neither Seller nor Purchaser so elects to terminate this
Agreement, then Seller and 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 in and 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
<PAGE>
allow for the completion of such repairs. If Seller elects to assign a casualty
claim to Purchaser, (i) the Purchase Price shall be reduced by an amount equal
to the lesser of the deductible amount under Seller's insurance policy or the
cost of such repairs as determined in accordance with Section 7.3 hereof, and
(ii) Seller shall execute, acknowledge and deliver to Purchaser at the Closing,
in counterparts, an assignment, expressly made without representation or
warranty by Seller and without recourse to Seller, of Seller's interest in any
insurance or condemnation proceeds which may be payable to Seller as a result of
such casualty or taking, subject, however, to Seller's right to receive
reimbursement therefrom of any reasonable amounts paid or incurred by Seller for
or on account of repairs and/or restoration to the Property prior to the
Closing. Upon Closing, full risk of loss with respect to the Property shall pass
to Purchaser.
Notwithstanding anything hereinbefore provided to the contrary,
in the case of a casualty, Seller shall, on or prior to the Closing, endeavor to
obtain a written acknowledgement from its insurance carrier in which such
carrier agrees as to the amount of the insurance proceeds and its obligation to
pay such proceeds to Seller. If, at the Closing, Seller is unable to provide
Purchaser with such acknowledgement, Seller shall be entitled, upon written
notice delivered to Purchaser at or prior to the Closing, to reasonable
adjournments of the date of Closing one or more times, for a period or periods
not to exceed, in the aggregate, fifteen (15) days, to enable Seller to obtain
such acknowledgement. If Seller does not so elect to adjourn the Closing, or if
at the adjourned date Seller is still unable to provide such acknowledgement,
then (a) Purchaser may, at its option, terminate this Agreement by written
notice to Seller, in which event the sole liability of Seller shall be to direct
Escrow Agent to refund the Deposit to Purchaser, and to refund to Purchaser the
title examination, search and survey charges referred to in Section 2.2 above;
or (b) Purchaser may purchase the Property without such acknowledgement. Upon
such refund being made to Purchaser in accordance with clause (a) of the
immediately preceding sentence, then this Agreement shall automatically become
void and of no further force or effect, and neither party shall have any
obligations of any nature to the other hereunder or by reason hereof, except
obligations which, pursuant to the provisions of this Agreement, are expressly
stated to survive the termination of this Agreement. If Seller elects to adjourn
the Closing as provided above, this Agreement shall remain in effect for the
period or periods of adjournments, in accordance with its terms.
Section 7.3 Definition of "Major" Loss or Damage. For purposes of
Sections 7.1 and 7.2, "Major" loss or damage refers to the following: (a) loss
or damage to the Property hereof such that the cost of repairing or restoring
the premises in question to substantially the same condition which existed 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 ONE
MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000.00), and (b) any
loss due to a condemnation which permanently and materially impairs the current
use of the Property. If Purchaser does not give written 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.
<PAGE>
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the
transaction contemplated by this Agreement, Seller represents that its sole
broker is Bender & Company, Inc. ("Seller's Broker"), and Purchaser represents
that it has no broker. Each party hereto agrees that if any person or entity,
other than the Seller's Broker, makes a claim for brokerage commissions or
finder's fees related to the sale of the Property by Seller to Purchaser, and
such claim is made by, through or on account of any acts or alleged acts of said
party or its representatives, said party will protect, indemnify, defend and
hold the other party free and harmless from and against any and all loss,
liability, cost, damage and expense (including reasonable attorneys' fees) in
connection therewith. The provisions of this paragraph shall survive Closing or
any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 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 or its
brokers or agents 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.
Neither Seller, nor any affiliate of Seller, nor the person or entity which
prepared any report or reports delivered by Seller to Purchaser shall have any
liability to Purchaser for any inaccuracy in or omission from any such reports.
SECTION 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, 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, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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 EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR
RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING PACKAGES
DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY SELLER, THE
MANAGERS 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 ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
<PAGE>
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 OR DESIRABLE 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 THE RISK THAT
ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, 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 REASONABLE ATTORNEYS' FEES) 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 AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PROPERTY.
Section 9.3 Survival of Disclaimers. The provisions of this
Article IX shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Purchaser and its representatives
shall hold in strictest confidence all data and information obtained with
respect to Seller or its business, whether obtained before or after the
execution and delivery of this Agreement, and shall not disclose the same to
others; provided, however, that it is understood and agreed that Purchaser may
disclose such data and information to the employees, lenders, consultants,
accountants and attorneys of Purchaser provided that such persons agree to treat
such data and information confidentially in accordance with that certain access
agreement dated November 8, 1996 between Seller and Purchaser. In the event this
Agreement is terminated or Purchaser fails to perform hereunder, Purchaser shall
promptly return to Seller any statements, documents, schedules, exhibits or
other written information obtained from Seller in connection with this Agreement
or the transaction contemplated herein. It is understood and agreed that, with
respect to any provision of this Agreement which refers to the termination of
this Agreement and the return of the Deposit to Purchaser, such Deposit shall
not be returned to Purchaser unless and until Purchaser has fulfilled its
obligation to return to Seller the materials described in the preceding
sentence. In the event of a breach or threatened breach by Purchaser or its
agents or representatives of this Section 10.1, Seller shall be entitled to an
injunction restraining Purchaser or its agents or representatives from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting Seller 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 termination of this Agreement.
<PAGE>
Section 10.2 Public Disclosure. Prior to and after the 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. The provisions of this Section 10.2 shall
survive the Closing or any termination of this Agreement.
Section 10.3 Assignment.
(a) Subject to the provisions of this Section 10.3, the terms and
provisions of this Agreement are to apply to and bind the permitted successors
and assigns of the parties hereto. 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. In the event Purchaser
intends to assign its rights hereunder, (i) Purchaser shall send Seller written
notice of its request at least five (5) business days prior to Closing, which
request shall include the legal name and structure of the proposed assignee, as
well as any other information that Seller may reasonably request, and (ii)
Purchaser and the proposed assignee shall execute an assignment and assumption
of this Agreement in form and substance reasonably satisfactory to Seller, and
(iii) in no event shall any assignment of this Agreement release or discharge
Purchaser from any liability or obligation hereunder. Notwithstanding the
foregoing, 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. The sale or other transfer of any interest
in Purchaser, including, but not limited to (i) in the event Purchaser is a
corporation, a sale or transfer of the capital stock of Purchaser which is not
publicly traded or the issuance by Purchaser of additional shares of such
capital stock, except to shareholders of record of capital stock of Purchaser on
the Effective Date, or (ii) in the event Purchaser is a partnership, the sale or
transfer of any general partnership interest in Purchaser, shall be deemed an
assignment or a transfer of Purchaser's interest, or a part thereof, under this
Agreement. The provisions of this Section 10.3 shall survive the Closing or any
termination of this Agreement.
(b) Notwithstanding anything to the contrary hereinbefore
contained in this Agreement, Purchaser shall have the right, without Seller's
prior written consent, to assign or transfer any of Purchaser's rights,
obligations and interests under this Agreement prior to the Closing to an
Affiliate (as hereinafter defined), but no such assignment or transfer shall be
deemed a release of Purchaser from its liabilities or obligations under this
Agreement and such assignment or transfer shall not be permitted if it shall
cause a violation of ERISA. For the purposes of this Section 10.3, an Affiliate
shall mean any corporation which, directly or indirectly, controls or is
controlled by, or is under common control with Purchaser, Cali Realty, L.P.
and/or Cali Realty Corporation. For the purposes of this definition, "control"
(including "controlling", "controlled by" and "under common control with") as
used with respect to any corporation means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting securities
or by contract or otherwise. Purchaser shall, in connection with any assignment
or transfer permitted under this Section 10.3(b), provide Seller with a copy of
any documentation evidencing such assignment or transfer at least five (5)
business days prior to the Closing.
<PAGE>
(c) Notwithstanding anything to the contrary set forth in this
Agreement, Purchaser shall be liable to pay, and agrees to pay in full at or
prior to Closing, the transfer tax (if any) and any other applicable tax or
assessment, which is or may be due on (i) any transfer of Purchaser's interest
in this Agreement with respect to which Seller has provided Seller's prior
written consent (however, Seller has no obligation to provide Seller's written
consent with respect to any such transfer), (ii) any sale or transfer of capital
stock of Purchaser which is publicly traded, or any issuance of capital stock of
Purchaser, regardless of whether such sale, transfer or issuance is made to
shareholders of record of capital stock of Purchaser on the Contract Date, (iii)
any sale or transfer of any partnership interests in Purchaser, and (iv) any
transfer of Purchaser's interest in this Agreement to an Affiliate, and
Purchaser and any such assignee and transferee (if any) shall jointly and
severally indemnify and hold harmless Seller and Seller's successors and
assigns, from and against any and all claims, damages, losses, costs, expenses
and liabilities, including, without limitation, attorneys' fees and
disbursements, arising out of Purchaser's failure to comply with its obligations
under this Section 10(c).
Section 10.4 Notices. Any notice pursuant to this Agreement shall
be given in writing by (a) personal delivery, (b) reputable overnight delivery
service with proof of delivery, (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 upon receipt or refusal to accept delivery, 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. Unless changed in
accordance with the preceding sentence, the addresses for notices given pursuant
to this Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
200 Park Avenue, 12th floor
New York, NY 10166
Attention: Joanne Lyons
Telephone No. (212) 578-2892
Telecopy No. (212) 679-3899
with a copy to: Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: William P. Gardella
Telephone No. (212) 578-5884
Telecopy No. (212) 685-5927
If to Purchaser: Cali Realty Acquisition Corp.
11 Commerce Drive
Cranford, NJ 07016-3549
Attention: John R. Cali
Telephone No. (908) 272-8000
Telecopy No. (908) 272-6755
<PAGE>
with copies to: Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Attention: Wayne Heicklen, Esq.
Telephone No. (212) 326-0854
Telecopy No. (212) 326-0812
and Cali Realty Acquisition Corp.
11 Commerce Drive
Cranford, NJ 07016-3549
Attention: Roger W. Thomas, General Counsel
Telephone No. (908) 272-8000
Telecopy No. (908) 272-6755
Section 10.5 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.
Section 10.6 Entire Agreement. This Agreement, including the
exhibits and schedules hereto, contains the entire agreement between the parties
hereto 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, other than any confidentiality agreement executed by
Purchaser in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will
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 the transaction contemplated by this Agreement. The
provisions of this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in
counterparts, all such executed counterparts shall constitute the same
agreement, and the signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the
transaction contemplated herein, telecopied signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound
by the signatures on the telecopied document, are aware that the other party
will rely on the telecopied signatures, and hereby waive any defenses to the
enforcement of the terms of this Agreement based on the form of signature.
Section 10.10 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; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State in which the Property is
located. Purchaser and Seller agree that the provisions of this Section 10.11
shall survive the Closing or any termination of this Agreement.
<PAGE>
Section 10.12 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 to
enforce the provisions of this Agreement or of the documents to be executed and
delivered at Closing.
Section 10.13 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.
Section 10.14 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.
Section 10.15 Recordation. This Agreement may not be recorded by
any party hereto without the prior written consent of the other party hereto.
The provisions of this Section 10.15 shall survive the Closing or any
termination of this Agreement.
Section 10.16 Purchaser Approval. Notwithstanding any other
provision of this Agreement, the obligation of Purchaser to consummate the
transaction contemplated herein shall be subject to the condition that the Board
of Directors of Purchaser shall have approved the sale of the Property to
Purchaser, pursuant to the terms and conditions of this Agreement, on or prior
to December 3, 1996. If Purchaser fails to notify Seller by 5:00 p.m. (local
time at the Property) on December 3, 1996 that its Board of Directors has
approved the sale of the Property to Purchaser pursuant to the terms hereof,
then this Agreement shall terminate and neither party shall have any further
rights or obligations hereunder (except for any indemnity obligations of either
party pursuant to the other provisions of this Agreement), the Deposit, or
portion thereof previously deposited with Escrow Agent, shall be returned to
Purchaser and each party shall bear its own costs hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: /s/Joanne M. Lyons
------------------
Joanne M. Lyons
Assistant Vice-President
PURCHASER:
CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By: /s/ John R. Cali
----------------
John R. Cali
Title: Chief Administrative Officer
and Head of Acquisitions
Escrow Agent executes this Agreement below solely for the purpose of
acknowledging that it agrees to be bound by the provisions of Sections 1.5 and
1.6 hereof.
ESCROW AGENT:
STEWART TITLE GUARANTY COMPANY,
a Texas corporation
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale..............
Section 1.2 Property Defined............................
Section 1.3. Purchase Price..............................
Section 1.4 Payment of Purchase Price...................
Section 1.5 Deposit.....................................
Section 1.6 Escrow Agent................................
ARTICLE II TITLE AND SURVEY
Section 2.1 Existing Title and Survey Matters...........
Section 2.2 Pre-Closing "Gap" Title Defects.............
Section 2.3 Permitted Exceptions........................
Section 2.4 Conveyance of Title.........................
ARTICLE III REVIEW OF PROPERTY
Section 3.1 Right of Inspection.........................
Section 3.2 Environmental Reports.......................
Section 3.3 Right of Termination........................
Section 3.4 Review of Tenant Estoppels..................
ARTICLE IV CLOSING
Section 4.1 Time and Place..............................
Section 4.2 Seller's Obligations at Closing.............
Section 4.3 Purchaser's Obligations at Closing..........
Section 4.4 Credits and Prorations......................
Section 4.5 Transaction Taxes and Closing Costs.........
Section 4.6 Conditions Precedent to Obligation of
Purchaser...................................
Section 4.7 Conditions Precedent to Obligation of
Seller......................................
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of
Seller......................................
Section 5.2 Knowledge Defined...........................
Section 5.3 Survival of Seller's Representations and
Warranties..................................
Section 5.4 Covenants of Seller.........................
Section 5.5 Representations and Warranties of
Purchaser...................................
Section 5.6 Survival of Purchaser's Representations
and Warranties..............................
ARTICLE VI DEFAULT
Section 6.1 Default by Purchaser........................
Section 6.2 Default by Seller...........................
Section 6.3 Recoverable Damages.........................
ARTICLE VII RISK OF LOSS
Section 7.1 Minor Damage................................
Section 7.2 Major Damage................................
Section 7.3 Definition of "Major" Loss or Damage........
ARTICLE VIII COMMISSIONS
<PAGE>
Section 8.1 Brokerage Commissions.......................
ARTICLE IX DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents....................
SECTION 9.2 AS-IS SALE; DISCLAIMERS.....................
Section 9.3 Survival of Disclaimers.....................
ARTICLE X MISCELLANEOUS
Section 10.1 Confidentiality.............................
Section 10.2 Public Disclosure...........................
Section 10.3 Assignment..................................
Section 10.4 Notices.....................................
Section 10.5 Modifications...............................
Section 10.6 Entire Agreement............................
Section 10.7 Further Assurances..........................
Section 10.8 Counterparts................................
Section 10.9 Facsimile Signatures........................
Section 10.10 Severability................................
Section 10.11 Applicable Law..............................
Section 10.12 No Third-Party Beneficiary..................
Section 10.13 Captions....................................
Section 10.14 Construction................................
Section 10.15 Recordation.................................
Section 10.16 Purchaser Approval..........................
A DESCRIPTION OF LAND
B LIST OF PERSONAL PROPERTY
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E FORM OF TENANT ESTOPPEL CERTIFICATE
F TENANT ESTOPPEL STANDARDS
G FORM OF DEED
H FORM OF BILL OF SALE
I FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF TENANT NOTICE
L FORM OF FIRPTA CERTIFICATE
M LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION
P LIST OF VIOLATION NOTICES
Q RENT ROLL
R EXISTING TITLE AND SURVEY MATTERS
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
Exhibit A - Page 1 of 1
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
All furniture, furnishings, appliances, equipment, tools and supplies, if any,
presently located in or on the Property to the extent that the same are owned by
Seller and will be in existence on the date of Closing (no representation being
given in any respect whatsoever by Seller that any such furniture, furnishings,
appliances, equipment, tools and supplies are in fact presently located in or on
the Property or that the same are in fact owned by the Seller and/or will be in
existence on the date of Closing).
Exhibit B - Page 1 of 1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT C
LIST OF OPERATING AGREEMENTS
VENDOR AGREEMENT CANCELLATION
NAME DATE PURPOSE TERM CLAUSE
- ---- ---- ------- ---- ------
<S> <C> <C> <C> <C>
Dover Elevator Company 9-1-96 Elevator Maintenance 3 years 30 days
National Metal & Marble
Maintenance 7-1-96 Metal Refinishing 1 year 10 days
Interboro Disposal &
Recycling Corp. 7-1-96 Trash Removal 1 year 10 days
Diversey Water
Technologies, Inc. 7-1-96 Water Treatment 1 year 10 days
Valcourt Building
Services of NJ, Inc. 6-1-96 Window Cleaning 1 year 10 days
International Service
Systems 8-1-96 Janitorial 1 year 10 days
GS Edwards 8-1-96 Fire Panel 1 year 10 days
Rentokil Environmental
Services 7-1-96 Interior Plant Maintenance 1 year 10 days
S. Guerriero Landscaping
Contractors 3-1-96 Landscaping Maintenance 11-30-96 10 days
Lake Construction 10-28-96 Parking Garage Repair Work 12-15-96 10 days
Carrier Corporation 4-1-96 HVAC System 1 year 10 days
Cooper Pest Control 7-1-96 Pest Control Services 1 year 10 days
Borg Warner not yet signed Security Services 1 year 10 days
Exhibit C - Page 1 of 1
</TABLE>
<PAGE>
EXHIBIT D
LIST OF ENVIRONMENTAL REPORTS
Phase I Environmental Report prepared by Langan Engineering and
Environmental Services, Inc. dated August 30, 1996
Phase II Environmental Report prepared by Law Associates dated
December 9, 1991
Phase I Environmental Report prepared by Law Associates dated
October 15, 1991
Exhibit D - Page 1 of 1
<PAGE>
EXHIBIT E
TENANT ESTOPPEL FORM
, 1996
Cali Realty Acquisition Corp.
11 Commerce Drive
Cranford, NJ 07016-3549
Metropolitan Life Insurance Company
200 Park Avenue, 12th floor
New York, NY 10166
Re: Lease dated _____________________ , 199 (the "Lease") executed between
_________________________________________, and
________________________________________________ ("Tenant"), for
premises located at One Bridge Plaza, Bridge Plaza, North Marginal
Road, Fort Lee, New Jersey
Gentlemen:
The undersigned Tenant understands that Cali Realty Acquisition Corp. or
its assigns intend to acquire fee title to that property located at One Bridge
Plaza, Bridge Plaza, North Marginal Road, Fort Lee, New Jersey (the "Property")
from Metropolitan Life Insurance Company ("Landlord"). The undersigned Tenant
does hereby certify to you as follows:
A. Tenant has entered into a certain lease together with all amendments
(the "Lease") as described on Schedule 1 attached hereto.
B. The Lease is in full force and effect and has not been modified,
supplemented, or amended except as set forth on Schedule 1 attached
hereto.
C. Tenant has not given Landlord written notice of any dispute between
Landlord and Tenant or that Tenant considers Landlord in default under
the Lease.
D. Tenant does not claim any offsets or credits against rents payable
under the Lease.
E. Tenant has not paid a security or other deposit with respect to the
Lease, except as follows: .
F. Tenant has fully paid rent to and including the month of
, 1996.
G. Tenant has not paid any rentals in advance except for the current
month of , 199_.
H. The Lease expires on ____________________________.
I. Tenant has no options, rights of first offer or rights of first
refusal to purchase the Property, except as follows:
Exhibit E - Page 1 of 2
<PAGE>
TENANT:
_________________________________
a _______________________________
By: _____________________________
Name: ___________________________
Title: __________________________
Exhibit E - Page 2 of 2
<PAGE>
EXHIBIT F
TENANT ESTOPPEL STANDARDS
Each tenant who leases at least 10,000 rentable square feet of space in the
Improvements.
The Tenant Estoppels shall cover, in the aggregate, at least seventy-five (75%)
percent of the total leased space in the Improvements as of the Effective Date.
Exhibit F - Page 1 of 1
<PAGE>
EXHIBIT G
FORM OF DEED
Exhibit G - Page 1 of 3
<PAGE>
EXHIBIT H
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (the "Seller"), for and in consideration of the
sum of Ten Dollars and other valuable consideration to it in hand paid by CALI
REALTY ACQUISITION CORP., a Delaware corporation (the "Purchaser"), the receipt
and sufficiency of which are hereby acknowledged, hereby sells, assigns,
transfers and conveys unto said Purchaser any and all of Seller's right, title
and interest in and to all tangible personal property located upon the land
described in Exhibit "A" attached hereto and hereby made a part hereof (the
"Land") or within the improvements located thereon, including, without
limitation, any and all appliances, furniture, carpeting, draperies and
curtains, tools and supplies, and other items of personal property owned by
Seller (excluding cash and any software), used exclusively in the operation of
the Land and improvements, as is, where is, and without warranty of title or
use, and without warranty, express or implied, of merchantability or fitness for
a particular purpose.
TO HAVE AND TO HOLD all of said personal property unto Purchaser, its
successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the day
of , 199 .
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By:_________________________
Name:
Title:
[ACKNOWLEDGEMENTS AND/OR WITNESSES TO BE ADDED
IF REQUIRED UNDER APPLICABLE STATE LAW]
SCHEDULE "1"
LEGAL DESCRIPTION
[To be attached]
Exhibit H - Page 1 of 1
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (the "Assignment") is made as of this day of
, 199 between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation,
("Assignor") and CALI REALTY ACQUISITION CORP., a Delaware corporation
("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Exhibit "A" attached hereto and incorporated herein by
this reference, more commonly known as One Bridge Plaza located in the Borough
of Fort Lee, County of Bergen, State of New Jersey (the "Property"), and the
mutual covenants herein contained, the receipt and sufficiency of the foregoing
consideration being hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and conveys to Assignee all of Assignor's right,
title and interest in, to and under any and all existing and outstanding leases,
licenses and occupancy agreements (collectively, the "Leases"), of the
improvements comprising a part of the Property, including without limitation,
all those Leases described on Exhibit "B" attached hereto and incorporated
herein by this reference, together with all security deposits tendered under the
Leases remaining in the possession of Assignor.
Assignee does hereby assume and agree to perform all of Assignor's
obligations under or with respect to the Leases accruing from and after the date
hereof, including without limitation, any and all obligations to pay leasing
commissions and finder's fees which are due or payable after the date hereof
with respect to the Leases, and claims made by tenants with respect to the
tenants' security deposits to the extent paid, credited or assigned to Assignee
by Assignor. Assignee agrees to indemnify, protect, defend and hold Assignor
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignee's obligations hereunder.
Assignor shall remain liable for all of Assignor's obligations under or with
respect to the Leases accruing prior to the date hereof. Assignor agrees to
indemnify, protect, defend and hold Assignee harmless from and against any and
all liabilities, losses, costs, damages and expenses (including reasonable
attorneys' fees) directly or indirectly arising out of or related to any breach
or default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective heirs, executors, administrators,
successors and assigns.
This Assignment may be executed 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.
Exhibit I - Page 1 of 2
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By:_________________________
Name:
Title:
ASSIGNEE:
CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By:_________________________
Name:
Title:
[ADD STATE SPECIFIC ACKNOWLEDGEMENTS AND/OR
WITNESSES FOR ASSIGNOR AND ASSIGNEE]
SCHEDULE "1"
LEGAL DESCRIPTION
SCHEDULE "2"
LEASES
[To be attached]
Exhibit I - Page 2 of 2
<PAGE>
EXHIBIT J
FORM OF ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES (the
"Assignment") is made as of the day of , 199 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation, ("Assignor") and CALI REALTY ACQUISITION CORP.,
a Delaware corporation ("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Exhibit "A" attached hereto and incorporated herein by
this reference, more commonly known as One Bridge Plaza located in the Borough
of Fort Lee, County of Bergen, State of New Jersey (the "Property"), and the
mutual covenants herein contained, the receipt and sufficiency of the foregoing
consideration being hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and conveys to Assignee all of Assignor's right,
title and interest, to the extent assignable, in, to and under any and all of
the following, to wit:
(i) the contracts and agreements listed and described on Exhibit "B"
attached hereto and incorporated herein by this reference (the
"Contracts"),
(ii) all existing warranties and guaranties (express or implied) issued
to Assignor in connection with the improvements or the personal
property being conveyed to Assignee by Bill of Sale on the date hereof,
(iii) all existing permits, licenses, approvals and authorizations
issued by any governmental authority in connection with the Property,
and
(iv) the non-exclusive right to the name "One Bridge Plaza."
All items described in (ii), (iii) and (iv) above are hereinafter collectively
referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignee agrees to indemnify, protect, defend and hold Assignor
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignee's obligations hereunder.
Assignor shall remain liable for all of Assignor's obligations under the
Contracts and Intangible Property accruing prior to the date hereof. Assignor
agrees to indemnify, protect, defend and hold Assignee harmless from and against
any and all liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees) directly or indirectly arising out of or related to
any breach or default in Assignor's obligations hereunder.
Exhibit J - Page 1 of 2
<PAGE>
This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective heirs, executors, administrators,
successors and assigns.
This Assignment may be executed 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.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By:________________________
Name:
Title:
ASSIGNEE:
CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By:________________________
Name:
Title:
[ADD STATE SPECIFIC ACKNOWLEDGEMENTS AND/OR
WITNESSES FOR ASSIGNOR AND ASSIGNEE]
SCHEDULE "1
LEGAL DESCRIPTION
SCHEDULE "2"
CONTRACTS
[To be attached]
Exhibit J - Page 2 of 2
<PAGE>
EXHIBIT K
FORM OF TENANT NOTICE
TENANT NOTIFICATION LETTER
[DATE OF SALE CLOSING]
HAND DELIVERED
TO: All Tenants at One Bridge Plaza, Bridge Plaza, North Marginal
Road, Fort Lee, NJ
RE: One Bridge Plaza
Notification Regarding Change of Ownership
This letter is to notify you as a tenant at One Bridge Plaza, Bridge Plaza,
North Marginal Road, Fort Lee, New Jersey (the "Property"), that the Property
has been sold by Metropolitan Life Insurance Company, a New York corporation
("Seller"), to Cali Realty Acquisition Corp., a Delaware corporation
("Purchaser"). As of the date hereof, your Lease has been assigned by Seller to
Purchaser. From the date of this letter, any and all unpaid rent as well as all
future rent, or any other amounts due under the terms of your Lease, shall be
directed as follows:
TO: ______________________
ATTN: ______________________
AT: ______________________
______________________
As part of the sale, all refundable tenant deposits, if any, actually held by
Seller with respect to the Property have been transferred to, and Seller's
obligations with respect to such deposits have been assumed by, Purchaser as of
the date of this letter. Any and all payments of rent (or other sums due under
your Lease) hereafter paid to any party other than Purchaser shall not relieve
you of the obligation of making said payment to Purchaser.
Seller: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: _______________________________
Name:
Title:
Purchaser: CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By: _______________________________
Name:
Title:
Exhibit K - Page 1 of 1
<PAGE>
EXHIBIT L
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT
IN REAL PROPERTY TAX ACT
(ENTITY TRANSFEROR)
Section 1445 of the Internal Revenue Code provides that a transferee
(purchaser) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (purchaser) that
withholding of tax is not required upon the disposition of a U.S. real property
interest by METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
("Transferor"), Transferor hereby certifies:
1. Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations).
2. Transferor's Federal Employer Identification Number is 13-5581829.
3. Transferor's office address is:
One Madison Avenue
New York, New York 10010; and
4. The address or description of the property which is the subject
matter of the disposition is One Bridge Plaza, Bridge Plaza, North Marginal
Road, Fort Lee, New Jersey.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.
Transferor declares that it has examined this certification and to the
best of its knowledge and belief, it is true, correct and complete, and further
declares that the individual executing this certification on behalf of
Transferor has full authority to do so.
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By:________________________
Name:
Title:
Dated:__________________
Exhibit L - Page 1 of 1
<PAGE>
EXHIBIT M
LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
Exhibit M - Page 1 of 1
<PAGE>
EXHIBIT N
LIST OF BROKERAGE AGREEMENTS
Lease Commission Agreement dated _________________ by and between
Metropolitan Life Insurance Company and ______________________
Exhibit N - Page 1 of 1
<PAGE>
EXHIBIT O
LIST OF SPECIFIED LITIGATION
Media Adventures
Exhibit O - Page 1 of 1
<PAGE>
EXHIBIT P
LIST OF VIOLATION NOTICES
None
Exhibit P - Page 1 of 1
<PAGE>
EXHIBIT Q
RENT ROLL
Exhibit Q - Page 1 of 1
<PAGE>
EXHIBIT R
EXISTING TITLE AND SURVEY MATTERS
The state of facts shown on the Survey
Easement between Public Service Electric and Gas Company and New Jersey Bell
Telephone Company as contained in Book 6580, Page 82.
Easement between Public Service Electric and Gas Company and New Jersey Bell
Telephone Company as contained in Book 6596, Page 977.
Restrictions as contained in Deed Book 5337, Page 155.
Based upon a survey made by Warren D. Skrable, dated September 20, 1996, the
company hereby insures against loss or damage which the insured shall sustain by
reason of any encroachments, overlaps, boundary line disputes or easements,
except as follows:
A. Mislocation and encroachment of chain link fence along
Northerly line.
B. Encroachment of walls and sign in bed of central road.
C. Storm sewer pipes crossing Southeasterly and Southwesterly
portion of premises.
Assignment and Assumption of Lease, recorded June 18, 1985, in Book 6928, Page
384.
Memorandum of Lease Agreement, recorded on September 22, 1995, in Book 7821,
Page 921.
Assignment of Lessee's interest in Lease Agreement, recorded September 22, 1995
in Book 7821, Page 923.
UCC-1 #5338R-93, recorded on December 22, 1993
UCC-1 #5339R-93, recorded on December 22, 1993
UCC-1 #1154R-96, recorded March 11, 1996
Exhibit R - Page 1 of 1
EXHIBIT NUMBER
10.58
Exhibit R - Page 2 of 2
<PAGE>
AMENDMENT TO SALE AGREEMENT
This AMENDMENT TO SALE AGREEMENT (hereinafter referred to as this
"Agreement"), entered into as of the 4th day of December, 1996, by and between
METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation ("Seller"), and CALI
REALTY ACQUISITION CORP., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into that certain Sale Agreement
dated as of November 26, 1996 (hereinafter referred to the "Contract"), whereby
Seller agreed to sell and convey to Purchaser, and Purchaser agreed to purchase
from Seller, certain property commonly known as One Bridge Plaza in Fort Lee,
New Jersey and more particularly described on Exhibit A attached to the
Contract;
WHEREAS, as a result of Purchaser's review of the component systems that
may be related to the perimeter leaking at the Property, Purchaser has
requested, and Seller has agreed, to reduce the Purchase Price by the amount of
Two Hundred Thousand and 00/100 Dollars ($200,000.00); and
WHEREAS, the parties hereto desire to modify the terms, provisions,
covenants and conditions of the Contract only in the respects hereinafter set
forth.
NOW, THEREFORE, in consideration of these premises and the mutual promises
and covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. All terms used herein without definition are used herein with the meanings
assigned to such terms in the Contract, unless the context otherwise requires.
2. Section 1.3 of the Contract is hereby deleted in its
entirety and replaced with the following Section 1.3:
"Section 1.3 Purchase Price. Seller is to sell and Purchaser is to
purchase the Property for the amount of TWENTY-SIX MILLION EIGHT
HUNDRED THOUSAND AND 00/100 DOLLARS ($26,800,000.00) (the "Purchase
Price")."
3. Except as expressly modified by this Agreement, the terms, provisions,
covenants and conditions of the Contract shall remain unchanged and are hereby
ratified and confirmed as being in full force and effect.
Exhibit R - Page 3 of 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their respective duly authorized representative(s)
as of the day and year first above written.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By:/s/Joanne M. Lyons
---------------------
Joanne M. Lyons
Assistant Vice President
PURCHASER:
CALI REALTY ACQUISITION CORP.,
a Delaware corporation
By: /s/John R. Cali
-------------------
Chief Administrataive Officer and
Head of Acquisitions
Exhibit R - Page 4 of 4
